Q2 2020 DiaMedica Therapeutics Inc Earnings Call
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Good morning, ladies and gentlemen, and welcome to the Dod Medical Therapeutics second quarter 2020 financial results Conference call.
An audio recording a webcast will be available shortly after the call today under Amedicas website at Www Dot Guy medical Dot Com, India investors section.
For the company for Ses with his remarks. Please note that the company will be making forward looking statements on today's call. These statements are subject to risks and uncertainties that could cause actual results to differ materially those protected and these statements.
More information, including the factors that could cause actual results to differ from projected results appears in the section entitled cautionary statement regarding.
Regarding forward looking statement in the company's press release issued yesterday under the heading.
Risk factors in diet Medica previously filed annual report on form 10-K.
Dan Medical FCC filings are available at Www Dot if you see dot Gov and on its website.
Please also note that any comments made on today's call speak only as of today August 12, 2020 and may no longer be accurate at the time of any replay are transcript reading.
Dan medically disclaims any duty to update its forward looking statements.
Following the prepared remarks, we will open the phone lines for questions. If you would like to ask a question. During this time simply press star and the number one on your telephone keypad.
I would like to withdraw your question press the pound King.
I would now like to introduce your host for today's call rig Pauls Die Medicare Chief Executive Officer, Mr. pause you may begin.
Thank you Lisa good morning, everyone. We hope you continued to be safe and well.
We'd like to welcome you to our second quarter 2020 earnings business update call yesterday after market close we issued a press release, the business update and ever financial results for the second quarter 2020. We also filed our quarterly report on form 10-Q, both documents can be found in investors and media section our website.
Hi, Amedica Dot com.
With me here today is our Chief Financial Officer, Scott Cohen, and our Chief Medical Officer, Dr., Harry I'll corn.
First.
Let me begin with a few comments on or public offering, which we closed this past Monday as I'm sure you saw Guggenheim Securities was the lead book running manager with Craig Hallum at a joint book running manager and National Holdings athlete manager and the offering that raised gross proceeds of 23 million, which included the exercise why the underwriters up to.
Fall over allotment option at a public offering price of $5 per share.
Over the last few months, we've been clear that given that we believe we have adequate capital to get to the phase two results in the first two cohorts of our Redux CKD study, we're not going to seek additional capital and we had that data.
We've also been clear however that a good reason to deviate from this plan would be that if we had an opportunity to bring in recognized biotic funds, whose investment would represent an independent validation of DMD nine.
Over the this past summer.
We have continued to share story and the results from a remedy stroke study and our plans in the CKD space with a number of biotech funds. We were recently presented.
With an opportunity to conduct an offering with special spouting funds and that's what's driving this offering you offered as prime I sold to institutional investors well I wish we could share with you. The names of our new investors will have to wait for the investor to report their positions I'm confident that our shareholders will be pleased with our new investors. In addition to.
New investors. It was also very gratifying to see a number ever existing investors also participate in the offering.
We intend to use the net proceeds from this offering to continue or clinical in product development activities before do you want to nine including the addition of a third cohort of diabetic kidney disease subjects to our Redux study initiation of our next study in acute ischemic stroke will further use the net proceeds to expand or.
Team to support this additional work and for other working capital in general corporate purposes.
Let me begin my update on our read next trial with review of our clinical progress in study of DMD knowing for CKD.
In July of 2019, we completed a phase one be clinical trial of do you money nine in participants with moderate or severe CK chronic kidney disease or CKD caused by type one or type two diabetes. The study was performed to assess the pharmacokinetics of three dose levels of deal 29, those being three five.
Micrograms per kg administered in a single subcutaneous dose as well as evaluation of safety Tolerability and secondary Pharmacodynamic endpoints. The study results identified the dosing at a rate of up to five micrograms per kg in the moderate CKD patients was likely to restore kit.
Okay, one to what we believe as normal range.
This affirmed or dosing plans for our ongoing clinical trial in CKD patients we observed.
Observed favorable overall pharmacodynamics results that included short term improvements in estimated glomerular filtration rate or Egypt far with an average increase of 4.6, m. else and the urinary Alvin to create and ratio or you HCR.
