Q3 2019 Earnings Call
Please continue to standby. Thank you for your patience.
This time, all participants on in listen only mode and audio webcast of this call is available on the Investor section of lineage website at www dot linear sell dotcom.
This call the subject to copper right and as a property of lineage recordings reproduction or transmission of this call without the express written consent of lineage Oh strictly prohibited.
As a reminder, today's call is being recorded I would now like to introduce your host for today's conference you want to home director of Investor Relations and lineage misses on.
Please go ahead.
Thank you Sarah.
Afternoon, and thank you for joining US a press release reporting or third quarter 2019 financial results was issued earlier today November 12, 2019 and can be found on the Investor section of our website. Please note that today's conference call and webcast will contain forward looking statements within the meaning.
Federal Securities laws, including statements regarding our strategy gold product candidates in clinical trials and financing and cost savings matters such statements are.
Our subject to significant risks and uncertainties, including those described in our press release issued on November 12, 2019 in a recent FCC filings on form 8-K Form 10-K , and Form 10-Q actual results or performance may differ materially from your expectations indicated by are forward looking statements due to those red.
And uncertainties, we caution you not to place undue reliance on any of the forward looking statements, which speak only as of today joining us today, our Chief Executive Officer, Brian Colley, Our Chief Financial Officer, Brandi Roberts, our Chief Medical Officer, Edwards, and our senior Vice President clinical in Medical Affairs, Gary Hope.
The executives will provide prepared remarks, then take questions from analysts and institutional holders with that I'd like to turn the call over to Brian O'malley our CEO .
Thanks wanted a good afternoon, everyone. Thanks to a productive quarter, we have a good pull planned for you today I, mostly going to speak about Renevia and offer Gen followed by some brief marks on hope you see one and back to before handing things off to brandy.
Randy will review our financing activities for the third quarter and discuss our plans for further significant reductions in our cash spending which will occur in 2020, and which will strengthen our financial position, even as we advance multiple product candidates with large commercial potential.
Starting off we recently announced that our facial aesthetics product Renevia was granted the CE Mark very proud of the lineage team successfully developed this product conducted a controlled multicenter clinical trial produced excellent safety and efficacy results and now has received approval of that product in a major market territory.
Many small companies and never achieved these milestones I believe it reflects well on the teams skills and performance.
Fortunately this regulatory clearance for commercial sale comes with an intended use over navios for the delivery of a toll just adipose tissue or fat to restore augment facial volume for the treatment of facial lipoatrophy.
And if you follow this program for a while you already know that facial lipoatrophy is often associated with treatment of chronic diseases like HIV, which is the patient population from which our clinical data was generated.
But lipoatrophy has many causes and it's actually a feature of the normal aging process. So we believe renevia may address a much broader population than just HIV patients and therefore represents an attractive market opportunity.
In particular, we believe using renevia in combination with a patients phone fat to augment facial volume, maybe a more appealing option for medium where even large volume procedures.
The reason we believe this is the facial aesthetics is a highly.
Oh excuse me.
A highly or did the field with a lot of qualitative feedback and send the data, which we collected from the Renevia clinical trial includes descriptions of a more natural feeling material then would be expected from dermal fillers any longer lasting treatment effect, then would be expected from fab trends.
Plant alone.
So we envision the full commercial opportunity for whenever you may not reside simply within the HIV lipoatrophy market, but as a substitute for fat transfers more generally it is a higher end option than currently available dermal fillers.
Consumer spend billions of dollars in a wide range of a set of medicine treatments look younger providing new and better treatments for these individuals can be very attractive to physicians for whom the cash pay aspect of these procedures is an important economic advantage for their practices.
Although whenever he has an attractive market opportunity marketing is effectively as I. Just described will require resources and time, so in order to be fishes with the use of our own capital our plan to reach this market is to identify a partner with both the aesthetic experience in the capabilities to a stab.
Wish whenever you as a procedure of choice in these themselves.
Specifically, we haven't gate to European based life Science advisory firm to identify and external commercialization partner to launch for Navios on our behalf and further develop it in the European aesthetics market.
That process is now underway and our target list includes more than 100 potential partners.
The deal likely would not happen until next year, but we are presenting these partners with an asset which is already approved to be marketed throughout the region. So the risk of product approval is not an issue in our objective will be to attract multiple bidders and select the best partner from there.
And as we make progress with this effort we will provide additional information regarding the commercial plans for this newly approved gossip.
Moving next to offer Gen. Our dry A.M.D. program.
We made excellent progress this year to rapidly identify in deployed the orbitz sub retinal delivery system into the clinic.
Orbitz is a novel ft, a clear device, which we option from gyroscope a UK based company.
