Evaxion at Sidoti Conference: AI-Driven Drug Development Strategy

On Thursday, 22 May 2025, Evaxion Biotech AS (NASDAQ:EVAX) presented its strategic initiatives at the Sidoti May Micro-Cap Virtual Conference. The discussion, led by CEO Kristian Kansdrop, focused on AI-powered drug development advancements and partnerships, notably with Merck. While progress was highlighted, the company acknowledged that current market conditions have not yet been reflected in its share price.

Key Takeaways

• Evaxion is advancing AI-driven drug development, with a focus on cancer and infectious diseases.
• A significant partnership with Merck could potentially extend the financial runway into 2027.
• The AI platform is validated and cost-effective, with three clinical trials supporting its efficacy.
• Key milestones include Merck’s option decision and phase two data for EVX-one expected later this year.

Financial Results

Evaxion is currently funded into mid-2026, with the potential to extend this to 2027 if Merck exercises its option, bringing an additional $10 million. The company’s annual burn rate is approximately $14 million. Merck, holding 20% of Evaxion, recently invested $3 million in a public offering. The option and licensing agreement with Merck includes an upfront payment of $3.2 million, with potential downstream payments up to $592 million per product plus royalties.

Operational Updates

Evaxion’s AI immunology platform, validated in three clinical trials, offers fast and cost-effective vaccine target discovery. The platform facilitates discovery in 24 hours and is 90% cheaper than traditional methods. The lead candidate, EVX-one, is in phase two development for metastatic melanoma, showing promising results with a 69% overall response rate and a significant reduction in tumor lesions.

Future Outlook

Evaxion aims to maintain its position as a leading AI-powered biotech company, focusing on drug discovery and development. The company plans to generate positive cash flow and become a preferred R&D partner. Upcoming milestones include Merck’s option decision, EVX-one’s two-year data readout, and potential new partnerships.

Q&A Highlights

The potential of EVX-one as a standalone treatment and in combination with checkpoint inhibitors was discussed. The company is committed to improving its AI platform to detect novel targets. The partnership with Merck, initiated in 2023, is crucial, with Merck expected to take full responsibility for the development and commercialization of the vaccine candidates, should they exercise their option.

For further details, please refer to the full transcript below.

Full transcript - Sidoti May Micro-Cap Virtual Conference:

Alex, Host/Moderator: At the bottom of your screen. And after the presentation, we’ll open to your questions. With that, Christian, I’ll hand it over to you.

Kristian Kansdrop, CEO, Evaction: Thank you so much, Alex. And as always, good to see you, and, great to be here and having the opportunity of presenting Evaction. I’m Kristian Kansdrop. I’m the CEO of Evaction. And, I think it’s fair to say we are at a very exciting point in time in the Evaction journey.

We, early this year, raised a decent amount of cash, now have cash into mid twenty twenty six at our latest public offering. We also had Merck participate in the offering. That’s the third time in a row Merck is participating in one of our offerings, and they now hold around 20% of the company. What we also have is we have a transformative option and licensing agreement, which we signed with Merck in September. It is tracking towards the decision point of option exercise expected in the second half of this year.

If Merck decides to exercise the option to both the vaccine candidates included in that optional licensing agreement, we can get $10,000,000 in cash, which would in turn extend our runway into 2027. On top of that, we are seeing our lead candidate EVX-one continuing to deliver solid data, and we are on track for our two year readout in the second half of this year. So with that brief intro, let me take you through a quick evaction update. First and foremost, I will be talking about the future, and we know how it is when you talk about the future. That is uncertain, so I direct your attention to our forward looking statement slide here.

Briefly, who is For those of you who don’t know us, we are a pioneer in fast and effective AI powered development of new medicines. The core the core of Evaction, that’s our AI immunology platform, clinically validated and leading platform. An interesting thing about Evaction is we were actually founded as an AI first company back in 02/2008, I. E. We have had a significant head start and have been spending the past fifteen years in developing, perfecting, and validating our platform.

That is a key differentiator compared to many of the newer AI companies out there today. On top of that, we have been spending time building a multidisciplinary capability set around our AI platform. And today, we, on top of that, have a state of the art web lab here at our site in Denmark as well as animal facilities. And what this has allowed us to do is to build a broad pipeline, pipeline of preclinical and clinical programs across cancer and infectious diseases. With that, we are focusing both on platform and pipeline to create value, and that offers quite significant and unique opportunities for value creation, which we are pursuing in a multi partner approach.

