Q1 2020 Earnings Call
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Good day everyone and welcome to the cell Q&A release of the first quarter 2020 Financial results at this time. All participants are in a listen-only mode later. You'll have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star and one on your telephone keypad. Please note. This call may be recorded and it will be standing by if you should need any assistance on the outer the program over to the Chief Financial Officer Vicky, please go ahead.
Thank you operator. Good afternoon everyone and thank you for joining us today for a discussion of first quarter 2020 Financial results and business office lights. We issued a press release announcing our financial results for the first quarter ended March 31st, 2020 a few minutes ago. Today's press release can be found on the investors section of our website www.moodys.com. Before we begin I would like to remind listeners at our comments. Thursday will include some forward-looking statements these statements involve a number of risks and uncertainties, which are outlined in today's press release and in our reports and filings with the SEC actual events or results May differ materially from those projected in the forward-looking statements.
Such forward-looking.
Statements and their implications involve known and unknown risks and uncertainties and other factors that may cause actual results or performance to differ materially from those projected on this call. We will also refer to non-gaap financial measures. These non-gaap measures are used by management to make strategic decisions forecast future results and evaluate the company's current Performance Management believes. The presentation of these non-gaap Financial measures is useful for investors understanding and assessment of the company's ongoing operations and prospects for the future. You can find a table reconciling the non-gaap financial measures wage Gap Financial measures in today's press release. And with that. I'd like to introduce Brian Sullivan our CEO.
Thank you, Vicki and good afternoon everyone. I'm very pleased that you joined today for an update on our progress this quarter. I'd like to comment on our first quarter results focusing on a particular on a few things the status of our product development project our collaboration discussions in our Fact one and back to clinical trials biggie will follow me to discuss our financial results, and then we'll open the line for questions.
Today only a small proportion of cancer patients are benefiting from the advancements made over the past twenty years in molecular based medicine and recent reports estimate that roughly 80% of cancer patients black and action-packed typically a molecular mutation, but that an oncologist can use the guide selection of the targeted therapy for their cancer patients.
Is that like huge unmet patient need for new Diagnostics with the 80% of cancer patients today who are not eligible for targeted therapies. We found itself to address this month need a platform diagnosis dysregulated oncogenic signaling, which is the underlying cellular activity driving many cancers patients. We diagnosed with a dysregulated signaling pathway have a disease mechanism that directly corresponds to a matching targeted therapies mechanism of action. Our strategy is to help pharmaceutical companies obtain new indications for their targeted therapies to treat the page of Sigma tests identify since dysregulated signaling is too complex for a molecular test characterized you can leverage the capability of our sales signal platform to create a proprietary business.
So that's what you about strategy. Our R&D team is working hard to expand the applications for our platform new test expand the number of patients from they positively impact and increase the number of potential pharmaceutical. I live collaborations we can pursue
so I'm excited to report that we again made significant progress this quarter developing a new Dynamic signaling test to diagnose cancers driven by dysregulated rats or Ras signaling wage. Hopefully complete development of a cell signal test for breast and ovarian cancer patients by the end of 2020 this regulation of Wrath signaling which includes the rapper and chot Ka Katie Pathways is estimated to contribute to 30 to 40% of all cancers pharmaceutical companies have developed numerous drugs that Target wrath involved Pathways. However, the number of interactions between rats regulated Pathways has made it extremely difficult to use molecular tests to identify patients with dysregulated r a signaling tumors in this channel has a dying of cancer driven by a dysregulated drastically network is magnified because two or more different pathways are typically involved.
Recent research is also
That wraps mutations play a much less important role in this regulated R A signaling than previously thought.
Give me a platform is uniquely suited to entangling complexity of the steamer subside then identifying the targeted therapy combination capable of treating it in particular development of our last test that with our unique ability to analyze complex signaling activity involving multiple Pathways, including G protein-coupled receptors or receptor tyrosine kinases and pathway notes month or as Dynamic signaling test would be our for cell signal test.
For her to see Madam signaling have the potential to diagnose oncogenic signaling activity undetectable by molecular tests in up to 1 and 3 for two negative breast cancer patients off to develop a rap Dynamic signaling test for successful the percentage of cancer patients who could benefit from a cell signal theft could increase significantly since the patients diagnosed by yourself taking a test of those current molecular tests can identify each test offers a potential opportunity for pharmaceutical companies to expand the number of patients eligible for their targeted therapies, or to obtain new indications for 16,000 working with pharmaceutical companies to gain approval for new drug indications. We would significantly expand therapeutic options for cancer patients.
There are last call we announced we would report preclinical results for our first cell signal test for ovarian cancer at the 2020 annual meeting of the American Association for cancer research aacr, which was originally scheduled for late. April due to the covid-19 pandemic acrs rescheduled most poster presentations including hours until late June.
