Q1 2020 Earnings Call
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Greetings and welcome to the video Biopharmaceuticals quarter, 120, 20, <unk> earnings Conference call.
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I would now like turn the conference over to your house, Jeff lacking CEO. Thank you. Please begin.
Thank you Daryl I appreciate the introduction.
Good afternoon, and welcome everyone to the videos first quarter 2020 earnings call I'm, Jed Latkin, Chief Executive Officer video Biopharmaceuticals. This call covered under videos financial and operating results for the first quarter of 2020, which ended on March 31st 2020, along with a discussion of Golden milestones for the rest.
A year following our prepared remarks, we will open up the conference call to question answer session with me on our call today is our Chief Medical Officer, Dr., Mike Rosebel, and our director of Finance and administration Erica eat.
Before we begin our formal remarks, I would like to remind somebody varden you updated.
Safe Harbor statement for Ur Cobot, I'd like to remind everyone that some of the statements on this conference call maybe considered forward looking statements where the meeting of section 27 Am Securities Act of 1933 as amended and section 20 want to each of the Securities Exchange Act of 934 as amended that concerns matters that involve risks and uncertainty.
He is that could cause actual results to differ materially from that was anticipated or projected in the forward looking statements words, such as expects anticipates intends plans aims targets believes seeks estimates optimistic potential goal suggest and similar expressions identify forward looking statements.
These forward looking statements relate to the effectiveness of the company's bodily fluid based diagnostic tests as well as the company's ability to develop and successfully commercialized such tests platforms for early detection of cancer and the diagnosis and monitoring of rheumatoid arthritis.
The company's actual results may differ materially from those indicated these forward looking statements due to numerous risks and uncertainties for instance, if we fail to develop and commercialize diagnostic products, we may be unable to execute our plan of operations. Other risks <unk> uncertainties include the duration in severity of the recent covert 19 outbreak and its impact on our.
Business financial condition or prospects, including eight to go a decline in the volume of procedures using our products potential delays and disruptions to global supply chain manufacturing activities logistics operations employees and contractors the business activities, our suppliers distributors customers and other business partners as well as the.
Next on worldwide economies financial markets, social institutions labor markets and health care systems failure by the market place to accept the company the parts of the company's spelman pipeline or any other diagnostic product company might develop the company will face fierce competition and the company's intended products may become suites do the highly competitive nature of the die.
Nostix market and its rapid technological change.
Inability to maintain our listing with a nice American and ability to maintain effective internal control over financial reporting the outcome of any pending litigation and other risks identified in the company's most recent annual report on form 10-K, and quarterly reports on form 10-Q, as well as other documents with the company filed with the Securities and change in Exchange Commission.
These statements are based on current expectations estimates and projections about the company's business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks uncertainties and assumptions that are difficult to predict forward looking statements are made as the data This conference call at except as required.
I Love the company does not undertake no obligation to update its forward looking statements to reflect future events or circumstances.
Finally in light of Cobot 19, the longer term impact on our business is less clear at this time, notably we will need to continue to assess disruptions. It's also discussing guidelines and restrictions on travel or our ability to develop our product pipeline potential closures of certain facilities and the general economic impacts of this widespread public health crisis. In addition.
And the measures taken by local state and federal governments, the United States actions taken to protect employees and the impact of the pandemic on various business activities in the second stage could adversely affect our financial condition results of operations and cash flows. We are conducting today's earnings call with participant in different locations given the covert 19 pandemic. So.
Yes, you to please bear with us if there any technical issues, although I should mention that both Michael myself or here in Ohio.
Business updates, okay, I want to start my comments by commending and complimenting all of our front line first responders square out in the field everyday fighting this devastating virus without them the situation would be much worse than it is they are the real heroes out there and we should join the with the rest of the new Yorkers, who everyday at seven P.M. stop and sure them on across the state.
Hi, This is something we should be doing across the country.
I want to acknowledge the team into video that has continued throughout this turmoil to keep the business running and keep our trials intact I want to especially thank my entire clinical crew, especially Bonnie. Unlike well then working around the clock everyday to make sure that we keep the trials running smoothly and keep recruiting new patients and to Dr., Ralph who has been staring at him.
Images literally 24 hours a day for the past several weeks. Thank you for all that you've done and continue to do answer the rest of the team I'm immensely proud of every one of you every day.
Today's comments I'm going to focus on two things first the progress of the already trials and second on the announcement this past Monday concerning our European partnership.
I'm very pleased with the progress of the company has been making on many fronts. Many things have changed in our world. Since we last spoke with you just two months ago back then we were wrapping up arms, one or two but still have more patients needed to reach critical mass for a potential interim analysis I am pleased to confirm that we continue to enroll patients throughout the.
Current teen and have enough for the interim look and we remain confident overlap full enrollment of the third arm of NAV 331 very soon.
Right now all reviewers are hard at work going through the M&A images generated thus far and as Dr. Rosen will detail. We should have these interim results shortly.
Our partnering front, we have a lot to discuss.
Having daily calls with our potential partners, we feel confident we have some positive development imminently, but as I have said repeatedly we're proceeding cautiously and carefully better to take longer than to make another bad deal and it's on this last point, but I want to spend some time.
As many of you know Europe has not met our expectations the contract with Norgine predates current management and I think that after our announcement Monday there was some confusion in the market as to how important this news was.
I want to discuss a few things first off this was an evergreen contract that did not have a termination date.
It also locked up all of our future product development and commercialization opportunities.
Secondly, as a company nobody has been very disappointed in the progress of sales in Europe, and understand that with a new partner or even our own lymphoseek in Europe will be a great success.
The termination of this contract took years in the making and it unlocks tremendous potential spring new deal with more upfront money and greater economic share.
Also as a product and it's already approved in Europe and the other territories, we feel that it makes a very compelling offering to multiple potential partners that already have experience with a product in Europe and that's something I also want to focus on currently while Norgine has the main distributor of the product in Europe. They do use some outside.
Third party companies to sell in certain key markets. Those two key markets, which are actually doing better than the other markets in Europe are very large imaging and diagnostic focused companies that we hope to have discussions with in the near future.
