Q2 2021 Progenity Inc Earnings Call
[music].
Yeah.
Welcome to defer JV second quarter, 2021 earnings call.
At this time all participants are in listen only mode. After the speaker presentation, there will be a question and answer session.
To ask a question. During this time, you will need to press star one on your telephone keypad.
And if you require any further assistance please press star zero.
I will now turn the call over to Robert <unk>, managing director with Westlake IC are prevented east Investor Relations firm. Thank you. Please go ahead.
Thank you operator, good afternoon, and welcome to <unk> second quarter 2021 financial results Conference call. Joining me on the call are Dr. Harry Stylee, Chairman and Chief Executive Officer, and Eric <unk>, Chief Financial Officer, before I turn the call over to Doctor Stylee I would.
To remind you that today's call will include forward looking statements within the meaning of the federal securities laws, including but not limited to the types of statements identified as forward looking in our quarterly report on Form 10-Q that we will file later today and our subsequent periodic reports filed with the SEC.
Which will all be available on our website in the investors section.
These forward looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control. Please note that the actual results could differ materially from those projected in any forward looking statement.
For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking statements as well as risks related to our business. Please see our periodic reports filed with the SEC.
A slide deck with some supplemental information is also now on the website, but it will not be directly referenced by the speakers on the call today.
With that I will now turn the call over to Dr. Harry Stylee, Chairman and CEO of progenitor.
Thank you Robert and thank you all for joining us this afternoon.
The second quarter the company initiated a transformation there it ticked up materially materially reducing its burn rate was accelerating the transition to an innovation leader.
Company focused on its oral delivery of boarder molecules and it's IBD platforms.
<unk> also successfully completed the program on a full validation studies for its preclude you at RSA in parallel advanced our single molecule detection platform and is committed to making technical and commercial progress with these programs, including with partners.
We also continue to explore various financing options, including generating non dilutive capital Erik Hirsch CFO shortly elaborate on our financial operating performance.
First we recently announced the successful completion of the validation study crowed wonderful for our preclude a rule out test for preeclampsia.
As noted previously precluded achieved a primary hazard ratio endpoint of the study protocol and demonstrated strong performance there.
The results so far and validation study are currently being drafted by the independent principal investigators for submission to a peer reviewed journal.
Results as a result, we are limited in our ability to provide more detail regarding specific results. Here. However, I can assure you that we are really pleased that the test performance.
As intended to be used clinically was consistent with what we observed in our pro wants to know and verification.
Pre validation set.
The performance gives preclude you have the potential to transform patient management globally by enabling physicians to create friendship.
With signs and symptoms of Preeclampsia further <unk> just recently received an important patent allowance for one of the key assays and our normal precluded test. This constitutes a further strengthening of our growing portfolio of IP portfolio.
That precluded you attached as a multi analyte immuno diagnostic laboratory developed test that is operationally ready for commercialization.
As a reminder, preeclampsia is the second most common cause of <unk> 17 in the U S with more than 700000 women presenting each year with signs and symptoms of possible preeclampsia.
The most effective treatment for preeclampsia is typically delivery that is most often premature.
<unk> is a global challenge and effective operator independent test to aid in the management of this complex disorder is simply not currently available.
<unk> also has potential as an IBD immuno diagnostic kit, which can better serve our global community.
Our preference is to identify commercial partners that can facilitate physician patient access and reimbursement in partnership with us in the U S market and do the same for the CE IBD for the global markets.
I could not be more excited about the potential for this test.
Positive any change clinical practice in the management of freight trends here and to generate economic benefit to the health system.
I want to take this opportunity to congratulate the team and our other stakeholders for a successful pre <unk> validation study.
Whilst we continue to support that preclude your test development at this stage of our transformation, we are prioritizing our capital allocation to advancing our complementary or robust therapeutic drug system or <unk>, followed by a drug delivery system or DDS platforms. We expect this year to generate key.
Preclinical and clinical feasibility data, especially for our drug pipeline, primarily with a prototype autonomous devices and to further advance our platform technology. As a reminder, we have effectively contracted the manufacture of IPO, including at Illumina.
Let's start with our oral bio therapeutics program.
The goal of this program is to achieve oral delivery and to maximize systemic distribution of biotherapeutics, especially monoclonal antibodies, but also other proteins peptides steakhouses and potentially vaccines is the Gi tract is host to the majority of the immune system.