Excluding subjects with normal U.S. CR levels. The average you AC or increase decrease was 23%. These improvements correlated with the timing of the greatest increasing the hormones nitric oxide in prostate gland. Since we believe that these results were drug related as the greatest improvements occurred at approximately 24 hours after deal morning nine.
In administration and then subsequently to client.
Next we completed a post talk analysis of endpoints in the remedy stroke trial, which was comprised of a subset of participants with impaired kidney function as determined by the participants having in Egypt far less than 90.
Elevated blood glucose levels above seven minimal.
This subgroup represents individuals with diabetic kidney disease and included 25 participants nine of which were treated with deal 29, and 16, which received placebo well. The sample size was small those received 29 were observed to experience a statistically significant improvement in kidney function as measured by EG if our.
Compared to placebo, specifically I mean difference of 12.7 M. else at day 22.
The average improvement in Egypt par levels in a dealer nine group was maintained after being off do you want to nine for 34 days potential signal of the sustained benefit.
Patients who received 29 also demonstrated a reduction in blood glucose levels compared to placebo with the mean decrease trend of 2.2 Millimoles.
We believe the DNA product profile for patients with diabetic kidney disease could include improvement in kidney function as measured by both Egypt far and Alvin urea, along with reducing glucose in diabetic retinopathy, while also reducing the risk every a current strokes.
We believe dominant when a nine can do so by restoring the levels of kill Okay, one to normal healthy range.
In addition from a regulatory perspective, we're optimistic based upon a scientific workshop collaboration conducted over the last few years by the National Kidney Foundation with the U.S.F.D.A. and the European Medicines agency that we could see new potentially lower thresholds for registration studies for the treatment of diabetic and chronic kidney.
Diseases, which are based upon both Egypt far album and open urea.
If these new metrics are allowed it could greatly reduce the clinical burden.
Based upon these observations were very excited to initiate a third cohort and I read next phase two CKD trial focused on participants with diabetic kidney disease.
In total our redux phase two CKD study well known rose 90 participants in three equal cohorts. The first cohort is focused on participants with hygiene and property. The second Hypertensive African Americans with CKD, who are not diabetic.
Third cohort being added isn't diabetic kidney disease participants will be treated with do you might want to nine for approximately 13 weeks at dose level of either two or five micrograms per kg, which is administered subcutaneously twice per week.
The primary efficacy endpoints for the overall study or EG afar and Albin urea secondary endpoints are focused on evaluating potential for do you only nine to positively impact the underlying disease, causing each participant CKD.
As we recently reported as of August <unk> 2020 enrollment in the first two cohorts of the react study was approximately one third complete due to actions implemented to combat. The cobot 19 pandemic, we've experienced slower than anticipated enrollment. We believe this has been due to a combination of the reduction or suspension of active.
Heavies at some of the clinical study sites as they address staff and patient safety concerns and patients concerns related to visit visiting clinical sites.
We anticipate that the cobot 19 pandemic will likely continue to adversely affect our ability to recruit or enrolled subjects and at this point well. We have recently seen an increase in screening activity with a few new participants poised to enroll we're still not able to provide guidance on the completion of enrollment of the study.
We added a 13 study site in July to assist with a subject enrollment and we'll consider additional sites if conditions warrant.
Well results was observed to date in the react study indicate a safety profile consistent with past studies. There is insufficient data at this time for us to evaluate or comment upon efficacy the third cohort and diabetic kidney disease will be leveraging the current 13 clinical sites and once cobot related pressures ease.
And we do not anticipate that the addition of the third cohort will adversely affect recruitment and first two cohorts.
We also remain optimistic that what the limited participant contact required by the design of the Redux study sites will be able to progress more rapidly with resuming recruitment and screening for the redirect study once the kobin related pressures. These.
Turning to our stroke program and for our new listeners do you morning, 920 for our treatment window. Following an acute ischemic stroke is intended to provide a treatment option into the approximately 90% of stroke patients who are not eligible for either mechanical thrombectomy or TPS.
Treatment for these patients is limited to palliative care, which focus on rehab and symptom management when we looked into the remedy dataset adjust those patients that most closely aligned with our patient population intended to be treated with DMD on.
