Q4 2019 Earnings Call
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Ladies and gentlemen.
Today's conference is scheduled to begin momentarily until that time Airlines will again be things don't musical. Thank you for your patience.
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<unk> pharma business update conference call.
At this time, all participants aren't in listen only mode. Following management's prepared remarks, we'll hold acuity fashion.
I ask your question. Please press star followed by one on your Touchtone phone as a reminder, this conference is being recorded March 12, 2020, I would like to turn the conference.
On breed. Please go ahead ma'am.
Thank you operator. Good afternoon. This is a bomb Briggs with L.A.J.. Thank you all for joining CNS is pharmaceuticals business update conference call.
Earlier today CNS issued a news release announcing financial results for the 2019 fourth quarter and full year.
I'd like to be added to the company's email distribution list to receive future announcements. Please register under CNS website at CN, Afirma dot com or call L.A.J. in Los Angeles that three Ueno, 691, 7100 and speak with Contra Gen.
Before we begin I'd like to remind you that any statements made during this call by management other than statements of historical facts will be considered forward looking and asked such will be subject to risks and uncertainties that could materially affect the company's expected result.
The forward looking statements include without limitation the various risks described in the company. The annual report on form 10-K for the year ended December 31, 2019 filed today and subsequent filings with the FCC.
Importantly, this conference call contain time sensitive information that is accurate only as of the date of the live broadcast today March 12 2020.
Except as required by law CNS undertakes no obligation to revise or update any forward looking statements reflect events or circumstances. After the date of this call.
Joining me from CNS pharmaceutical or John Climaco, Chief Executive Officer, and Chris down the Companys Chief Financial Officer.
During today's call management will provide an overview of the company's clinical development programs and future milestones and its recent financial results.
At the conclusion of the prepared remarks, well open the call to your question with that let me turn the call over.
Hey, John.
Huh.
Good afternoon, everyone and thank you for joining the call today.
Since completing our IPO exactly four months ago, it's been an eventful time for the company.
We've expanded our pipeline received positive feedback from the U.S.F.D.A. regarding our lead clinical program.
And completed GMP manufacturing of our lead drug candidates all of which I will discuss nimble.
However, the start first conference call to public company, let me begin by giving some background on CMS pharmaceutical and our lead drug candidate groups.
Groups in most of it.
Dr. Baltimore Prebuy professor of the dismal chemistry, but MD Anderson cancer Center in Houston.
Three days also the founder of CNS and serves as chairman of our scientific Advisory Board.
Dr. Predates research combines biology, and chemistry with a focus on the design and development of drugs. So what did we target DNA and inhibitors signaling and metabolic pathways that are important to tumor progression in survival.
Reasons drugs <unk>.
Trial, and several others aren't very stage of the preclinical development.
Rubis is currently be <unk> being developed for the treatment.
The patients with Glioblastoma, multiforme or GBM, which is the most aggressive form of primary brain cancer.
GBM cancer cells reproduce quickly are supported by a large network blood vessels, making this cancer highway invasive and virtually in trouble.
Approximately 15000, UGI, new cases are diagnosed each year in the U.S.
Optimal therapy, including surgical resection radiation and chemotherapy with the current standard of care drug Temozolomide patients have a median survival of only 15 to 23 month.
Sadly.
Approximately 40% of patients are genetically predisposed to respond to temozolomide and even these patients will almost all eventually relapse following first line therapy.
The remaining 60% of patients currently have no approved or effective treatment for their disease.
While these patients are still treated in the United States.
Other countries, such as Poland, Germany, or other Useight. These patients are generally introduced the hospice care in an effort to make their last stage with the devastating disease as comfortable as possible.
In this bleak landscape was the opportunity for Baru person and GBM patients around the world.
Rubis into the infer cycling, which is a class of anti cancer agents that are among the most powerful chemotherapy drugs ever created and are the most effective against many types of cancer.
