Q2 2020 Caladrius Biosciences Inc Earnings Call

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Welcome to the Caladrius Biosciences second quarter 2020 financial results and business update conference call. Currently all participants are any listen only mode. Following management's prepared remarks holding companies session to ask a question I'm not time he's pass that start.

Hello by one on your Touchtone phone if anyone has difficulty hearing the call Burns. Please press star zero for operator assistance as a reminder, this call is being recorded today Thursday August 13, 2020, I will now turn the call over to John Menditto, Vice President of Investor Relations income.

Communications I Caladrius. Please go ahead Sir.

Thank you operator, and good afternoon, everyone welcome to cloud your since second quarter 2020 conference call to discuss our financial results. Joining me today from our management team is Dr., David Mazzo, President and Chief Executive Officer.

Earlier today, we issued a press release announcing our SEC, our 2022nd quarter financial results, which is available under the investors section of our web site.

You have not received this news release or we'd like to be added to the company email distribution list. Please email me at Jay Menditto I'd call address Dot com.

Before we begin I'll remind you that comments made by management. During this conference call will contain forward looking statements that involve risks and uncertainties regarding the operations and future results of Caladrius.

Encourage you to review the company's filings with the Securities and Exchange Commission, including without limitation forms 10-K, Hence you an 8-K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward looking statements. Furthermore, the content at this conference call contains.

Time sensitive information that is accurate only as of the date of this live broadcast Thursday August 13, two 2020.

Glad you asked by scientists undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call. Please keep in mind that the company continues to conduct calls from different locations. During the koeppen 19 pandemic. So we appreciate your patience sure we have any tech tech.

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With that said I'll now turn the call over to Dr. Maddox Dave.

Thank you John and good afternoon, everyone I hope all of you are in good health and remain safe. Thank you for joining us for a second quarter business update.

In light of the ongoing cobot 19 pandemic, we're very pleased with our second quarter results on I'm, especially proud of the entire team a collateral for their ongoing effort and dedication that has resulted in another quarter of strong operational performance.

Basically collateral strengthens its cash position in conjunction with advancing and expanding on our CD 34 positive cell technology based clinical programs in particular T. L. B S 119 for the treatment and repair cobot 19 induced lung damage.

Lps 12, as a treatment for critical limb ischemia or see alike in Japan, and he'll be S. 16 for the treatment of coronary microvascular dysfunction, we're CMT I will discuss each program in more detail in a few moments, but before we get into that I will discuss a few organizational changes.

As we announced earlier this week, Joe Talamo, our Chief Financial Officer tender his resignation in order to explore opportunities outside Calabria.

Joe will be with us through August 21, and working closely with him we have organized and orderly transition of roles and responsibilities until we conclude our search for a highly qualified permanent replacement.

The result of the change however, Joe will not be joining us on today's call on behalf of the entire company I reiterate our gratitude to Joe for its long time surface and contribution.

He played an integral role in the formation and definition of what is now collateral and leaves the company in excellent financial condition. The wishing all the best in his new endeavor.

We also previously announced we're honored to welcome Dr. Michael Davidson. Most recently of course video as the newest number up our board of directors, we look forward to leveraging Dr. davidsons invaluable experience spending research and clinical development regulatory approval partnering and M&A as we continue to drive the evolution of our company.

With that I will now review and provide commentary on our second quarter financial results as well as the funding activities since the close of the quarter.

As previously discussed during last quarter's call in April we closed the sale of a portion of our qualified New Jersey net operating losses, netting $10.9 million of non dilutive capital pursuant to the New Jersey Economic development Authority technology business tax Certificate program.

The entire 10.9 million was recorded in the second quarter of 2020 has a tax benefit resulting in the company reporting net income of $6.6 million and $2.6 million for the three and six months ended June 32020, compared with net losses of 5.1 million.

And 9.5 million for the three and six month ended June 32019.

