Broker upgrade, page-8

Frank,

I'd like to draw people's attention to the importance of the topic list on the first slide. The broker report as usual got close to the real issues, but missed precisely what success or failure turns on.

Anti-PD1 therapies are a truly amazing development, they prevent the immune system being turned off in the melanoma micro-environment. That is, when the immune system turns up in a melanoma, the melanoma responds to down-regulate the immune system's attack. The Anti-PD1 therapies prevent this down-regulation and allow continued full-on attack.

However -- why do Anti-PD1 therapies only work well in no more than ~30% of patients? Simply that the immune system has not recognised the melanoma as a threat. Anti-PD1 works poorly when there are no "TILs" in the melanoma. (TIL = tumor infiltrating lymphocyte).

With respect to Viralytics, the critically important result they await is whether intravenous administration of Cavatak leads to TILs. If so they have little doubt of effectiveness in combination with Anti-PD1 and would recommend pursuit of it if (again) asked by Merck.

Now - back to the slide posted. That lists some of the key techniques by which researchers are hoping TILs can be enhanced immediately prior to treatment with Anti-PD1. Radiotherapy and vaccines are the two other primary areas that might enhance recognition of the tumor as an attack target by the immune system. Cavatak is particularly good as it preferentially targets the right area (via ICAM-1). Once in the right area and replicating, the double stranded RNA it produces is a massive red-flag to the immune system: the body is under attack. That is, by first reaching the tumor area then replicating massively it pulls in the immune system. Vaccines as competition are no near-term threat, years of research in that direction for melanoma has not landed any goals.

In my view, partnering should occur once results of TILs and PD-L1 expression in tumors are sufficiently demonstrated by the STORM trial.