Q4 2019 Earnings Call

Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on music cold. Thank you for your patience.

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Ladies and gentlemen, thank you for standing by and welcome to the Die Amedica Therapeutics Inc. Q4, 2019 results earnings Conference call.

At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During the session. Please press star one on your telephone if you require any further assistance. Please press star Zero I would now like to hand, the conference over to your speaker today, Rick polls President and.

Speaking of officer. Thank you. Please go ahead Sir.

Thank you Lisa good morning, everyone, we hope, you're Oh safe and well, we'd like to welcome you to our year end 2019 earnings and business update call.

Yesterday after market close we issued a press release when the business update in summary financial results for 2019, we also filed or annual report on form 10-K, both documents can be found in the investors immediate section ever website anti emetic I dot com.

With me here today is our Chief Financial Officer, Scott Cone, and our Chief Medical Officer, Dr. Harry Elkhorn.

I remember set out some ambitious goals for 2019 I'm proud of her team, which has accomplished each of the items, we outlined a year ago, specifically, we planned initiated and completed phase one be study in subjects with chronic kidney disease key step in understanding the impact of kidney disease.

Pharmacokinetics profile for de I'm wondering nine and preparing for phase two.

Study in patients with chronic kidney disease.

Second we assembled a truly world class Advisory board to a guy to our chronic kidney disease clinical development program.

Third working with Advisory Board, we planned and initiated our phase two.

On a kidney disease trial and important trial in which we will study participants with chronic kidney disease caused by our gene and property.

And African Americans and better hypertensive in non diabetic.

Lastly, we completed enrollment in our enlarged remedy study in acute excuse me stroke, we believe because of these accomplishments we were able to attract the interests of a couple of biotic equity fund and complete a small public offering in February of this year, which strengthens our balance sheet.

As a result, we have the capital to complete our current studies, even with potential adverse impacts related to the krona virus outbreak along with funding our operations through the end of 2021.

Therefore, we are less exposed to the current market volatility and challenging environment caused by Kobin 19.

Well, we're pleased with our accomplishments the entire team remains committed to advancing the clinical development deal 29 in 2020.

Do you want to nine holds the potential to have significant impact on patients suffering from chronic kidney disease and acute excuse me stroke, we're excited and cautiously optimistic to see the phase two clinical data from deal I'm wondering nine during 2020, and we look forward to sharing results as they become available.

Now, let's touch on our clinical programs in more detail.

First with respect to remedy study in subjects with acute ischemic stroke. We've previously disclosed that enrollment was completed last October and final enrollment was 92 participants remedy is a phase two study designed to assess the safety and Tolerability.

Do you many nine in the treatment of participants suffering from acute ischemic stroke or yes.

And to also explore markers of potential therapeutic efficacy of de I'm wondering nine.

The endpoints of this study include the standard functional measurements for stroke, the modified Rankin scale, the National Institute of Health stroke scale and the Barthel Index will also evaluate multiple plasma based biomarkers such as measures of inflammation like C. Reactive protein. These markers are assessed at.

Multiple points throughout the study, including 90 days post stroke. In addition, because of our work in the kidney space and the ever increasing interest of the medical community in the potential links between vascular and renal disease. We will also be looking at kidney function measured by calculating the estimated familiar filtration rate for today.

Since over the duration of the study.

The last participant followed up visit was completed in late January 2020.

And we are waiting for the statistical analysis or Sep files from our contract research organization along with the study results. Once we enter advisors have those files well verify the completeness and accuracy other clinical database and then we will analyze and followed by announcing the topline results. Unfortunately this process has been.

Stood by few weeks due to staffing issues with the contract research organization, compiling the analysis of these have been unrelated to covert 19.

We will work aggressively to review the and then released topline results as soon as possible and which is planned for early Q2 2020.

Additionally, with the postponement of the European stroke conference from May to November 2020, we're evaluating alternatives for releasing full study results.

Next let's turn to I read next phase two CKD study, which is enrolling participants in two cohorts. The first cohort is focusing on participants with AIG and property.

Previously confirmed by biopsy and the second cohort is focused on hypertensive African Americans, who are not diabetic.