Accepted abstracts will be closed by mid-may just need to identify a new sub group of ovarian cancer patients with tumors and at the undiagnosed hyperactive oncogenic six activity.
we continue to advance our discussions with pharmaceutical companies were a number of potential clinical trial collaborations while we still expect to close several collaborations this year clerical sponge and pharmaceutical companies we have to work with you have been affected as most companies have to varying degrees by the 19th and Emmett and these are that may delay finalizing some of these potential off this past year end 2020 potential collaboration Partners include many of the country's leading cancer research centers as well as several Global pharmaceutical companies the goal of these collaborations is to evaluate the effect of targeted therapies and breast cancer patients identified by cell signaling a test and these potential collaborations would the finalized enable us to study a range of drugs either a single or combination agents
If successful We Believe collaborations could ultimately lead to helping these therapies gain, if the approval to treat the patient populations are tested Enterprise and since the collaborations were pursuing involved Thursday 8:00 sponsor and in some cases to pharmaceutical companies significant times required to finalize that related agreements between the three or four parties. I'd like now to turn signal on our clinical trial in light of the recent developments relating to the covid-19 pandemic the focus of Health Care Providers and hospitals and fighting the virus and consistent with the fda's updated industry guidance for conducting clinical trial was issued in mid March 2020. We're experiencing delays a million moment of patience in our ongoing clinical trials related delays for our trials are consistent with it reported by most plentiful call sponsors. In fact during discussions with clinical sponsors. We've learned that even surgeries to remove cancerous. Tumors are getting delayed in some cases.
As a result, we now expect in term results. In fact one is back to trials could be delayed until the second half of 21 and the final results approximately nine months later. We'll continue to evaluate the situation and provide updates as appropriate. But of course will be taking every step we can to mitigate the effects of the covid-19 pandemic on these trials. I'd like now to have Vicki review the financial results for you Vicky. Thank you Brian for 2020 with 2.255 million or 22 cents per share compared to a one point eight five million net loss or 18 cents per share for the first quarter of 2019 become a quarterly net losses include a significant non-cash item stock-based compensation. We also include in our press release non-gaap adjusted net loss for the core birth.
our non-gaap
The net loss was 1.78 million or 17 cents per share for the first quarter of 2020 compared to non-gaap adjusted net loss of 1.66 million or 16 cents per share for the first quarter of 2019 R&D expenses increased approximately $200 million during the first quarter of 2020 compared to the first quarter of 2019. This was primarily due to a $200 million increase in compensation expense which included 8.19 million of non-cash stock-based compensation in addition other research and development expenses increase .0 1 million do to clinical validation and laboratory studies and operational and Business Development activities.
The approximately .08 million increase in G&A during the first quarter of 2020 compared to the first quarter of 2019 was a truck to non-cash stock-based compensation.
We ended the quarter with approximately 16.9 million of cash and cash equivalents the net cash used in operating activities for the first quarter of 2028 with 1.83 million. This was a result of non-gaap adjusted net loss of 1.78 million and 1.1 million of working capital changes in prepaid assets and accounts payable offset by depreciation expense of 1 million.
Thank you Vicki. So in summary or excited about our continued advancement of new cell signal test and the progress towards closing important collaboration agreements. We're monitoring the covid-19 situation closely doing everything. We can to mitigate any impact on our trials and collaboration discussion timelines operator. Could you please open up the line for questions?
At this time, if you'd like to ask a question, please press the star and one keys on your telephone keypad. Keep in mind. You may remove yourself from the question Q at any time by pressing the pound key off. Once again, it is star and one to ask a question today.
And we'll take our first question from each head with HC Wainwright, please go ahead your line is open.
Well, this is Martha speaking on behalf of each one from HC Wainwright congrats on the progress and thanks for taking our questions. So just a camera clarification, Um, when do you anticipate the pi3k functional signaling test to enter a clinical trial following your great progress in the development of the test in the physical store? We started discussions. But as we found the timing of getting these discussions off to fruition is quite extensive and and so we we began discussions with different investigators and and pharmaceutical companies. We haven't put a hard date on that page, but if history is a guide it typically would take we would expect twelve to eighteen months to get a collaboration from the time. We we announce initial data.
All right. Thank you for the update. You're welcome.
We'll take our next question from her with craig-hallum, please go ahead you'll end is open.
Thank you. Good afternoon. Brian and Vicki. I'm going to follow up on on the the previous question. I Brian you mentioned the Wrath signaling test. You know that that you're that you're working to develop and and you cited pi3k as one of the underlying Pathways within within rash signaling and and regulation. I guess that you're that you're targeting and it sounds like a a a nicely sized patient population that that can help you uncover. If you're successful in that regard given that it it sounds like is a subset of rash would you expect would you expect to stand alone a trial or would you suck collaboration or would you expect that? You might find more success when for lack of a better word a unified Rass celcia test is available.