Anthracyclines are designed to damage the DNA in targeted cancer cells by interfering with the action of the took boy summary to an enzyme critical to cell proliferation.
And for cycle is as a class have been used from more than 60 years to treat a variety of cancers, such as breast ovarian and lung and other major malignancies.
However, historically anthracyclines have never been used to treat primary or metastatic brain cancers, because scientist could not demonstrate that anthracyclines, we're able to cross the blood brain barrier.
Rubis and May change that history, because it is the first anthracycline that appears to cross the blood brain barrier, which of course is critical for any GBM therapeutic.
In 2006, Reatta Pharmaceuticals conducted a phase one clinical trials Rufus and demonstrated a 44% response rate in 25, evaluable patients, who partial responses and one durable complete response.
CNS holds an exclusive worldwide license to Burleson and all right acquired all data assets to know how from re auto related to the phase one trial.
Building upon the foundation of this very promising phase one trial, we're proud to have made significant progress toward initiating a phase two clinical study of groups and to treat GBM.
In the second half of this year, we look.
Forward to initiating or open label Phase two clinical study in approximately 60 patients in the U.S. pending FDA approval of our investigational new drug application or I N D.
In May of last year, we received positive feedback from the FDA regarding our pre I in D. request, including our proposal to use a previously manufactured and currently available.
Why oh groups and in the phase two clinical trial.
Along with utilizing a doshi dosing regimen based on we ought to successful phase one trial.
It was beneficial to understand the FDA viewpoint on two major considerations as we prepare our I.M.D. submission.
With a favorable response from the F.D.A. to use the current Lee available supply Brutus. Some we have worked diligently to ensure that material meets all GMP impurity specifications with analytical testing underway, we agree process the existing batch one abruzzi, which provides the necessary supply for most patients.
The enrolled in the U.S. clinical trial, we are continuing large scale production of groups and to supply the remainder of our phase two trial in the U.S. as well supporting our research and development partner W.P.D. pharmaceuticals with their clinical trials in Poland.
W.P.D. will also be conducting a phase two clinical study with for Rufus and for GBM patients in adults, which will mirror our own adult phase two trial in terms of size and protocol, allowing us to have twice as much data available for F.D.A. review.
W.P.D. will also be conducting its first ever phase one clinical trial study of roots in children.
CNS hasn't sub license agreement with W.P.D. that grants and commercial right. So in a limited territory for Rufus and primarily consisting of parts of eastern Europe and Central Asia.
An exchange W.P.D. committed spend certain amount on clinical trials of Brutus and all of which will benefit CNS in seeking eventual approval of drugs.
You P.D. was awarded a 6 million dollar grant from E U Polish National Center for research and development to fund these upcoming trials far exceeding the required $2 million of development spending required under the license agreement.
We believe the award of that grant underscores the therapeutic potential of groups and while also recognizing the unmet medical need face in patients with GBM.
W.P.D. was also founded by our founder Dr. pre Bay and as such the relationship is conducted using best practices for related party transactions, including approval of all transactions by our audit committee comprised of independent directors.
We previously announced that the single site for the W.P.D. pediatric trial has been engaged and that is children's Memorial Health Institute the largest pediatric hospital in Poland. W.P.D. is finalizing site selection for the adult phase two trial and we look forward to making that announcement in the near future both phase one pediatric trial.
In the phase two adult trial are expected to be initiated in the second half of the year.
Our second drug in the pipeline is W.P. 12, 44, which we license from MD Anderson earlier this year.
W.P. 12, 44 is a novel DNA binding agent.
Don Dikla cross the blood brain barrier for the potential treatment of primary in metastatic brain cancers.
In preclinical studies W.P. 12, 44 was shown to be 500 times more potent when it came a therapeutic agent dental rubis and in inhibiting tumor cell proliferation <unk>.
The nvvault activity it is worth a topic brain tumor model and it's potentially novel mechanism of.