I am confident that this region will finally turn from disappointment to a meaningful contributor by the end of the year I also want to note that during the transition period and the video will be receiving the lions share of the economics, albeit from a very low base.
This announcement should be taken as a tremendous positive because in the write downs lymphoseek will be successful in Europe as it has been here in the United States.
And with that I'd like to turn call over to Dr. rosell for more details on our development front Mike.
Thank you jet and Hello, everyone as always I'm happy to participate in today's call and provide you with updates from the clinical side.
So I'll begin with the progress on our currently running phase Twob trial in all right well external collaborations have slowed in many areas due to the for on a virus crisis. We have continued to make progress on the already trial with several of our sites still recruiting and just this week, we opened up you CSF as another major academic site for Rick.
Segment, and they are optimistic that they will have patience ready to enroll.
In the very.
Short term.
You might recall from our last update that we have completed enrollment in both arms, one and two of this trial and are more than halfway through enrollment in arms three well there's been a slowdown in recruitment due to the krona virus our projections remain that this trial will complete this year schedule.
As a reminder, this is a three arm trial in arms, one and two we are evaluating the repeatability reproducibility and stability of our till Manocept imaging read out in both healthy subjects and in patients with active IRA and in the third arm. We are mirroring our upcoming phase three study in order to enable us to obtain data to help validate our power.
Calculations as announced previously the interim results on the first two arms were very positive demonstrating low variability of imaging both within day. It overtime. Those data demonstrated that technetium 99, Mtell manocept can provide robust quantitative imaging in healthy controls and in patients with active already and that.
This imaging a stable reproducible and can define joints within without already involved inflammation. This is fundamentally important to advancing our technology into a successful product in our it.
The next milestone is the interim look at the arm Threed data.
This is what we are currently immersed in our plan was to wait until about half of the arm three subjects had their second imaging event at five weeks post initiation of anti TNF Alpha therapy.
We have the data in hand, and have spent the last six or so weeks doing image and data analysis literally seven days a week day and night. The mountain data is large and this is an enormous undertaking but this is absolutely critical to our next steps and so we're spending essentially all of our time and far into overtime working on this I don't want over promise.
But we expect a preliminary results on these data that we can discuss publicly very very soon.
I'd be happy to explain in more detail what we're doing in terms of the analysis. If you would like me to do so during the Q in a period.
In parallel and then follow on service, we will be preparing a fleshed out package of all of our interim analysis data from all three arms of the trial to take to the FDA in order to be sure. We're fully aligned and have their nod for initiation of the phase three.
We will continue to enroll into arms three of the current trial and are planning for the start of the phase Twob comparative study of our imaging readout two pathology from the joints a patients with all right as well as the phase three we're well positioned for the phase three since most of the sites that are currently recruiting into the ongoing study will be rolled right into that trial.
Oil and so the logistics and strategies for recruitment are already being established.
With some slowdowns of the review cycle of the trial protocol due to the Corona virus. It looks like initiation of that comparative imaging to pathology phase Twob study I just mentioned can happen in the upcoming quarter that study will primarily enroll subjects in the UK, where our principal investigator who is the world's leading position in snowmobile tissue.
Biopsy of patients with our a is located and where there is a network of academic centers that also have specialists in this domain.
We will have at least one site in the U.S. as well recall that that trial is not required for FDA approval in the initial indications that already that we're going for.
We believe it is critical in order to achieve qualification of CD to a six of the biomarker for rheumatoid arthritis, as well as to engage with possible pharma partners for its use in trials of their new are a therapeutics. Our plan at this time for the phase three is to be ready to begin following the meeting I mentioned before with the FDA and that first patient person.
Visit will happen later this year.
You might have also seen that we recently announced the signing of a letter of intent with World class World care clinical to partner on the are a clinical imaging work flow and commercialization. This is no small point, what we have as a commitment from the world's leading independent contract research organization dedicated to imaging in clinical trials.
Additional imaging and large scale data management experience that they want to serve as the central reading lab for to Manocept imaging in our a once it is assuming FDA approval commercialized.
These folks are the real deal and they have the experience in infrastructure needed to be the central imaging lab for both the next two clinical trials as well as the commercialized product we have multiple imaging companies buying for this opportunity and we've added them all very carefully we came to a unanimous decision internally that world care was.
Right partner to go with based on their depth and breadth of experience capabilities and true interest in alignment with what we're trying to do with this product in terms of the imaging read out and workflow.
So in other indications updated you previously that we have completed patient enrollment in imaging of all subjects in our NIH funded study in cap as these sarcoma as outlined in that studies title. In this trial, we are seeking to evaluate the safety of escalating doses up to manocept by IB injection and perform a comparison to subcutaneous injection.
In HIV patients diagnosed with cap disease sarcoma might recall that the capture the sarcoma cells themselves Express the CD tour six receptor that our technology targets and so from both the diagnostic imaging perspective, as well as a possible therapeutics perspective, it makes sense to pursue it as an indication as well as of the continued impacted.
I was on HIV infected people both in the U.S. and in particular throughout Africa.
So no safety signal was detected and we completed a comparison of the Subcu injection route to IB injection in the subjects. The new here today is that we have recently received complete biopsy results in the final data analysis is ongoing qualitatively. What we have seen is localization of Ks lesions and visualization of the Lynn.
Biotics and following a full analysis and wrap up we hope to open up discussion with FDA about path to a supplemental end da and K S.
On the cardiovascular disease front work is continuing on the atherosclerotic plaque imaging study at MGH in Boston.
And we'll begin again shortly on our NIH funded preclinical study at the you a b University of Alabama, Birmingham that study was slowed because of the Corona by wireless locked down it you a b.
Using funding from our funding from our NH Therapeutics Grant you remember that we have made significant steps towards synthesizing a robust reproducible and scalable therapeutic construct that can then be tested in human studies. We also continue to make significant strides into producing the next generation of our molecule that we think will provide for improvement in.
Certain diagnostic and therapeutic applications. This work has continued over the last quarter.
In this last quarter. We also converted another provisional patent in this case, a therapeutic one two and a one application we continue to expect to file at least one more new provisional patent application. This year on improvements in chemical synthesis and we also continue work on new therapeutic constructs with payloads.
