Q4 2019 Earnings Call
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Good afternoon, ladies and gentlemen, welcome to the place Therapeutics fourth quarter and full year 2019 earnings results call.
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Before we begin if we want to advise you that over the course of the call and question and answer session forward looking statements will be made regarding events trend business prospects and financial performance, which may affect plus their beauty future operating results and financial position all such statements are subject to risks and uncertainties.
These include the risks and uncertainties described under the risk factor section included in the plus Therapeutics annual reports on form 10-K, and quarterly reports on form 10-Q that with the Securities and Exchange Commission from time to time, plus Therapeutics advises you to review these risk factors and considering such statements.
Plus therapeutic assumes no responsibility to update or revise any forward looking statements to reflect events trends or circumstances. After the date they are made.
And it's now my pleasure to turn the floor over to Dr., Marc Hedrick, plus therapeutics, President and Chief Executive Officer, Sir you may begin.
Good afternoon, Thank you Angela and welcome to or two for full fiscal year 2019 earnings call.
Hi, Marc Hedrick, President and CEO, plus therapeutics, and Jordan news or new Chief Financial Officer, Mr., Andrew Sims.
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On behalf of the entire pitch therapeutics team I wish old Buda best possible Coke during using critical times, we're a company dedicated to health care and we hope you and your family's recouping as well as you can.
We do encourage you to call the advice of your doctors and public health officials and this target with car.
Good day, though I'm pleased to report the results of course therapeutics fourth quarter and full fiscal year 29 team.
However, before we go through a review of last fiscal year, let's first focus or more current news and in particular are exciting announcement. This morning.
Most importantly today, we announced that we have entered into definitive agreement to weitzman's multiple rare cancer drug product candidates and private Texas based biotechnology company Nano T X therapeutics.
The transaction terms include an upfront payment of $400000 in cash and $300000 and plus talk.
Furthermore, the company made pay up to 1 million 136.5 million in development and sales milestones and appeared single digit royalty on U.S. and European sales.
Transaction subject to customary closing conditions is expected to close in the second quarter fiscal 2020.
The license drug portfolio is sacred appointed mental life is seldom encapsulated radio nucleotides and related technologies for a number of cancer targets. The lead drug tested this acuity really nano like the so also called or no initially being developed for recurrent glioblastoma.
Our though is infuse directly into the brain tumor <unk> precision brain mapping and convection enhance delivery technology to deliver very high therapeutic doses of radiation to patients whose cancer has recurred following initial surgical resection and treatment with chemotherapy you.
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We're very excited about this transaction it is consistent and always with our publicly stated strategic games that have been mentioned frequently in the past few quarters.
Among those games.
Strategic expansion of our pipeline and in this case, the when exclusive in licensing transaction.
Also cost efficient development via more virtual drug development model, while leveraging non dilutive sources of funding in this case technology with a strong funding track record via the state of Texas, and the NIH National Cancer Institute.
[noise] and clinical focus on oncology and more rare poorly indications in this case, so just curious glioblastoma carcinoma, toasters and others and then finally everything or extensive expertise and novel drug formulation and mental lipid films in this case by applying their internal capabilities.
CMC clinical development. The moved these products into late stage trials in one day potentially commercial introduction.
[noise] also as we noted previously in our plan, we prefer to invest in drug candidates that meet three key criteria first.
To address it another substantially underserved medical need.
Second.
They combine known active pharmaceutical ingredients that have extensive safety and efficacy information.
With new technologies that improve both safety and efficacy and third these products will have at least a 250 million dollar addressable market.
These drug candidates revolver this transaction check all three boxes.
I'll provide more details on the technology and the clinical status regarding this transaction momentarily, but in summary.
This transaction Comports precisely what their previous guidance.
We're particularly pleased you said you're able to deliver a first deal so probably within the first quarter of our new fiscal year.
So now before getting to our F. why 2019 review I'd like to address the current global crisis now on everyone's mind, specifically covered 90.
And this company's response to it.
I'm relieved to report that there's been no material impact on our operations as a result, the corona virus, none of our employees that tested positive and we currently expect no material impact on the results for fiscal year 2020, which ends December 31 2020.
Our recent implementation of a substantially virtual development model is serving us well during the pandemic. Additionally, our facilities in Austin and San Antonio remain open.
Although while lightly staff.
We have flexible work schedules to provide maximum support for our employees.
Be assured our company has business continuity plans at all sites should the needs or need to rise to implement them.