In July we reported that the first use in a clinical trial with the orbit Sds system went well.
We thereafter reported that the first patient treated with the orbit device had experienced improved vision of 13 letters that just three months as assessed by an early treatment diabetic retinopathy scale or E T Drs.
At the same time, we also introduced a new slot and inject formulation of origin, which completely eliminates the need for a day of preparation of the RP self prior to treatment.
It's now takes a surge in less than 10 minutes to get the cells ready to inject.
On inject formulation.
Allows us to open clinical trial sites, which did not have dose prep capabilities and so we're now in the process of opening additional sites.
We've taken steps to introduce these two additional competitive advantages into the off for Gen program those being sauna Jack in the orbit device because we believed that the combination of having the best sells the best production process and the best delivery system will position us as the front runner.
In the race to address the enormous unmet dry A.M.D. market.
We're not limiting our efforts to simply demonstrating the safety and efficacy of operation. We're building important features into the commercial characteristics of this program to anticipate widespread use such as large scale production and ease of administration.
By incorporating these considerations early in our development process, we raised the value of our products to potential corporate partners in the near term.
And they're likely eventual revenue potential once commercialized.
Lastly, we believe that are large patent estate provides us with valuable protection with respect to this and other markets.
In terms of recent clinical data.
Last month, we were pleased to present additional positive data from our origin study at the American Academy of Ophthalmology or eight Oh annual meeting.
Treatment with origin continued to be well tolerated and at the first time points available to us all four cohort for patients reported improved visual acuity on an E T Drs.
I just want to take a brief moment to explain how the T. Drs works de Drs isn't I chart, which displays 14 lines of different letters with each line containing five letters.
Each line is printed isn't any descending font size and the number of letters you can read is a measure of your visual acuity.
To help understand how these visual acuity measurements translate into daily living activities like reading are driving or avoiding falling down a flight upstairs I encourage everyone to do a quick internet search for the Trs and see for themselves the difference between reading, an additional 10 or even 20.
The letters.
The reason, it's important to understand the EG Drs scale more fully is that in the data presented at a oh all four cohort for patients reported an improvement in visual acuity on the scale in the treated eye with a range of tend to 19 letters gained.
And it back the largest increase recorded at any single time points in these in cohort for patients was 22 letters.
These are notable differences in the before and after measurements.
As you make further recall the cohort for patients were the first patients treated in this trial, who had less advanced disease and still retained meaningful vision.
Therefore, these patients had greater potential for vision improvement and more accurately reflected the patient population, we intend to target commercially.
The fact that all four patients had improvement would quite important.
Additionally, previously reported structural improvements in the retina decreases in Jerusalem density and asymmetrical growth in areas of geographic atrophy, receiving entre origin, which had been a circuit observed in some patients were maintained.
And there's evidence of the continued presence of transplanted cells persisting now for more than three years following administration in some cases.
The second cohort for patient has completed their 15 months post treatment assessment and continues to show visual improvement increasing again now from eight letters at 12 months to 10 letters at 15 months I.
That means all four cohort for patients have gained at least 10 letters as what their last reported time points.
And Additionally that first cohort for patient has demonstrated improved reading speed following opportune treatment.
Overall, we are encouraged by the direction of these data and the increasing body of evidence, we're gathering which supports our hypothesis that our fully differentiated RP cells can provide a clinically meaningful benefit to patients with dry AMD D.
Dry AMD is enormous unmet need with millions of patients in developed countries, losing their I'd say.
But because dry MD involves the death of functioning cells.
Pharmaceutical approaches to treating dry AMD d.. So just small molecules antibodies have failed, thus far and may never 60, while our approach of replacing lost cells holds great promise.
Looking ahead, we have already scheduled to surgery date for our next orbitz patients and pending a preplanned meeting with our independent data safety monitoring board in which we will seek to remove the Kurds protocol mandated treatment stagger.
We expect to complete enrollment of all six orbit patients in the first quarter of next year.
I'd like to emphasize it this is probably earlier than some of you expected, but we believe enrollment of the final four orbit patients will go significantly faster than historic rates due to three factors.
Those factors are the ability to include patients with better baseline vision and less advanced disease.
And increasing the number of eligible in orbit train study sites, which were opening or have opened.
And most importantly, removing the Kurds protocol mandated treatment stagger.
Overall, we believe the option data are encouraging and we look forward to providing you with further clinical updates on this program at the become available.
As well as a formal scientific conferences such as at ARVO. The Association for research and vision in Ophthalmology 2020 annual meeting, which will be held in Baltimore next may.
We've also continued to make progress with our vision restoration program, which is a separate product initiative from operation.
