Q2 2020 Plus Therapeutics Inc Earnings Call

Quarter 2020 earnings results call at this time, all participants have been placed in listen only mode and the floor will be opened for your questions. Following the presentation.

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<unk> operating results and financial position.

All such statements are subject to risks and uncertainties, including the risks and uncertainties described under the risk factor section included in West Therapeutics annual reports on form 10-K, and quarterly reports on form 10-Q filed with the Securities and Exchange Commission from time to time well.

Therapeutics advises you to review these risk factors in considering such statements.

Plus therapeutics actions and no responsibility to update or revise any forward looking statements to reflect events trends or circumstances. After the date. They are made it is now my pleasure to turn the floor over to Dr., Marc Hedrick, plus therapeutics, President and Chief Executive Officer, Sir you may begin.

[music], Thank you Erica and good afternoon.

Eric said welcome to our Q2 fiscal year 2020 earnings call.

Name is Dr., Marc Hedrick, President and CEO plus therapeutics.

Joining me is our Chief Financial Officer, Mr., Andrew Sims.

Today I'm very pleased to report the results from second quarter about fiscal year 2020.

However, before I get to our Q2 update and results.

I would like to update you on the cobot 19 situation as it applies to plus.

First on behalf of all of US on the plus therapeutics team, we sincerely wish that you and your family's friends and colleagues are the best possible health in spirits as a pit pandemic continues to affect us all.

Well no way minimizing the wearable impact to the virus when the world is 2020.

Its present crisis point to the critical importance of our industry not only directly to the bulk of ourselves in our fellow man, but at the importance of our industry to the health of the economy as a whole.

During the pandemic pluses capital efficient it substantially virtual operating model continues to serve us well.

Our facilities are open and staff in a flexible manner to provide maximum ability to fully operate the company at 100% and help support our employees and their families.

We are following Texas Governor Abbott's lead and specifically the language from US on August eight proclamation. It says quote every one must do their part to slow the spread is covered 90 by wearing a mask practicing social distancing and washing hands frequently and thoroughly we will overcome this challenge by working together.

We agree.

Similar to my report last quarter, no significant supply chain interruptions have occurred and we currently expect no material impact on results for fiscal year 2020, which is December 31 2020.

No I would like to discuss in detail our drug development activities and specifically I'll focus my remarks on three key topics first progress on the clinical development of our lead drug Rennie amid a lipid films were already now currently being developed for recurrent Glioblastoma also called GB.

[music].

Second our report progress on bringing forth additional indications for our in L. products apart from recurrent GBM and finally, I will have an update and other important business matters.

The lead in license drug asset in a rare cancer focused portfolio is our Adele.

[noise], which has mentioned is currently being developed for recurrent GBM or brain cancer.

Recurrent glioblastoma is nearly a universally deadly cancer that affects about 13000 people per year in the U.S.

Essentially all primary tumors go on to recur after initial treatment.

There are currently few approved treatments in the recurrent setting that in aggregate provide only marginal survival benefit.

In contrast to emerging therapies for many other types of cancer types.

So we know about still must still a very bad problem.

As it stands today for Glioblastoma standard external beam radiation therapy or E. B R. T is still the most effective component of the standard multi modal therapeutic regime.

Multiple randomized studies show a five month improvement in survival with FBR t. radiation as compared to an additional only two and a half month with the addition of chemotherapy in three months were added specific tumor treating fields.

Now our team has a number of specific reasons why we are very high on the recently licensed our in L. platform for Glioblastoma.

It's got an impressive scientific pedigree in that first caught our attention.

Its development actually began about a decade ago by multi institutional consortium at the University of Texas Maze Cancer Center, you T. health, San Antonio and MD Anderson cancer centers.

Its its initial development. It has received funding from the now 6 billion dollar funding mechanism called the cancer Prevention and research Institute of Texas first to get off the ground and now its development is partially funded by the U.S. National Cancer Institute.

Now having successfully brought the technology in house to plus and with further Indepth scientific and clinical diligence, we continue to be more and more impressed by the number of unique aspects to the overall value proposition of arnelle, both for recurrent glioblastoma and other cancers potentially as well.