No supply chain interruptions have occurred and we remain in close coordination with our partners employees of potential risks and Mitigations.
We're also exploring the provisions of the recently passed care as long as to how it might provide support to plot.
As a final point with regard to this issue.
Besides protecting our workforce and maintaining our business. We're also trying to make a difference to others coping with the impact into krona virus.
Recently, we donated the lions share of our personal protective equipment inventory, such a surgical masks clubs and other protective items to San Diego scripts health for distribution to its frontline doctors nurses and other health care practitioners that are under frontline's caring for patients affected by the curve at 19 pandemic.
As many of you know scripts health as a private nonprofit integrated health system in San Diego and plus Therapeutics of course has had a longtime presence in San Diego and lawyer will.
Well continue to <unk> to do our part to look after our employees and look for US. It's we could help the communities in which we live and work.
Okay. So let's return to the F., why 29, Ti review, which market productive and pivotal time in the history of this company.
In fact Q4 was the first full quarter of the new revitalized plus therapeutics, the clinical stage pharmaceutical company focused on the discovery development and delivery of complex and innovative treatments for patients battling rare cancers.
Let me briefly summarize some of the substantial progress we made and 2090.
Most notably we injected $26 million.
The balance sheet by a combination of transactions, including selling non core assets completing a 15 million dollar public offering and negotiating a 4.6 million study close out reimbursement from the U.S. Department of health and human services.
Also in order to preserve cash and ensure efficient future capital deployment, we consolidated operations for the whole your California, Texas and significantly Virtualized, our development model, meaning an increase and cost effective reliance on trusted consultants and less on it.
Expensive full time infrastructure and short.
We spend down to a built for scale and shouldn't drug development monetization and liquidity.
Our move to Texas was a key part of this we're in close geographic proximity to some of the world's most pronounced in cancer researchers and institutions.
As you probably know our new home state of Texas has a statewide commitment to oncology.
Best characterized by the cancer Prevention and research Institute of Texas is funding the second globally only to the United States Federal government and the public funding of cancer research.
Founded didn't know eight.
Separate has since awarded almost two and a half billion dollars towards over 1500 grams focused on academic research cancer prevention and product development research.
Just to summarize all this I'll just reiterate what I said in our recent letter to shareholders.
I believe strongly that plus therapeutics now has the financial capability development focus and cost structure to achieve long term viability and growth.
Now let me must ahead here and provide further details on the transaction we announced this morning.
We've licensed a family of drug candidates characterized by novel chemistry.
Typically the B M E D. A cumulated via media is a is a key later and it in this case Kilitch Iridium, what 86 is or radio isotopes encapsulated via Nana lysosomes.
These unique drugs are both beta and gamma energy emitters.
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As it works within the tumor which is very important particularly in the brain.
At least precise formulations.
Oh, it's approximately one to two millimeter radioactive penetration and a 90 our half life.
When delivered directly to tumors. These comp helps can deliver approximately 30 X or 30 fold the radiation to tumors and can standard external beam irradiation without the local side effects incurred beam irradiation is aimed through normal tissue ticket to the brain. Furthermore.
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A multi institutional consortium based in Texas at the Mays category Center, and you'd see it help Antonio MD Anderson Cancer Center and it was led by the internationally renowned Dr., Andrew Bruckner MD Phd.
The lead drug assets.
And this basket of IP that we and its iridium Nana lipid some developed initially for current doma.
Dr Brynner and his colleagues.
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In a modern times that we live in radiation is the most affected component of the standard multi modal therapeutic regime used in glioblastoma.
Multiple randomized study show about a five month improvement in survival with external beam radiation alone compared to an additional two and a half months with the addition of chemotherapy and three months for targeted tumor treating fields.
By infusing the drug directly into the tumor bypassing the blood brain barrier normal brain external tissues are space after Bailey.
In the case of these drugs.
The mechanism of action is clear cut we know radiation is effective against Glioblastoma, yeah, and adequate those can be effectively delivered.
For comparison.
Barry.
Generally station protocols for recurrent Glioblastoma typically retirement and total gross of 35 Gray greatest how the radiation doses measured in contrast, the most free to patient dose with all right now and the clinical trial. That's ongoing today received over 500 Gray 30.
Five to 500, Greg.
In terms of clinical status with us with respect to this trial. We're currently in a U.S. FDA approved phase one dose finding study at a single site in Texas in San Antonio with plans underway to expand the two additional sites in Texas.