And I’m just gonna spend a little bit of time on on the focus on both platform and pipeline because, of course, you often hear people are saying, you gotta decide. Are you a platform or a pipeline company? You can’t be at both. I firmly believe due to unique capabilities and properties of our AI immunology platform, we can be both. If we look at the platform, what that does, it enables what we call high value, low risk partnerships on target discovery, design, and development.

Here, teaming up with pharma, teaming up with biotech to develop novel vaccine candidates. A good example of this is in 2023 where we entered into a collaboration with Merck on developing a novel vaccine candidate for a infectious disease, bacterial infectious disease, where there are no vaccines available today. We were approached, asked if we could deploy our AI technology platform to develop a novel vaccine candidate, and that is one element of the option and licensing agreement that we entered into with Merck last year. On top of that, we can, of course, use the platform for fast and cost effective replenishment of our internal pipeline as we have a strong focus on partnering. When we are partnering our existing pipeline candidates, we need to continue refilling that.

That can be done in a very effective and fast way via deploying our AI immunology platform. For the pipeline, this is really around advancing select high value programs into preclinical, early clinical development ourselves, focusing on retaining value and then partnering at the right point in time. An example of what we wanna do here is EVHXB2, which is our proprietary gonorrhea vaccine candidate, which we actually partnered with Merck in the optional licensing agreement entered into last year. So this is really about retaining value by bringing assets into either pre preclinical or early clinical development before pursuing partnering. So there’s a lot of complementarity between both platform and pipeline enabling us to pursue both.

And just a few words on on the partnership with Merck. I’ve talked about it already. It is an optional licensing agreement covering two candidate, our proprietary eBXB2 gonorrhea candidate, and then eBXB3, which is the target discovery collaboration we entered into with Merck a year earlier. And, of course, having the opportunity of partnering up with the world leader in vaccine development and commercialization is of significant strategic and financial value to us, but more important so, it allows for fast and effectively bring these novel vaccine candidates towards the market. Both areas are diseases where there are no approved vaccines today, so a significant and serious unmet need.

The structure of the agreement is we got 3,200,000.0 upon signing last year. And as I said, if Merck exercises the option to either one or two candidates, two candidates, we get 10,000,000. If they exercise the option for only one candidate, we get 7,500,000 during the second half of this year. In addition to that, significant downstream payments up to 592,000,000 per product plus royalties on sales. On top of that, I already mentioned it, Merck is our single largest shareholder with around 20% of the company.

So this, of course, further solidifies our relationship with Merck. And let me just touch a little bit upon the markets that we are addressing today. Cancer and infectious diseases. Both of these are markets with significant significant unmet need. Think about it.

Within cancer, ten million people dying a year due to cancer. Way too many. But also also within infectious diseases, we actually have eight million deaths a year due to infectious diseases. So significant unmet needs just in the two areas we’re in today. In terms of market sizing, the cancer immunotherapy market expected to be almost 280,000,000,000 by the end of the decade, the infectious disease market almost 70,000,000,000 US dollars.

So fair to say we have ample opportunities for addressing significant unmet need, thereby also significant market opportunities with our AI immunology platform. Let me just dive a little bit into what is AI immunology actually about. It is for vaccine target discovery, design, and development. First and foremost, it’s a validated platform. Due to the fact that we embarked on this journey in 02/2008, we have already now validated the platform in three clinical trials.

This is a unique differentiator compared to many of the companies who have emerged over the past couple of years focusing on utilizing AI for target discovery. We have shown in a clinical trial setting, there is a clear link between the predictive capabilities of our platform and outcomes. The platform is fast. In just twenty four hours, we can run the model to get proposed targets for a given either infectious disease or a cancer vaccine candidate. The model is also very targeted in the sense that it gives a ranked list of targets, And we know we can choose just the highest ranked ones and only need to test those.

That means that we can test 80% fewer targets than what you have to do if you apply conventional methods. Taking this together, it also means that it’s a very cost effective platform to utilize for novel target discovery. Actually, it’s 90% plus cheaper than deploying reverse vaccinology for identifying novel targets. So this in essence means it’s fast, it’s cheaper, and hopefully also leads to lower risk in novel drug development. It’s also scalable.

We can deploy the platform into more than hundred different diseases, creating a lot of growth opportunities for the future. Just a few words on the actual architecture. If we look at the infrastructure, we’re deploying all the modern novel tools, large protein language model, AML, proprietary datasets, Python, etcetera. We have a quite unique setup with a mix of cloud and on premise setup. But where the really differentiating element comes in, it’s in a unique building block architecture we have for the platform.