Those that did not receive mechanical thrombectomy and those that not respond to Ta we saw positive therapeutic effect in patients treated with DMD. Nine. This group included a total of 46 participants 25 of which were treated with do you morning, nine and 21, who are on placebo the results showed.
That 36% of participants in the deal 29 group progress to a full or nearly full recovery at day 90. This was measured by the NIH a score of zero or one in the Desilva group only 14% of for participants progressed to a full or nearly full recovery. This represents a 22.
[music] percent absolute increase and as a portion of participants achieving a full or nearly full recovery.
Or also 857% relative increase in addition, subject upts decreased from 24% in the placebo group to just 12% in the deal 29 group, a 12% absolute decrease in subject us.
Well. These results are based upon a relatively small number of subjects. It is interesting to note that deem 29 results were based upon a 24 hour therapeutic window to first dosing.
Compared to Ta the current standard of care, which demonstrated in approximately 11% improvement in full ordinarily for recoveries with an initial treatment window of three hours post stroke at first approval.
I would also note that kellock hang the human form of kill Q1 extracted from human year and was approved in China based upon similar efficacy as our D. and wanting nine results based on our estimates kellock hang has treated over half a million patients for acute ischemic stroke.
Looking forward with our stroke program. We are currently developing the protocol for proposed phase three study of do you money nine in the treatment of stroke as part of this process. We have engaged a global consulting firm to provide an independent evaluation of our target product profile and proposed clinical endpoints, along with feedback from payers and neurology.
Yes.
We also want to ensure that we are addressing the necessary economic endpoints to support products deployment and reimbursement of deal money nine.
We are currently finalizing a meeting request for a type b meeting with the U.S. After FDA. This meeting request is expected to be submitted shortly and if the FDA agreed this meeting would likely take place this fall.
I would now like to ask about kellen to take us through the Q2 2020 financials.
Thank you Rick a good morning, everyone as Rick mentioned, we Didnt release, our financial results for the second quarter 2020, and filed the 10-Q yesterday after the market's closed.
You haven't had a chance to review those documents, they're both available on either the die amedica or the FCC web sites.
Our net loss for the second quarter of 2020 was 2.5 million or 17 cents per share our net loss for the six months ended June 32020 was 4.9 million 36 cents per share.
This compares to a net loss of 2.5 million or 21 cents per share for the second quarter 2019, and the net loss for the six months ended June 32019, a 5.7 million or 48 cents per share.
Our research and development expenses decreased to 1.6 million for the three months ended June 32020 down from 1.9 million for the three months ended June 32019, a decrease of point Threemillion.
R&D expenses decreased to 3 million for the six months ended June 32020, compared to 4.5 million for the six months ended June 32019, a decrease of 1.5 million.
The decrease for the six month comparison was primarily due to nonrecurring costs of approximately 1.3 million incurred for a new production run of the DM 199 drug substance during the six months ended June 32019, and the net decrease in year over year clinical study costs. We're.
Priests in the clinical study costs was due to a combination of the decrease in costs incurred for the remedy stroke study as it winds down in the current year ended nonrecurring costs of the phase one be CKD study, which was started in completed in the first half 2019.
These decreases were partially offset by cost incurred for the redux phase two CKD study, which initiated late in 2019.
As well as increased noncash share based compensation costs.
Our general and administrative expenses were 1.1 million for the three months ended June 32020 up from 867000 for the three months ended June 32019.
Got a expenses increased to 2.1 million for the six months ended June 32020.
Point 4 million from 1.7 million for the six months ended June 32019.
The increase for the six month comparison was primarily due to increased noncash share based compensation costs.
Total other income decreased to 243000 for three months ended June 32020 down from 280000 for the prior year period.
Total other income decreased to 231000 for the six months ended June 32020, compared to 458000 for the six months ended June 32019.
The decrease for the six month comparison is primarily related to reduced R&D incentives associated with decreased remedy stroke study costs during the six months ended.
June 32020.
Partially offset by reduced foreign currency transaction losses.
Turning to the balance sheet. We finished the second quarter 2020, with cash cash equivalents and marketable securities of $11.8 million current liabilities of 1.2 million and working capital of 11.2 million.