In total we're targeting a <unk> 250 billion market that is prime for these oral delivery solutions.
During the second quarter of 2021, we initiated preclinical studies of our lead candidates PGN Ob won at Illumina monoclonal, which is subject to the BLA pathway and PGN <unk> <unk> tied a peptide likely the 505 two pathway.
Each of lodging for the first time on prototype autonomous OLED and the swine model.
Our own design.
The goal of these studies is to demonstrate product availability of our lead <unk> drug candidates within autonomous obs and define its operating parameters.
The preclinical models.
Initial data with the prototype <unk> is very promising and supports the potential for the <unk> to achieve industry, leading point of ability for proteins peptides another bond molecules.
Despite expected normal performance variability at this early stage of development.
We recently demonstrated in a Swan modal a significant drug was detected in approximately half the animals in a test group achieving an average global liquidity of approximately 15% to a maximum of 44% of IV for at Illumina. Following a single dose highlighting the <unk>.
<unk> potential for this program.
This is an unprecedented performance for a monoclonal antibody.
We continue to make rapid progress in tweaking the prototype delivery platform, including formulations refining our animal models and developing our understanding of likely performance in humans we.
We believe that on average profitability of around 10% to 15% of IV with repeat dosing will prove satisfactory for a large number of bio molecules. We anticipate that we will meet that we will meet almost slightly exceed this range.
We believe yogurt, yes platform can number one help improve patient compliance and lower IV infusion costs to help expand the market for GOP agonists and other drugs across a range of chronic use indications three helped biotherapeutics central monoclonal has become more competitive.
A small molecule substitutes and finally, we have the potential to target and treat a range of pathologies, especially liver diseases.
Our strategy is to advance our own pipeline, while continuing to partner with third parties leveraging their drug candidates and resources to make the <unk> a leader in the oral delivery of biotherapeutics.
As we are using no drugs with established safety and efficacy profiles. We believe we should be able to generate compelling bioavailability data in animal models and provide clinical proof of concept with first in man studies.
In parallel our first two <unk> partnerships with major pharma are advancing as expected.
While <unk> is designed to achieve over delivery and some extra my systemic distribution of biotherapeutics.
<unk> is designed to treat Gi localized disease with minimal systemic breakthrough.
The goal of this program is to deliver some utilized heico's pharmaceuticals to specific locations along the GI track initially to treat inflammatory bowel disease or IPO date.
We are developing drug device combination products.
That deliver proprietary <unk> formulations of drugs.
That leads to the side of disease in the Gi tract, thereby maximizing the available dose and tissue and.
In achieving Peng colonic distribution.
We are first targeting the estimated $15 billion of IBD market without Attunity drugs PGM 001 at Illumina, a monoclonal antibody and PGM 600, Tofacitinib, a small molecule normally absorbed in the stomach and the upper Gi tract.
Our initial focus being ulcerative colitis or UC.
Whilst whilst the novel route of administration for the aluminum extrusion BLA BLA regulatory pathway. We believe that citizens device combination can exploit a 505 pathway and allow us to take advantage of the primary data and potentially benefit from a relatively short path to a commercial ASP.
Yet.
We continue to believe we have the potential with this platform to achieve rapid induction superior clinical remission rates and reduce safety events for the treatment of IBD and colitis.
As a reminder, during the first quarter, we completed our first clinical study with the prototype autonomous DVS successfully valuation capsule safety clogging and Tolerability and the Guestroom Stein will track of 12 normal healthy volunteers.
No safety issues were reported.
By specifically targeting the segment of the Gi tract with disease burden.
Have the potential to maximize the drug exposure at the <unk> site at many more systemic exposure and off target organ effects.
We also completed during that period, a preclinical study evaluating the safety Tolerability and PK PD effects of a seven day administration and dogs, a PGM 600, so utilized tofacitinib delivered by DDS.
<unk> of 25, <unk> or <unk> <unk> per day with direct comparison to a standard orally administered systemic tablet at 10 milligrams per day over a week.
We were able to show that.
The DDS can function as intended and the majority of cases and achieve tissue tofacitinib levels and tissue to plasma ratios of tofacitinib, along the length of the colon.
These were at least 25% to 50 times higher respectively with PGM 600 at 10 milligrams daily compared to the standard oral tablet formulation at the same dose.
These results demonstrate that PGM six hundred's proprietary liquid formulation and targeted delivery can achieve Penn colonial distribution and facilitate because youll penetration.
