Q4 2020 Forte Biosciences Inc Earnings Call
Greetings and welcome to Forte Biosciences fourth quarter and full year 2020 conference call. My name is Melissa and I'll be the operator for this call.
On the call are Paul Wagner, President and Chief Executive Officer of Forte, Biosciences, Denburg, Foretastes, Chief Medical Officer, and Tony Riley Forte, Chief Financial Officer.
Before I turn the call over to Paul and Tony to discuss the business and financial highlights I would like to make a comment regarding forward looking statements.
Many of the statements made today are forward looking statements, including statements with respect to the company's cash position and they've had the potential development timeline of the company's product candidates.
Actual results could differ materially from those contemplated by our forward looking statements and reported results should not be considered as an indication of future performance.
Please look at our filings with the SEC for a discussion of the factors that could cause our results to differ materially additional information is also set forth in our annual report on form 10-K for the year ended December 31st 2020 as filed with the SEC on March 16th 2021.
The forward looking statements on this call are based on information available to us and we just claim any obligation to update these forward looking statements except as required by law.
I'll now turn the floor over to Tony who will discuss the financial highlights of the fourth quarter and full year 2020.
I will now give an update of our financial results for the fourth quarter and full year 2020, we ended the year 2020, with approximately $58 $8 million in cash and cash equivalents.
Which we believe is sufficient to fund operations for at least the next 12 months as we continue to advance our lead product candidate <unk>.
S B four O one true clinical trials.
Cash burn for the fourth quarter 2020 was $4 $1 million.
So the financing transactions, we closed an underwritten public offering.
One 6 million shares of common stock on November <unk> 2020, which include share sold upon the full exercise of the underwriters option to purchase additional share.
Including this option exercise net proceeds of the offering were approximately $42 $7 million after deducting $3.3 million in underwriting discounts commissions and other operating expenses.
What's he had $12 8 million shares of common stock outstanding as of December 31, 2020.
In terms of operating results research and development expenses were 3.3.
<unk> 3.0 million.
A million dollars at $1.2 million.
The three months ended.
December 31, 2020, and 2019, respectively.
And 10.0 million and $2 7 million for the years ended December 31, 2020, and 2019, respectively. The increases in R&D expenses in 2020 were primarily due to manufacturing and clinical development costs as we advanced F. Before a one true phase two clinical trials, we expect our research.
Our share of development expenses to increase during the next 12 months.
The clinical development of Ft Four award.
General and interest expenses were $1 5 million.
Point 4 million per three months ended December 31, 2020 in 2019, respectively.
$4 2 million and 1.4 million for the year ended December 31, 2020 in 2019, respectively. The increases in 2020 were primarily due to professional fees co legal auditing and business consulting services and increases in head count expenses as we scaled operations and became a public company.
On June 16, 2022, with a reverse merger with Tokyo.
And in the second quarter of 2020, we recognized a charge of $32 $1 million for acquired in process research and development of which $30 9 million was non cash related.
E R&D charge was related to the reverse merger with temperature.
Losses per share were $3 seven and 74 cents for the three months ended December 31, 2020 in 2019, respectively and $6 three two and one.
1.93 for the years ended December 31, 'twenty, 'twenty and 2019, respectively.
Additional details of our financial results for the fourth quarter and full year 2020 can be found in our form 10-K as filed.
Filed with the SEC on March 16, 2021, you can also find more information in the Investor Relations section of our website at Www Dot Forte by Rx talk hub.
I will now hand over to Paul.
Great. Thank you Tony.
What day Biosciences is developing SB four one which is our lives bio therapeutic for the treatment of inflammatory skin diseases and our focus is on atopic dermatitis, we've been working on epic fall one in collaboration with the National Institute of Health, NIH, NIAID and they've only been thought leaders and.
Leaders in the science understanding all.
I'll go back to your composition of the skin and how that bacteria interact with their skin.
Atopic dermatitis is a disease that affects approximately 17 to 20 million people in the United States alone. That's a a large population multiples larger than psoriasis and more than half of those are kids are pediatrics, there's no cure for atopic dermatitis at presence and the treatment options for those pediatrics in particular are very limited we believe it is.
A significant unmet need for a very safe and effective therapy to treat these patients and are hopeful that ft for one can meet that need and to that end in October FDA granted fast track designation to <unk> for one based on the unmet need and the seriousness of the disease, we've got extensive preclinical and mechanism of action data than ever before.
