Q1 2021 Qualigen Therapeutics Inc Earnings Call
[music].
Good afternoon, and welcome to the quality of <unk> Therapeutics first quarter 2021 earnings report and corporate update conference call. All participants will be in a listen only mode should you need assistance.
Please signal conference specialist by pressing the star key followed by zero.
Please note. This event is being recorded I would like now to turn the conference over to Tony sure precedent of Investor Awareness, Inc. Please go ahead.
Thank you Matt welcome to the quality of Therapeutics conference call to discuss the financial results and business progress for the first quarter ended March 31st 221. My name is Toni Shor President of Investor of why do you think to the end the call we have with US Michael point of our Chief Executive Officer and Mr. Chris.
For a lot chief financial officer of quality and therapeutics.
We will begin the call with a brief business update and overview of the company's first quarter results. After the update management will answer the questions that were sent in advance prior to this call.
Before we begin I would like to remind listeners that comments made during this call by management will include forward looking statements within the meaning of federal security laws. These forward looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results.
For a list and description of risks and uncertainties. Please review quality didn't filings with the SEC Importantly, This conference call contains time sensitive information that is accurate only as of the date of the broadcast today May 18 2021.
Except as required by law quality of undertakes no obligation to revise or update any forward looking statements to reflect the events work circumstances. After the date of this call I would now like to introduce Michael play of our CEO and founder of Koala, Jim Michael.
Thank you Tony and good afternoon, everyone.
Thank you for joining us.
I hope that all of you and your loved ones are safe and keeping well well many businesses are closed during these unprecedented times.
We remained open to manufacturing ship, our fast pack you mean, the O assay products to meet the needs of our diagnostics customers.
During this time, we also advanced our therapeutics pipeline programs, which we believe will provide the greatest value growth drivers for our shareholders.
And which we would like to spend most of our time today discussing.
Quality of <unk> currently has three promising drug candidates in its pipeline for viral disease and cancer.
And we hope that any one of these therapeutics programs may ultimately become a billion dollar plus commercial opportunity.
Over the next several years, we expect to achieve numerous inflection points for these drug candidates.
Which would serve to derisk, the technology and as a result create greater and greater value for our shareholders.
We are well on the way the hitting some of these value creation of milestones in this current calendar year.
Our first drug candidate Q1, 165, formerly called a S 14 of 11.
Is it potential broad spectrum anti viral within anticipated initial indication for treating hospitalized patients with COVID-19.
Our second drug candidate Q1 to 47, formerly called Allen.
As the first in class cancer therapeutic with an anticipated initial indication for treating acute myeloid leukemia.
Our third drug candidate program covers the Ras EF family of Ras Oncogene protein protein interaction inhibitor of candidates.
Which represents the potential blockbuster technology in the oncology space.
Now, let's dig a little deeper into these drug candidates and explain with shareholders may expect in the coming periods.
Our Q1 165 programs of functional Aptamer that if and when approved is expected to be utilized initially to treat hospitalized patients with COVID-19.
We are pleased to tell you today that we remain on track to submit an investigational new drug application or I N D. In the second half of this year.
Assuming the FDA accepts the I N D. We plan to initiate a small phase one b human clinical trial.
To be followed by the beginning of Phase Iia trial by the end of this year.
Entering into these clinical trials will mark major milestones for quality.
Now you may be asking why continue to pursue therapies for COVID-19, giving the prevalence of vaccines.
The short answer is the market for these therapies will continue to be significant well into the future.
First although the vaccines are excellent of protecting people from catching COVID-19.
Existing therapeutic standards of care are not nearly as effective in helping people, who actually get COVID-19.
Secondly, COVID-19 will unfortunately be here for a long time.
Many parts of the world of far behind the curve and Vaccinating their populations.
We continue to be for many years, even in the U S and Europe. There are many people who choose not to get vaccinated.
This means we will continue to be COVID-19 patients and hospitals and these patients will become as sick as COVID-19 patients do now.
These patients will represent of continuing medical need and a large market even if there are thankfully.
Patients than it would've been if not for the vaccines.
Our drug candidate <unk> 165 targets nucleolar, an endogenous protein that enables viral replication.
Since it does not target the virus itself Q and 165 is expected to be effective and rapidly deployable to treat both old and new COVID-19 variance.
But of course, this would need to be confirmed in future clinical trials.