We made further progress during the second quarter, and then ongoing clinical feasibility study in patients with ulcerative colitis, using the monoclonal biotherapeutic humira delivered by enemy, Panama, which are both proxies for our PGM 001 at Illumina.
Tds platform.
First of all subjects have completed the dosing regimen and initial results are quite promising next month, we expect to finalize the design of the first human feasibility studies delivering humira with the GDS is the what is the design of human feasibility study with Pjm's et cetera.
Clinical feasibility studies anticipated to initiate in first half in 2022 pending IRB approvals.
You'll hear more about this study likely in the September timeframe.
Crohns and Colitis Foundation is.
He is also helping fund the development of the Dts for the treatment of IBD and we recently published a peer reviewed article regarding the DDS.
We believe that GDS platform will materially advanced treatment of Gi disease initially <unk> in UC.
Strategy begins with transforming established drugs with known efficacy and safety profiles, but has the potential to materially enhance any compatible drug directed at <unk> Gi looks like disease and in this instance, enable new effective IBD treatment regimens, such as rapid induction and extending to.
Drug combination therapies.
While we will focus on our drug pipeline and delivery platforms. We have moved the Rss <unk> Dx to primarily engineering development of second generation builds to support larger scale manufacturing and with this focus we have limited preclinical clinical studies at this time.
We have discussed to see both mutation for <unk> in the past and continues to be excited voice as potential. We are also evaluating the use of the <unk>.
T.
Data from our studies and from existing literature illustrate that TNF levels and the alumina mucosa of IBD patients may vary tremendously from patient to patient over time.
New pathways for inflammation could supersede for example, TNF.
<unk>.
We believe that we can measure team another slight declines in situ using your assess opioid dx.
We can optimize as a consequence, we can optimize patient selection for clinical studies establish a more precise dosing regimen and help with patient monitoring for disease progression.
We believe that such a capability makes further contribute to a superior response rate for our drugs and the ability for physicians to most closely monitor the patient for disease progression.
Completing our innovation pipeline update with a single molecule detection platform, we recently established.
Coefficient of variation using genomic DNA has.
Approximately <unk>, 5%, which is supportive of an <unk> assay performance equivalent to next generation sequencing.
We soon intend to report our performance for detecting <unk> 'twenty $118.13, and deploy these any successful at preference to date is to partner the platform, especially with NYPD test providers.
We continue to believe a single owner single molecule detection platform has the potential to reduce <unk> direct cogs by up to 50% and achieve equivalent performance to traditional next generation sequencing.
Should also be noted that this platform is expected to be capable of detecting and counting specific DNA RNA epigenetic as well as protein targets with high sensitivity and low costs.
Such the platform may provide deal for liquid biopsy applications in oncology.
And now we'll discuss our progress with the operational performance of our business transformation.
As we mentioned in our corporate update in June we officially closed.
Commercial laboratory and refocused resources towards our innovation pipeline.
Whilst business closures are difficult on a number of levels. The changes we implemented have already achieved a $97 million reduction in that.
Revenue operating expenses run rates and supports improved control of our burn rate.
We will provide more details later on this call.
As I mentioned earlier, we prioritize our capital allocation.
Towards our drug device platform programs of secondarily towards a refinement of our preclude you test and single molecule detection platforms. As you can see we are on track to significantly moderate our cash burn requirements again gained considerable more control over our cash burn rate and we will continue to pursue.
New partnerships and ASP.
Net divestitures that have the potential to strengthen our balance sheet.
Our result in risk sharing.
This goes when fully realized will extend our runway materially and reduce our dependency on the capital markets.
In parallel <unk> affiliate laboratory operations continued to perform while we explore potential divestiture of that operation to generate non dilutive capital of Aaron's business is performing well in terms of volume demand and we will update you. When we have new developments. We may also choose to continue to operate there.
<unk> business and exploit its obgyn channel four preclude you and non sequencing NYPD is that proves to be optimal.
While I am pleased to share that we settled a lawsuit with natera through a cashless agreement. We are pleased to have resolved the dispute amicably and that we are able to avoid further legal costs and diversion of resources.
In summary, our <unk> innovation pipeline is progressing well with both the <unk> and the DDS now available as prototype autonomous devices that are enabling key studies.
And to advance our programs and partnership opportunities.
I'm also very excited about the successful outcome for the precluded our pro on a full validation study results, which we expect to be published as soon as practicable.