At New key southwestern Medical school and MD Anderson.
In the trial, thus far 13 patients have been dose to date and we are now in the fifth dosing cohort the radiation radiation dose in the current cohort is now approximately at 15 times. The dose that is typically delivered by external beam radiation.
I am doses are planned in subsequent cohorts.
This far no serious adverse events have been observed.
And the trial.
And in terms of efficacy signals.
We continue to follow these patients, but the first few patients in which complete tumor coverage with our and out was achieved.
Survived for 30, and 33 months respectively.
And that's compared to a median survival of about nine months in patients who receive standard of care.
Another thing we really like about this technology is it has had substantial third party review and support it was previously funded by the cancer Prevention and Research Institute in Texas, and there may be third further opportunities for phone as well.
Currently the technology is funded through phase two till phase one, but three phase two by the National Institutes of Hell and National Cancer Institute here in the U.S.
The recently awarded 3 million dollar Grant award from the anti NII will function primarily to create cost offsets for plus during the continued clinical development of our in our for recurrent glioblastoma.
So what about next steps.
We plan to do several simultaneously, namely complete the phase one trial and determine the maximum tolerated dose.
Explore ways to accelerate development both in.
And with the FDA is supported by the clinical data.
Finalize our plan for more definitive safety and efficacy studies with the agency.
And complete the CMC and scalability work required to move this too late stage clinical and commercial product availability.
Another reason our team is so enthusiastic about this technology in this transaction.
As there is that the same product candidate is in preclinical development for several additional indications, including breast head and neck.
Optimal NGL carcinoma closes liver and ovarian cancers.
It appears to be quite promising in those although still early.
This technology can be a game changer for some of these really tough clinical problems.
Therefore, its ARPU and they continue to refine the development plan and support development for additional indications and report back as soon as we complete that planning process.
Furthermore.
Another license preclinical product candidate as part of this transaction is a co encapsulated dr. Robertson accumulated Iranian nanoliposomal. It has been studied in the treatment of squamous cell carcinoma, the head and neck and may have use in a number of other tumors as well.
Finally, these assets are supported by numerous patents worldwide and peer reviewed publications.
So let me move on to the rest of our pipeline as you May know our pipeline also contain does that plus which is a phase two ready albumin stabilized pegylated lipid someone goes to paxil that is intended to target a number of cancers, including small cell lung cancer.
To summarize what we've we've said before it's a re formulation of Sanofis taxotere ddos attacks or using our proprietary nanotechnology platform being developed for relapsed small cells small cell lung cancer, and the new and alternative treatment option to Novartis is high canton or topotecan.
According to decision resources.
Typically can as a standard of care in this patient population and generated 190 million in sales in 2018.
So surplus has an FDA orphan designation for small cell lung cancer, and we have received FDA pre I and the feedback indicating that the product may be eligible for the five or five due to regulatory pathway.
Prior to date today's announced transaction managements plan had been to proceed to a phase two trial in small cell lung cancer patients with platinum sensitive disease with progressed after first line therapy.
However.
Management believes predict prudence dictates that in the current macro you can buy economic environment.
The uncertainty about the capital markets and with multiple new assets in the pipeline, we will proactively in Q2 adjust as needed our clinical priorities and plans for capital deployment.
Well do that in such a way to maximize stockholder return.
We therefore put a near term temporary hold on development spend it does a plus all the rapidly assess the overall situation.
Regarding our other asset Dr. plus we're in discussions with interested parties in acquiring this drug as a potential first generic version of Calix in Europe.
Additionally, we continue to review a number of other co development in enlightening licensing opportunities.
Year to expand our pipeline.
And now I'll turn it over to Andrew since our newly arrived Chief Financial Officer.
For a financial review, but before I do Andrew Let me just.
Give you a brief.
But before anybody who's background is a great addition to the Pete.
Andrew was previously an audit partner Edmonds ours, a global accounting advisory audit tax and consulting firm.
Was originally based in both the Oxford, England in New York offices.
Andrew audited and advise global public clients, including a variety of healthcare companies, primarily based in Europe and he was a lead partner on over 50 acquisitions and numerous quite cross border financings into other transactions is a certified public accounting here in the U.S. and a chartered accountant, England and Wales and it was.
Raising educated in the United Kingdom.
But he is still has an understandable accent so andrew.
You're welcome aboard and I'll turn it over to you.