Our enrollment target is 30 participants pool per cohort and participants will be treated for approximately 13 weeks at two dose levels. The primary endpoints will be the estimated glomerular filtration rate also referred to as EG afar and urban urea, along with standard safety and Tolerability markers.

We continue to enroll subjects and I read like study and this includes enrollment in the past two weeks that said subject enrollment has been slower than expected. This has been primarily in the African American cohort, where we've experienced a higher level of screen failures related to finding individuals with chronic kidney disease, but that are not diabetic.

We've been working with our study sites to improve the identification recruitment in screening of study participants.

And we recently increased the number of clinical sites.

From 10 to 12 to expand available pool of candidates.

However in spite of recent enrollments the covert 19 outbreak in the U.S. and measures taken to mitigate the spread of this virus appear to have a recent adverse effect on subject recruitment for context here I want to point out.

Our original study design provided for registered nurses to make home visits for the majority of subject treatments. We chose this approach originally to maximize participant compliance with the treatment protocol today, we take some comfort in that this approach is consistent with the principle of social distancing recommended by the.

Various government authorities as of today, we don't expect that cobot 19 will disrupt the treatment of subjects already enrolled.

The 12 clinical sites are spread out widely across the US as of yesterday 10 of the 12 study sites are continuing to enroll patients while the others intend to remain open and continue to recruit and screen subjects.

We didnt have new patients enrolled last week.

This could change on a day to day basis, and and state by state.

Clinical team has also been working diligently to ensure that study sites and home nursing service providers have procedures in place to protect the safety of study participants and clinical personnel.

In addition, we're taking steps to allow subjects screening to be formed in incentives home to further reduce the requirement for subjects to travel to the doctor's office or clinic.

This would limit the studies.

The study subjects need to visit the clinics to just the first day of treatment and minimize the impact of social isolation on study participation.

With recent acceptance of the institutional review board also click to call the IR be changes.

We could minimize patient visits to the clinic to just the initial dosing of drug obviously, the U.S. is still an early process of combat included 19 outbreak and no one knows the extent of the measures that may ultimately be taken.

Continue to monitor and evaluate the impact of cobot 19 on our studies.

But in light of the rapidly involving coordinating situation, we no longer feel comfortable providing you projection for the availability of interim topline results. Instead, we will commit to providing additional information as conditions allow.

We remain focused on protecting the safety of trial participants adhering to clinical next best practices and keep the risk of trial integrity to a minimum.

With that I'll now turn the call over to Scott to provide a summary of our financial results for 2019.

Thank you Rick Good morning, everyone as Rick mentioned, we did release or financial results for full year 2019, and filed our form 10-K yesterday. After the market's closed I Trust you've had an opportunity to review these documents.

Starting with the income statement, our net loss for the full year 2019 was 10.6 million or 89 cents per share.

This compares to a net loss of 5.7 million or 74 cents per share for the full year of 2018.

Our research and development expenses increased to 7.9 million for the full year 2019, an increase of $3.4 million from 4.5 million for the full year 2018.

The year over year increase was due to a number of factors, which included the costs, we incurred in producing a new batch of the DM 199 drug substance, which is approximately $1.4 million as well as the costs incurred in conjunction with our phase one be and phase two clinical studies in the chronic.

Kidney disease patients during 2019, and some related non clinical testing.

An increase in the noncash share based compensation costs also contributed to this increase now these increases were partially offset by a year over year reduction in the cost incurred in conjunction with the remedy phase two clinical study in AI asked patients patients, which completed enrollment.

In October 2019.

Our general and administrative expenses were 3.7 million for the full year 2019, compared to 2.7 million for the full year 2018.

This 1 million dollar increase was primarily due to additional costs associated with the company status as a NASDAQ listed us public reporting company, which commenced in December 2018.

These additional costs included increased professional service compliance and noncash share based compensation costs.

Increased personnel costs also contributed to the increase now this increase was partially offset by onetime costs of approximately $360000, which were incurred in 2018 and were associated with the NASDAQ listing process and related legal and accounting fees.

Our total other net income net was 1 million for the full year 2019, compared to 1.1 million for the full year 2018.

This decrease is primarily related to the initial recognition of the R&D incentives from the Australian government, which were paid for qualifying research work performed by Die Amedica Australia.