Last month, we presented preclinical data from this program at the society for Neuro sites annual meeting.
The preclinical data provided evidence that retinal tissue produced in lineages laboratory from a human pluripotent stem cell line was able to engraft safely in rent models used to study severe retinal degeneration.
But its survive for six months or longer in the sub retinal space and importantly, the that showed evidence of functional improvement.
Moreover, the implanted retinal tissue produced photo receptors carrying mature markers, including were Dobson and developed many synaptic who tone evidence of synaptic connections with the host recipient inner nuclear layers and ganglion selling.
Our vision restoration program has received a total of $2.3 million to date in the form of that'd be IR grant from the NIH and we continue to apply for external grants to support this initiative.
Moving next door OVC, one program for spinal cord injury, we have completely transferred the manufacturing of this program to our facility in Israel.
As we all know this program generated extremely promising clinical data, which clearly supports further development, but the manufacturing process. We obtained this year from the a serious acquisition is not as advanced as we would like in order to initiate a late stage clinical trials or support future commercialization.
Just as with operation, we are focused on making sure that Oh P.C. One has all the character is it characteristics that will prepare it for broad commercial use and which will make it more attractive to potential corporate partners.
Therefore, we're now working to introduce valuable improvements to the production process. So that things like the scale purity and reproducibility of OVC, one is as robust controlled and commercially viable as we enjoy with our opportune program.
For example, we want to develop a bond and jet formulation. So that we can eliminate the need for ddos preparation and make more clinical sites eligible thus, reducing the time needed to complete the next study.
He stepped obviously, we'll take some time, but our in house cell manufacturing stuff are highly experienced and have already shown an ability to manufacture nearly 5 billion origin cells from a single batch. So we're confident in our team and their ability to introduce these improvements to the OPGC one program.
Sacrificing quality.
And while we do already have input from F.D.A. on our next trial design, we want to generate data from manufacturing steps I. Just described before committing to affirm initiation day or a detailed protocol for that trial.
In the meantime, we will continue to provide updates from time to time to reinforce our confidence in the program for you and to recognize meaningful milestones as we make progress toward the commercial manufacturing for the manufacturer of GMP material to support our next trial.
Overall this work is part of a broader staggered development plan, which we believe will set up the LPC one program for long term success and by chance. This may also create better timing for future interactions with serve the California stem cell agency, which has been a valuable and longstanding partner in this exciting air.
Yes.
It's worth remembering that spinal cord injury patients are in dire need of treatment options and that in an effective therapy for them could save millions of dollars of lifetime health care costs per patient.
Importantly, we will be providing another data update from our Scistar clinical study of OPGC. One on November 15, when we host therapeutic area experts at the Solebury trailed event for analysis for analysts and investors.
This update will include two year results from Sri and functional performance. Soon thereafter, we expect to complete the Scistar final study reports and publish these results in a major medical CER.
Moving into the back to our dendritic cell.
Cancer vaccine.
As a reminder, this isn't allogeneic or off the shelf product candidates based in part on an earlier apologists products, which showed impressive survival results in a small trial of cancer patients.
Our newer allogeneic approach addresses many of the limitations of an autologous treatment.
Cancer Research UK is currently conducting the clinical trial of back to in patients with non small cell lung cancer.
This study is largely intended to demonstrate safety and tolerability of our treatment, but an important question. We're asking in parallel is whether patients develop an immune response to our antigen.
If we are able to instruct the patient T cells to mountain elevated and specific immune response to our antigen. We believe we will have a compelling argument to combine our dendritic cell vaccine with checkpoint inhibitors and observe superior outcomes compared to either treatments used alone.
It's supported this approach recently published data suggests it may make sense to attack cancer from two sides. The immune checkpoint inhibitor makes cancer cells more susceptible to destruction by T cells, while our dendritic vaccine would enhance T cell activity against those tumor cells.
C or UK are currently screening patients for the study and we're hopeful to receive the first set of Immunogenicity data before year end.
Under the terms of the C or UK agreement, we don't currently have the right to share these data publicly.
But if there's anything inciting in these data we'd like to share it with our stockholders. So we're speaking would see our UK about relaxing the permissions with respect to data disclosure.
And with that I'll now hand things over to Brandy to review, our updated financials and discuss some of our additional planned for this year.
Thank you Brian .
I'd like to start the financial discussion off with an update on our cash position. We ended the third quarter with $35.7 million in cash cash equivalents and marketable security.
We previously outlined a larger corporate financial plan to raise operating capital from time to time to support our clinical stage programs through sources other than lineage common stock and we continue to execute against the strategy.