Thank you much and good afternoon, everyone.
I'm very excited to be out of the team plus and I'll be discussing plus therapeutics financial results for the fourth quarter and full fiscal year 2019 as presented in our earnings release today.
For the 12 months ended December 31st 29 team on net cash used in operating activities was 5.9 million as compared to 12 million in 2018.
Our Q4 2019 net cash provided by operating activities was 1.03 million compared to cash used in operating activities, a 2.5 million in Q4 2018.
The reduction in annual cash burn was mostly related to discontinued operations, which resulted in reductions in operating expenses.
Net income for Q4, 2019 was 0.8 8 million as compared to a net loss of 2.2 million in Q4 2018.
The increase in net income is mainly due to the increase our the development revenue and an increase in the fair value of warrants.
For the 12 months ended December 31st 29 team the net loss was 10.9 million.
As compared to 12.6 million for the same period in 2018.
Research and development expenses in Q4, 2019, our research and development expenses were 1.7 million versus a 1.6 million expense in Q4 2018.
For the 12 months ended December 31st 29 team R&D expenses were 5.4 million.
The 5.5 million in 2018.
The decrease in research and development year over year spending was primarily attributed to a decrease in professional services and printing services.
Now onto our sales and marketing.
Our sales and marketing expenses increased this quarter to approximately 163000 as compared to approximately 47000 in Q4 2018.
The 12 months ended December 31st 29 team on December 31st 2018, our sales and marketing expenses were 468000 643000, respectively.
The decrease in sales and marketing expenses is mainly due to decreases in salaries and benefits related to reduce headcount due to our plan move towards an R&D focus company.
DNA expenses 1.5 million for Q4, 29 team as compared to 940, thousands in Q4 2018.
The 12 months ended December 31st 29 team.
And 2018.
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The year on year reduction in GNS expenses was mainly related to reductions in salaries benefits and professional services.
In addition, this decrease was driven by a one time expense relates the termination of a lease agreements office space in San Diego.
There was also a decrease in legal and professional fees and salaries and benefits.
Now with respect to revenues.
Q4, 2019 total revenues were 1.2 million as compared to 713000 than Q4 2080 for the 12 months ended December 31st 2019 cents, where revenues were 7 million as compared to 3 million in 2018.
The increase in revenues is mainly due to the recognition of the body revenue.
Turning to the balance sheet.
As of December 31st 29 team, we had 17.6 million of cash 9.3 million that that principle.
In December 2018, we amended our debt with Oxford, providing additional flexibility by pushing out our interest only period through April 1st Twentytwenty.
Our liabilities increased to 22.1 million. So 12 months ended December 31st 29 team as compared to 18.8 million at December 31st 2018.
Primarily relates to warrants issued in the September 29 gene offering.
Finally, some of you may have also seen in the Eighteight. It was filed pre market. This morning, we have entered into the nights Amendment with Oxford Finance, our senior lender.
When this lomas first entered into in 2013, the total amount borrowed was 27 million.
Remaining balance principal balance prices lines amendment was down to 9.3 million.
The key aspects of this nice amendment are paid down to 5 million the principal outstanding balance of 4.3 million.
Extended the maturity dates on the loans at June 2024.
Which is an incremental 36 months.
Extending the interest only period from April 20 to 20 through to April 20 to 21.
Amortizing the remaining balance of the following such eight months at approximately $113000. Among the final payment of 3.2 million in June 2024.
Prior to this amendment. This loan was set to come commence amortizing in may of Twentytwenty at almost 700000, among some of the final payments you in June 2021, a 2.2 million.
And now I'll turn it back to you Mark.
Andrew Thank you very much. So let me just update you on key forthcoming milestones and then we'll turn it over for Q in Asia and regarding the milestones related to new assets.
We will be.
Well be integrating those assets immediately and report back soon as we refine and clarify upcoming milestones, albeit a bit general here, but I think you'll get the picture.
First of all most importantly, we want to complete the are another phase one trial as soon as possible and determines the maximum tolerated dose.
We also want to work with the agency right away to determine age suitability potentially accelerate the past the market such as orphan designation fast track or breakthrough designation.
And then be develop a development to commercial clinical and regulatory plan for our now for Glioblastoma.
We also want to be.
The same scalability work acquired view.
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The commercial available.
Paul.
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Property acceptance.
Yeah.
And our pipeline.
Regarding their supply us as I mentioned, we want to rapidly in Q2 clarify its role in our overall pipeline and determine next steps for this asset.