During 2018.

Which included research work performed in 2017 and 2018.

The decrease was partially offset by increased interest income earned on marketable securities during 2019.

Next the balance sheet, we finished 2019 with cash cash equivalents and marketable securities of 7.9 million current liabilities of 1.3 million and working capital of 7.5 million.

This compares to 16.8 million in cash and cash equivalents 1.3 million in current liabilities and 16.7 million in working capital as of the end of 2018.

The decreases in the overall cash cash equivalents in marketable securities and working capital were mainly due to the use of cash to fund operations during 2019.

No in February 11th of this year, we completed the public offering of common shares as Richard mentioned in which we raised gross proceeds of $8.5 million and net proceeds of approximately 7.7 million.

Therefore, looking at December 31, 2019 on a pro forma basis, including these net proceeds.

We had cash cash equivalents and marketable securities at $15.6 million.

This additional capital from the February offering should.

Should allow us to complete our current phase two clinical studies and fund our operations through 2021.

All the strengthening our balance sheet in February was very timely and we believe we're in a position that as things stand today, we can deal with any potential financial shocked produced by the responses to the cobot 19 virus and thankfully as Rick mentioned as well we are much less exposed.

To the current volatility in the capital markets.

Now, let me turn the call back over to Rick.

Thank you Scott Operator would you. Please open the lines up for questions.

Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key please standby will be compiler Q and a roster.

Okay.

And our first question comes from the line of Alex Nowak from Craig Hallum Capital. Your line is open.

Great Good morning, everyone.

Rick you mentioned in enrollment at a slower in the African American cohort as you were finding patients who are our diabetic here what would be the risk of opening up enrollment to the African Americans, who are diabetic instead of excluding though.

Yes, so I think part as Alex will just no part of getting a study underway learning where the patients are how to attract them down.

No even going back to a few weeks ago, we felt a lot better what the steps taken.

Being able to to find these these these patients.

What we don't want to do at this point is or at any point for that matter is changed the protocol.

To add a few more patients.

We selected with our scientific advisory board to limit diabetics because.

Diabetics now adds in typically a couple other medications that the patients are on so it could.

It just not just a clean patient population. So at this point here, we feel comfortable with the plan of the increased number of sites from 10 to 12 and then also the work that our clinical group has been doing working with the sites.

Basically daily phone calls so we feel much better even to a couple of weeks ago, and then cobot. This whole coal that 19 has put a bit of or rent share. So.

This point here you know, we'll see how the next few weeks go in terms of coal that.

But one of the things that we are pleased about is that this the study design is having the home health care nurse nurses go visit the patience, we feel by limiting the touch points to as few as one.

The initial.

Site visit for the patient.

Even when things get back going again with with Covance 19 in patients people getting back to normalcy.

We feel that patiently more comfortable entering our study versus other studies, where patients have to go into the clinic on a weekly basis, there is going to be some concerns.

Okay understood and actually staying on that topic there within this last week.

It sounds like from your from your prepared remarks that patient dosing and follow up in the all those are all proceeding. According to plan just within the last week.

Okay.

There's been no change theres been weve enrolled patients in the last week and.

Nurses are continuing going to the sites that hasn't there hasn't been any missed missed a dosing or the patients.

Okay. That's good to hear and then what needs to change to allow your study sites to move enrollment to be on setting is it as simple as a change in paperwork or is it something more intensive to get them the switch.

Yeah, so to change in our and our <unk>, our IR B, which occurred last week.

So we will be ready to go here. It's a two week process. So we'll be ready to go as I guess as soon as next week.

Okay got it and then would you ever consider it this coven impact continues to last.

Into the summer months would you consider and you are having trouble enroll it really at the same time would you ever consider reading out the 12 week data on just the patients you have enrolled to date.

Are you going to wait to do the full 60 patients at this point.

Yes at this point, we're considering everything we do feel that it's more of a cobot 19 issue now versus identifying the African American patients that are non diabetic.

Okay got it and then just last question for me in the stroke study you mentioned there paired remarks measuring easier if our data which is pretty interesting when you speak with your advisory Board how do they look at IGI are far and a stroke population as a proxy for your kidney study is it fair to say this is a is a good proxy here.

