Q3 2020 DiaMedica Therapeutics Inc Earnings Call
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Good morning, ladies and gentlemen, and welcome to the Die Amedica Therapeutics third quarter 2020 conference call.
An audio recording of the webcast will be available shortly after the call today on die Amedicas website at Www Dot <unk>, I, Amedica dot com and the Investor and media section before the company proceeds with its 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 from those projected in these statements more information, including factors that could cause actual results to differ from projected results appears in the section entitled cautionary statement note regarding.
Forward looking statements in the company's press release issued yesterday and under the heading risk factors in Die Medicare's previously filed annual report on form 10-K, and subsequent quarterly report on form 10-Q for the quarterly period ended September Thirtyth two.
2020 die Medicare's SCC filings are available at Www Dot S.D.C. Dot Gov.
And on its website. Please also note that any comments made on today's call speak only as of today November 5th 2020, and made longer no longer be accurate at the time of any replay or transcript rereading.
Hi, Medicare disclaims any duty to update its forward looking statements.
Following their prepared remarks, we will open the phone lines to questions to ask a question during the session. Please press star one on your telephone.
I'd now like to introduce your host for today's call. Rick Pauls died Amedicas, President and Chief Executive Officer, Mr. Paul's you may begin.
Thank you Laura good morning, everyone, we hope youre doing well and staying safe.
Like to welcome you to our third quarter 2020 business update call we.
We issued a press release with a business update in summary of our financial results for the third quarter 2020 yesterday. After the market close at that time. We also filed our quarterly report on form 10-Q, both documents can be found in the investors and media section of our website at Diamond a good dot com I'm joined this morning by ARCI.
Financial Officer, Scott Cohen, and our Chief Medical Officer, Dr. Harry on corn.
We begin with an update on our redux trial in which we are studying the 29 for the treatment of chronic kidney disease or CKD reduction is a phase two multicenter open label investigation targeting 90 participants with CKD enrolled in three cohorts whats 30 participants per cohort.
One of the study is focused on non diabetic hypertensive African Americans with stage, two or three CKD and opened urea a group.
Interest at greater risk for CKD, even occasions. We also note that for African Americans, who have the April one gene mutation that risk for developing CKD is even higher therefore in our study we are testing for the April one gene mutation as an exploratory biomarker cohort two is enrolling participants with hygiene fraud.
See Coordthree is focused on participants with type two diabetes hypertension and Albin urea.
We initiated cohort three in de <unk> participants in August based in part upon some exciting data from a remedy phase two stroke study completed earlier this year specifically in a post talk analysis of the subset of participants considered to have diabetic kidney disease at enrollment Dk de was done.
Find its having an estimated glomerular filtration rate or easier far below 90, M.L. and glucose above 7 million all those subjects treated with DMD nine experienced a statistically significant 12.7, M.L. mean improvements in EG, a bar versus placebo during the 20 to date.
Given period.
In addition, the DMC nine treated group experienced a 2 million no mean reduction in blood glucose levels.
We also noted that the DMD nine group demonstrated a retained easier part benefit of 8.8, M. ALS mean improvement at day 56.
Which was 34 days off drug. We think this is very interesting signal for potential retained Egypt, bard benefit, which could make deamonte nine completely unique in the field of chronic kidney disease, and Dk D therapeutics with the potential to significantly improve patient conditions.
The second reason, we are evaluating participants with Dk D has to do with the potential new regulatory perspective for registration studies in the U.S. in Europe.
Earlier this year at the National Kidney Foundation led in the publishing of a special report based upon a scientific workshop collaboration conducted over the last few years by the national kidney function with the FDA. The Mi industry reports suggested that regulators use surrogate endpoints such as early June.
Changes in Albion, urea and or reduction in the rate of Geopark decline as the basis for conditional approval in clinical trials for CKD. If these new metrics are allowed it to greatly reduce the clinical burden, which reduced the time required to getting a treatment like do you wanting to patients in need of new therapies and for.
The increase the interest pharmaceutical companies in this space.
Before I continue just a quick reminder, participants in the Redux CKD study Oh.
Well received do you money nine for approximately 30 13 weeks at two dose levels. The primary efficacy endpoint for the overall study our improvements in open urea and EGI Afar secondary endpoints include evaluating the potential for de only nine to positively impact the underlying disease.