Other than dexamethasone Doxil rubis in that you've heard about before.
Those are some of the highlights of the last quarter that we wanted to touch on for this update we remain largely focused on the are a pipeline specifically the interim analysis and moving towards discussion with the FDA, while we continue to support and push for progress on our other diagnostic and therapeutic indications.
As always I want to thank the team here for their tireless efforts to keep things moving and our network of clinical trial sites and academic research collaborators for all of their hard work I wanted to keep these remarks relatively brief today and largely focused on our eight please feel free to ask me any questions about these or other topics I might not have mentioned.
Thank you know I will turn this over back to jet. Thanks, Mike So now let's move onto the financial update Erica.
Thank you did.
Oh, just wanted to start off by reminding everyone that our consolidated balance sheet statements of operations and statements of stockholders' equity have been restated as required for all periods presented to reflect the April 2019 reverse stock split as if it had have had occurred on January 1st 2018.
Consolidated statements of cash flows were not impacted by the reverse stock split.
For the first quarter of 2020 total revenues were $156000 compared to $42000 in the same period of 2019. The increase is primarily due to an increase in grant revenue related to small business innovation research grants from the NIH. According Manocept development.
Research and development expenses for the first quarter of 2020 were $999000.
Fair to $741000 in the same period of 2019 <unk>.
The increase is primarily due to net increases in drug project expenses, including Manocept diagnostic <unk> development costs offset by decreased Manocept therapeutic development cost.
Selling general and administrative expenses for the first quarter of 2020 were 1.8 million compared to 1.7 million in the same period of 2019.
Did that increase was primarily related to increased legal and professional services compensation and taxes and was offset by decrease depreciation insurance travel and Investor Relations.
The video net loss attributable to common stockholders for the first quarter 2020 was 2.7 million or 13 cents per share compared to a net loss of 2.4 million or 24 cents per share for the same period in 2019.
And finally Navidea ended the first quarter of 2020 with $601000 in cash and cash equivalents.
I heard of videos recent filings with the FCC the company executed funding transactions totaling $7.6 million in proceeds during the first quarter of 2020 <unk>.
The company's quarter, ending cash balance reflects the receipt of $850000 of the funding through March 31st an additional 1.7 million has been received during the second quarter to date with the remainder of the financing funds expected to continue to come in.
On an ongoing basis.
With that I'll turn the call back to Jed.
Thank you Erica and I wanted to thank everybody for joining us here Theres a lot of great promise and what we're trying to do here and I think that just once again I just want to stress.
And no small measure how big of a deal.
Announcement was on Monday, I think one of the things and we actually had an incoming shareholder question a week ago odd discussing both the China and the India agreement. So we have in place for instance, India is ready to launch.
But we've been waiting to get some very important paperwork that had to come through Europe, a that it's something that now that we've signed this agreement that paper work is going to be able to come through and we anticipate a that India should have all the correct paperwork and we should be able to start selling the product in India also by the end of year. So we are very.
Excited about that and with that I'd really I'd like to turn over to Daryl who would open up for Q1 eight please.
Thanks, so much of that saw will be conducting a question and answer session you.
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One moment, please what we pull for your questions.
Our first questions come from the line of Jason Mccarthy of Maxim Group. Please proceed with your question.
Hey, guys. Mike look you know it's on for Jason. Thanks for taking my question Congrats on the progress this quarter.
Thank you though.
Regarding the phase two other peak to read out that's coming up I like to see kind of.
Prime or expectations for the readout and give us a bit more color on really what you expect from that we should be looking for and what those results could mean versus the data we saw from arms one too.
Sure. So this is Mike Rosell I'll take that question first and Jed can chime in if he if he chooses [noise]. Thanks for the question good ones. So the.
The first two arms remember our the as I just mentioned repeatability reproducibility stability off from those we've been able to get a first pass first pass guests at the what is a healthy joint quantitatively versus a joint the subject with active are a.
Which is fundamental information from this interim analysis of the phase of the arm three study on three of the trial that mirrors. The phase three what we're going to be getting is an idea of the magnitude of change that we might expect to see if the anti TNF therapy is working so were for this arm three.
What we're doing is we're taking subjects, who are ready to be switched to a new therapy, right where imaging them before they have switched we're also doing clinical assessments at that time point. We then they then start their drug we call them back five weeks later and do another imaging session and clinical assessment.
And then we do the same at 12 weeks and 24 weeks for this interim look we're going to be or taking about 14 subject to a bad their baseline assessment, that's imaging and clinical as well as their five week and then we have about half that number who've gone out to 12 weeks and so what we're going to do isn't that first batch of fee.
14, 11 idea of.
What if has their imaging read out changed and how much has it changed in that time period from when they before they started the new drug till when they started the to draw the new drug in bid on it for five weeks. So this will give us an idea of dynamic range, we might expect to see in a larger study of our imaging read out in patients are undergoing.
This new therapy right in the our hypothesis is that if we if we see a reduction in their signal output that should map to the patients getting better clinically as assessed at 12 weeks and 24 weeks and if the output remains the same or gets worse than that would likely mapped to the drug not.
Really being working so we're going to get an idea would that imaging scan at the baseline to the five weeks of how much can we expect the signal to change and Thats fundamentally important to our power calculations for the sample size that we need for the phase three it also gives us information about how much of variability is too much.
The variability.
In the imaging read out itself right. So that goes back to that first interim analysis to healthy subjects and the and the subjects and arm to who have active already so from that we've got an idea of the of the repeatability of the imaging itself. So we know how how variable. It is right. So what's the fuzzy missing the imaging read out and it turns out.
It's really small which is good so our ruler is very finally, you know granulated is what that amounts to basically so we can detect small changes. So now we're going to know what this change is look like if any in patients who have their drug.
And finally, the roughly half those subjects will have data from the 12 week time point. So at the 12, we telling point is when you expect clinically that the drug will with the very noisy and nebulous clinical assessments that rheumatologist use currently to assess if the drug is working or not and that's why we're so far.