Action or highly promising while the target tumor type for this new drug candidate and groups and are identical they differ in their mechanism of action as I mentioned rubis in is a total of two inhibitor well W.P. 12, 44 is the DNA binding agent. This allows us to study a second method of attacking GBM tumors and.
Opens the door for potential com combination therapy approaches involving both compounds.
In 2020, we look forward to several key catalyst for the creation of shareholder value starting with the initiation of our clinical trials for Burleson in GBM, including the phase two study in the U.S. The phase two study in Poland and the Phase one study in Poland. In addition, we anticipate filing for orphan drug does.
Nation with the U.S.F.D.A., which is granted will provide market exclusivity for seven years from the date of the India approval.
As I mentioned, we also expect to initiate preclinical studies with our second drug candidate W.P. 12, 44 by the end of the year.
With that overview of our pipe on or near term milestones, let me turn the call over to Chris Downs or discuss portion of our financial profile.
Yes.
Thanks, John.
As John mentioned the company completed its initial public offering of common stock in November of 2019, and raised gross proceeds of 9.8 million, including the underwriters exercise of the on over allotment option.
As of December 30, Onest 2019, our cash position totaled $7.2 million with this cash balance. We believe we have the runway to advance our current clinical development programs into approximately mid 2021.
Let me summarize some of the key financial items Port for fourth quarter financial results, which we issued a news release earlier today.
It will be more commentary on our results at our business in our form 10-K, which was filed simultaneously.
General and administrative expense was $1.0 million for the fourth quarter of 2019, compared with 0.2 million for the prior year period.
I would highlight here there is euro there year over year comparable Realty is limited due to the prior year comparison period being prior to the IPO as such it is a time when the company had not yet accelerated its clinical development efforts due to capital availability nor was there yet the necessary.
Sorry, DNA infrastructure fully in place to allow for the clinical development work to proceed.
The fourth quarter 2019, GNS expense of $1.0 million also included zero point Threemillion of noncash stock based compensation and onetime nonrecurring expenses.
Research and development expense for the fourth quarter of 2019 was $1.5 million compared with $0 for the fourth quarter 2018.
The expense in the quarter was largely related to the front loaded costs of reprocessing and validating the existing batch of groups and to be able to commence our trials as well is starting to production of a new batch of the drug to allow us to complete the clinical trials, both in the U.S. and in Poland.
The net change in cash in the fourth quarter was $6.3 million as of December 31st 2019, CNS had cash and cash equivalents a seven.
Point $2 million, which included 8.8 million in net proceeds from our IPO.
We have publicly stated that our total cost for our phase two trial is between eight and $13 million and that to ensure we have adequate capital to complete the trial, we would need to raise up to $7 million of additional funding.
We would also like to state that are expected cash burn for DNA overhead is expected to be approximately $2.5 million to $3.0 million annually and the we're doing everything possible to keep that number as low as possible without impairing our ability to successfully conducted trials.
With that I'd like to open the call up for questions.
While we're waiting for the operated take questions. I also want to mention we will be participating in that 32nd annual Roth Conference next week, which is now being held on or virtual basis. We're available to have virtual meetings with institutional investors on March 16th and 17, if you're interested please contact your raw salesperson or you.
On breaks at El Ha.
With that I will turn over to the operator for questions operator.
Ladies and gentlemen, if you wish to register for your question for today's question and answer session. You will need to press Star then the number one on your telephone. If your question has been answered and you wish to what.
Drives your request you may do so by pressing the pound Keane. If you are using a speakerphone. Please pick up your handset before entering your request one moment. Please for the first question.
Once again, ladies and gentlemen, as a reminder to register for your question that Star one.
And there are no questions in queue at this time Mr. Kaneka you May proceed.
Yes.
I'd like to thank you all for participating on today's call. We look forward to keep you updated with our progress and appreciate your continued interest in CNS pharmaceuticals.
Thank you again for your time and your continued support.
Have a great afternoon.