Oh, one specific strains of resemble honest Nick hosted a comprised L. P for one where screen for and selected to directly address the underlying disease by driving tissue repair and then from anti inflammation secondarily. The mechanism of that before one includes suppressing harmful bacteria like staph aureus.
The completed phase one to a trial data in adult adolescent and pediatrics atopic dermatitis patients three years of age and older hasn't published in science translational medicine, and really underscores the quality of the science behind <unk> hundred one that data.
Great good tolerability and significant and consistent activity across mild moderate and severe disease across age groups, including the pediatrics and adults and across key end points, including easy score, Ed and pruritus or itch, specifically in the 20th Pediatrics treated for 16 weeks in the phase Iia trial at before.
Oh, one demonstrated nearly 80% improvement from baseline in atopic dermatitis disease activity as measured by easy.
The eczema activity and severity index and that effect was durable from between three and eight months after stopping therapy.
The proportion of patients that had at least 50% improvement in disease also called easy 50 with 90 per cent.
The EZ 75, or <unk> 70 per cent and easy 90 was 30% and in the subgroup of moderate to severe patients 100% achieved easy 50, nearly 90% achieved easy 75, and a third achieved the easy 90 endpoint Wheeler.
We look forward to further validating this dataset with the results of an ongoing multi center randomized placebo controlled clinical study and to that end I'm really happy to announce that we have completed enrollment in this study. We originally targeted enrolling 124 subjects, but due to strong demand we were able to enroll 154 subjects I want to congratulate.
The entire team on this very important milestone.
The trial enrolled pediatrics, two years of age and older adolescents and adults with mild to moderate atopic dermatitis. The majority of the subjects enrolled are under aged 18, and the majority of subjects have moderate disease severity.
This trial enrolled as you know during the peak of the Covid pandemic and for parents of these kids as young as two years of age to enroll their children in our trial under these circumstances, we believe underscores the unmet need and the interest in our approach we're excited to get to the data readout in mid year excuse me in third quarter and Dan is available.
For Q&A to provide additional perspective.
Also I want to mention that in March we had two more patents issue, which now brings our U S patent portfolio to nine issued patents with additional IP pending are allowed and this intellectual property portfolio is mirrored ex U S. With IP entered in more than 15 ex U S countries.
In terms of our cash position as Tony mentioned at the end of 'twenty 'twenty, we had $58 $8 million in cash and given our cash utilization rate, we are well positioned and expect to have cash sufficient for at least the next 12 months, we will now open the call up to Q&A.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question Kim you.
You May press star two if you'd like to remove your question from Nick Kim from participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment. Please poll for questions.
Thank you. Our first question comes from the line of Nicole to me now it was true Securities. Please proceed with your question.
Good morning, and thanks for taking my question with enrollment at 154 compared to the pen 124 patients.
With the last patient enrolled and given their first treatment and does the powering of the study or the statistical analysis plan change.
That's a that's a great question, we're not going to get into the specific details of when the last patient enrolled.
Again, the original mid year estimate will true provided we didn't know when the enrollment was complete now with the completion our completion of that enrollment we can refine the timeline, which is generally consistent keep in mind. The mid year estimate was that the beginning of the trial in the middle of the pandemic. So I think it's notable that we were able to generally hit that timeline that we are that we specify.
Fine.
With respect to the powering obviously theres 30 more patients than we had originally than we'd originally targeted but that really was because of the strong demand really wasn't to try to increase the powering. Although obviously, we do have more patients in the study now given the patients that had gone to the effort to come in for screening we wanted to be sure to allow them to a baseline and enroll.
And so again that resulted just 30 more pieces of the plan as a result of the strong demand I know Dan did you have more comments I tried to make on that.
No call I think you addressed that adequately thank you.
Yes.
Oh, Great and then just one quick question.
In terms of awareness and outreach for SB four one in the dermatology community. What are you guys doing in order to.
Create more awareness for it.
How should we think about the hyper scribing.
Yeah. That's a great question you know we've been out in the field talking not only with the clinical trial sites, but also with other.
Thought leaders and community based dermatologists.
The greatest increase in awareness will come with the readout of the phase two data I can say that the clinical trial sites are all very excited about this feedback from the patients is that they are very receptive to this they view it as a natural therapy, that's something that's very.