I'd like to highlight some of those for you on the call.

First in terms of pharmacokinetics Arnelle drug has a very long half life and low dispersion or drug distribution in the brain, meaning it stays around for a long time, where are you put it.

Maximizing the time on tumor of the radiation and therefore in turn maximizing the cancer, killing effects.

In terms of the isotope we use the radiation itself is delivered via unique they are agnostic radio isotope well therapeutic and diagnostic cold rainy him.

Which is made in the nuclear reactor and admits both the cancer.

Killing beta particle or high energy Elektron, and gamma energy useful for conventional imaging.

In terms of manufacturing our proprietary life with some construct and loading technology containing be immediately allows reproducible and scalable loading of high dose. It just like radioactive millennium into the life of films.

Now the therapy is highly targeted to the tumor and that's achieved by precision imaging.

Pre operative in Silico surgical planning.

And the best machine rated stereotactic delivery technology.

The safety margins are thought to be high as our another appears to be selective to cancer cells bearing normal brain tissues.

Prognostic Lee the gamma emission feature of the Ardelle may provide significant prognostic accuracy by allowing for real time imaging and dosimetry calculation and we're seeing that real time in our cohort five patients.

In terms of dosing.

We could potentially deliver 25 to 30 times as high a radiation dose as the next best therapy, namely external beam radiation.

And then finally and importantly patient convenience.

Ardelyx administered in a single treatment and short hospital stay versus E. B R. T. That's fractionated may require 20 or more treatments visits for a full therapeutic course.

There are other aspects of the value proposition, but you get the idea.

So last quarter, we listed several important milestones for the program for the remainder of 2020, Let me briefly review our progress to date.

Most critical for US was optimization of the regulatory plan completion of the clinical trial, and bringing the manufacturing and supply chains forward to industry standards in anticipation of next steps in clinical development.

We're making good progress on all three.

First.

We have transfer the idea to plus and we are now the registered trial sponsor with the FDA.

We completed the quality assurance audit and assume primary responsibility for the safe conduct of the trial.

We're also in the process of seeking orphan designations and fast track alternatives, including potentially breakthrough designation based on the ultimate data obtained in the trial.

Second since closing on the transaction, we have name the trial quote respect unquote, our E. S. PCT lots in a clinical trial web site.

Related to that that trial name.

We've added a second site at U.T. southwestern in Dallas and completed enrollment of cohort five.

Assuming the clinical data continues to meet the safety threshold, we should be ready to commence dosing cohort three in late August as stipulated by the present protocol pending DS it'd be review.

We also hope to have a third side onboard MD Anderson in Houston later in 2020, the further support enrollment.

Finally, we have transfer the phase one responsibility for manufacturing of Arnelle.

To complete the current trial to plus and are actively working on our plan for scale up the GMP quality standards and to provide for late stage clinical batch sizes.

Now, let me update you on the respect safety and feasibility trial.

As I referred to previously the fifth dose escalation cohort is now complete at 15 patients have been treated thus far with our now.

Single treatment dosing is now above 500 gray.

Escalation of the treatment volume is such that the estimated treatment volume.

In the plan six cohort will accommodate tumors of up to four and a half centimeters which should include the majority of tumor recurrences C.

In Glioblastoma.

As per the protocol, we're also increasing the number of delivery catheters up to a plan Max for catheters per patient.

And in the last cohort two of the three patients we actually use three catheters and that went very well.

That's important because it permits us to target a variety of tumor shapes and locations within the brain.

It's all about capturing the most number of patients possible that have occurrences.

There's been no treatment related SC ease observed thus far in there appear to be early signals of efficacy in patients with adequate dosing and tumor coverage.

As far to patients with good tumor coverage have survive greater than 30 months versus a mean survival of nine months with best available kidney care. However, I must caution. This is not an efficacy trial its safety dose escalation of feasibility trial.

We expanded enrollment activities, including those two increased trial awareness and then second trial site and we hope to expense into site number three as mentioned.

Now as I mentioned on the last call. We are actively evaluating from a strategic perspective, bringing forth additional clinical development programs for our now outside of recurrent glioblastoma.