Ladies and gentlemen that concludes your conference call for today, we thank you for your participation in assets you. Please disconnect your lines at this time.
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[music].
[noise] [noise].
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[noise].
Oh come to the CMS pharma business update conference call.
At this time all participants are in don't listen only mode. Following management's prepared remarks, we'll hold acuity fashion.
Last question. Please press star followed by one on your Touchtone phone as a reminder, this conference is being recorded March 12, 2020, I would like to turn the conference over to move on brands. Please go ahead ma'am.
Thank you operator good afternoon.
Greg with L.A.J.. Thank you all for joining CNS is pharmaceuticals business update conference call.
Earlier today Cnf issued a news release announcing financial results for the 2019 fourth quarter and full year.
I'd like to be added to the company's email distribution list to receive future announcements. Please register under CNS Web site at CNS pharma Dot Com, our call L.A. J and Los Angeles at three Leno, 691, 7100 and speak with constant Gen.
Before we begin I'd like to remind you that any statements made during this call by management other than statements of historical facts.
Be considered forward looking and as such will be subject to risks and uncertainties that could materially affect the company's expected myself.
Forward looking statements include without limitation the various risks described in the company's annual report on form 10-K for the year ended.
Decemberthirty, one 2019 filed today.
And subsequent filings with the FCC.
Currently this conference call contains time sensitive information that is accurate only as of the date of the like broadcast today March 12 2020.
Except as required by law CNS undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.
Joining me from Santa Pharmaceuticals are John Climaco, Chief Executive Officer, and Chris down the Companys Chief Financial Officer.
During today's call management will provide an overview of the company's clinical development programs and future milestones and its recent financial results.
At the conclusion of the prepared remarks, well open the call to your question with that let me turn the call over to John John.
Good afternoon, everyone and thank you for joining the call today.
Since completing our IPO exactly four months ago. It has been an eventful time for the company.
We've expanded our pipeline received positive feedback from the U.S.F.D.A. regarding our lead clinical program.
And completed GMP manufacturing of our lead drug candidates all of which I will discuss in a moment.
However, as the start first conference call to the public company, let me begin by giving some background on CMS pharmaceutical and our lead drug candidate groups.
Groups in was developed by Dr., Baltimore Prebuy Professor of medicinal chemistry that MD Anderson cancer Center in Houston.
Pre there's also the founder of CNS and serves as chairman of our scientific Advisory Board.
Your previous research combines biology, and chemistry with a focus on the design and development of drugs that selectively target DNA and the inhibitors of signaling and metabolic pathways that are important to tumor progression and survival.
It is its drugs <unk> clinical trial, and several others aren't various stages of preclinical development.
For Rubin said, it's currently be <unk> being developed for the treatment of patients with Glioblastoma multiforme or GBM, which is the most aggressive form of primary brain cancer.
GBM cancer cells reproduce quickly are supported by a large network of blood vessels, making this cancer highly invasive in virtually in trouble.
Approximately 15000, new GBM cases are diagnosed each year in the U.S.
Optimal therapy, including surgical reset.
Sure radiation and chemotherapy with the current standard of care drug Temozolomide.
They should have a median survival of only 15 to 23 month.
Sadly only approximately 40% of patients are genetically predisposed to respond to temozolomide and even these patients will almost all eventually relapse following first line therapy.
The remaining 60% of patients currently have no approved or effective treatment for their disease.
All these patients are still treated in the United States.
Other countries, such as Poland, Germany, or other you say these patients are generally introduced a hospice care in an effort to make their last days with this devastating disease as comfortable as possible.
In this bleak landscape wise, the opportunity for Burleson and GBM patients around the world.
Rubis into the infer cycling, which is the class of anti cancer agents that are among the most powerful chemotherapy drugs ever created and are the most effective against many types of cancer.
Anthracyclines are designed to damage the DNA in targeted cancer cells by interfering with the actions of the topel I summaries to an inside critical to cell proliferation.