And the third quarter, we sold 6.25 million shares of office I common stock for net proceeds of $10.7 million. Additionally, we sold a little over 650000 shares of agent common stock for net proceeds of $1.6 million and a little less than 650000 shares a part of feedstock for net proceeds of 1.2 million.
In dollars Accordingly, all of our remaining investment positions are now less than 20% of those companies outstanding shares and therefore are accounted for in our financial statements as marketable equity security.
Remember all of these positions are the result of the value created by our research programs over the years.
Recently, we have been effectively monetizing the value as we focus our own spending on developing our clinical programs, including whenever yup origin open c., one and back to.
Now I'll talk a bit about the statement of operations for the third quarter of 20 like team also by reminding everyone that beginning on August Thirtyth 2018 lineage sees recognizing revenues and expenses related to AJ edit subsidiaries due to the HX deconsolidation on that date Accordingly, our 2019 results do not include HX Act.
70, while a portion of the third quarter of 2018, Doug.
Total revenues for the third quarter of 2019 were $600000 a decrease of $400000 as compared to the same period in 2018.
The decrease was primarily related to a decrease in grant revenue, which is based on the timing of our grant related activities.
Operating expenses include R&D expenses as well as DNA expenses.
Total operating expenses for the third quarter of 2019 were $8.9 million, a decrease of $2.4 million compared to the same period in 2018.
The decrease was comprised of a $600000 decrease in R&D expenses, and a $1.8 million decrease in DNA expenses.
Our loss from operations for the third quarter 2018 was $8.4 million a reduction of $2 million as compared to the same period in 2018.
Other income or expenses net for the third quarter 2019 reflected other expense net of $9.1 million compared to other income net of $76.9 million for the same period in 2018.
The variance was primarily related to the gain on the deconsolidation of HX in 2018, and the changes in the value of our equity investments for the applicable period, which flows through the income statement.
Items do not affect our cash usage.
Those are our reported results, but of course, what interests many of our investors as our actual cash usage and the cash and marketable securities that we have available to fund our business.
We are happy to report that our operating expenses have continued to decrease.
As we have laid out previously Brian I and the entire management team have been focused on bringing corporate spend down by simplifying what we do at lineage.
It took us about nine months to get there, but we completed a lot of be simplification activities and the third quarter.
For example, we Cook, we closed out our Fremont, California facility when the tech transfer process or Jerusalem facility was completed at the end of August .
We also moved our corporate headquarters to Carlsbad in August and eliminated the majority of our shared services with Oncocyte and HX as of September Thirtyth.
Reductions in headcount related to these activities were completed in August and September we now have a new baseline to move forward with as a part of our new cost efficient business model.
However in light of sector weakness, we think it's prudent to take another step we think it makes sense to further reduce our cost and extend our cash runway as far as possible.
As I mentioned, we have $35.7 million of cash cash equivalents and marketable securities as of September Thirtyth, and we think our fourth quarter burn will be roughly $6 million.
We have worked on her 2020 operational plans to bring our net operational spend down to about $16 million, while still advancing our program.
Additionally, the know some do you have in essence is due to us and about 10 months. This payment is for $21.6 million plus $3 million an interest.
Our new plan should enable us to get pretty deep into 2021 without needing to raise capital through issuances of linear common stock.
And by then we will know a lot more about origin Ob C and back to as well as the commercialization of Rep whenever you.
This plan also provides us with additional flexibility so that we don't have to sell our investment positions in August site or HX. If we don't think it's the right time to do so.
We went through a rigorous process to reduce our burn we will have additional staff reductions this quarter to enable us to meet our new operational goals, but we think this isn't the best interest of our shareholders. Our main focus will be on completing enrollment in the phase 128 clinical study of operation and together the follow up.
That's a guide our late stage study design and partnership discussions and onshoring, ensuring we have a commercialization partner front renevia and the E U which may provide additional nondilutive capital in 2020.
We also will continue working on manufacturing enhancements for PC, one in preparation of initiating a randomized clinical study in 2021 and.
And we will continue our dialogue with the our UK and evaluate back to data as it becomes available.
With that I will turn the call back to Brian .
Alright, Thank you Brandy, we've taken steps in the past year to restructure the business substantially reduce our expenses and focus our bread on our brand and cell therapy in our most promising near term assets are inspiration of course comes from the patients. We aim to serve and we continue to be very excited about our cell.
Therapy programs and how they may benefit those affected by the serious medical conditions, we focus on.
We also were excited to oversee the new product approval and we'll be moving towards commercialization of our first product in Europe will continue to focus on the efficient use of resources to support the optimal clinical development of our cell therapy programs, which we believe will help maximize near term stockholder value.