Furthermore, and this is important we believe the same making the mechanism of <unk> 165 will also make it effective against other viruses. Both currently known like HIV, hepatitis and Ebola and unknown.
Society must be better prepared to battle viral outbreaks and pandemics in the future and we believe Q1 165, if and when approved can be another powerful tool in this inevitable fight.
The active compound in Q1 165 is the foundation for our second drug candidate Q1 to 47.
Before of licensing of Q1 165. This drug candidate demonstrated the favorable safety profile. When it was administered in phase one and phase two clinical trials.
More than 100 patients with advanced cancers.
Despite that of demonstrating clinical responses in several of these patients of.
Of which there cancers disappeared or tumor shrank substantially.
Q1, 165 did not stay in most patients bodies long enough to have a lasting effect as of cancer therapy.
We believe Q1, $2 47, which is the gold nanoparticle conjugated to of functional aptamer will solve that problem.
<unk> has successfully used the particle coating process for 20 years within our fast pack tests poachers.
This gold nanoparticle formulation is expected to dramatically increase the potency.
And we believe the efficacy of Q1 $2 47 by extending the length of time the drug remains in the body with the potential to target and destroy cancer cells in a wide variety of tumor types.
We are targeting to submit an <unk> for Q1 $2 47 in the second half of 2022 of <unk>.
The completion of the IND, enabling toxicology work.
We anticipate the first indication would be to treat patients with acute myeloid leukemia or AML.
Which has a five year survival rate of only 20% in adult patients.
Moreover, we have begun work to follow up on University College, London, encouraging research results using G quadruplex binders and targeted cancer therapeutics.
We think this technology for which we have procured contractual option.
Might possibly pair well with Q1 $2 47 for significant additional indications beyond day M L.
Such as for the treatment of pancreatic cancer, the third deadliest cancer in the United States.
Our third drug candidate exclusively the license from the University of Louisville covers the Ras the family of Ras Oncogene protein protein interaction inhibitor of candidates.
Ras genes produced proteins that regulate when and where the body produces new sales.
Problems occur when these genes become mutated and the resulting Ras genes proteins cannot switch to the off position.
These mutations are present in approximately one third of all cancers, including a high percentage of pancreatic colorectal and lung cancers.
The intended mechanism of action of Ras of blocks the binding of mutated Ras proteins for their effect of proteins upstream and stops them from causing further harm.
By preventing this binding action. This first in class mechanism could stop advanced solid tumor growth.
Such a technology could change the nature of how we treat cancer in the future and therefore, we are very excited about its potential.
We intend to select the lead candidate for clinical development by the end of this year at which time, we will be better able to provide you with the clinical timeline.
Now, let me point out that all of these drug candidates <unk> 165, Q1 to 47 and Ras F can.
It can be considered potential platform technologies.
They all could have multiple uses for different types of cancers and viral infectious diseases.
We believe that our diverse pipeline will provide multiple opportunities to develop drugs were substantial unmet need exists in each one and sizable markets.
In addition to our drug candidates. Our pipeline also includes our stars blood cleansing system.
Starz is of blood filtration device product candidate, which aims to utilize DNA optimize in our core commercialized fast pack particle coding technology to remove viruses and other harmful elements from a patients blood.
As we move forward, we plan to evaluate potential partnerships for further development of the star system.
Now before our CFO, Chris Lot's discussed or discusses our financial results.
I'd like to reiterate that we envision quality since future primarily in therapeutics the.
Bulk of our resources are being invested in our therapeutics programs.
Because that's where we see the maximum potential return the largest market opportunities and the best path to creating value for our shareholders.
Now in addition, we continue to deepen our therapeutic expertise and I am pleased to announce the Doctor Turkish <unk>, who has joined our company as senior Vice President and Chief Medical Officer as of yesterday May 17.
Doctor of short brings to quality and a wealth of experience in all phases of therapeutic drug development.
With the prior senior positions at companies, including Merck Pfizer engine intact.
I would now like to ask Chris lots, our Chief financial officer to discuss financial results for the first quarter Chris.
Thank you Michael.
Like to walk through our current financial position and results from the first quarter.
As Michael mentioned earlier, we saw a nice rebound in our fast pack reagent consumable sales this first quarter and that the reach the same level as the same quarter in 2020, as well as showing dramatic recovery compared to the later quarters last year, which had been more negatively impacted by the pandemic.