As we reported yesterday at the end of last week.
As of October Thirtyth, we have enrolled a total of 49 subjects up from 18 subjects as of August. This breaking this down we have enrolled 11 subjects in cohort 113 subjects in cohort two and 25 subjects in cohort three obviously, we're very happy that enrollment is nearly complete and.
The diabetic kidney disease cohort. This rapid enrollment is a function of the large patient population that matches the enrollment criteria for diabetic kidney disease, we believe that enrollment for IDE or decay de cohort will complete by the end of the year and topline results will be available in the first half of 2021.
In cohorts, one and two where enrollment has continued at a much slower than expected pace note that the feedback weve receiving from our study sites is that potential subjects are still hesitant to enter the study. Many of these individuals are considered to have comprised immune systems.
Which makes cold at a greater risk we believe that these concerns have likely been heightened with the recent surge reported its cobot infections and infection rates.
And in some cases the uptick in infection rates has also resulted in a reduction or suspension of activities at some of our study sites.
Well, we anticipate that the covert pandemic will likely continue to adversely affect our ability to recruit or enroll subjects in cohort one and two we are taking actions to improve the situation. We've recently added two study sites and are working with existing sites to expand the referral network. We also continue to evaluate additional.
Sites to further expand recruitments.
Turning to our stroke program, we're very pleased to announced that the FDA has accepted our request for a type b pre R&D meeting to review, our accumulated clinical and Nonclinical data I proposed clinical study design and certain other regulatory questions. The FDA did not put any qualifications on their acceptance and is off the table.
If I'd written responses to us by early December.
We believe that we have a solid foundation with the non clinical and clinical data that weve generated to date and of course, our belief is supported by the extensive use of efficacy of approved kill Okay. One products derived from human urine and poor signed pancreas in Japan, China and Korea.
As part of a meeting request we've asked the agency a number of questions to clarify the requirements for moving forward with the clinical development of deals 29 for acute ischemic stroke or yes. These include among other things the adequacy of our Nonclinical work performed to date and remaining planned Nonclinical work.
And ultimately whether they agree that our current committed data supports moving into and inter.
And actually a seamless phase two three adaptive study. In addition, we asked about timing to apply for fast track and breakthrough designation. Our goal is to conduct a well controlled study, which can be used to support an application for a commercial approval. We believe that our proposed phase two three adaptive study design can accomplish this school.
With adaptive design upon completion of the interim analysis of the study well that medical will remain blinded to the study results. The data monitoring Committee would review the results to determine whether the study should continue as planned or the sample size should be adjusted to ensure a statistical significant outcome is reached in this study.
We look forward to updating everyone. After received the fts feedback in the coming weeks.
We remain optimistic about demonize therapeutic potential for patients suffering for acute excuse me stroke in a remedy phase two study in non mechanical thrombectomy cohort. There was a 22% absolute increase were two and a half times improvement in the number of patients who achieved an excellent outcome compared to placebo. This was based on.
The NIH a score of zero and zero to one.
Keep in mind the importance of this in NIH score excellent outcome of zero, one means that you're able to live independently don't need help to dress eat or base.
For our phase two slash three study we have proposed excluding patients with large vessel occlusions and those pretreated with mechanical thrombectomy and T. P. Eight we believe deepening nine and is 24 hour treatment window may represent an effective and safe treatment option for the 80% to 90% of <unk> patients that are currently.
In eligible to receive TCPA.
And or mechanical thrombectomy, and for whom the only alternative supportive care for perspective. The club Buster Ta was initially approved with a three hour treatment window, and an 11% absolute improvement in excellent outcomes based on the NIH a score of zero to one.
Now turning to our recently completed public offering on August 10th of this year, we completed a public underwritten offering of 23 million in gross proceeds with net proceeds of just over 21 million we.
We intend to use the proceeds for the recently added de Kt cohort two or read X. trial to continue our clinical development of DMD nine in AI EPS and for other working capital and general corporate purposes.
I also like to highlight that Guggenheim Securities, which was the lead Bookrunner and managing for this offering we're pleased to share that the analyst coverage was recently initiated by answered Daryl.
I'd now like to ask Kevin to take us through the Q3 2020 financials.
[noise]. Thank you Rick and good morning, everyone as Rick mentioned, we did release the financial results for the third quarter and filed a 10-Q yesterday afternoon.