Differentiated from from what's out there, it's innovative and theres, a quite a bit of excitement out there on a regular basis I'm getting E mails from both physicians and from patients asking how they can access and get access to the 401. So so I do think that theres a lot of excitement out there it's very differentiated again.
To date, we've seen a very good safety profile, we'll see how that bears out with the phase two data, but that that really I think is a significant point of differentiation.
Pediatrics and the parents of the pediatrics are used to things like steroids can cause hyperpigmentation that can cause opinion of the skin stretch marks.
And a majority of these parents don't want to put their kids onto steroids and those that do drop them off fairly quickly and so to have an option of natural option like <unk>.
Before one is really unique and again I think that is part of the reason why we saw such good enrollment in this trial, even with relatively limited information on people are one and the clinical data that was out there parents are very very receptive to this study and ER and we had a robust demand for French free into the crowd into the trial.
And again this was in the middle of Covid, where you know parents, having to bring young children into a clinical trial site. Yeah, you know for the after the screening for the baseline and then for all of these visits I think that's a that's quite a statement on the unmet need as I mentioned before.
Great. Thanks, so much again and congratulations on the Panther.
Thank you Nicole.
Thank you. Our next question comes from the line of Kabbalah I'm looser with Chardan. Please proceed with your question.
Hi, good morning, and thanks for taking my call.
A couple of questions on your strategic plans, assuming things go well with your data readout for.
For example, with regards to pipeline indication expansion or are you doing preclinical work now or is it something that will be of particular focus a post let's say positive results and then what might be the focus of your headcount build out to the extent things do go well in the third quarter.
Yeah. Good question, Paul and thanks for those questions I appreciate it in terms of the pipeline indication first of all you know our target product profile eventually really is going to be.
In atopic dermatitis first it's going to be in infants all the way through to adults and we hope mild all the way through to severe we again in the two a trial we saw good activity in severe patients all in.
One severe patient that we did have in the to a trial she.
She had a greater than 90% improvement in her disease from baseline as measured by easy. So so we do think that this has good activity and as I mentioned before in the moderate to severe groups within that to a trial roughly.
Nine out of the 20 patients are 100 per cent of them all of them hit the easy 50 90 per cent. It easy easy 75. So again I think it's important first to focus on atopic dermatitis, which is where the large therapeutic opportunity is and in the pediatric portion of that as well, although again I think that there's an opportunity potentially even for the.
Dogs and combination therapy in the adult and we have done some preclinical work in other inflammatory skin diseases and we've seen some some positive.
Positive results, there are but but again I think the initial focus for us and a real focus of the commercial opportunity is in atopic dermatitis in terms of the head count.
We will expand with positive phase two data be looking particularly on the commercial side to expand a bit but again I'd say this is a very.
And friendly company you know, we're going to keep the cost down as we have you can see that our burn has been very modest.
On for between four and $5 billion. So so we're being very efficient with the capital that we have and obviously, you're just bringing in a key key hires that are really going to advance.
The the functional areas, where we kind of focus.
Alright, thank you.
Thanks, Ron.
Thank you. Our next question comes from the line of Michael Higgins with Ladenburg Thalmann. Please proceed with your question.
Thanks, operator, good morning, Paul Thanks for taking some questions. Congrats on the pace of the enrollment I'm looking forward to seeing that of course.
Question on the AR on the IP that you mentioned can you expand on what was included in those two recent filings.
Yeah, Great Great question. So so again as you heard we've got two more patents that have issued so were up to nine total here in the U S. That's going to be married internationally.
Internationally, we have more patents come in here in the U S. In fact more than already allowed.
Two new patents that we have so we started off.
Seven.
We're a bit more focused a bit more narrow those were issued.
Fairly quickly through the Tracfone process and now we're beginning to broaden that out. So the two patents are the first one is really a composition patent.
That will now allow us for our mucosa.
On the on.
The skin of individuals and it is a farmer pharmaceutical composition, that's formulated into a topical dosage. The other one involves the container until the <unk> of the product that needs to be reconstituted per topically topical application to the skin. So these are all listed on the U S. PTO you can you can check that out, but really happy to have those and again more coming so.
One thing that we've really focused on obviously this is a natural product, but we want to make sure that we've got robust patent protection from the very beginning we've been very aggressive about making sure. We've got good protection here and I think this is just an indication of the work that we've been doing for a number of years on the intellectual property front.
Thanks, that's very helpful.
I'd be remiss, if not bringing up the the news flow since the beginning of the year in the atopic dermatitis space, there's been several companies with with news out.