Mentally important to the rheumatologist practice right because we have something that is not nebulous, a noisy or at least hypothetically in so far it seems to be holding up trued are hard policies. So right now they have these very noisy clinical assessments they need to wait for three to six months before they can determine if a drug is working and about half the time that drug.
I won't be working on the subject with already the patient and physician won't know and the patient won't really know either that it is or isn't working until that time and so they just go on and about their lives and Meanwhile, their disease might be getting worse and co morbidities are stacking up we're hoping to give them in early read out at that five.
We period of if the drug is working or not right. So we're going to have about half of the subjects. In this interim look a will have had their 12 week assessment. So we're going to start to get an idea of is our change from baseline to five week to read out mapping to the clinical assessment at 12 weeks right. So we're going to get to know.
Number of important information points here, what is the magnitude of change we can expect to see with our read out and how does it matter. How does that early indicator that we expect to have baseline to five weeks, how does that map to the clinical assessment at 12 weeks. So these are very important things. These are the this is the nuts and bolts of what the phase three will consume.
First of and this will be our first look at those kinds of data now remember this will be preliminary it's an interim analysis, it's a relatively small sample size, but if these trends that trend in the directions that that we hope they do a this will be very important because it'll tell us.
That were on the right track right. The data will support our hypotheses as well is the plan that we've already discussed with the FDA. Then the next step will be then to bundle all those together and then prepare for discussion with the FDA and say you know here on the data from this trial do you agree with everything that we've.
So when you win that we can now step into the into the phase three so I'll leave it at that for now Jed wants to chime in maybe that's good or yeah, essentially to to really put that all down into one word.
We're looking at day zero, they get their medicine weak five are they getting better they not getting better and really that's the key here.
We have those patients that were evaluating we're hoping to see that we can detect a change if the changes good they cannot continue on the medicine all looks great. If there is no change or its getting worse than the medicines not working as we've said in our presentations. It's important these drugs haven't very one they're very very expensive and to have very serious.
Consequences potentially as we all know what kogut because it it significantly decreases their ability to fight off infections. So the faster we can detect whether or not it's working the better it is and that's really the Thrace, that's what we're looking for.
Alright, thank you very much mm.
Let's see shifting gears bit towards limbo see you could provide a bit more detail on the European market opportunity there because it seems like the previous commercial rollout in Europe may or May have led investors to you know undervalue. The words that program. So, let's see if you'd give us a bit of an overview of that.
Excellent Michael it so it's a great question because.
And you know Norgine did a very yeoman like effort in there in their selling of the product, but one of the issues that we had is as as a company that is not focused on our diagnostics radiopharmaceuticals or really any of the related products that would relate to lymphoseek.
We always felt and we're actually in the process of doing an independent third party valuation, we always felt that the market in Europe should be at least as big as the U.S. The U.S. is trending very well I want to applaud Cardinal they're doing a fantastic job over the last.
Couple of years to really push the growth in the product. So we feel that Theres No reason why Europe should not be a 50 to 100 million dollar market for this product if not more so.
There are green shoots and there are few things that norgine did well bye.
In particular sub contracting to do very good companies in certain key market, we've seen good uptake.
And in melanoma, we've seen good uptake in breast in certain areas and we're starting to see some good uptake in head and neck more importantly, we're actually seeing some of the new tenders that are coming in that have good stable pricing one of the initial problems was they definitely overshot on the pricing.
And in a price sensitive market that Europe is they try to sell the product for more well for close to triple the price of always going for in the U.S. What we're looking at here is we're seeing something very very important we're seeing that the price that we're getting in certain key markets is holding.
Very very strong and that's important so while we're not getting 1500 euros a dose we are seeing markets that are getting very strong prices inline with what we're seeing in Europe and in the U.S. and we're not seeing pushback on the reimbursement more importantly, and this is to nor genes credit we actually just got some new tenders in some very.
Price sensitive areas that are very profitable and they're good there I wouldn't say that they're more than the U.S., but they're in line with the U.S. and we do expect that once we re partner with somebody focused on Radiopharmaceuticals, we're going to accomplish two things one get a very nice upfront because we're now packaging a product that is.
Already approved versus something that is pending approval and we're going to go with somebody that specializes in the area for this product. So we feel that Theres no reason why the European market in a few years shouldn't be a 50 million dollar market or more and we will get nice economics on that I mean that is the other downside.
To the agreement is the economics, we're just not there for us and they never were going to be there and that was a problem and the contract was a permanent contract I think there with some rumors out there that the contract was coming to an end or there was some disagreements there were no disagreements and the contract was certainly not coming to an end and so this took.
A very very calculated very measured very long term approach to moving on and in the end. We feel that this is a great opportunity to capture revenues that we were never expected to get and have not been in our budgets and this is something we are going to be able to capture a within the next week within the next year or so.
Though because we have a six month transition period, the marketing authorizations can be transferred back to two or two on the video we expect that to happen with the next couple of months and then more importantly over the next six months the sort of the calculation flips instead of paying instead of receiving a small royalty will be paying out a small royalty to norgine and they'll come.
Continued to distribute the product until the transition period is completed.
Thank you and then.
So that's really to see how you would.
Hi, how are you prioritize.
Retires lymphoseek because it seems like.
There is a significant opportunity there, but the ari side of things, maybe the real opportunity as a bigger market. So I want to see would you prioritize a.
We deal to get this back in the market generating revenue get those upfront news that you will the R&D pipeline or are you planning more so to take take your timing really find the right partner for this as you've been doing with the already program where is it a little bit of both.
Excellent question.
I would say, it's a little bit of ball.
We are limited in some sort by what we can say, but the information that we gleaned from our former partner even over the last couple of weeks as as our transition team has been working with them.
We've learned some very key things in terms of how the market dynamics were that we didn't know we always saw that there were certain areas that we're doing better than others, but we really didn't get the real drill down into what was going on in the market because that was not required once again another deficiency of.
The contract, we really didn't get a very solid breakdown, what we did get now is we understand that there too.
Very large companies that are very focused in this area that are currently already subcontractors and our selling the product that doesn't necessarily mean that either one of them with partner with us and it doesn't mean that we're going to choose them, but we are going to take our time.