Turning to our operating expenses research and development expenses were 1.8 million and 3.3 million for the three and six month ended June 32020, representing decreases of 39% and 34% respectively compared with the prior year periods.

The lower research and development cost in the current year periods, but primarily a function of us having only one enrolling trial in 2020, our ongoing registration eligible study for CMBS 12 in critical limb ischemia in Japan.

Nevertheless, we did advance our overall scheme repair platform more specifically R&D expense comprised costs associated with the investigational new drug application and planning for commencement of a pilot study, but he'll be S. One onenine along with expenses for the completion of our escape C.M.D. clinical study for CMBS 16.

In coronary microvascular dysfunction and planning for the phase to be follow on study that program.

General and administrative expenses, which focus on general corporate activities were 2.5 million and 5 million for the three and six month ended June 30, 2020, representing minor increases compared with the prior year periods.

Turning now to our balance sheet and cash flow as of June 32020 kilometers had cash and cash equivalents of 34.9 million and working capital of $33.1 million.

Our cash and cash equivalents position at quarter end was significantly improved by the $10.9 million proceeds from the sale of our qualified new Jersey and the wells.

Well as to register direct offerings that rate $9.3 million gross proceeds.

In July 2020, we boosted our cash and cash equivalents position, even further with the closing of a $2 million private placement.

It is noteworthy dimension that the two registered direct offering and the July private placement, where all priced at the market.

Lastly, the company has opportunistically raised $8.3 million through its common stock aftermarket sales agreement with H.C. Wainwright company here to date have which 6.9 million was rate in July 2020.

As a result, we're pleased to report that we had cash and cash equivalents in excess of $42 million as of the end of July 2020.

Our operating activities generated $263 $263000, a positive cash flow for the six month ended June 32020, which was directly impacted by the 10.9 million dollar proceeds received from the sale of our qualified new Jersey and the wealth.

Excluding the New Jersey NFL proceeds.

Continued to manage operating cash burn effectively had approximately $5 million per quarter on average while continuing to advance our research and development programs. According to plan.

Despite the current economic challenges collateral has successfully secured approximately $30 million in new capital year to date, one third of which is non dilutive, which will support the initiation and execution of two new studies in 2020, a pilot study of CMBS 119 for the treatment and repair Covance 19.

Lung damage and a phase Twob study of CMBS 16 in coronary microvascular dysfunction.

Overall, the company remains confident that its current cash balance will fund operations through 2021.

That completes the financial overview and now let's move onto our exciting clinical development pipeline.

That's I've done on previous calls I will begin by providing a high level summary of what we're doing a cloud dress and why we believe our development programs are increasingly relevant and attractive investment opportunity today.

Glad this is focused on the development of cellular therapies designed to reverse not manage disease and we have late stage clinical programs underway based on a large database of human clinical data.

Our therapies to date have been shown to be effective and durable with a pristine safety profile and present the possibility of substantial pharmacoeconomic benefit.

Most importantly, we're working on products with the goal of providing patients with a single administration personalized curative therapy, rather that rather than one that requires frequent chronic we administration.

Our CD 34 positive cell technology has led to the development of therapeutic product candidates designed to address diseases and conditions caused by ischemia, a condition in which the supply of oxygenated blood to healthy tissue is restricted.

Previously published preclinical and human clinical studies have demonstrated that the administration of CD positive CD 34 positive cells induces answer Genesis of the microvascular CER that is that these cells prompt the development of new blood capillaries, thereby contributing to the prevention of tissue death by facilitating blood flow.

To the area other schemes infill.

We believe that several conditions caused by underlying ischemic injury can be improved through the application of our CD 34 positive cell technology, including but not limited to covert 19 induced lung damage critical limb ischemia coronary microvascular dysfunction and refractory angina.

I will now speak to the specifics of each of our development programs kicking off with CLP S. One onenine, our autologous CD 34 positive cell therapy for the repair cobot 19 induced lung damage.