And if you haven't had a chance to review these documents they are both available on either our website or the Fccs website.
Our net loss for the third quarter of 2020 was 3.2 million or 19 cents per share our.
Our net loss for the nine months ended September 32020 was 8.1 million or 55 cents per share. This compares to a net loss of 2.4 million or 20 cents per share for the third quarter of 2019 and the net loss for the nine months ended September 32019 of 8.2 million or 60.
Eight cents per share.
Now within that our research and development expenses increased to 2.2 million for the three months ended September 32020.
Which is up from 1.6 million for the three months ended September 32019. This.
This is an increase of 8.6 million, which was due primarily to the cost incurred in connection with the reduction trial, including the recent launching of the Dk cohort.
Now for the nine months ended September 32020, our research expenses decreased to 5.2 million down point 9 million from the 6.1 million for the nine months ended September 32019 the.
The decrease for the nine month period was primarily due to nonrecurring costs of approximately 1.3 million incurred for the new production run of the DM 199 drug substance during the nine months ended September 2019, and a net decrease in the year over year clinical study costs now that.
Decrease in the clinical study costs was due to a combination of the decrease in the cost incurred for the remedy stroke study as it completed in wound down here in 2020, and the nonrecurring costs of the phase one B C. Keep CKD study, which started and completed in the prior year period.
Now these decreases were partially offset by the cost incurred for the redux trial, which initiated late in 2019.
And increased manufacturing development costs and increased noncash share based compensation costs.
Our general and administrative expenses were 1.1 million for the three months ended September 32020.
Up from 1.0 million for the three months ended September 32019.
<unk> expenses increased to 3.2 million for the nine months ended September 2020, which is up 2.5 million from the $2.7 million for the nine months ended September 2019.
The increase for the nine month comparison was primarily due to increased noncash share based compensation costs and increased professional service costs.
Total other income decreased to $128000 for the three months ended September 32020.
Down from 225000 for the prior year period.
Total other income decreased to 359000 for the nine months ended September 32020, compared to 683000 for the nine months ended September 32019.
The decrease for the nine month period is primarily related to the reduce R&D incentives associated with decreased remedy stroke study costs. During the current year period, which was partially offset by foreign currency transaction gains recognized during the current year.
Next turning to the balance sheet. We finished the third quarter of 2020 with cash and marketable securities of $30.6 million current liabilities of 1.4 million and working capital of 29.7 million.
This compares to 7.9 million in cash 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 and marketable securities and in our working capital were due to our February and August 2020 public offerings of common shares.
In August we completed a public offering which rich discussed also in February of this year, we completed a public offering of common shares which raised gross proceeds of 8.5 million and net proceeds of $7.7 million.
Our current capital position should allow us to complete all three cohorts of our Redux phase two clinical study, which includes the Dk de cohort initiated here in August.
Additionally, we will be able to initiate our phase three study in acute ischemic stroke and fund our planned operations for the next two years we.
We continue to expect the impact that the delay in the redux study enrollment to affect the timing of the cost incurred but not to cause a significant overall increase in costs as again, we're managing this study internally.
However, we'll continue to assess the effect of the pandemic on the Redux trial.
Monitoring the spread of the virus and the actions implemented by local authorities 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. Operator, if you could please introduce the first analyst.
Yes, Sir and as a reminder to ask a question you'll need to press star one on your telephone. Our first question comes from Alex No lack of Craig Hallum capital.
Greg Good morning, everyone.
No I appreciate all the comments on the differences enrollment with Hygeia <unk> type one diabetics.
Other than opening up more sites, what else can be done to improve enrollment in that group, if they're just unwilling to calm and given the crowd of ours.
So everything is done there.
We actually can do that now we have the capability and it's the concern that the patients have not for that first screen because of your let's say enrolling the study is still ongoing.
Three months of participation and with the nurses coming into nurses are seeing other patients as well there is a perception there that they may be.
At risk for.
Receiving treatment.
Treatment from a nurse that may be exposed to somebody else at a covert. So we're trying to work through that from a messaging perspective and show them that we do have procedures in place to minimize their level of risk.
Sure No I know.
Understood.
Given the rate of enrollment of the type two diabetes cohort would you expand that size just given the very fast pace of enrollment instead of doing 30 patients look at 60 patients.