We're going to look for the right person what I would say is we're going to look for the right person to partner with and ER and I do expect that once this third party valuation that we're working on is completed within the next several weeks I do expect to move forward fairly quickly odd to get something done before the end of.
The transition period, so we're ready for a seamless transition now another key takeaway is remember the rest of the rights of our products were all locked up. So for instance, when we started partnership negotiations on our way, which have been going on for a very long time as everybody knows we couldn't talk about Europe, we couldn't talk about Australia, we can talk about newsy.
And because those were basically locked up as part of this agreement now we're able to do that so this really opens up so many amazing possibilities for us.
Now that we're not restricted.
Bye bye those up I just wanted to patients for the future. So we're going to take a measured approach, but I do hope that we have something finalized within the transition period.
Alright, Thank you very much incremental isn't the progress.
Thank you.
Our next question will come from a line of Joe Pelikan. Please proceed with your questions.
Thank you I, either one Jed and hi, Mike.
Hey, Joe.
This came out about left field the a European deal that's mainly what I wanted to ask the other gentleman asked most of those questions, but can you give any more light you like for instance, you referred where alluded to that we could see sales in Europe.
In line with what we're doing in the U.S., but we don't know what we're doing when in the U.S. The late in the last I knew we were doing I think around 30000 doses per year, but since we sold the program the product to what Cardinal we've got no updates I know that there was in that sale roughly 200.
$1 million or milestones I assumption is we won't get any those milestone payments, but can you give any enlightenment as to maybe how well lymphoseek is doing in the states and what is our baseline in Europe are we doing 5000 doses and thousand doses you can give a little what little more light on that we appreciate.
<unk>.
So Joe I mean, as part of the agreement that we have with Cardinal.
We can't we have the figures internally, but we're not allowed to disclose them. That's for Cardinal to do that what I would say is our where I previously thought that before 2026, we would not hit any of the milestones because they start at $100 million and annual.
Sales.
I actually think there's a chance that prior to 2026, we passed that first milestone I I'm very happy with the progress at Cardinal is making and they're really I think in my opinion getting getting traction I think that there is potential there I can't.
Discuss specifics, but what I would say is that in our initial overview of the of the market in Europe I do think we can get at some point in time to $50 million in sales I really am confident that because we've done work on it Norgine did work on it when they first started it I do think obviously the price.
Looking at launch was an issue, but they've really found they're getting to a good.
Reimbursement rate in Europe, and I think that's something that we can we can come to.
We can't give also that the other thing on I can't disclose what Norgine is doing in terms of dosages, what I would say is starting this next quarter, so well and we have a stub period will have part of May and June where we'll we'll be recognizing the sales minus a royalty percentage.
In some cost of goods sold so I think wait for the next quarter. The third quarter will be a better reflection, but of course remember it is affected by Corona. So there's just there's there are fewer procedures being done.
We are seeing in some of the southern European Southern European Nations, we are seeing good traction.
So for instance, Spain, Italy, those are all growing nicely, but they're not they're not big markets, yet we anticipate that.
With development and with a more hands on approach, especially a hopefully targeting discussions with the individuals that are involved in selling in those regions that we can turn it around fairly quickly as part of the deal where six during.
The next the next batch of product. So we will have plenty of well plenty of vials to sell for buying a approximately somewhere between nine and 12000 vial and that will give us plenty of product to sell not just in Europe, but also in India as well as well as Australia, New Zealand, So we think that.
While it's not going to happen overnight. We're finally in control of our own destiny, and that's what I really have to stress.
When I started this company in April of 16, and I've really I don't want to dwell in the past I. The past is the past and that is what it is but there were certain things that were out of our control. This was one of those things that was majorly out of control and as you know we've spoken quite a bit.
This was something that I've tried every angle to figure out how we could either improve Europe.
Or get it back the contract was very very airtight and I think that.
It was a little opening.
We we were able to work with that opening and we were able to reach a a common agreement with norgine and I. Thank them for being a so agreeable onto the to the solution that we put together and I'm looking forward to working with them on this transition period, and we have a good transition team in place.
But I think that now that we're in control of our own destiny, we will take a measured approach and we will get it done and I know on the back of your mind, you're thinking about also the partnership in the U.S.
Having said on last call we've had opportunities to sign a deal on all Ray just like we have opportunities to sell lymphoseek in Europe, but I really want to try as hard as we possibly can to get the right deal with good economics, something that we're not going to look back on and say what the heck happened here when I came.
In April of 16, I look back at some of the contracts and I said HM what happened why why do we have this contract surely there must have been an explanation at that time and as you know the company has gone in and out of financial distress. We're in a much better position now we have a solid backer and Mr., Scott and a couple of other key shareholders, who have shown their willingness to can.
Thank you to fund us whether or not we have a partnership there are also very encouraging about not to foresee deal and that is something that that we take very seriously but of course I want to guard the shareholders as much as possible and make sure that we don't do anything silly and we don't do anything hasty we're not looking for.
Quick press releases, where we're looking for our good press releases.
Good announcements and I I understand that patients the patients of our shareholders and how long it's taken but we are playing the long game. This European exit the exited as contract was the result of a very long and very measured approach and that's why as we transition to whomever our new ERP.
Partner as I hope that everybody will be happy with the new deal as well as the economics of the new deal, which which I expect we'll be better [laughter]. They it's easy it's a low BARDA to pass, but I expect that they will be better than than what we had in the past not to mention I should also there's several million dollars upfront as well.
Yeah, great. So it should be a material event for the company just with regards to the the deal on our Ray, which you said is eminent and I know, it's it's been eminent for awhile and I understand there's a lot that goes into these deals.
Before I review was soon and there was in the near future. It's now eminent I'm not taking the.
Easy sort of the fed president and look at things, but the language has specifically changed so eminent is closer than soon or near future. Okay. Because I'm, a new Yorker, I know you're from Ohio, now, but we look at imminent probably different than people from Ohio that just a little joke.
Just a question on the on the potential deal based on what you said it sounds like there's more than one discussion going on and then two to just give like Oh very wide screen or what should be expected. My guess is we're not looking that hit a home run on the dollars up front, but were.