We believe the thousands of patients globally, who survive covert 19 suffer long term effects of the disease manifested as debilitating lung damage.

Since the rise of the pandemic many companies have mobilized to determine effective treatments for the acute effects of the virus and door for a vaccine that sports inspection altogether collateral is on the other hand, it's taken a leadership position in helping those patients was beaten the virus that has suffered potentially permanent reduced pulmonary capacity in this.

Evidence from the pandemic indicates that a large portion of the survivors of cobot 19, who required bentonville Tory support will suffer long term debilitating lung damage in the aftermath of the first Sars epidemic. It was well documented that the corona virus target cells that express cdthirty four the resulting depletion of that.

Cell population is thought to be connected to the lungs inability to repair itself.

Furthermore, in the Cobot 19 pandemic emerging evidence indicates that the endothelial cells that line the microvascular CER of the long our targeted by the virus and that the destruction of the lungs micro circulation, maybe a critical factor in the inability of belong to auto repair even after the virus has been eliminated.

Previous clinical trials and preclinical models have shown that CD 34 positive cells Act in a regenerative capacity in multiple organs, including models of severe lung damage. Moreover, there is evidenced in preclinical models that restoring microvascular feature.

And microvascular function can trigger and sustain a regenerative process in the low.

Based on this accumulation of evidence we have opened denying the agreed with the FDA on a protocol and begun manufacturing preparations in support of a pilot study a CMBS 119.

In our collagen Cdthirty four positive cell therapy for the repair of cobot 19 induced lung damage in patients who have suffered respiratory failure. The protocol target enrollment of 10 to 12 patients in the trial, which we plan to initiate in coming weeks with the first of those patients targeted to be treated during the month of September.

Moving on now to CMBS 12, our product candidate for the treatment of critical limb ischemia or see ally.

See Elias characterized by severe obstruction of the arteries that significantly reduces blood flow to the lower extremities, principally the fee and legs and represents the end stage of peripheral arterial disease.

The allied patients often experienced severe rest pain limited mobility, non healing skin ulcers, and if not successfully treated eventual amputation.

Please note that it is a well documented but not well known fact that see ally patients have a higher mortality rate than patients with all cancers, except lung cancer.

So it'll be up 12 was awarded a sakigake designation from the Japanese regulatory authorities for the treatment of see ally the socket. The Suchocki designation is akin to an our math designation in the United States and affords the recipient.

Prioritized regulatory consultation a dedicated review system to support the development interview process, including the option of a rolling Jay and da submission as well as reduced review time of six months for CMBS 12 registration application once filed.

You will be a 12 also is eligible for early conditional approval and possibly full approval in Japan based on the compelling nature of the complete data from our ongoing prospective randomized controlled open label Multicenter study in CLL patients.

In addition, the European Medicines agency granted CMBS 12 advanced therapy medicinal product or 80, MP classification for the treatment of see ally ATM piece are defined as medical treatments that are based on genes or cells and are intended as long term or permanent therapeutic solutions twoq.

We're chronic human diseases at a genetic cellular or tissue level. This regulatory achievement sets the stage for us to work closely with European regulator regulators to define the most expeditious development and regulatory plan to registration ups Lps 12 in the U.

The ongoing study in Japan comprises subjects divided into two cohorts 30 subject group with traditional arteriosclerosis zeolite and a seven subject group with burgers disease that type of see ally often associated with heavy smoking.

Those subjects were allocated to treatment our dose to put CMBS 12 in a single treatment through a series of intramuscular injections. In addition to receiving standard of care pharmacotherapy.

Subjects randomized to the control arm only receive standard of care with drugs approved in Japan, including anti platelet agent anti coagulation and Faisal Dilators the choice of which has made by the investigators according to the protocol.

The study allows for the rescue a subject in the control arm by indicating the crossover to treatment. If theres see ally is deemed to be progressing the primary objective of the studies to show. The CMBS 12 can prevent the serious consequences of see allied by reverting to patients to a satellite precondition through improved blood flow.