Potential indications we are interested in developing today represent indications for arnelle for which there is substantial preclinical information already published and actually some of that can be found on our web site and we're happy to share that if you reach out to us.

In particular and and by no means to limit the scope of our analysis left him an NGL carcinoma, ptosis parent Neil carcinoma, and recurrent head neck cancer represent three promising potential indications with solid preclinical data already published each of these indications also are consistent with our previously stated.

Portfolio investment strategy, namely to address unmet or substantially underserved medical need all three of those qualified.

Combined known active pharmaceutical ingredients that have solid safety and efficacy information available with new delivery technologies that improved both safety and efficacy again, all three meet that criteria and third we prefer that they have at least a 250 million dollar annual addressable market opportunity again check all three boxes there.

So our plans to complete this analysis and potentially move forward before the end of 2020 consistent with previous guidance.

Just a brief comment about our licensing activities.

And first out licensing.

We have initiated discussions with potential partners to discuss opportunities to help us expand our in L. development more rapidly.

Preference with our now is to keep the U.S. rights and seek partners internationally.

Regarding our two other clinical stage assets dose of plus Indoximod plus as previously mentioned we plan to further their development only with partner support.

We are at have been such discussions, but our development focus is obviously precedent on arnelle and moving rapidly forward.

Additionally, we are committed to continue a deliberate and disciplined outreach program gear to identify other possible strategic in licensee candidates that either logically expand our drug pipeline or related technology capability.

Similar to our now transaction I think Thats a good example for what things that we're looking for we look for technology. That's good science good pedigree.

As appropriately valued and can be developed and capital efficient manner. For example, potentially potentially utilizing development grants in the case of Ardelle from the NIH or potentially from the state of Texas, specifically the separate funding mechanism I mentioned before.

So those comments complete let's turn the call over to Andrew for view of the quarterly financials, Andrew. Thank you Mark and good afternoon, everyone.

I'll be discussing plus therapeutics financial results for the second quarter 2020 as presented in our earnings release today.

For the six months ended June 30, Twentytwenty on net cash used in operating activities was 2.9 million as compared to 4.4 million in 2019.

Q2, Twentytwenty net cash used by operating activities was 1.4 million compared to cash used by operating activities of 1.2 million in Q2 2019.

Gave a reduction in cash burn for the six month period was mainly related to discontinued operations, which resulted in reduced operating expenses.

Net loss for Q2, 2020 was 1.8 million as compared to a net loss of 9.1 million in Q2 2019.

The decrease in the loss is mainly due to the approximate 7 million loss from discontinued operations in 2019, the related to the Q2 2019 asset divestiture.

Now with respect to revenues.

Q2, Twentytwenty total revenues or 0.2 million as compared to 0.3 million in Q2 29 team.

For the six months ended June 30, Twentytwenty total revenues was 3.3 million as compared to 1 million and 29 team.

The decrease in revenues is due to the anticipate to close out the bought of contracts.

For research and development expenses.

In Q2, Twentytwenty, our research and development expenses was 0.3 million versus a 1.2 million expense in Q2 2019.

For the six months ended June 30 Twentytwenty.

R&D expenses were 1.2 million compared to 2.7 million in 2019.

The decrease in research and development year over year spending was primarily attributed to the completion of the Baltic contracts and 29 thing.

Approximately 0.8 million was incurred in Q2 twentytwenty relating to the in license agreement with nano Tx.

Oh, sorry, 4.4 million was paid in cash it closed in early may with the balance in stock.

Now onto our sales and marketing.

Our sales and marketing expenses were approximately 0.1 million for both Q2 2020 and 29 team.

And 0.2 million for the six months, but June 2020, and 29 team.

GNS expense was 1.3 million for Q2, Twentytwenty as compared to 0.9 million in Q2 29 team.

For the six months ended June 30, Twentytwenty and 2019, GNS expense was 2.8 million as compared to 2.2 million.

The year on year increase reflects an increase in professional fees in Q2 relating to the recent in licensing transaction.

This increase was partially offset by decrease in payroll and related expenses.