In for a partner that can fund the are a through commercialization with no video doing all the work and maintaining a bigger ownership of the potential approved product am I correct.
What we're looking for is a deal that combines a full funding of the of the price of the program.
As well as somebody who would assume the cost of getting the manufacturing up and running which is no small thing that's a several million dollars commitment as well as the marketing as well as a commitment to a minimum spend on marketing and commercialization, which as you well know because of the.
The Lymphoseek rollout I buy we'll just say the Lymphoseek rollout is no small thing I mean, that's probably tens of millions of dollars. So these are very very detailed things that have you have gone in on back and forth as we're having with the multiple parties and.
We're at the stage, where we are in those negotiation.
Spend on commercialization spend on marketing the split of the economics up given the amount of spend that will be committed or you know there will be a good economics split.
But more importantly, I want to make it clear that when we get a deal done on it is designed so that we're not gonna have to go back to the shareholders and say Oh, you know the launch is eminent well I need $30 million to get it launched that's that's not going to happen what I'm, hoping for its whomever we partner with and this is.
She has a negotiation they understand the market they have the financial muscle and the wherewithal to expand but more importantly.
We are going to go as big and as as wide with our distribution as possible. So unlike lymphoseek, we would expect that any deal would not exclude participants would cover 100% in the market and not 70% of the market.
And that's what's key we want to make sure that every rheumatologist has access to this project to this product I've used the words game changer, I know they sort of been bandied about our message boards and whatnot, but we really think and the interim analysis in the next several weeks will show that I hope I really think that this could be a game changer and in order for beauty game.
Andrew It's got to be a few things one that's got to be priced well, it's got to be distributed well by somebody who has the muscle to do it and more importantly, you've gotta cast a wide net the way we're going to run the phase three we're learning from the past so the way we're going to run the phase three is by opening as many centers. This possible I can't give specific numbers.
Because we don't want to give that away, but opening as many centers as possible in key areas you build up a base right away. So those centers that are doing the diagnostic right now are in the trials those are all going to be our very first customers their patients are going to be already getting it. So instantly for instance, let's say and this isn't the numbers.
With phase three we have 100 patients in the phase three we have.
The 100, or so 107 patients in the phase to be those are customers. Those are people as you know on like Lymphoseek. They get their day zero and now they are a lifetime customer of ours and it grows and grows from there I don't want to give an example of a.
Advacare pyramid scheme, but the more customers you have in the more you know the people that are involved in it and it grows and grows and grows and that's where we feel that we're going to have a built in.
Building to distribute right off of that but more importantly, whomever we partner with needs to show US a defined commercial plan that covers the entire country, because we don't want to Miss anybody we want everybody to have access to this product and we want everybody to be using this product within the first few years of watch.
Okay. That's great. Thank you did.
Thank you Joe.
Next question.
Our next questions come from align to Mike ratio. Please proceed with your question.
Yes, good day.
Yes, Mike Erica.
Everybody, there as well and healthy in states like during this period.
Thank you thank you Mike.
Yeah. My first question, let me.
On the Lymphoseek for one moment, you mentioned, the India I thought is Japan, and Australia close to approving it also.
So Japan, we have not.
We have not license the product in Japan, yet I mean, I think thats something that we are working on.
And that's them that will happen. So Japan is further off because Japan similar to China, they're going to have to do fall off Fullscale trials with India, we sent them the samples they sent them. The CPI, there's back and forth, we feel that they're not going to need to have the fullscale trials.
Thats the indication that we've gotten they do need a they do need some documents that unfortunately, Bob just because of.
Some of the issues with Europe, we havent been able to provide those documents yet, but we feel those documents will be provided within the next week or so.
And that should.
Allow for a rollout in India, hopefully by the end of year as you know India is currently in the scale the full locked down so.
I couldn't say for sure I have to caveat that with what would happen with Covance and how soon the they unlock things over there.
And Australia.
I'm Australia.
Australia, we're moving toward saw we're moving towards we have the approval I believe and so whomever.
We partner with the goal is to start selling at their eminently, but it's not once again, Australia, I don't think going to be a huge market but.
I couldn't be surprised I didn't think Spain would be a very big market, but so far it's been a it's been nice and profitable.
Small, but growing nicely.
Okay, staying with LSW and the European the reversion to.
To me the biggest benefit to that and the upfront revenue is a great addition, but I thought freeing up our eight and the other diseases.
Or you Tomorrow, you want to dress was even a bigger value driver, yes, you're correct that was that was the big change here I mean remember.
Not to go through the path, but at one point in time, we didnt have the right. We didn't even have the rights to already in the U.S. that we step one on one of the first things I did was to get those rights back.
And it was important to us because.
We did realize for better or worse that as long as this contract was in place. It was can be very difficult for us to license out our a CV or really any other indications outside of the outside the U.S. in the European Union, Australia, New Zealand because of this contract.
Now let me go to the financials for one quick second and going through the spend that you had in the first quarter. Your spend was about 2.8 million.
Looks like you have roughly another 6.8 million to come in.
The.
The deals that you did you said you got 1.7 in the bank using that 2.8 million.
Fair to say.
Even with the trial.
In the UK and the continued growth.
There are three and the arm and and the phase three on all right, but you should be able to get through into September timeframe.
Oh, Yeah cash that you had.
Yeah for sure I mean, I think whether or not we have a partnership we should easily be able to get through that I do think like I said things are moving rapidly on the other front, which would obviously have to have more money coming in but no I believe that.
That we're going to have enough money and also.
The way the 4.2 million financing was structured is actually there it's structured in a very nice way, where there's a trigger mechanism, where we will get to keep some of the upside on the C. RG, so thats more money that could potentially come into us.
It's.
Actually a decent amount of money that could potentially come into us. So it does give us a bunch of flexibility what I would say.
Yeah, we are up we are funded.
Well into hopefully getting everything started.
But I anticipate some events happening sooner rather than later that are going to bring more funding into the company.
Now on the the remaining money to come in you had 1.65 million shares out there from the original S. Three bed ever gets funded or is it still in the offering.