In effected Lynn CLS free status is defined as two consecutive monthly visits in which rest painted bastien and previous non healing skin ulcers are completely healed as determined by an independent adjudication Committee.

As previously reported and as you can review in our corporate presentation on our company website. The burgers disease cohort is completely enrolled and the results from that group are very positive and consistent with the beneficial therapeutic effect and safety profile as reported by previously published clinical trial in Japan, and the United States.

For patients with Berbers disease, amputation, and even death or likely outcomes and no available pharmacotherapy prevent amputation, however, subject in the burgers disease cohort in our study have achieved the remarkable remission rate of 57%, meaning that for up to seven subjects have now met the primary endpoint and our CFO.

Free it's worth repeating that the natural history of burgers disease patient is continued disease progression often leading to amputation. So our data are extraordinarily positive. We're very encouraged by the study results to date and believe that they suggest the positive outcome for the overall trial, recognizing however that the final conclusions.

The trial will be dependent on all data from all subjects.

Despite the continued impact of the covert 19 pandemic enrollment in our trial to slowly returning go like most companies executing clinical trials around the world enrollment remains unpredictable and its rate and duration notwithstanding impact of cobot 19. The company remains encouraged by the patient Prescreening pipelines that has recently.

Identified and targets completion of enrollment by the end of 2020 with topline data for the full study available in late 2021 or early 2022, leading to an earlier possible approval in Japan in mid 2022.

Regarding commercialization our strategy remains to license or partner CMBS 12 in Japan and to that end our conversations continue with prospective partners and we continue to seek to consummated deal in concert with the completion of the study if not before.

Turning now to CMBS 16 are promising CD 34 product candidate for the treatment of coronary microvascular dysfunction.

Like all our CD 34 positive cell therapy product candidates he'll be a 16 uses a proprietary and patented formulation of CD 34 positive cells, specifically designed for an injection at or near the site at the scheming insult, which indicates CMD isn't infusion into a coronary arteries.

So there'll be a 16 is the subject of the recently completed escape CMD trial, a 20 patient proof of concept clinical trial evaluating CMBS 16, as a treatment for coronary microvascular dysfunction, a disease involving damage to the tiny arterial blood vessels.

The micro circulation in the heart with no accompanying discernible large vessel blockages.

Despite the absence of large vessel disease CMT patients have an equally poor prognosis related to major adverse cardiac events and death as patients who have identifiable large vessel blockages, but because there are no large artery blockages to visualize CMD is often under diagnosed miss diagnosed.

And door untreated it is especially important to note that CMD is more frequently encountered in females, making this an important emerging women's health care issue.

So there'll be a 16 is designed to address and reverse the underlying pathology of CMD by employing the CD 34 positive sales innate ability to increase micro circulation and thereby improves symptoms and hopefully improve the long term outcomes in the patient with DMD.

In May of 2020, the company in the full data results from the escape CMD trial at the society for cardiovascular and geography, and interventions were Sky Twentytwenty scientific sessions virtual conference.

As predicted by preliminary results announced in November of 2019 data showed highly statistically significant improvement in coronary flow reserve correlating with symptom relief for patients with CMD. After a single Intracoronary injection of CMBS 16.

The results of the CMD excuse me the result of the escape CMD trial on not only important for defining the next development step for CMBS 16, but they provide the first direct quantitative evidence in humans corroborating the mechanism of action a CD 34 positive sell something which is supportive of all of our development.

Program.

We're now focused on raising awareness of this growth in women's health crisis, as we complete preparations for the initiation of a rigorous space to be clinical trial of CMBS 16, with the first patient expected to be enrolled in the fourth quarter of Twentytwenty. The planned double blind randomized placebo controlled trial will evaluate these.

The efficacy and safety of delivering autologous CD 34 positive cells as CMBS 16 in subjects with coronary microvascular dysfunction.