So with that I'll turn turn the call back over to into the operator for any questions.
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Thank you the floor is now open for questions. At this time, if you will have a question or comment. Please press star one of your attach time from if at any point. Your question is answer you may religious telephone key by pressing the balance team again, we do you asked that while you pose your question.
You pick up your headsets for that optimal sound quality. Thank you.
And our first question comes from the line of Ed Woo. Please go ahead.
Particular my questions there congratulations on the deal today and obsolete. Thank you for donating the medical supplies. Obviously everything helps in this time of made my question is on Das said plus I know you mentioned that you're going to do review in the second quarter, but are you leaning towards putting more emphasis on the assets that you guys acquired today.
Or is it really just.
Everything's on the table.
Hi, Ed. Thank you for that and appreciate the question I think there. We we are we in licensed so many diverse assets.
That I think its behooves us to take a step back a rapid step back recalibrate and.
Deploy our capital where we can make the biggest impact for stockholders. So yeah. I think we're really looking at that asset. We think it's we think it's a great assets.
It requires some more development dollars.
But we also are really enamored with the assets. We just in license I think to be fair. We just do we and I assure you. This process has been ongoing but we want to finalize it that's a reevaluation process make a clear definitive decision and then communicate that and then and then move the ball forward.
Great and then I know you touched on a little bit about how you guys were still reviewing.
There are possible our assets that you guys might be interested.
Has the krona virus changed any of the outlook in terms of nor the type of opportunities are products that are out there.
Yes, it's a great question.
It's in my view, it's too early to tell whether that has changed the outlook on the opportunities that are out there, but I really what I will say is that the November.
State.
Legislative approval and voter approval of the separate grant has spent a lot of inbound interest in our company based in Texas.
With a deep connections into separate in terms of our team and people that advisors in a lot of water companies that may be.
Run out of capital or capital constrained that have very exciting oncology assets and they're looking for ways to partner, we had hoped that being in Texas might create some visibility is related to that and that seems to be the case, but where we have a pretty aggressive.
Outward facing.
Process of trying to identify you assets that we can bring any we like assets like the one we announced today that comes in with.
Partial funding that's pretty that is increasingly deepen the clinical development program. So thats. The today is an example of the kind of assets that we like.
Great well. Thank you I wish you guys. Good luck in safety. Thank you.
And why they cannot view.
Well again, if you would like to ask your question. Please press star one of your attach Tom phone at this time.
And what we have an email question.
Okay go ahead.
Hi, the question is about the market opportunity for Ari now.
For real Boston, Miami overall market side so.
Just briefly.
Currently there there are approved treatments for glioblastoma, but.
None of them are particularly great. It's a.
What are the most aggressive of the primary tumors that occur in people. So I mentioned, there about 12000 people a year that have that disease. So once a pit that's a patient failed standard frontline therapy, which is the typical course, the prognosis is very poor.
The active reintervention drugs in our current situation like Bevacizumab and on musty.
Has been proven to to prolong survival, but but they're not great and after treatment failure survivals not good about the 120 days or so so if you look at just a recurrent GBM market with Abbott as a context. We think alone. This is about a 750 million dollar year annual operating.
I'd now if you add another potential opportunities in.
First line GBM or some of the other cancers I mentioned I think the opportunity runs well over a billion dollar so based on the kinds of things were looking for this fits very nicely into.
Into Uh huh.
Into that bucket.
And again, if he would like to ask your question. Please press star and the number one key on your telephone keypad ANS Taiwan.
We have no further questions at this time I will now turn the call that to Dr. had a record for any additional are closing remarks.
Thank you Angela and.
Thank you again for those of you on the call and and are listening.
On the recording once again that the transition we completed 2090 has positioned plus therapeutics to maximize the value of our core expertise and nano particle drug formulation drug manufacturing and scale up as well as clinical development.
Well, we're extremely pleased by the transaction, we announced this morning.
We see more such transactions possible in future.
Well diligently continue to evaluate a number of other opportunities to support and build out a valuable drug development pipeline consistent with the criteria, we blades laid out in previous two quarters and typified by today's announcement.
So as always on behalf of the Board management. Thank you again for participating in this call more information can be found at our website plus therapeutics dot com and on our Linkedin and Twitter social media sites have a good evening. Thank you.
Thank you. This does conclude today's conference call. Please disconnect your lines at this time and having wonderful day.
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