This compares to 7.9 million in cash cash equivalents and marketable securities 1.3 million in current liabilities and 7.5 million in working capital as of the end of 2019.
The increases in the company's combined cash cash equivalents and marketable securities and in our working capital are due to our February 2020 public offering of common shares.
Further on a pro forma basis, after giving effect to the public offering which closed on Monday, our cash cash equivalents and marketable securities would be 32.9 million.
So again as Rick pointed out this week, we completed a public offering of common shares raising gross proceeds of 23 million a with estimated net proceeds of 21.1 million.
Our current capital position should allow us to complete all three cohorts in our.
Redux phase two clinical study in.
Initiate a phase three study in acute ischemic stroke and fund our planned operations for the next two years.
Further we continue to expect the impact of the delay in the redux study to affect the timing of cost incurred but not cause a significant overall increase in costs as we are managing this study internally.
However, we continue to assess the effect of the pandemic on our redux trial by monitoring the spread of the Koeppen 19 virus and the actions implemented to combat the virus and we will continue to provide updates.
Now, let me turn the call back over to Rick.
Thank you Scott, we'd like to open the call for questions. Lisa If you could please introduce the first analyst.
At this time I would like to remind everyone who would like to ask a question. Please press star then to number one on your telephone keypad.
Your first question comes from the line.
Craig Hallum capital.
Great Good morning, everyone.
Thank you for providing the enrollment figures as we're very helpful. In the early weeks of August how has enrollment and trending compared to the last few months and given we're hearing that centers are reopening, but we're seeing enrollments slow throughout all of health care is the slowdown really patients not wanting to try something new at this point too.
Due to cold or is it that patients still just are coming back to the clinic.
Yes, Thanks, Alex.
Yes, let me, we're encouraged to seeing no increasing numbers of screening.
Alan just clearly related to patients being hesitant to come to the clinic.
Going back to early this year, we can we adjusted our protocol where patients would only need to make the first visit so the screening can be done at their home or office by a nurse.
Come into the clinic for the first dose and then everything else actually although the dosing the vitals can be done at the patient Homer office.
But clearly there's there's some concerns with even can making one visit and we're seeing that more so in the African American group then than we are in the gate.
And so it's something that we're working to I think we've identified the patients just a matter of them getting to the comfort level, where they'll they'll come to the clinics for that literally for that for that first for that first dose and after that everything else can be done at home or Homer office.
Okay understood and understood that I'd use of rare disease here in the African American course population, but the not one that come in.
Is another piece of the limiting factor there African American cohort that the patients can't be diabetic I'm just wondering what does the risk of opening up that group to include African Americans that are diabetic.
No it the Werent, we're not concerned about identifying the patients for either of the the the first two core instead of that have been enrolling here since.
Early early this year.
Also for the third cohort in diabetic kidney disease.
Harry isn't working very closely with the now 13 sites. Many of these sites he's had passed relationship ships with and.
We're working to identify the patients so that the patients within the clinics have been identified to let me just a matter of get having the patients comfort to come into the clinic.
Okay understood and then on the third cohort here for kidney is the idea to prove that diem, one and I can improve kidney function or reduce blood glucose or maybe both.
No it's kind of goes back to the.
Prior used case, and then one a nine to reduce blood glucose.
I also would you expect that this third cohort to enroll more quickly than the other two.
Yes, so the rationale for the for the diabetic kidney diseases. When we when we looked at the this particular after looking at the remedy stroke data and looking at the subgroup.
No post hoc analysis, and just looking at those patients that had.
No that would that number that we're diabetic and with chronic kidney disease.
When we saw that 12.7 ml change in Egypt bar versus placebo that was statistically significant and just jumped out at US and then we also looked at there.
Early signs of retained benefit 34 days later and so my adding this this third cohort I.
I think longer term I really can see do you money nine being used for chronic kidney diseases in patients that will will that have diabetic or or chronic kidney disease that will improve both EG, a far and Alban urea well also lowering glucose and those patients that are diabetic.