We are also advancing a single molecule platform and expect to have additional updates soon.
In addition to the material reduction in operating expenses in total control of capital utilization, we anticipate multiple key catalyst this year and beyond.
With that I'll now turn the call over to Eric <unk> for a discussion of our financial results for the second quarter of 2021.
Thank you Harry and good afternoon, everyone.
I'll provide a brief overview of our financial results and also invite you to review our second quarter financial release.
10-Q for a more detailed description as.
As we progress and accompanies transition the shift away from molecular testing operations will change our revenue profile and as a result, our financial picture. Consequently, we are also shifting our focus from revenues to concentrate on managing cash burn and more precisely ensuring that we completed the company's transformation.
And optimized capital allocation towards our innovation pipeline.
I am happy to confirm that we've now secured a reduction of $97 million in net operating expenses annual run rate to be realized in the second half of the year and I have also a line of sight on an additional $50 million reduction between now and the end of Q4.2021, when the remaining lab activities that are currently.
Still required to support the operations of our affiliate I expect it to be eliminated assuming that we can successfully monetize the asset in the interim we are aiming to maximize <unk> revenue performance.
While we reported $18.7 million in revenue in the second quarter of 2021 from discontinued operations $8.6 million of which came from a very low or.
Our focus is now shifting to our operating and SG&A cost management activities.
Total operating expenses were $46 million in the second quarter of 2021, and as we gradually we do spend associated with our lab operations during the second half.
We expect total operating expenses before stock based compensation expenses to reach less than $25 million by the fourth quarter more importantly, our monthly run rate operating expenses before stock based compensation expenses are expected to reduce from the $15 million level. During the first half of 2020.
One to reach less than $7 million by the end of the fourth quarter, the majority of which to be allocated to R&D illustrating the benefit of the company's focus on our innovation pipeline.
That's been profile sales and marketing expenses, mostly presented in discontinued operations.
<unk> to go from approximately $28 million in the first half of 2021 to approximately $8 million in the second half as we continue to support our variable commercial operations and be eliminated if we complete the divestiture of our lab operations.
<unk> expenses in the second quarter were $27 million and before stock based compensation expenses are expected to be approximately $25 million in Q3, as we absorbed the company transition cost during the quarter and reduced to $11 million in Q4 in line with our overall cost reduction profile.
Phil.
R&D expenses were $13.4 million in the second quarter and I expect it to remain generally at current levels, but gradually shift towards our precision medicine drug programs in the later part of 2021 and into 'twenty two as they become the central focus of our capital allocation, but we also expect to maintain.
A stage gated data driven approach to new capital commitments.
In parallel we expect to gradually reduce and shift our women's health program R&D spending from completion of existing studies and development towards partnership support activities, including reimbursement as a result, our R&D expenses before stock based compensation expenses are expected to be approximately 12 million.
In Q3 and $10 million in Q4.
During the second quarter, we raised $40 million in gross proceeds through a private placement and had a cash balance of $67 million at the end of the second quarter.
With that I will now turn the call back over to Henry.
Thank you Eric.
Our transformation is advancing as expected at this juncture and we have already realized a $97 million reduction in operating expenses run rate with more on the way soon.
We are sharpening our focus on disrupting the bio molecule market through oral delivery via the <unk> and potentially achieve revenue reduction with superior response rates a few safety issues for the <unk> platform and the treatment of IBD colitis.
Recently received funding from the Crohns and Colitis Foundation to advance the Dts and have published the platform's potential.
We have two complementary destructive drug platforms that will power and differentiate our clinical pipeline and which we believe will provide sufficient optionality for new partnerships with pharma, especially as we generate data.
I'm also especially proud of our collective efforts and successfully advancing precluded us through the pro Bono for validation study.
Yes.
Preeclampsia have proven elusive until development of pre studio, which promises to be a powerful tool in helping physicians manage patients with signs of symptoms of preeclampsia and as a consequence potentially generate a multibillion dollar market in the U S alone and disrupt the reproductive health channel.
We now have the opportunity to optimize its commercialization in the U S and global markets activity through partnerships.
Future milestone as we discussed today and as presented in our support materials supporting materials are expected to enhance value as we make progress with our innovation pipeline.
A number of innovations across all markets and in certain instances has the potential to be commercially transformative.
We are excited by the continued reduction of our cash burn rate and you have some potential in the new focus on Optionality, we provide for future value creation.