The platform consists of 26 different building blocks. These building blocks, we can put together in different ways to give the desired properties of the model. And that’s important because that means by just improving the performance of one building block, we can improve performance across multiple places in the platform. And with the things that’s happening, the the rate of change in AI, of course, being able to continuously continuously improve the performance of the model with limited investment is a key enabler to staying ahead of competition, and that we can do with this unique building block architecture. I already talked about it.

We can easily expand into new therapeutic areas. Today, we are in cancer and infectious diseases. Tomorrow, we could expand into autoimmune diseases, allergies, multiple opportunities for future growth. What we also have I touched upon it. We have been building a multidisciplinary capability set around the platform, starting with the disease biology understanding, ranging our target discovery into the vaccine and adjuvant design, preclinical work, CMC, and clinical development, we have the full range of capabilities in house.

What we also have here is state of the art lab and a state of the art animal facility. And that’s important because that means whenever the bioinformatics team come up with some AI prediction, we can go straight into the lab, which is right out here, design the vaccine, take it into the animal facility, test it out, validate the AI hypothesis, and generate proprietary data. And this this allows for driving continuous differentiation. If we look at it, due to the multidisciplinary capability set we have around it, we can do these continuous iterative learning loops. We can expand our dataset with proprietary data, and we can rapidly validate AI prediction.

What’s also important is, of course, we have full control of the process from the very early idea to validation, and we are a one stop shop towards pharma partners given that we have everything in house. That also means, as you see on the right hand side in in this slide, that the the value of our platform significantly higher than what you see for the less mature AI companies who haven’t been building the broad capability set around the platform. And this, the capability set, the AI platform, have allowed us to build a quite unique pipeline within cancer and infectious diseases. You see the pipeline here on on the slide. Our lead asset is EBX-one in phase two develop development in metastatic melanoma.

I’ll have a few slides on that later, so I won’t be talking much more about it here. Our preclinical infectious disease pipeline lead acid, staph aureus, late preclinical development. And you see the two assets here, EVXB2B3, which are partnered with Merck. Common common for all of our infectious disease assets is is areas where you don’t have approved vaccines today. And if you combine that with the growing antibiotic resistance, then you have significant unmet needs that need to be addressed.

But let’s, take a closer look at EBX-one. It’s a personalized cancer vaccine for first line treatment of advanced melanoma, I. E. Skin cancer. The concept here is patient gets diagnosed with cancer, a biopsy is taken from the tumor, biopsy from healthy tissue, is being sequenced, and is being fed into our AI model, which then designs a personalized cancer vaccine specifically for that patient.

It is a combination trial with anti PD-one antibody with the aim of improving clinical outcome. If we look at the data here, on the right hand side, sixty nine percent overall response rate is the data we presented at the one year readout of the clinical trial. If you compare that to what, for instance, Keytruda have shown in the same population in their KEYNOTE-six trial, the registrational trial, they showed a thirty three percent response rate. So a significant improvement compared to what is gold standard within metastatic melanoma today. What we also have seen, and that’s very important for the concept of the personalized cancer vaccine, is that eighty percent eighty percent of the neoantigens in the vaccine candidates are eliciting a immune response.

And what you really wanna do when you develop a personalized cancer vaccine, it is to have the components in the vaccine activate your immune response. And here, the 80%, that is significantly higher than what we have seen other companies present with their personalized cancer vaccines. Just a few more, words on on EVXO one. These are also from the one year readout of the phase two trial. We saw that fifteen out of sixteen patients saw a reduction of tumor target lesions.

Actually, three out of sixteen patients saw a complete remission of tumor target lesion. Very strong data, which makes us excited about the two year readout on track for the second half of this year. Just a few words on, two of our infectious disease, programs, EBXB1, our Staph aureus candidate. We have shown significant protection in lethal sepsis and skin infection in mouse models. We have also actually shown protection against surgical site infection in large rodent animals.

And, again, no vaccine is approved for staph aureus, so we are very optimistic about the prospects for our EVX b one. EVX b two is including the optional licensing agreement with Merck. We have shown protection against gonorrhea in 50 different strains. And, again, an area where no approved vaccines exist today, and the problem of growing resistance from against antibiotics just continues continues to increase. So very strong evidence here that not only within cancer and the data that was generated here, but also within infectious diseases, we have the opportunity of making a significant difference by targeting huge unmet needs with our AI immunology platform.