While also improving retinopathy diabetic retinopathy, specifically in Japan, we know the porcine kill Q1 has a label in the is widely used by directly cleaving VEGF and the Guy and then Furthermore, looking at the profile of our drug can also help to treating some of the complications so having too.
You know reduce recurrent stroke. So when we look at as a profile on a drug with a with as I call. It was simply protein replacement therapy.
It just has a wonderful profile. So it just gives us more options here so that when the react study is complete we can look at the data.
We can decide where which cohort we see the greater the most compelling clinical effect, while also taking into from a regulatory perspective. The pathway. So we can either look had going rare or else, we can or near term or else. We could more near term looking at going to the diabetic kidney disease, but knowing very helpful for us to know that longer term.
There could be a real opportunity here for treating the greater diabetic kidney chronic kidney disease patient population.
Okay excellent that's really helpful. And then just two more questions. If I can show. It does look like the FDA meeting in stroke got pushed out just a couple months versus the original expectations any reason for the push or is this just it takes time to analyze all the data.
Act together this admit they all while we're dealing with covert and work from home environment.
Yes, no. It's great question. So we have a package that's very close for submission, but what we want to do before submitting that as we had get engaged a global consulting firm, that's really helping us on the product profile on getting feedback from payers from neurologists. So that we really got to we are fully.
Understand the profile.
Ahead of that submissions so that any additional questions can be incorporated so yes, it's pushing it back slightly here from what we had initial anticipated, but not changing the timelines of when we think we can launch the.
The ideally the phase two trial.
Okay understood and then as you are finalizing this meeting with FDA just provide any highlights some of the questions you'll be asking where are you still be seeking an ASP for the phase three.
Yes, so some of the questions that we have.
A little bit asking about.
Breakthrough fast track.
And that's the NSP a.
Size of the study so we as as we look at the profile for phase three we feel it will be very similar to the phase to the biggest differences that at this point, we're planning to exclude mechanical thrombectomy and also to exclude patients that have a large vessel inclusion we feel those pace.
Ones aren't the right fit for for our therapy, and so that really is what what we're planning right now as being the main difference from our phase two other than you increasing the number of patients.
Okay understood very helpful. Thanks for the uptick.
Thanks, Alex.
Your next question comes on line of Thomas Flatten out with Lake Street.
Hey, good morning, guys. Thanks for taking the questions to follow up on the on the stroke discussion.
And I just want to make sure I was confused Rick about your prepared comments or is there still some question about what the appropriate endpoint might be or is that likely going to be.
Forward near full recovery and or death, and would you think about doing those as co primary.
So yes, let's also be a key question for the FDA, we are planning to propose an excellent outcome.
Of either Mrls or the NIH has strokes scale.
But not done.
On death, we'll be looking as a secondary endpoint okay.
And then.
With respect to the cash position I know you said in your press release you'd have about two years, where the cash does that.
Does that include the initiation of a phase three study in stroke or does would that be incremental to the cash that you require going forward.
No Thomas that includes the initiation.
Okay.
And then.
Given the slowdown and not looking at.
Stroke study initiation. This year do you think that the spend.
In operating expenses in the second quarter is reflective of what is going to look like going forward or do you see some acceleration in that with the potential rebound from Covidien and the the addition of the third arm.
To the Redux study.
Boy I sure hope it increases.
[laughter] that Doesnt sound weird, but no I hope, we see an increase.
Related to some easing of the tensions related to covert.
And then of course, adding this third cohort.
All in we are looking at an incremental $2 million for that cohort. So we'll incur that over the period of time it takes to enroll that which again hopefully will will will.
Hopefully the rate of enrollments will increase here soon.
Great all right well thanks for the questions I appreciate it.
Thanks, Alex Thomas Thomas.
At this time there are no further questions I would like to turn the call back over to Mr., Rick Falls for closing remarks.
All right again, we'd like to thank everyone for joining us. This morning, we're pleased to share the rationale for expanding the redux study to include diabetic kidney disease, and we look for discussing our plans for phase three stroke study with the FDA and sharing those results with you. We look forward to speaking again soon and reporting on our progress. We appreciate your interest and continued.
Support please stay safe in these challenging times and with that this concludes our call.
This concludes today's conference you may now disconnect.
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