So with that operator, we are now ready for questions.
Understood.
At this time I would like to remind everyone in order to ask your questions.
Please press Star then the number one on your telephone keypad.
Again, Thats star one on your telephone keypad.
For just a moment to compile the Q&A roster.
Your first question comes from the line of Steven Mah from Piper Sandler Your line is open.
Great. Thanks, operator, and thanks for taking the questions.
Thanks Steven.
Hey, How're you doing.
So just a few questions on <unk>.
Can you give us a sense for the stature of the journal that your principal investigators intend to submit the pre <unk>.
David here.
I believe that were going for.
A very tough.
General clinical journal.
Very top.
Obgyn MSM Journal.
Accounts can be specific because.
You're actually not.
Committed tonight many journals.
Yes, just sort of getting a sense for the different tiers. So it sounds like it's one of the top top tier journals.
Yes.
Okay.
And yes, just continuing on a pre <unk>.
Erica does the Opex guidance I just gave does that include the any sort of scaling up.
For the <unk> launch.
So what it includes is the support.
Work that we would do with commercial partners.
To get the test ready for commercialization.
Including work on reagents and supporting basically the.
Yes.
Clinical utility study that we would need to do in part in partnership.
Okay and so the Opex does include.
<unk> expenses for the clinical utility studies.
Our share are part of the clinical utility study correct.
Okay got it.
But just to be clear you don't have any partners yet right.
Not yet, but the team is obviously progressing very well and we had to wait until we have the actual validation study results in order to have a real conversation with a partner is that we have already had either conversations or have been approached by.
And the other thing that is actually conducive there is the increase in our IP portfolio strength. So harrie talked about this as well so all of this basically.
Triangulates to being in a good position to have those conversations.
Okay got it and.
Do you guys have any sense for when when pre including <unk> launch or is that is that predicated with getting a partner commercial partner.
There's no <unk>.
You guys would not launch it on your on your own am I understanding that correctly.
We're not likely to launch their own.
Predicated on a partner.
Okay got it.
Alright, and then my last question and then I'll hop back in the queue.
So looking at the $5 million in revenue it looks like the narrow revenue was put into discontinued ops.
Have that correctly.
That is correct. So all the lab.
Generated revenues are showed in discontinued operations.
Nicky.
That's our either discontinued or held for sale and are happening and you see there are the cost reimbursement that we are benefiting from the pharma partnerships when we run the feasibility studies.
Okay got it okay. So Vera has actually moved into held for sale status now from an accounting that's positive.
That is correct.
And Youll see this in defining when the Q is filed shortly.
Yes.
Okay, Alright, alright, thank you.
Yes, thanks for the questions.
Your next question comes from the line of Catherine Schulte from Baird. Your line is open.
Hey, guys.
Just staying on the topic of preclude you.
You mentioned conversations with potential partners I guess, when do you think weekend here of potential announcement around that.
That's going to be sometime next year.
Slightly.
Okay, and then on exploring strategic alternatives for the apparel business I guess, how are those conversations progressing.
And when could we hear an update there.
If we choose to transact it should be this year, if we decide to do to retain the business.
You'll hear this year as well.
Okay.
And the move into precision medicine.
Randy.
Ronnie Therapeutics IPO like how far ahead are they in terms of timing and development just from a technical perspective, how does your platform differentiate itself versus Zahrani pill capsule.
And I believe they talked about.
<unk> in the range of 40% to 78%. So just wondering why you think.
Personal might be sufficient.
Well that's for a specific drug which is highly boiler by available.
The.
Ronnie technology is actually very limited you'd have to cope crystallize your drug.
And it could close oxidize formulation, which is unique and idiosyncratic.
We have the ability to.
To use a variety of formulations and solution.
So that's a very promising and distinct advantage. The other of course is that.
The 15% boiler availability is is what we believe you need to achieve in order to be able to deliver a large number of drugs using our platform. However.
We expect to be superior to that level of performance.
The other approaches.
We've already demonstrated an ability to deliver monoclonal anti.
Antibodies.
And.
As far as we're aware no other entity.
As shown that capability.
Thats just the beginning for us.
Okay.
Okay.
Rioting in ways that we believe we're going to be.
Very well differentiated from folks like <unk> and others.
We believe our technology is going to become.
As a consequence more closer Tal.
But we will be able to address a broader range of bio therapeutics.
And in a much more based on weight.