Now moving onto our phase three ready CD 34 positive cell therapy product candidate in the United States CMBS 14.

She'll be US 14 is being developed to address no option refractory disabling engine or Nord by stimulating the growth of new microvascular mature in an oxygen deprived heart in those patients who have had large vessel disease treated with all available therapies, but still have debilitating engineer likely due to a micro.

Vasculature deficiency.

Our confidence in this program is based on a series of published Phase one two and three study result that indicate the consistency of therapeutic effect, a CD 34 positive sales to increase exercise tolerance reduce engine of frequency and severity and decrease long term mortality associated with the condition.

As discussed on our previous quarterly update we finalized with FDA. The protocol design for confirmatory phase three trial to support the registration of CMBS 14 for nor the in the United States due to the projected cost to the study. However, we have deferred initiation in us pending confidence that we've acquired to fill.

And capital to fund the study to completion among the possible sources of capital our non dilutive grants under partnerships both of which we are pursuing vigorously and so in closing we're very pleased with the corporate development achievements made in the second quarter. It is especially noteworthy that during these uncertain times, we managed to signal.

Second we increased our cash position and launched a clinical program directly relevant to the medical challenges presented by the covert 19 pandemic throughout the balance of the year, we expect to advance our clinical development pipeline and strive to achieve a number of important additional development mindset milestones more than ever experienced dedicated and pass.

And the team remains committed to the advancement of our programs as we work to bring innovative treatment options to patients in need and restore human health and with that overview operator, we're now ready to take questions.

Thank you as a reminder to ask your question. Please press the Starkey followed by one on your Touchtone phone.

He's offer only one question per lives during their time, and then be prepared to returning to the queue for any additional questions.

Your first question comes from Milan of Kumar Roger from Brooklyn Capital Management. Your line is open.

Congratulations on all up real good a sign that thanks for taking my questions.

With regard to the lung live better try and.

It is data available they tattersall globally planting right I think targets.

I'd for.

As well as AUC to Fourx, but anything cells.

So in south side treatment large high enough Mark go to school. Thank you will be selecting fought in this trial.

And also.

Lark high enough to lung damage.

We expect to how patients in this trial like large state of lung damage.

Okay, well Kumar. Thank you very much for your kind words and for your questions and being on the call today.

We will be looking to enroll patients in the CMBS 119 pilot program, who have suffered a debilitating respiratory failure as a result of corporate 19. So these will be patients who have been on ventilators and have been successfully X debated, but still have.

Lung deficiencies or they could be patients who are on ventilators, who have cleared the virus and our otherwise I'll use the term healthy but cannot be successfully excavated because they are not capable of properly oxygenating on their own and so this.

This is a a sort of a dual set of patients and this will be the the target of the trial. When we are looking at the trial will be looking of course at efficacy endpoints that include clinical measures such as oxygen saturation, a supplemental oxygen requirement pulmonary function testing and also.

So the resolution of pulmonary infiltrates and of course will follow that with that with safety endpoints as well, although I would like with all of our other CD 34 trials, we do not expect to see any serious adverse events, because we've never reported a sole laded adverse event in any of our trials.

And in terms of targeting sales to the longer.

Do you think pain, but I mean, upscaling will lead to dart powder.

A lot about your thoughts in terms of cloud targeting the so stood alone.

Our our data from from previous study shows that an intravenous injection of the of the of the cells will allow them to enter the the circulation system and b cells have a whole new mechanisms due to CXC our for sale.

Surface proteins that allows them to hone two to move to the areas of the scheme to consult they clearly are will be based on models that we've seen they clearly we'll also migrate to the loan as part of an intravenous infusion.

And in thumbs up expectation of number of films that will be needed.

That's part of the exploratory in nature of this pilot study, we don't really know because we don't know enough about the disease and the extent of the damage has caused the also could be a spectrum of damages based on the patient population. So we will be a we'll be using.

Dosing, that's similar in size to the to the to the number of cells that weve used in our previous studies, but it will be you know hopefully millions of cells per kilogram of body weight.