Anthracyclines as a class have been used for more than 60 years to treat a variety of cancers, such as breast ovarian and lung and other major malignancies.
However, historically anthracyclines had never been used to treat primary or metastatic brain cancers, because scientist could not demonstrate that anthracyclines, we're able to cross the blood brain barrier.
Rubis and May change that history, because it is the first anthracycline that appears to cross the blood brain barrier, which of course is critical for any GBM therapeutic.
In 2006, we ought to pharmaceuticals conducted a phase.
One clinical trial with Brutus and demonstrated a 44% response rate in 25 and valuable patients to partial responses and one durable complete response.
CNS hold an exclusive worldwide license to blueberries and all.
Acquired all data assets no help from re auto related to the phase one trial.
Building upon the foundation of this very promising phase one trial, we're proud to have made significant progress toward initiating our phase two clinical study of groups and to treat GBM.
In the second half of this year, we look forward to initiating our open label Phase two clinical study in approximately 60 patients in the U.S. pending FDA approval of our investigational new drug application or I M D.
In May of last year, we received positive feedback from the FDA regarding our pre I in D. request, including our proposal to use a previously manufacturer and currently available supply of groups and in the phase two clinical trial.
Along with utilizing a doshi dosing regimen based on Reorders.
Successful phase one trial.
It was beneficial to understand the FDA viewpoint on two major considerations as we prepare our I.M.D. submission.
With a favorable response from the F.D.A. to use the current Lee available supply Brutus and we have worked diligently to ensure that material meets all GMP impurity specifications with analytical testing underway, we agree process the existing batch one abruzzi, which provides the necessary apply for most pace.
He has to be enrolled in the U.S. clinical trial, we are continuing large scale production.
Groups and to supply the remainder of our phase two trial in the U.S. as well supporting our research and development partner W.P.D. pharmaceuticals with their clinical trials in Poland.
W.P.D. will also be conducting a phase two clinical study with for rubis in for GBM patients in adults, which will mirror our own adult phase two trial in terms of size and protocol, allowing us to have twice as much data available for FDA review.
W.P.D. will also be conducting its first ever phase one clinical trial study of roots in children.
CNS hasn't sub license agreement with W.P.D. that grants and commercial rights in a limited territory for brutalism, primarily consisting of parts of eastern Europe and Central Asia.
In exchange W.P.D. committed spend certain amount on clinical trials, the Brutus and all of which will benefit cnf in seeking eventual approval of the drugs.
You P.D. was awarded a $6 million grants from the you Polish National Center for research and development to fund these upcoming trials far exceeding the required $2 million of development spending required under the license agreement.
We believe the award of that grant underscores the therapeutic potential of groups and while also recognizing the unmet medical need face in patients with GBM.
W.P.D. was also founded by our founder Dr. pre Bay and as such the relationship is conducted using best practices for related party transactions, including approval of all transactions by our audit committee comprised of independent directors.
We previously announced that the single site for the W.P.D. pediatric trial has been engaged and that is children's Memorial Health Institute, the largest pediatric hospital in Poland W.P.D. is finalized and site selection for the adult phase two trial and we look forward to making that announcement in the near future both phase one pediatric trial.
In the phase two adult trial are expected to be initiated in the second half of the year.
Our second drug in the pipeline is W.P. 12, 44, which we license from MD Anderson earlier this year.
W.P. 12, 44 is a novel DNA binding agent designed to claw cross the blood brain barrier for the potential treatment of primary in metastatic brain cancers.
In preclinical studies W.P. 12, 44 was shown to be 500 times more potent then it chemotherapeutics agent dental rubis and in inhibiting tumor cell proliferation.
The invivo activity in fourth the topic brain tumor model and it's potentially novel mechanism of action or highly promising while the target tumor type for this new drug candidate and groups and are identical they differ in their mechanism of action as I mentioned rubis and they totaled two inhibitor, while W.P. 12 40.