Interest expense decreased in the six months to June 30, Twentytwenty 0.2 million from zero <unk> point Sixmillion in the six month to June 32019, reflecting the principal pay downs and 2019 and Twentytwenty.

Turning to the balance sheet.

As of June 30, Twentytwenty, we had 9.3 million of cash on hand, and 4.3 million of debt transferable.

In April 2020, we amended our debt with Oxford, providing additional flexibility by pushing outside interest only period through May 2021, together with the pay down to 5 million a principle.

Our liabilities decreased to 10 point Sixmillion June 30, twentytwenty as compared to $22 million at December 31, 29 team.

This decrease is primarily driven by two factors.

The first was the 5 million pay down the Oxford debt facility in April 2020.

The second was the amendment and resulting re cost of to warrant liability to stockholders equity in Q2 Twentytwenty.

6.7 million.

And now I'll turn it back tomorrow.

Thank you Andrew.

Finish up before today I'd like to just recap the progress toward our stated 2020 milestones.

Our primary year end goal is to complete enrollment of the dose finding feasibility safety study for Arnaud.

We plan to report that data and work to subsequent publish it in the medical literature.

That goal is predicated on the assumption that cohort six court five this completed cohort six is the final dosing cohort, which is a reasonable judgment at this point.

To that end, we intend to begin to treat patients at the planned to new trial sites of UTI southwestern and ultimately MD Anderson.

We'll also continue to optimize the regulatory and clinical program for our unhelpful Glioblastoma and at the appropriate point in time obtained FDA guidance on next steps, including development of a phase two and or pivotal study plan for Glioblastoma.

In parallel to the trial, our CMC team is in the process of substantially upgrading the supply chain for our now as well as a manufacturing controls and scalability the product to late stage clinical trial standards, it's actually our team that's manufacturing the life of films for the the current patients in the last patients in cohort.

Soon we intend to complete our internal review of additional indications for our now and execute any required I in the enabling studies required for clinical introduction.

We're going to continue to be aggressive highly disciplined in assessing new pipeline enhancement opportunities for the company and we'll continue partnering discussion with the goals of finding strategic development partners for our programs Arnelle disciplined Doxil plus.

With that I'll turn it over to the operator, Erica for any questions that might be on the Q.

Thank you.

Now open for questions.

At this time.

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Well.

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Thank you. Our first question is from Robert Leboyer Ladenburg.

Good afternoon, and congratulations on the progress.

My question.

Just partially answered by Dr. Henry.

And I was going to ask.

You were going to complete the six cohort three patients.

Any estimate of timing as to when that would be.

Hey, Robert Thanks for participating it's mark.

Yes so.

The.

The NIH protocol actually called out eight cohorts and goes up to.

The total.

Radio radiologic activity of about 41, Millicuries right now where we're substantially below that however, we've increased it to a volume and to a dose and we're still.

Still appears to be.

Safe.

With a nice safety margin that we think that with the increase in dose and volume cohort six we can pretty will cover with adding in a multiple catheters. The the lions share of recurrent tumors.

So the it's it's a little bit of an issue diminishing returns as to whether you continue to go on and push the dose and the volume higher so our instinct and top talking with our.

Our clinicians evolving trial.

That's six is six cohort is probably the right number and so the plan there would be you have to wait 30 days after the last patient cohort side than we can begin to treat the six patient.

First patient cohort six will need to wait and just make sure at the higher volume.

And radiation dosage that the patient tolerate set well and then we can go one complete the cohort and if that indeed is the last cohort will will do a total of six patients.

It's a cohort and given given what we're seeing with our.

Our efforts to communicate the trial and bring patients into the trial for around the country. In fact, we're getting some input from patients outside the U.S., we think that.

Those efforts plus adding the additional sites gives us a good shot at completing that by the end of year.

Okay, great. Thank you very much.

Thanks for the question Robert.

Once again, if you have a question please press star one.

At this time.

Our next question is from Ed.

At all.

Yes. Thanks for taking my question. My question is more on opportunities right. Now obviously, there's a lot of disruption with co bit gone on have you seen increased opportunities for you to evaluate new products or has it been shutdown.

Okay.

Hey, Hey, Ed.

No.

From from the.