There is there's still some I.
I mean, obviously, we've been a little bit more flexible with.
Two of the parts of the financing to allow for some kogan related disruptions and so we're bringing the money as we sort of need it we have that buffer and we've gotten our plan out where the money will come in.
As we need it so there won't be any gaps, but I'm not forcing any issue is just to allow for the.
You know the realities of what's going on in the in the market with Covance.
Okay on the 4.2 on the preferred that's an equity recognition isn't it.
It's a so it's a preferred stock that is.
There are terms and where we can convert.
At a market at a market price, if we want to or.
We will use the we would use a portion of the proceeds from the Crj litigation. So it's it's basically backstopped.
By the Crj litigation and it's at our at that are discretion, how we how we said it how we set it up so we think we have oh, we have enough flexibility depending on where we are weekend. We can redeem we can redeem the preferred stocks for a slight premium so the shares were issued at.
Dot 10, we can redeem them at 11, the preferred shares and we can do that in either stock or cash from.
From Crj from the Crj decision. We can also if somebody else hypothetically speaking if an outside investor came in and shows and chose to buy those.
Thank you to redeem it that way as well and just sort of transfer the ownership of the preferred shares. It allows for a lot of flexibility and it also allows for us to can to decide flexibly, whether we use the proceeds from Sergey or we converted into stock and I think a lot of things will be dependent on where the price as what the liquidity is like in the market.
It's just a very good.
It's a favor a very favorable instrument for the company because it allows for flexibility and Moreover, it limits.
In limits, our overall exposure.
The way you structured it appears to be equity on the balance sheet is that correct or fair. Yes. It is it is equity on the balance he is not that because they cannot claim cash unless it's available from the from the appeal.
Okay I got another second I'd like to go a little bit into some of the scientific stuff micro you yeah.
Like you said originally you had a little more detailed rami, our threed and what you are going through in that assessment, you talked a little bit you and you had talked about the you know the first five weeks and a 12 week.
How far do you have yet you have to get to pass the 12 or 14 weeks before you can go to the FDA with the results and the P. three because I noticed that your timetable in your presentation that you released today same his presentation that you had before where you've got some time.
The middle of this I think the third quarter going to the FDA say on the P. three that's still fair and how far do you have to get arm three to actually go there.
That's fair. So this is Mike Rosebel, Hey, Mike how are you saw good question. So we.
So how do is.
As a train sets a more interesting enough itself. There is no ft. A requirement here of course, it's really up to us what we think is.
The best package that we can bring to the FDA with all of the considerations, we have as a as an ongoing from in mind as well. So we want to bring them. The best data, we can as rapidly as possible, but it needs to be robust data it needs to make the case to ourselves to us into the FDA well that we can go forward into the phase three.
So.
The way we've planned it is and we plan at this way from the beginning is we for the arms three in the on three.
Of the currently running phase to be as the portion again that exactly mirrors. The phase three so it's a mini phase three what we what we feel we need to them to go to the FDA is.
The idea of the magnitude of change so what do you see a dynamic range of our imaging read out from baseline to five weeks.
A bunch of subjects, who are now put on a new drug right. So we want to know.
What does that look like if they're getting better is our read out predicting this.
Earlier than the clinical assessments and and how how big are those bans right. So how much change are we seeing right. So we know our it our mode. Our method is very sensitive to change that's part of that first interim analysis now we're going to see what is the change in the patients themselves. When they are put on a new drugs. So we need at least it.
A minimum a significant number and we think 15 14 15 is a significant number of subjects, who had the baseline scan gone on the drug and come back a month later the five weeks scant right. We think it will be very importantly, additive to that to bring a number of those subjects and it's going to be about half of that number maybe two thirds by the.
Time, we go to the FDA.
Well it who will have had their 12 week follow up.
And the reason for that reason that that is important is as I mentioned earlier.
It's at 12 weeks, and then 24 weeks, where the clinical assessment start to be robust enough that the doctors can say is this drug working or not so remember we're looking at as part of this interim analysis not just the dynamic range. We can expect but this will give us if we wait to 12 weeks and have maybe eight to 10 subjects. We can then say.
Hey, and those eight to 10 subjects. How good are we have predicting the 12 week clinical assessment when the Doctor can start to make some clinical determinations his or her self right. So we think that will be important to have as well. So we want to bring a like I said may at least half of those subjects, those 14 or 15, we'd like them to be out to the 12.
Brief range. It turns out we have that number already so but as you as you might imagine as you would expect the trial is ongoing patients are enrolled enrolled subjects are progressing through the trial by the time, we get in front of the FDA or even in the next couple of months when we send the FDA the package that we're going to ask them.
To comment on we're going to accumulate several more of those subjects will have add their 12 weeks scans. Some of them. We'll have there have out there 24 weeks scan. The six month scan all of that data will be additive to our fundamental information, which is what is the dynamic range. We can expect to see because that dynamic range, we modeled that.
And made some guesstimation some educated guesses for our design of the phase three in terms of the powering but this will also begin to tell US hey, if the thing working and remember is dead said nicely. We're looking at we're going for three main indications right and so the first one is Ken our imaging read out give doctors.
Reliable early indicator of if a drug is working or not because right. Now you wait three to six months, it's all trial and error if that drug Didnt work you go on another one that's also trial and error you May go another three to six months patients may go a year with the drugs that don't do anything. So we are and they are getting bad things are happening or their joint.
To their lives it all stacks up it accumulates cost of the health care system, It's all bad.
Hoping to have an early read out that doctors can rely on to say is this drug working or not so that's one main meat of our indications. We're also going for because we're doing all of these clinical assessments and we're having imaging done at all of the same time points. We feel we're going to have a robust imaging read out that can follow patients longitudinally.
So it's not just a one use case, where dr. says Oh. This readout says the drug is working go home.
The doctors the patients the health care providers and payers are going to want.
This to be these subjects to be followed up with scans every several months every not on a three to six month to say hey, it's still working our your your read out getting worse as it indicating things are status quo or think maybe even getting better. So that's the second indication. The third one is really cool so I'm going to.
Go over this quickly I've done it before but.