For the DNA binding agent. This allows us to study accepted method of attacking GBM tumors and opens the door for potential com combination therapy approaches involving both compounds.
In 2020, we look forward to several key catalyst for the creation of shareholder value starting with the initiation of our clinical trials for Bruce listen in GBM, including the phase two study in the U.S. The phase two study in Poland and the Phase one study in Poland. In addition, we anticipate filing for orphan drug.
As a nation with the U.S.F.D.A., which granted will provide market exclusivity for seven years from the date of the Anda approval.
As I mentioned, we also expect to initiate preclinical studies with our second drug candidate W.P. 12, 44 by the end of the year.
With that overview of our pipe on or near term milestones, let me turn the call over to Chris Downs for discussion of our financial profile.
Chris.
Thanks, John.
As John mentioned the company completed its initial public offering of common stock in November 2019, and raised gross proceeds of 9.8 million.
Putting the underwriters exercise of the on over allotment option.
As of December 30, Onest 2019, our cash position totaled $7.2 million with this cash balance. We believe we have the runway to advance our current clinical development programs into approximately mid 2021.
Let me summarize some of the key financial items for fourth quarter financial results, which we issued in the news release earlier today.
It will be more commentary on our results at our business in our form 10-K, which was filed simultaneously.
General and administrative expense was $1.0 million for the fourth quarter of 2019, compared with 0.2 billion for the prior year period.
I would highlight here that there is euro there year over year comparable in the limited due to the prior year comparison period being prior to the IPO as such it is a time when the company had not yet accelerated its clinical development efforts due to capital availability, nor was there yet the necessary DNA infrastructure fully in place to allow for the.
Clinical development work to proceed.
Fourth quarter 2019, GNS expense of $1.0 million also included 0.3.
Billion of noncash stock based compensation and onetime nonrecurring expenses.
Research and development expense for the fourth quarter of 2019 was $1.5 million compared with $0 for the fourth quarter.
2018.
The expense in the quarter was largely related to the front loaded costs of reprocessing and validating the existing batch of groups and to be able to commence our trials as well is starting to production of a new batch of the drug to allow us to complete the clinical trials, both in the U.S. and in Poland.
The net change in cash in the fourth quarter was $6.3 million.
As of December 31st 2019, CNS had cash and cash equivalents, a $7.2 million, which included 8.8 million in net proceeds from our IPO.
We have publicly stated that our total cost for our phase two trial is between eight and $13 million and that to ensure we have adequate capital to complete the trial, we would need to raise up to $7 million of additional funding.
We would also like to state that are expected cash burn for DNA overhead is expected to be approximately $2.5 million to $3.0 million annually and that we're doing everything possible to keep that number as low as possible without impairing our ability to successfully conducted trials.
With that I'd like to open the call up for questions.
While we're waiting for the operated take questions. I also want to mentioned, we will be participating in that 32nd annual Roth Conference next week, which is now being held on or virtual basis. We're available to have virtual meetings with institutional investors on March 16 from 17, if you're interested please contact your raw sales person or your model.
At El Ha.
With that I will turn over to the operator for questions operator.
Ladies and gentlemen, if you wish to register for <unk>.
<unk> for today's question and answer session you would need to press Star then the number one on your telephone. If your question has been answered and you wish to withdraw your request you may do so by pressing the pound key.
If you are used to have speakerphone. Please pick up your handset before entering your request one moment. Please for the first question.
Once again, ladies and gentlemen, as a reminder to register for your question that Star one.
And there are no questions in queue at this time Mr. Kaneko you May proceed.
Yes.
I'd like to thank you all for participating on today's call.
Look forward to keep you updated with our progress at appreciate your continued interest in CNS pharmaceuticals. Thank you again for your time and your continued support have a great after doing.
Ladies and gentlemen that concludes your conference call for today, we thank you for your participation and asked if you. Please disconnect your lines at this time.