So the near term milestones, which our investors can expect to see include the completion of patient enrollment in the U.S. using the sawn inject and the four bit Sds device in the origin study that's expected in Q1 2020.
Back to initial Immunogenicity data from the ongoing phase one study in non small cell lung cancer, which is expected around year end.
New obregon data from the ongoing study, which would be presented at ARVO in May 2020.
Continued advancement of the LPC, one program with those manufacturing improvements I explained which will be ongoing throughout 2020.
We plan to meet with the FDA to discuss the clinical development of old P.C., one which is planned for the middle of 2020.
We said a lot about identifying and external partner for commercialization of Renevia in Europe that works already begun is targeted for the first half of 2020.
And as always we aim to maintain a high level of engagement with the investment medical communities through participation industry conferences in the strengthening of existing partnerships with entities such as the NIH I, a server and see our UK.
Lastly, we're very excited to be hosting lineages first k. all day with renown therapeutic area experts in ophthalmology and spinal cord injury in New York at the end of this week.
Dr. Alan Ho is a written a surgeon and director of retina research at Wills Eye Hospital.
Doctor, who is the current president of the Retina Society.
And has been study chair steering committee member or principal investigator on over 50 clinical trials.
Dr who has direct experience with the orbit Sds as he helped to develop and refine the device. When it was initially developed by the Janssen biotech unit of Johnson and Johnson.
Doctor, who will be leading the discussion of our option program. This week you will provide an overview of the orbit Sds device and as well discuss the dry AMD be landscape.
Dr., John Steves, Ameritus principal investigator I cord and professor in the Department of Neuroscience at the University of British Columbia is a spinal cord injury expert.
Dr. Steve's curve research folks is an arm in hand rehabilitation after spinal cord injuries.
His goal is to improve rehabilitation strategies, but using assisted robots and virtual reality training.
Dr., Steve works on developing better criteria for enrolling participants in Sci clinical trials and on improving outcome measures of the electrical properties of the body in the nervous system.
Dr. Steve's will lead the discussion of our OPGC. One program you will provide an update on the ongoing Scistar study and discuss the spinal cord injury clinical trial landscape.
This event will be an interactive day, where presentations from the two gentlemen, I. Just described we followed by Q and eight session between the experts in the pending institutional investors and sell side analysts. They also will be webcast them. So we invite you to listened in and hear from additional voices about our problem.
And programs.
Thank you all for joining us today with that.
Sarah the team here is ready for questions.
Thank you to ask the question at this time you only need to press Star then one on your telephone to withdraw your question. Please press the pound King.
Please standby, we composite culinary roster.
My first question comes from the line of Joel Panting, Guinness with H.C. Wainwright. Your line is now open.
Hi, guys. This is supposed to traditional solar from the line would show think for all the uptake. So congrats on the progress social question My hand, so the first one for you only need your program are you looking for specific geography to stop.
So thank you for the question are centered in regard to Joe with respect to the geography, the CE Mark covers a broad number regions.
Essentially overlaps in European Union.
So nowadays it's less importantly, we're a potential partners domiciled is more important that they have the capabilities to be able to reach perspective subjects and there are a differential levels of enthusiasm for products like this.
Some regions have great.
Interest and excitement in aesthetics, others less so so we envision this process as being one which we evaluate a constellation of different factors the capability as a potential partner and the.
Perspective revenues ultimately that they believe that they can reach and that will help us to fine whether a greater emphasis is in one area within the European Union or another area of the European Union, but in all cases, our focus will be in territories, where the CE Mark is clickable and recognize.
Yes.
Alright. Thank you so much for gas [laughter] few other question for me, so what kind of PC one manufacturing announcements are you focusing on.
So I think it's premature to.
Prescribed what the future press release.
But generally speaking or objective here is to enhance the overall characteristics, we want the product to be easier to make it easier to use a used an example of.
With op region, we were able to introduce a simple slot and inject formulation. Currently we do not have a simple follow on inject formulation for obesity. One so it requires extensive dose preparation the day before so that's one example that we would look to as being indicative of some kind of feel.
Tiers that we want to have in place and locked before we initiate a a larger comparative and randomized trial.
Oh, that's definitely helpful, what kind of clean coal and or business update should we expect for the back to program.
So for Vac too as I as I will make the caveat to that the second time that we don't actually have the right. This time to disclose.
The data we have to get the permission from see our UK, but the data that we are most interested in obtaining and then hopefully soon after sharing would be on the immunogenicity dendritic cancer cell back T. The vaccines generally speaking our well tolerated. So I don't think we're expecting.
To see.
Issues with respect to the tolerance, although because your engendering an immune response it wouldn't be that unusual to see side effects, such as flu like symptoms or injection site reactions those would be consistent with a mechanism of action for a dendritic cell vaccine, but our interest is really on.