Those three sub types of already there are thought to be three sub types of our eight right to other three of those are heavily involved macrophages are imaging agent targets macrophages, and so does our therapeutic the third sub type does not have heavy macrophage involvement and so you might say will allow well that's a bad thing for you guys right because you know.
Our imaging the Mac phases in one whole subtype doesn't really have high involvement of macrophages, that's actually part of the most exciting opportunity here turns out that there's no way of determining currently if you as an already subject.
But what subtype you might have unless you do one of these invasive biopsies that are unreliable enough themselves and only done at several sites around the country and are not reimbursable. So without that the doctor is really in the dark, saying I'm going to give you some drug there's growing evidence that the sub type you have.
Is affected more or less positively by different classes of drugs. So we think that are scan is going to be able to tell the physician even at the baseline do you does the subject have that that very low level macrophage involved IRA or one of the other two when we might even be able to say.
Something all about which of the other two the subject cats, but in any event. If we can even just tell the doctor look it looks like you've got the sub type that as low level macrophage involvement. It turns out there was growing evidence that a certain class of drugs. The anti TNF Alpha is don't work well it all in those subjects, so even at that baseline scan.
The Doctor could say I'm going to rule out this whole class a drugs that you might spend the next year or two going through and I'm going to give you something else and so we can maybe get patients. The idea is to get subjects to the right drugs sooner than they do currently and may be significantly so sooner or not by that I mean, even a year sooner or maybe.
Even more so those are the indications the data we're going to take to the FDA will give us an idea of the order of the magnitude of change we can expect to see in the early read out the baseline to five weeks. We'll also be will have an idea by the way you might have gleam. This from what I just said the story I told as we look at the baseline scans themselves.
We're seeing some different.
I don't know if I can I wouldn't call them sub populations, yet, but we're seeing different groupings of the signal read out those groupings might matched to the subtype, which would be great. We're going to know that for sure based on two things one clinical outcome to that other phase Twob study that I mentioned so.
We're already seeing those.
That lining up with our hypotheses, which is great to the FDA will give an idea of the order of magnitude change and an early read out of our predictive ability to the 12 week clinical assessment. So we've got the data.
We think already in hand that we need to make our case to the FDA provided these data turned out to support our hypotheses I'm not going to reveal anything right. Now we're we're really in the word in the home stretch of analyzing those data and based on what you had said about definitions of eminent and soon I suppose I will change Mike.
My My statement too we will we will be announcing our.
Preliminary results imminently.
And our.
Are you.
Well.
Mike I would say last after the last conference call you could hear the excitement in your voice. When you were seeing are more than ours too I'm hearing some excitement and your voice of what you're seeing on our three.
Well I mean excitable person yeah [laughter].
[laughter], so I'll take that as a positive [laughter] very happy with the progress we and we expect that we expect that it will continue so things are really going well here.
As I said the office really happens gift to be we're we're moving forward thankfully.
And hopefully we're just continue the momentum.
Well, Mike Michael again, one comment I now know why jet directed me to some housing just very proximal to the office.
Expecting me to be will actually have moved in my Cod and I think Bonnie hasn't well to her office. So we and eight Ralph is somewhere in the enter Lance turning out to computer screen as we speak so anyway back back to you Mike sorry.
Anyway, that's good that you're closer nothing like Oh, you can't do that during this period is it's just you guys you got it wrong Hey.
Oh, Hey, serious point here.
One thing that I'm sure, you're you're emphasizing with your partners, but the market doesn't see this and I don't know if you ex if you communicate or will this ability to do the simple handheld.
Two d. type planners with it so it can be used remotely. So people don't have to get into congested areas to get this done we've talked about a couple of times ago, but I think the simplicity of British you're doing really has a lot of market value to it because particularly with with distancing and with people not wanting to.
Leave and get into congested areas. This has a lot of value that I just don't think the market is thing.
I think you're right and this is Mike Rosenthal, our Jed comment as well you are right and we do make that explanation and it's interesting actually so I come from and imaging background in big pharma and and we've seen this commonly folks in big pharma at first pass, especially the ones who spent their lives in the weeds of imaging will say Oh why don't you. Some you know the Threed respect yada Yada yada.
But instantly they see when we pointed out to them that the there's a broad much broader distribution base of two d. planar cameras and other systems of that ill and so I think the market opportunity is made much larger by focusing on that and indeed, it's also simpler logistically the scans are easier to acquire we've proven we.
I think that the robust than we will continue to do that with the to the plane or imaging systems that are out there and we found as I mentioned in one of the previous calls that even older generation cameras that might be and surprisingly in places in the U.S., but also in other parts of the world those cameras give us robust read outs as well so we.
Think boom immediately when this thing is commercialized.
Any place we can then be rolled out rapidly in the technology will not be an impediment to adoption as you. Just said so maybe just wants to add I I mean, I think that that's the key point I mean, we've been lucky with where our centers are and we've been lucky that.
We've been able to do that because it's not it is its simplicity of it and that's why we do think that with the right partner and the people who understand the benefit of.
Hello.
[laughter].
Hello.
Gentlemen, your line May have gone up you by accident.
Eric Other line, it's still lack therefore, we can't hear them.
Oh interesting.
Yeah, I can't give me there now we can hear it helps or what happened Oh now you can hear US yeah. There youre right. We were we were saying all these nasty things no. We weren't I was just gonna say that the partners partnership discussions we've had those those folks get it which is a good thing.
They understand the the the way we've thought about this.
Smartly I think that are that we can have this wide market adoption or rapidly and technology won't be an impediment. So.
Thats it.
Yes, but again I think I think with the current cobot situation. This is a great tool to be out there in the financial markets with the public markets. This is not just limited to a big Dr. off Big Medical Center, there's a lot of people tend to have that do you.
Yep.
Very good well. Thank you. Thank you so much Mike and I.
I mean without I think we're going to wrap up I just want to thank everybody for calling in.
I hope to be speaking with all of you guys again in the very near future.
Imminent.
Imminent.
Yes.
Thank you. So much. This does concludes Tonight's conference you may disconnect. Your lines at this time. Thank you for your participation have a great evening.