Thank you.

Thank you Kumar.

Once again, if you about you asked the question style well number one.

Your next question comes from the line.

Engineers from HC Wainwright your line is open.

Hey, guys. Good afternoon Hope you are all doing well and thank you for the update.

Dave My two questions are focused on clinical trial conduct now now that we you know more studies are coming up and we can get a little more into the weeds.

Upcoming studies, so first on Cove it.

I guess, even though it's only 10 to 12 patients and it should be able to identify patients just curious on any particular site restrictions with regard to.

I'll, let you round cell therapy delivery and also potential competition around other cell therapies that are being used for Tobin right now as well.

Hey, Joe. Thank you very much again for your well wishes seems to you and yours and thanks for being on the call as it relates to the clinical trial for CMBS Fund one nine no. We we obviously there are lot of companies working on a variety of treatments and as I said in my prepared remarks, though.

A majority of the company seem to be focused on the acute stage of treatment for on on the infection prevention of vaccines and there are a smaller group of people who are working on the long term or chronic effect.

Given that coupled with what unfortunately now is the myriad number of cases of covered 19 that exist in the United States and the fact that those numbers are growing and are predicted to explode again as we get into the fall. We don't expect that theres going to be any shortage of of patients here.

To enroll in our trials, we we don't believe that the the sites will have to have any specific.

Knowledge of handling.

The cellular therapies the member our cell therapies involved.

In this particular case, a single day of mobilization using a pharmacotherapy. So just in Italy and administration over an available drug which will mobilize sells to the peripheral drugs to the peripheral blood stream the ability to conduct than a for rhesus to collect a sample of Mama sites and then the ability to provide a in it.

Intravenous infusion for the treatment. So it's certainly not you know not anything that any a competent clinical hospital a couldn't do when we'll be looking to enroll the trial as quickly as possible. So that will likely take us to those places that either have been previous hot spots or are becoming hot spots at with pay.

Patients with pulmonary.

The dilatation.

That's perfect I appreciate that and then the other clinical protocol question that I have is for the upcoming CMD study was 16.

I guess I want to talk to the placebo controlled aspect of that what specifically you're going to be using to the control and for the control and then I guess the in the weeds question has to do with you know are there any sort of factors of comparing the the cells part versus the control part that physicians are nurses might be able to.

Tell the difference you know based on discussed city levels, and again, sorry, I'm getting into much into the Weve there yes.

No no no problem no, but we believe that it's important to provide controlled.

Placebo controlled randomized data as we move into phase two data and so we'll be doing a true placebo. So the pieces of patients who are randomized placebo will go through the DRG CSF pretreatment and the apheresis. They will have a sample of their sell their monocytes shipped off for us for prepped.

Operation, but what was returned to them will be just sell deal you went without any of their any of the cells and they'll get the same intracoronary injection in the same way as the.

As the a that the treatment arm will so I doubt that it would be.

Possible for nurses or the interventional is to determine who is getting cells and who isn't based upon the appearance or the the method of administration I think with time.

In fact, we kind of hope with time that you'll have to get they'll get some idea because based on the escapes DMD trial, we started to see those people who were treated showing positive results in terms of improved exercise tolerance reduced and Jeanette.

General Health improvement overall in a few a three month and so they may see patients getting better and they may attribute that to the fact that they think those patients had had treatments, but there should be no way to break the blind bye bye visual.

Means until the studies completed and we actually Michigan's announcement at the results.

Perfect I appreciate that color and good luck.

Thanks, Joe.

This concludes our question and answer portion of the presentation I'll now turn the call back to about the muscle for closing remarks.

Again, thank you all for participating on today's call. We look forward to speaking with you again during our next quarterly conference call into continuing to provide updates on our achievements in progress and we remain grateful for your continued interest in our company and the support you provide to cull address bio sciences stay wealth and have a good evening.

Right.

Conference call no.

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