Being able to identify.
Specific immune response to our advantage and we need to tie together the stimulus we put in and how the body response to that.
The same time, if we also enjoy any sort of indications of response, whether it's complete or partial we certainly want to report on that the numbers are still quite small so there wouldn't be statistical significance, but it would be additive to an overall story that we would want to see unfolding that.
A patient that has some sort of a response to our therapy would also have evidence that they have a high level of immune reactivity to our antigen. So it's not so much around safety I would say the priority is the immunogenicity because if you don't give you don't have evidenced that mechanistically it makes sense.
Than anything else that you're reporting can be called into question. So the primary interest. The primary response for us would be around the image is to be data.
Oh I see that's very helpful and do you have any guidance for when you're going to release data.
With respect to the back to program.
Yes.
So we believe that we will be able to how's the initial immunogenicity data collected from the end of this year.
We would hope to be able to be afforded the ability to share that but again that will be CR ukase decision and we would just we would just hope that they would like us feel compelled to share information. It's it's a promising of interest naturally being the being a.
The entity that they are they are principally concerned with developing new therapies, but also their publication and wanting to not undermine any publication so.
It's a negotiation, it's a discussion but hopefully they understand that if there's something encouraging that the world wants to know about them.
Oh I see Okay. My last question. So for do you all pension program, how many additional patients had you dosing core number four.
So we have an additional five subjects that are planned to be dosed with deep orbit Sds [laughter]. The protocol has room for eight additional subjects the protocol as drafted.
Is it anticipate.
24 subjects.
One of the questions that we will take up later in the year and earlier next year is whether we would want to end the protocol. After the six orbitz subjects are dose and the reason for that consideration is that if the orbit Sds is performing very well.
That would be the route of administration that we would anticipate we would go forward with and there wouldn't be a reasonable.
They wouldn't be a reason for us to go back to the old way of administering the cells. So it's possible that we would end the study a little early after the orbit section.
We could also think about maybe adding additional patients if we needed to or one or two but I can tell you that the protocol calls for eight additional subjects, but the orbit portion of it called only for the next five additional subjects.
[noise] I see thank you so much value for all you have to [noise].
I appreciate your questions. Thank you.
Thank you Hi next question comes from the line of keeping a tight with Chardan. Your line is now open.
Thank you.
And with respect to.
Op region, the ability to move from the stagger two parallel enrollment is that condition.
Just a.
Quick review of safety for the second patients.
I can't you know what I'll do I'll, just throw that to Gary Hoak, who runs the program and you can tell you about the staggered and how we hope to remove it.
Okay. So yes. Your questions, yes is dependent on the second vision going well certainly be just because obviously keenly interested in that are different patients being.
See heat treated.
So as they want to make sure that doesn't close the wells. So soon the second surgery goes well.
As our decision that the remove all staggered subsequent visions.
And.
And this is about the for patients.
Google or bad, but well during world.
The learn from that patients that would be helpful going forward.
Well, it's was the first two person humans that was the first on a drug formulation of oxygen pursues the order 2.0 devices five two J devices.
So so there's a learning spreads to do that procedure alone and so that subsequent procedures will build on that.
We anticipate that each subsequent procedure will go better than the previous.
Okay I'm going to add also that I don't think we were lucky that the first orbitz subject went well I think that the device was very well designed.
Maybe the primary area of risk is that because it's a new device anytime a surgeon is using it is typically their first time using it in an active surgical environments. They are able to practice on animal eyes for cadaver eyes, but.
There is risk associated with a new set of hand, using it for the first time in a clinical setting.
Okay, Great [laughter] sponsor brand the arm.
Speaking about the call lessens the next year.
How should we think about split between March and June .
Yeah, So we think.
We've obviously been working to reduce our expenses in both of those areas.
I would say.
For 2020, I would think you know if you looked at our quarter to date for this period, we were roughly half and half that probably makes sense going forward as well.
Okay very well thanks.
Thank you Kate Thank you for the question about cash projections I hope people don't Miss the very significant reduction in our budget for 2020, I mean that is a really major point that I think we made and it just the way. These things are structured it ends up coming in the middle of presentation, but our anticipated cash needs next year compare.
And to what we had previously guided is a massive reduction and we're very proud of that without any meaningful slowdown in our free to progress. So thanks for the question about cash projections.
Thank you. Our next question comes from the line of Jason Kolbert with Dawson James Your line is now open.
Hi, guys. Thank you love to stay on the topic of cash projections. So you know if I look at what the anticipated burn rate for the full year 2019, as it was pretty high what on a percentage basis, how much lower do you think it's really going to be in 2020 is it 25% lower.