Or could there just speak too much noise in the stroke group that that you really can't tease out the benefit.

What we're looking at it we are advisory boards that is intriguing that.

First many patients who had a stroking, including those in our study.

Also have kidney disease, so it'll be a call. It an early look at a kidney function.

In our study.

Okay, that's interesting well congrats on the great progress and 19 and.

They say about there.

Great. Thank you Alex.

Our next question comes from the line of Thomas Flatten from Lake Street Capital markets. Your line is open.

Good morning, guys. Thanks for taking the questions.

So Rick I know you Didnt want to provide guidance with respect to completion of enrollment and timing of the study could you give us a sense of.

On a percentage basis or an absolute number basis, where we are relative to the 60 total patients enrolled or we quarter of the way is there any any any any quantitative information you can provide there.

Yes, so we haven't provided specifics in terms of the number of patients I mean, I will say two weeks ago related for the whole covert 19 really became front and center.

We were looking at topline results in Q2.

And earlier versus later.

But then when you know uncovered 19 hit we would be we feel we just have to put a pause here on any guidance.

So hopefully here in the coming weeks.

As as things progress, we get more clarity on uncovered 19 will be in a better positioned to provides even some updated guidance.

Great.

And then the cash runway through the end of 2021 does that include the initiation of any phase three studies, either in stroke or chronic kidney disease.

Yeah. It allows to pull to complete the the ongoing phase two trials and then to plan and prepare to launch phase three but then we'll need to either partner or secure additional capital.

But I will clearly give us time to make those decisions without having to worry about.

Getting force, Dan or having to raise capital right after data comes out.

So I will give us some time to make some decisions.

Okay.

And then with respect to the us to the stroke data. So are you guys still blinded to it.

Yes, we are.

Okay, and then given that you don't know the.

The the venue for the release given the delay in the into the Vienna meeting.

Are there other meetings, where you have to be considered to embargo rules or anything like that or are you comfortable that you'll be able to release a meaningful data set in the next few weeks I think you said in your press release.

Yes. The plans we will do topline in the next few weeks and then right now we're looking at other conferences other events.

Challenges that a lot as other events that we would normally considering our also.

No there is uncertainty whether or not they'll be held at their current times. So so what we should hopefully at some clarity here, though called in the next month on on venue, but yes. Our plan is to do topline results. After weve. After we go to the data and analyze it.

That's great. Thanks, guys appreciate it.

Thanks, Tom.

And our next question comes from the line of Kyle Bowzer from Dougherty. Your line is open.

Hey, good morning, Thanks for taking the questions.

The first how are the production runs going what what does the latest run look like in how do you feel about the supply levels for now.

For the drug levels.

That's right.

Yes, So last summer fall, we completed a 250 leader run that will be enough product to get us through phase three.

And so there's there's no concerns there with having enough material.

To complete the count particular completed phase two trials.

Okay.

As we think about phase three for stroke I know, we want to see phase two data shakes out first but.

I believe the earlier plan was to have some sites in China.

Given the covert 19 situation.

Your competitor in China manufacturer scale, K, one with human year in might not be in favor as much anymore for obvious reasons.

To the extent you could share I mean as it has there been any indication that the regulatory process for you in China.

Could therefore be accelerators stretch just kind of any thoughts there.

Yes, really right now our focus is going to be on a global study so focusing on us in Europe.

And then if theres an opportunity to add sites in China and other parts of the world for that matter, we will consider but we still feel the real opportunity for this for this treatment is in the U.S. and Europe.

While also will be opened to having sites in China, if it makes sense for us.

Okay, and maybe if you were able to find another strategic partner any updates regarding conversations with potential partner.

After the Chinese market right now our focus is on the data and after that point then we'll we'll we've got a list of companies interested.

We want to get the data and then from that point, we think we'll be in a stronger position.

Makes sense, okay. Thanks, so much.

Thanks.

I would now like to turn the call back over for closing remarks.

Thank you everyone for joining us. This morning, we appreciate the continued support of our shareholders and analysts and also our employees who work hard and have an instrumental in moving DM wanting forward. We look forward to speaking to in the future and updating you on our progress with that we conclude our call. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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