Just looking a little bit ahead, what are strategic ambitions and and imperatives? What we wanna do is what we wanna be, we wanna remain a leading AI powered tech bio company. And to do that, then we really need to maintain the leading AI platform. And that’s where this unique architecture we have with the building blocks is so important because that allow us to stay at the forefront. Then we need to drive best in class drug discovery and development.

We need to develop a novel pipeline of r and d assets. We need to become the R and D partner of choice. I think the optional licensing agreement we have entered into with Merck is a good step on the way really to become the preferred partner of choice when it comes to AI based drug discovery and development. Ultimately, we wanna generate a positive cash flow. As I said, currently cash at hand into, mid twenty twenty six, we have been optimizing our burn.

So we have an annual burn of around 14,000,000. We, with a option exercise from Merck, an additional 10,000,000 in income, we will have cash into 2027. We have already achieved the first couple of milestones for for the year. We have a number of important milestones coming up for the second half, Merck option exercise decision on that. We have the EVXO one phase two data.

We also have a strong focus on generating new partnerships. We have the ambition of entering into at least two new partnerships throughout the year. We have a strong business development pipeline supporting that. We, are also gonna select a lead candidate for a precision based cancer vaccine concept where we presented proof of concept in the fall of last year. Truly exciting because that will allow for a much broader commercial scope in terms of what we’re addressing with our cancer vaccines.

So significant value catalysts coming up in the second half, Merck decision on ops and exercise, EBX-one, phase two data, and for new partnerships as well as several events within our R and D portfolio. Good thing is I’m not doing this alone. I have a strong team helping me to to drive this with relevant experience from both industry, big pharma, biotech, and we are ready to execute upon our strategy. And to sum it up, I would say we are in a very good position. We have seen a strong momentum in our strategy execution throughout ’24 into ’25.

We have raised needed cash in the beginning of the year. We have a 20% shareholder with Merck and an exciting, collaboration with Merck on EVX b two and b three, and we continue to see EVX-one generate strong data. All in all, exciting times ahead with significant value triggers coming up. And with that, Alex, I will hand it back to you for any questions.

Alex, Host/Moderator: Absolutely. Well, thank you very much, Christian. A lot of exciting updates. Maybe we could start with today’s release. You know, you had a release on EVX o one.

You’re now in a position to explore the vaccine as a stand alone treatment. And so I’m curious, is the vision, you know, primarily monotherapy in the end, or, you know, do you see a pretty well developed market for combining with checkpoint therapy, you know, inhibitors or or other mechanisms?

Kristian Kansdrop, CEO, Evaction: Well, I mean, we actually see hopefully broad applicability. Of course, so far, we have explored EBX-one in combination with checkpoint inhibitor. But what we also do know is that, even though checkpoint inhibitor is a gold standard of immunotherapy, there are still a large number of patients who don’t respond to checkpoint inhibitor. So there’s clearly a need for bringing additional treatment options to the market where you are not pursuing it in combination with a checkpoint inhibitor. And that’s where today’s announcement, which is around we have dosed the first patient in the extension of our EBXO one trial.

It was originally a two year trial. We have now extended it to a three year trial, not because we haven’t seen good data, but because we have seen so good data that we had that we were curious to see how would it look on a three year horizon and also how would it look if EBAs one is administered as monotherapy. Because so far, the first two years is being co administered with a checkpoint inhibitor. But as the label for the checkpoint inhibitor is indicated for two years, we now have the opportunity of exploring it as monotherapy. So I think, Alex, we will need to let the data speak, but, at least I am very excited about the data we have generated so far and getting not only two year data, but also three year data for EBX-one is gonna be very exciting.

Alex, Host/Moderator: Great context. Thank you. And, you know, something I else that I thought was interesting, right, is you have multiple shots on goal. You know, the AI immunology engine has generated multiple assets. And so I’m curious, you know, has that process improved over time with faster development, better response rates?

And, you know, is there potential to continue improving that with advances in AI? And even a question from the audience on, you know, the use of quantum computing and and that to, you know, to improve the drug development vaccine development.

Kristian Kansdrop, CEO, Evaction: Well, there’s no doubt. I mean, we have seen a continuous improvement of our AI immunology, over time, And we continue to improve that, and and that there’s still room for improvement. You can say, of course, EVXO1, if we take the 80% of the neoantigens eliciting a immune response I talked about, that’s the latest data point. The first data point in in the phase two trial, that was seventy one percent eliciting immune response, then it got to seventy nine, and now it’s eighty. So so we see this improvement over time.