Perspective of Arnelle for Glioblastoma.

With the exception a very early on where we would just uncertain how the hospitals would look at us and our ability to to take over the trial, having disclose the recent transaction, we weren't really sure, but just as I mentioned, it really hasn't affect us as it relates to the Glioblastoma trial.

To the additional indications related to our now again don't see an issue there.

Related to looking at other assets you know I think the only issue. There has now everything's done virtually antica upfront there was sort of this kind of awkward transition between.

What everybody was used to in terms of business development activities to the new world and it really is a new world.

But we're seeing continued opportunities out there in our sweet spot and continuing those discussions and and we're evaluating those in context of where other places we might put capital. So I think right now.

I don't see much of a different other than where we're doing it differently and we're not meeting in person or meeting online.

Great and then my question is obviously the about opening additional sites in Texas to do the study.

Obviously, Texas is one of the hot spots for covered right now I'll do you see any impact or is it.

Manageable.

Yes. Good question I, we were concerned it upfront but.

What we're hearing from both of our two sites said and Tony and UTI. Southwestern is this is an essential activity.

These patients are desperate as you know, they're going to die without intervention.

It's inevitable. So they are prioritized and there's just there's been no delay.

That we see.

In fact, if you look at.

The fact that we closed this relatively recently the fact, we got to patients and we've got a trail web site up and running we're getting inbound requests for people to split in the trial, we're hitting those off to the two both institutions.

Just don't see a delay there I think we're feeling pretty confident that.

The cope it won't affect our ability to to get this trial for space one fully enrolled.

Great that's really good to hear thank the fresh in my questions and good luck.

Thanks.

Our next question is from.

Without PBM.

Hey, Mark Thanks for taking the call.

I've a question you mentioned.

You mentioned something about.

Evaluating other programs to launch.

With your now program how quickly does the separate funding come into play and how soon does it come into play as you're making that evaluation could you just talked about that a little bit so we understand.

How that funding comes through and how much it could potentially offset a one.

Yes good.

Good question now that.

Separate is still a little bit up in the air we're waiting for word any minute about but any changes to the funding cycle typically they would take.

Grants.

Around this time every year they have to two funding cycles, and we would be potentially receiving funding from that.

First of the year so.

My guess is that's going to get pushed off because we haven't heard anything at least not in the last few days.

So so we'll see.

Thats already been approved by the voters.

And so I don't anticipate that goes away, but I think they're having some logistical challenges in Texas related to separate.

So separate will fund preclinical or clinical it will fund up to phase two and up to $20 million.

So.

We think that Theres an opportunity to.

To seek funding potentially for further our in L. developments for recurrent glioblastoma irrespective of VNC I funding that we have today.

But also funding to bring the additional are an l. assets into the clinic.

As I mentioned.

Separate had previously.

Funded the are in L. program and help get it off the ground. So the they've already seen a positive impact of that funding by virtue of the fact that it's gotten funding and now is heading towards the next clinical step and appears to be a promising therapy.

So.

So I think the are an l. further indications have some some opportunity to be funded and our plan is to honestly to file every cycle one of the reasons not the only reason, but an important reason relocating the Texas around our San Antonio facility was that we can take full advantage that we think there's an enormous.

Opportunity there and we're actually getting inbound calls from companies who are not in Texas, but are looking for potential partners to help.

Worked together to access the funding available in Texas. So bottom line is the time moves up in the air but you know I think we don't see that funding source going away are being cart back.

Well, thank you for that clarity.

You bet. Thanks.

No further questions at this time Dr. hedges.

Thank you for closing remarks.

Great. Thank you Erica.

To to close I'd, just like to thank everybody for joining us on the call today.

Like just take them take a moment to specifically point you to our new clinical trial website at <unk>.

Www Dot respect dash trials trials plural TR.

Dot com.

And then much more information can be found in our corporate web site, plus therapeutics Dot Com, and then our Linkedin and Twitter and social media sites.

As always on behalf of the Board management employees. Thank you for their support of the company and have a good evening. Thank you Erica.

Thank you. This does conclude today's conference call. Please disconnect your lines at this time and have a wonderful.

[music].