For the three months ended March 31, 2021, total revenues were $1 $9 million compared to about $1.5 million. During the same three months in 2020, which is an increase of over $400000. This increase was due to recognition of license revenue from the.
<unk> of milestones related to the easing of <unk> technology transfer agreement previously announced in January.
Excluding revenue from this new agreement fast pack product sales were approximately flat compared to the same quarter a year ago.
And we're cautiously optimistic that the recovery trend will continue as more patients returned to physician offices for diagnostic testing.
In addition, we have a little over $150000 and remaining deferred revenues from the easing agreement that we expect to be recognized later this year.
In terms of our cash position as of March 31, we had a cash balance of $21 $9 million.
Based on our current cash on hand, and assuming currently planned expenditures and level of operations. We believe that we have sufficient capital to fund our operations into mid 2022.
New opportunities are unforeseen challenges could change that runway forecast.
We have about $28 8 million common shares outstanding as well as 180 shares of preferred stock, which are convertible into about 243000 common shares.
We also have about $4 million outstanding employee options and $9 6 million warrants.
Of which $2 9 million warrants are liability classified.
Because our stock price fell during the first quarter of 2021, there was a corresponding reduction in the fair value of this liability classified warrants that caused a significant noncash reported gain for the company in the first quarter due to accounting rules.
On the expense side, we spent $2 $9 million in general and administrative expenses in the current period compared to $918000 in the prior year period.
This is largely due to increases in noncash stock based compensation of $1 $1 million as well as other public company expenses non incurred in the same quarter last year due to quality and having been a private company at that time.
Investors looking at our G&A expenses year over year should keep in mind that the comparison is skewed because of compares this year as public company to last year's private company expenses.
Total R&D expense was approximately $3 $5 million for the current quarter compared to $238000 for the prior year period.
Of this $3 5 million $3 2 million or 91% was attributable to therapeutics, and just $330000 or 9% was attributable to diagnostics.
The bulk of our Therapeutics research and development expenses for the quarter consisted of $2 $7 million in expenses related to the potential application of <unk> 165 to the treatment of COVID-19.
Of this amount of about one $8 million was drug manufacturing costs for our anticipated clinical trials and $875000 was other preclinical research costs compared to no expenses for this program in the year ago period.
In addition, we had preclinical research and development costs of just over $200000 during the quarter for Q N $2 47, and also about $200000 for assets.
Diagnostic research and development costs were primarily due to stock based compensation expense related to our public company status and also wind down costs related to the COVID-19 antibody diagnostic test that we voluntarily withdrew in April.
For the future, we expect our therapeutic research and development costs to increase significantly as we move into the Q1 and 165 clinical trials later this year and they will continue to far outweigh our diagnostic research and development costs.
Loss from operations in the first quarter increased to $5 $8 million from the $784000 loss from operations for the same quarter last year, mainly due to the higher G&A and R&D expenses and as I mentioned earlier, we had a noncash gain of $2 $1 million, resulting from the.
The reduction in fair value of our warrant liabilities during the quarter.
These warrants will continue to create significant distortion in our balance sheet and P&L from quarter to quarter due to external factors such as the price of our stock.
We will continue to seek ways to change the underlying factual conditions related to these warrant liabilities as best we can in compliance with GAAP to reduce or eliminate this noncash line item in the future.
And with that I'll turn the call back over to Tony for Q&A.
Thank you Chris the.
Following the more questions submitted.
First question is are you still on track to file your Q and 165, Indeed this year.
If so when.
Yes, Hi, this is Michael as we talked about earlier in this call. We are pleased to say we are on track to file the I N D. For Q1 165 during the second half of this year.
Second question is when will you report data from the Q1 165 clinical trial.
We plan to report the interim data as soon as its available following the standard clinical trial reporting process and this process includes the unblinded the data and quality control checks that have to be done before we can make the data public.
It's important to understand that there will be data from the phase one b trial of cue 165, and then other data from the larger phase Iia trial.
So we expect that we'll be able to report data from the phase one be in early 2022, or perhaps sooner and from the phase Iia later in 2022.
Okay. When will you start the phase <unk> clinical trial of 165 for COVID-19 patients.
For pending regulatory agency feedback to our IND submission, we expect to initiate the phase one b to a clinical trial in the second half of this year.
Many many people many shareholders were surprised by your announcements that you withdrew the EUA submission of your fast pack COVID-19 antibody test.
Can you please comment on that.
Ah yes.
We really appreciate the question because I think we need to address this.