And and the same goes, of course, for, our infectious disease, part of the business where we are working on constantly improving, the platform not only to be faster. We are we are at a point where it’s not so much about speed, but it’s more about being able to detect novel targets. And that that’s where we, last year, launched an upgrade of our bacterial part of the AI platform where it can also predict toxins, which is also an important possible target for for infectious diseases. And I I would say quantum computing, I I think it’s still early for that in a drug discovery context. And and it’s probably right now more a matter of having access to the right data, not necessarily only the amount of data, but the combination of data and then having sufficient computational power to execute upon that.

Quantum computing is still in in early days, but, of course, definitely something that is gonna be interesting to follow for for the longer term.

Alex, Host/Moderator: Makes sense. Thank you. And we’re getting some questions around, you know, partnerships and licensing. So maybe we could start with Merck. And if you could talk a little bit about the development of that partnership and, you know, the ability to continue and and expand it and also even if they’ve, you know, participated in some of your recent fundraising rounds.

Kristian Kansdrop, CEO, Evaction: Yeah. No. The the r and d collaboration with Merck that actually started in, 2023 where I am we were approached, asked if we could utilize our AI immunology platform to discover a novel vaccine candidate within a bacterial bacterial infectious disease. It has not been disclosed with bacterial disease this is, but it is one with high unmet need and no vaccine today. That kicked off in in September 23.

During ’24, we were in partnering discussions with other companies around our gonorrhea vaccine candidate. Merck also had an interest in in in that candidate. And as we were progressing with other parties, they decided, let’s include both b two, the gonorrhea candidate, and b three in one agreement, and we entered into the option and licensing agreement in, September 24. And then assuming Merck exercises the option in second half of this year, they will assume full responsibility for the further development and commercialization of the two vaccine candidates. We will be entitled to milestones, and we will incur no further cost.

As I also said, Merck have participated in the three last financing round. They invested the first time in Septem or in December 23 in a private placement we did. Then we did a public offering in February 24 where they also invested. And then again here in in February or in January, we raised 10,800,000.0 in the public offering, and Merck came with 3,000,000 out of those, bringing their total ownership to to 20%. And this is the Merck Global Health Innovation Fund, I e the internal venture fund, that that, is responsible for for that investment.

We are super pleased with having them in as a shareholder, very supportive, and, of course, with a long term view for the company and and broad interest in, in the platform.

Alex, Host/Moderator: Great context. Thank you very much. Maybe we could talk a little bit about, you know, trends in the share price over the last couple of years. For folks newer to the name, you know, could you give a little bit of context? And, also, maybe could you touch on, you know, what particular things you think the street may be underappreciating?

Kristian Kansdrop, CEO, Evaction: Yeah. As you know, Alex, then we we IPO ed, in February, ’21, which was more or less on at the peak of of the the the current, biotech valuations. We were IPO ed by Oppenheimer, and they were actually we were actually their last IPO before the the the full market more or less, collapsed and and and closed down. And you can say it has been, it has been tough years for both biotech in general, but small biotechs in particular. No doubt about that.

But I also think it’s fair to say from a fundamental point of view, Evaction has never been stronger than we are now with a good cash position, with a significant shareholder in in Merck, and, of course, the optional licensing agreement combined with a strong business development pipeline. So I I would say, where where we are now, it’s a matter of executing upon our strategy. We are in the good position that we don’t need to go to the market for for cash, have cash into mid twenty twenty six. And with the 10,000,000 from Merck, we will have cash into ’27. So so I think from a fundamental point of view, we are very strong.

I think are there specific Evaxion, elements that the market don’t appreciate? You could say, for instance, when we announced the the merger agreement last year, bringing in near term cash in excess of our market cap, we only saw a very small increase in share price. So I would say, the current environment, that has not really been reflected in the share price. But my focus is not so much the share price. It is on delivering on the strategy.

And then, I am hopeful that

Alex, Host/Moderator: that

Kristian Kansdrop, CEO, Evaction: it will also be reflected in in, in the share price with all the exciting things we have ahead.

Alex, Host/Moderator: Absolutely. And that’s a great, you know, summary of the value proposition for folks looking, you know, across AI, you know, drug development, cancer vaccine development. So I think that’s a great place to end because we are at time. So I I’d like to pause, you know, and thank you, Christian, and also thank everybody listening for joining us today.

Kristian Kansdrop, CEO, Evaction: Yeah. Thank you, Alex, and thanks to all of you those of you listening in. As always, great to be here, and good to talk to you all.

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