No, no, that's a great question and kind of as a bit of biology involved in that. So the rafts tickling network is comprised of you know, too important pathway snap K and and P a three K and faith in those pathways are different notes that include the a three k a k t and then rap and and mac and Eric. So these are all potential drug targets. They're all dead and either support and cooperation of cells or or how how long they can survive and the work we completed when we were developing r p i c k test
I've revealed to us how we could go about untangling other notes that are part of this raft signaling Network. And so what I think we will ultimately end up with are several. You might call them subtests within the rest is that that identify subsets of patients within the the Rev involved cancer and we refer to our signaling Network because um, it will invariably in these other tests involved or require multiple drugs to treat the disease took in ISM and um, and because you know, these Pathways cooperate and the situation is somewhat akin to the one we discovered when we found our involvement and cooperation with her Family Pathways. In this case, you know, we are, you know working with intracellular targets as opposed to extra cellular receptor targets dead.
You know another layer of complexity, but overall then I would say the pi3k we'll ultimately probably be as as we would consider a subset of a family of Wrath related signaling tests.
Okay, that makes sense. And and your your answer actually kind of captured a a follow up there because I was sensing a parallel to the test that you had developed as well. So so thank you for preemptively answering my next question on C met you mentioned that you know the 12 to 18-month sort of timeline on on the collaboration for pi3k. You know, we're we're kind of sitting out around that that level with with cement at this point. Do you would you expect that that sort of the nearest in collaboration would expect at this point I would say that is among the I think it's like my children. They're all and this case we have several that are similar stages and amongst those at this similar stages are ones. That would include see met drug.
Okay. All right. That makes sense. And then one last question for me and you addressed it in the in the press release and in your your comments home kind of come into today expecting that the covid-19 probably had put a little bit of Chill on on clinical trial activities. And uh and and that you know, potential collaborations is people are thinking about what to do during this pandemic as it pertains to clinical events. Like do you sense any different level of Engagement from potential research Partners or Pharma on collaborations when there isn't that face-to-face at some of these bigger industry events and and we're a lot of money on Virtual or are you still seeing or sensing that there's going to be that same engagement level or is there is there a bigger hurdle to overcome, you know having to do it kind of more remotely like that.
Well, that's a good question. I think you know people have quickly adapted to having Zoom calls and to revolt presentations, you know on a shared screen, uh, and they're efficient. Um, and you know, it allows for easy, you know back and forth. So so we've been pretty successful. In fact engaging folks in this environment. We obviously haven't been travelling and visiting folks and so we're hopeful that even though I won't give us a chance to just run into people which I think is is one of the benefits of those those conferences is that you you meet people who would otherwise maybe meet but but pretty deliberate about the sensor that we're targeting and and we're pretty focused on how to network with in in the groups that we have relationships with and and we have a a pretty focused um targ
In terms of number of sites. We'd like to collaborate with and how they'd line up with other sites that we might be.
Having discussions with though so sure it's all things being equal. It's better to meet people live at a conference like that. But you know, we're still you know, plugging away and and able to advance, you know, the collaboration. I think the the biggest effect of covid-19 though is that many of the doctors that were working with our senior leaders in the institutions where they're serving and so they are involved in developing covid-19 protocols and and you know kind of larger issues around their Health Care Systems, and so that's just takes time away from home, but we're trying to do and which is understandable but it doesn't make them go away either. So it's just everything is kind of burdened with the backdrop of covid-19. I guess, you know would be to be the trials. I mean the thing that was surprising to us was you know, the impact on treatment of cancer patients. We we knew and Ed.
Probably read about a lot of other trials that are evaluating Cancer drugs that have been impacted delayed slowed down and we're no different than them. But what was surprising at least the last was the fact that for many cancer patients procedures Sergio surgeries to remove. Let's say Allegiant Allegiant are being delayed and and edit it has as much to do with risk of infection for these patients as it does potentially for whether they would be considered elective surgery, but regardless, I mean the the healthcare system in general has been impacted in that that has, you know, not with the cancer world as as I probably would have thought, you know, if you had asked me the question in early March, but clearly affecting pretty much every every corner of their Market.
It definitely has definitely a fluid situation. That's all I had. Thank you Brian. Appreciate that. Thank you, sir.
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Well, I think in the absence of further questions will release everybody really appreciate your listening to our call and look forward to communicating with you and uh pretty much for now. Goodbye.
This does conclude today's program. Thank you for your participation and you may know disconnect.
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