No everything out 30 day, Yeah, right now 30 patient is the you know the study size that we.
We feel very comfortable with and you know we're also I also anxious to get a topline data out onto the street.
Okay, that's great.
At least one went ecommerce it had yeah. Yeah. Sorry go ahead I'm sorry, we also added Peter sites. So like in the Florida area, specifically in Orlando, we have physicians that have network one another and specifically primary care physicians that have these potential patients that they do feel that they potentially could screen.
They are being referred onto our clinical trial sites now that's also a new strategy that we put in place in the last month.
Okay got it very helpful.
And then any any update on conversations you're having with finding a partner on stroke. In my guess is that probably is going to want to wait to hear from EPS da before signing anything but just any update on the the partnering conversations that stroke.
Yes, we've been having some ongoing conversations both.
Global and also specifically for regional in China and Japan.
Includes TCPA and gained 1.9 in your face to the data actually pretty good maybe I Miss you Miss heard you there.
Yeah, no. So ultimately we think you know team when I could be effective with or without TPH.
Before the <unk> you know for the registration studies well, we feel now is having a very clean trial study so that will exclude the TCPA along with the EMD mechanical thrombectomy and also those patients with large vessel inclusion so it's.
Something from the initial label, we plan to exclude Ta, but we could look at adding that at a later date.
As we had in the prepared remarks, I mean ultimately.
80% to 90% of patients are not receiving PTA or mechanical thrombectomy and so we want to have a very focused on targeted trial design.
Okay that makes sense. So appreciate the update thank you.
Our next question is from answered the route of Guggenheim.
Great. Thanks for taking the question so it sounds like the issue is as a floor.
Solvency and Hypertensive African Americans is not site specific and more around sort of patient risk groups or maybe lack of diagnosis due to cope with this are you seeing similar.
Enrollment issues across other property.
Proppants Sea trials, and maybe what what you've been able to kind of take away from from from those and then I have a follow up question.
Sure Terry.
Yeah sure. Good question the sites that we have for the IDE unit property cohort are sites that also have done other.
Protocols and in conversations with them. It is across the board. They are having the same your shoes for all their protocols all their studies specifically in these niche populations, it's been very difficult.
Great Thanks for that and I guess overall.
Overall, I guess given sort of the okay. Okay, one sort of rationale for Dan 199.
I guess, how how much read through on do you see sort of on a positive D. K B study too.
The Juno property in an applicant.
American hypertensive side, how much more competency you get in that mechanisms from the Dk D trial, given that it's going to it's going to read out first and sort of the overall hypothesis here for for for the little kill Q1 levels.
Yes, I think it will be it will be strong we feel that you know do you mean nine karaoke wind will be effective relief for all forms of chronic kidney disease. The rationale for the study design once the three cohorts now as you'll give us an opportunity to look at the different.
Groups and determine where do we see the IDV the greatest clinical effect and then what our plan is taking that the clinical data in the context of you know the the clinical path for each of the causes to then very quickly decide on which of the three cohorts will move forward.
You know in into the late late stage clinical studies.
Great Thanks, and congrats on the progress.
Thank you.
Our next question is from Thomas Flatten of Lake Street capital.
Hey, good morning, guys. Thanks for taking the question just a couple of and just a follow up on the earlier question about the FDA meeting. So just to confirm have you met with the FDA or is that still to be done is that still a to be completed item.
So we said in a formal request with questions to the FDA here going back a number of weeks ago and they responded with a excepting the meeting request and asked for us to send them the questions and that they would provide a formal response in writing to us by by early December.
And so is there an expectation that there will be a formal meeting following that or is the is the written response, a surrogate for actually meeting with them.
That's right.
Okay and then if there any follow ups then we'll we'll look at discussion based upon that.
Got it and then can you just remind us what discussions if any have you had with the FDA around.
April one as a as a biomarker.
We have not had a discussion yet about about April one it's something that we want to have some data in hand, and so ideally you know first part of next year sometime will be in a position to talk to the FDA.
With actual some data in hand, so we want to get the data first.
Got it appreciate thank you.
Thank you.
And we have no further questions at this time.
Okay.
And.
And thank you everybody appreciate your time and hope everybody stays well and safe and we look forward to keeping you updated with our progress.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating and you may now disconnect.
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