Is it 40% lower.
Yeah, it's actually pretty it's pretty big Jason So when you look at our you know what we've already spent to date in 2019 and what we forecast for the fourth quarter. You know that's roughly about 34 million and we're saying we expect our net operational tend to be about 16, so that's less than half of what we've spent in 2019 and of course, we had the merger.
With a serious this year. So we had lots of expenses related to bringing that company in and getting the synergies completed so that we can run the company on a much lower burn going forward.
Yeah, I'm willing to bet to that most analysts like me have not caught up with these changes so they are pretty significant changes.
Yeah I appreciate you taking a look at taking a look at that and then making sure. Those are updated yeah exactly among the other part though is how much cash is locked up in all your holdings, just without kind of holding you to a specific number you how you know and I'm going to go through the balance sheet and go through the quarter in kind of come to.
My own conclusions, but when you look at your holdings today, how much cash is kind of locked in there.
Yeah, so not a problem. So we just saw the 10-Q as well so you'll be able to see all the information there, but we showed a bit cash of about 14.4 as of the end of the third quarter and a little over 21 of Martin also marketable securities. So that's how you get to the total of 35.7.
So you can see how that cash will slow. So you know, we don't really need to make any decisions in the near term about whether we're going to sell any of those marketable securities and as you also know we have that youve in essence, no coming due to us in just about 10 months. So let's get you know by reducing our expenses. It really gives us a lot more flexibility in terms of when we need to.
That said to sell those assets or you know look at that right. So remind me of the value of that note and also the value of your remaining equity holdings and the other companies.
Sure. So as of 930 that equity Securities was about 21 point Threemillion.
Okay, and then in terms of.
I'm, sorry remind me of your first question.
Oh I was trying to get a handle on the what is the value of the remaining two facets note. In addition, sure sure sure yeah. The face value of that you have in essence noticed 21.6 million.
On the balance sheet to date, it's 23.2 would be accrued interest and at maturity, we would expect that to be 24.6.
Okay. Yes. So you know plenty of cash it's really here you guys are in a great spot. So now I'm going to ask yeah.
It to me that's just a very obvious question, but I think it'll be helpful to a lot of people having lived through this before with other companies like stem cell, saying some of the parallels are striking but some of the differences are striking to like the emphasis on manufacturing. So Brian can you talk just a little bit about what's involved in the tech trying.
As for to make manufacturing happened in Israel, and then help me understand when you look at macular degeneration versus spine, how you're going to prioritize their programs and how you're going to avoid some of the pitfalls that may be on did.
Them sell think which fair enough, it's a different product but.
They were going after the same things with the same concepts right.
Yes, certainly so I think one thing that is.
Perhaps not well understood across the investment community at large rights outside of your specialist is that growing and manufacturing cells is completely different than making small chemicals. If you do a nuclear filyk April substitution reaction in the chemistry lab a your results.
Going to look essentially the same every single time, because its physics says it's bounded by the laws of physics cells behave with a lot more variability.
When you grow cells. If you can imagine that almost any variable you can dream up could be demonstrated as having an effect on the lineage of a.
Population of cells and to give you a real nice specific example.
The rate at which a bunch of cells are moved up and down the pike pet or whether cells are growing on the edge of a flask versus the middle of the flask everything you can imagine can cause variability and you're talking about a process that maybe you know it varies from company the company, but it could be for.
Two weeks it could be six weeks it could be eight weeks of cell growth. So you have this countless number of areas of potential variability.
And of course, what the F.D.A. cares greatly about is control they want to make sure that you're making the same thing every time. So that if you test yourself in a patient population and the grant you approval, you're not administering something different later on so the tech transfer is really a massive undertake.
Because you're changing the operators youre changing the equipment, you're changing the air pressure because you could be at a different altitude. Everything you can think of has to be reconciled and explained and control. So it's just simply a long process is a laborious process, but that is exactly why we want to own the pro.
Process and have it in house, because I think you get better results faster and more efficiently and cheaper than if you throw it over a wall to some contract manufacturing that just doesn't have the same passion and concern and attention to detail.
With respect to prioritizing our programs there is a bit of a natural hierarchy. Our dry A.M.D. program is probably the one that garners. The most attention because we are really in a a compelling part of its development where patient by patient each piece of new data is.
Adding to a story that really seems to indicate that the cells or can have a positive effect on a person's vision and slowed down the anatomical destruction in the back of the API. So I think from a short term perspective operation is is at the forefront.
With respect to the second position I would presume that that is held by the spinal cord program because the clinical data that was generated is really exciting and theres a as little as competition has arisen dry AMD either is even less.