It doesn't seem to be anything that's a direct hit that seems to show some interest in this space.
He comments in reaction to a true what you've been seeing as well and in the clinical progress out there in a day.
No look I think it's good for the entire space, you know, whether you're referring to bacterial therapy that we don't consider ourselves necessarily to be a microbiome company considered the effect before I wanted to be a drug product that consist of bacteria are the differences were not focused on treating despite all of this we're focused on treating the underlying disease, but to the extent that there's more work that's being done in this space.
Whether it's through bacterial based therapies or whether it's small molecules biologics, it's really increasing awareness, it's bringing more patients and I think that's good for everybody.
Thank you know first of all credit goes to you know regeneron and Sanofi with the pixel two has really led the way here and started to focus on atopic dermatitis is a significant disease with that with a substantial unmet need in there and again well.
We can look at the adult moderate to severe a portion of this market, which is the minority of the market and that's really where a lot of the biologics are our focus.
There's quite a bit of development going on there, but I'd say, there's there's less development going on in that mild to moderate pediatric space, which again is the majority of the market and where it my view that day that the greatest unmet need exists.
Thanks, I appreciate that looking forward to seeing to other potential expansion and other skin conditions as well in the summer so or at least hearing about it. This summer. So thanks again I'll stop there.
Thanks, Michael.
Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.
Our next question comes from the line of Kumar <unk> with Brookline Capital markets. Please proceed with your question.
Hi, Thanks for taking my questions and also congratulations on the progress despite challenges due to COVID-19.
With.
Yeah.
So with regard to the specified side with it. So what are you guys seeing Dave are you seeing any challenges due to the COVID-19.
And maybe.
In terms of Big picture at all once you how the phase two data out how should we expect in terms of timeline with regard to interactions with the FDA and how quickly do you guys think you can start the phase III trial.
And also how are you guys thinking about.
Interactions with regulatory agencies in Europe kind of plans for Europe.
Great questions I'll, let Dan take those last two I'll, just say haven't gone out to visit them just in the middle of visiting the clinical trial sites now went out and visiting them, but there's a lot of excitement I. You know first of all this is a natural therapy, that's very appealing to both the day with physicians and the patients. The fact that this isn't it a therapy that's <unk>.
Hey, Dan its illiquid its not a messy cream I think is a differentiation in the fact that it's applied just three times a week not once or multiple times a day is an important differentiation.
The fact that theres not a significant burden.
With blood draws or other types of panels that are needed makes it so much easier trial to get broke so you know overall, it's been very positive I you know I asked that question.
The principal investigators and the site coordinators regularly you know what are you hearing what you know what kind of feedback are you receiving an overwhelmingly it's been very very positive that the parents are very receptive to this therapy bacterial therapy that they view us as a natural therapy, a natural option to what they see as you know drugs that are being applied to the skin of their kids and the fact.
And I've made this point several times, but it is very important I know the.
The fact that we were able and you point this out.
As well, but the fact that we were able to get this not just enrolled but over enrolled by 30 patients a significant you know a day.
A man is an indication of the unmet need I mean, you know these parents first of all had to face COVID-19, bringing their kids and into the physician office in the middle of the Covid pandemic. They all day they.
They don't know that this therapy works. Obviously this is part of the proof of whether this therapy works.
We believed for a very hopeful for this trial with the parents don't know that for a fact, that's why we're doing this trial.
And they don't know what their kids are gonna go onto placebo or active and in spite of that they're bringing their kids and to participate in this trial I think in part because of the significant unmet need there's little there's few other options that they have so so I really think that there's been.
A lot of positive feedback from the from the sites and we're looking forward to getting the data in the third quarter. Dan did you want address the are the two questions were just asked.
Sure. So as you can imagine we are planning to engage the FDA. After we get our phase II data and we're working already to begin preparations for that process and we will proceed with them interaction with the FDA as soon as feasible. After we obtain our data.
As you can imagine we are also working on a strategy for the EU.
The U S is obviously the primary focus of this is the largest market, but the EU is also a very important market. So we're.
Working with various people to work together to get scientific advice from the future again after we get our phase two data.
We expect that we've launched the low.
A free program in the first half of next year.
Okay, great. Thank you so much.
Sure.
Thank you ladies and gentlemen, this concludes our Q&A session and thus concludes our call today. We thank you for your interest and participation you may now disconnect your lines.
Yeah.