Back in the spring of 2020, we tried to contribute to the national effort. When there was an emergency campaign.
To provide as many COVID-19 tests as possible.
We submitted an application for emergency use authorization of our EUA for a fast path COVID-19 antibody test in June.
And for nine months this application lingered with the F D a.
In the meantime, alternative tests and testing practices had become readily available and it became clear to us that the FDA did not feel that there was a really.
A really strong need for a test or the there was any longer an emergency.
For alternative with no E way was to go through the lengthy and expensive non EUA medical device approval process. It's also called the pre market approval.
And we concluded that in view of the cash needs of our therapeutics programs. There was no longer a viable business case for advancing and marketing the test.
Now of PMA submission process takes at least of year end would cost of several million dollars.
And that several million dollars, we feel could be better utilized on our therapeutics program. So while we shared everyone's disappointment, we did know while debt to impede our progress toward developing a robust therapeutics pipeline for viral diseases and cancer.
The next question came in was does your of COVID-19 Therapeutics has a strong future.
And are you concerned that there simply may not be a need or sense of urgency like what has become of the COVID-19 test.
Yes, great question.
As mentioned earlier in today's call all of the vaccines are excellent of protecting vaccinated people from catching COVID-19.
Existing therapeutic standards of care of not nearly so effective in helping people, who actually do catch COVID-19.
Many parts of the world of far behind the curve and Vaccinating their populations and we will continue to be so for many years and even in the U S and Europe. There are many populations in individuals who choose not to get vaccinated.
This means there will continue to be COVID-19, teen patients and hospitals.
And you know theyre going to get just the sick and the future is they're getting now and as they have in the past. The second of change. These patients will represent of continuing medical need and the large potential market.
And in addition, this is also extremely important.
We'd like everyone to keep in mind, the Q1 165 targets nuclear oil and wishes of protein it enables viral replication.
We're not targeting the virus itself. There for Q1 165 is expected to be equally effective against any new COVID-19 variants such as the ones we're seeing from <unk>.
South Africa and Brazil.
Also for the same reason we continue we think Q1 165 will ultimately be shown to have applications far beyond COVID-19 has a broad anti viral which is an area of huge unmet medical need.
The next question is do you have enough money to sustain your business and for how long.
This is Chris lots of thank you for the question, we expect that our cash runway will take us into the middle of 2022.
Next question is where do you see the biggest growth opportunity for quality Jen.
Well as we discussed earlier, we believe our pipeline will provide multiple opportunities to develop treatments were substantial unmet medical needs exist.
Especially in oncology and viral diseases.
Our strategy is to push forward a multitude of therapeutic technologies in areas of high unmet medical need.
And we believe that this strategy will provide us with the highest probability of success over the long term.
Can you explain the clinical trial of <unk> 165, and why why there is the phase one b in the phase two and how many patients will be included can you give us the good sense of that understanding.
Yes sure.
The reason for a phase one b is that the FDA has asked US just to take a very small group of patients and confirm the dosing that we're going to use in the larger trial.
So again, we're talking of very very small number of patients and then from there we will move right into the phase two way in the phase two way is the real reason for the phase two ways to show that the drug works or doesn't work in COVID-19 patients.
That trial is going to be up to 500 patients and we're expecting to have an interim readout on data at about 120 patients now.
Now the way. This trial is going to work is patients will be enrolled in the trial, who are admitted to hospitals with COVID-19.
And then the patients will be split into two groups. So one group will be put on standard of care plus some placebo.
And the second group will be put on standard of care.
Plus Q1 165.
And the primary endpoint that we're looking to achieve is a reduction in the length of stay of the patients that are on the queue and $1 65.
So that's really an overview of how that trial is going to work.
Thank you for that clarity if you don't mind I'd like to turn it back to Michael now for closing remarks.
Thank you Tony.
Yes.
Hosing I would just like to reiterate the quality of <unk> and is poised for severance for hitting several key inflection points before the end of this year.
Including filing of the IND for Q1 165 to treat hospitalized COVID-19 patients.
Beginning of Q1 165 clinical trial.
Finally as of the formulation of Q1 $2 47.
And advancing our lead candidate for Ras F.
Our team of quality and remains focused on executing our mission to deliver shareholder value, while putting patients first.
And I would also like to take this opportunity to thank you for your continued interest in and support of quality and therapeutics.
Conference has now concluded. Thank you for attending today's presentation you may now disconnect.