In the spinal cord injury space. So I think that that's some an area that you can really imagine a small company going far and being very successful with it and then thirdly, only because you've got to choose whose first second third I I would put our oncology program and I'm thankful that there's an increasing body of evidence that would suggest.
That dendritic cell vaccine will have a place in the future and the physicians armamentarium, but we need to demonstrate some of those items that I shared earlier with respect to immunogenicity.
And then lastly, with respect to comparisons with Stemcells, Inc.
I never want to want to disparage other companies, but what I can say is that.
The materials that we are growing are coming from cell lines, there's no new material that being obtained and I think that overall in the field of cell therapy and I believe you even written about this at times there has been a maturation and cell therapy, where the tools that we used to measure things in our.
Understanding of what's happening to these cells how to use them how to administer them how to grow them et cetera is vastly different from when companies like Jeroen had first started out in the space and there was great promise around the whole field I think the great promise is real it's just taking a little bit longer because that's.
The nature of scientific progress so I hope that covers the three parts of your question. It does and its main thing how much you've transformed this company just in the short period of time, you've been there. My last question is really on renewed via.
My nickname in Japan was Carnegie that means raccoon, because I always have black guys. So what I want to know as it seems to me that the a static marketplace for a pillar is huge it's enormous the amount of money. The spent on this country.
Just on you know they went when you're off as you get older a natural feature of aging, it's kind of a thinking outlook. So I would think that the BD potential here could be quite significant what's your early read.
Yes.
I My early read is that there's little that attracts more attention. These days than people wanting to look and feel good. So I concur that the aesthetics market represents a huge opportunity admittedly. It is competitive you really I think need to find your nishu need to find where you stand out.
If you are a smaller product or you're a smaller company you need a foothold you need a beachhead you need a place to start and to build from I think we have that inherently built in with Renevia because the data in HIV Lipoatrophy was quite convincing so I think that can afford a potential partner.
A beachhead so to speak.
And then additional work and a lot of market research you start to sort of emerge from there and figure out where other appropriate uses could be.
Based on collection of additional data and market research as I say, so I think the really short answer is unknown to us it's unknown to us in part because we're not a European based aesthetics company. That's why we're looking for a partner who brings those capabilities.
But I think that we are.
Quietly optimistic about the short medium and long term future.
Yes, I am too. Thank you so much great job today.
Thank you Jason.
Thank you. Our next question comes from the line of Jason Mccarthy with Maxim Group. Your line is now.
Hi, This is Joanne land the line for Jason Mccarthy, Congratulations on the progress and thanks for taking the question. So my first question is more clinically related.
As we've seen in wet AMD de an improvement of 15 letters or more typically represents a clinically meaningful improvement and sense wet and dry AMD be or similar but distinct diseases could you shed a bit more color on what are some of the approvable endpoint. So you might be seeing in drain D. and then could you explain the importance of focusing on treating pain.
In two or legally blind versus patients with less severe disease why is it easier for the second group of patients. Thank you certainly Joanna and thanks for joining I'm going to pass the question again to Gary hold who can talk to you about.
Similarities and differences with wet and dry as well as the importance of no treating the better vision subjects.
So the three line difference is typically associated with the wet AMD therapies. So.
I Leah and Lucentis.
The difference between treatment and sham treatment groups and Sutton messaging improvements is a three lines difference at the at the one your assessment standpoint.
To be would be GA therapies.
50% reduction in the progression of the area of GA.
And that was done to the level doesn't have study is primary endpoint also.
Study.
So it would be up to discussions with the agency to see whether its geographic atrophy or best come to visual acuity, which might be more important for both played a role.
And so.
That ultimately steer was the next study might look like.
With regards to why we think the less severely affected patients are likely to benefit from therapy in all likelihood. The photo receptors are much more preserved and we're much more likely to.
Preserve those that are still in the public transitionary those are.
Sick, but not not dead yet.
And the thought as a sell replacement therapy with the RB Robertson enables will sell too.
The again.
Stopped and synergy halt the progression of disease.
Okay, Great things that was helpful. Thanks again for taking the question and we look forward to an update from the Kale all of that.
Thanks Joanne.
Thank you. This concludes today's question and answer session I would now like to turn the call back to buying Collie CEO for closing remarks.
Alright. Thank you Sarah I appreciate everyone joining us up Newnham, obviously excited about our plans and is this a final reminder, our focus going ahead will be on three items, collecting and maturing or option data and dry AMD D. Finding the right commercialization partner for an area and a as always ensuring we meet our milestones while keeping our expenses lowest possible.
Thank you so much I look forward speaking with the some of you after the event.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.