Okay.
Okay. Thank you.
Youre welcome.
Again for anyone else, who wants to ask questions.
Press Star one on your telephone keypad.
Your next question comes from the line of my Yang Manzoni from B Riley Securities. Your line is open.
Thank you for taking our question. This is as you answered all my hands on and congrats on the progress on multiple fronts.
High level, we will.
Your line for Purion.
Why did you focus on.
And also on.
What other disease indications.
The next stop powerfully are all BD off on the ETF platform and I have another follow up question. Thank you.
Okay. So for the <unk>.
Yes platform, we decided to use drugs that are very accomplished.
Hi.
Evidence of efficacy and safety profiles.
Okay.
Pattern within the bottom called yearly development cycle of our technology.
One.
Because the technology's, new we want to isolate as much of any <unk>.
Variation to the technology and also the drug in technology. So we initially were targeting.
An antibody, which is representative of many other antibodies and many other disease areas. It happens to be at Illumina, we choose.
Similar to.
<unk>, which is the world's largest selling drugs and has broad utility in.
Also new disorders.
Well.
Oral delivery capability could provide profound advantages, especially over the 15 or so by similar companies that are going through conventional routes.
The other thing is that market is still projected post exploration of these con for Humira is still projected to be $14 billion to $15 billion global market.
Okay.
Hopefully beautifully positioned to deliver an oral formulation of adalimumab, which is in its own right potentially very exciting but also.
But also as an example of other monoclonal <unk> in other diseases behind that.
Assessing a drug called Liraglutide.
<unk> one agonists.
Known as Potenza, it's one of novo's or drugs.
And that could take advantage of the <unk> pathway and what's exciting here, assuming assuming we could exploit the primaries clinical data is as is.
Emerge as a as a follow on to <unk>.
And both the glucose management market.
As well as the cardiovascular indications market and potentially the obesity market now that's predicated on two things that we see compelling data we are seeing for adalimumab molecule.
And then also.
We're allowed to leverage fully.
The primary clinical data.
Generated today now of course literally chart is an example of a peptide not just as a <unk> one agonist, but <unk> for example, and many many other peptides.
You see our approaches were taking a platform approach.
Our lead drugs are examples of a class, but at the same time.
And you mentioned commercial potential in their own right.
Damped behind that.
Wait and see.
There is a very large number of potential candidates for example that we can exploit.
And you can begin to look at.
Treatment of Gila Hemophiliac shifting jets everyday human growth hormones by the oral route.
There's many other antibodies and many other peptides. The other exciting feature is we have a partnership with <unk>, where we're exploring our technology to deliver antisense.
And there's also there's also potential interest if that goes well.
To deliver mrna vaccines by the oral route.
Okay. So thats the versatility of our platform and.
Sure.
Catherine asked the question a distinct advantage we have is that we're in.
Able to work with.
Liquid formulations.
Inventory formulated but could take advantage of our formulation repertoire.
Okay. So thats the OIBDA you guys and.
We are working towards generating the data that is of the right caliber that will lead to broader partnerships with a follow up.
<unk> partners and with new pharma partners.
There's plenty of opportunity for more than one entity in this space, we really are on the ground floor.
Okay.
Yes, that's very helpful.
Maybe my follow up.
On camera.
Visibility.
Our partner <unk>.
The key points.
Bioavailability or whether you're a preclinical model close to their accumulation results.
The house and preference.
Our model our animals.
So I'll give you a general response. So one is the general goal is about 15%, but average bioavailability with about 50% CV coefficient of variation.
So as you can see there is a high tolerance.
Two.
Variability.
Now thats very much drug dependent.
Dosing regimen dependent and PK dependent.
What I've shared with you.
Essentially one of the targets now.
We have to develop models.
For example.
So we are developing.
Porcine models as well as.
Canine models.
And.
And that helps us not just demonstrate the potential of the technology, but also helps us fine tune the parameters so that we could.
Graphically.
Command, which is really all go we don't hear too.
The way when you are at this stage of development in the preclinical stage.
Have to demonstrate performance in an animal model that is related.
You can learn from and humans, but ultimately.
The help inform the human case.
Great feature of our technology is we can chew.
So it's like a digital technology, we can tune a variety of parameters. So we're not locked in a very rigid pathway, we have the ability to choose various parameters to help optimize deliver.
Delivery.
For a particular drug.
And the particular spaces.
And thats another powerful feature that we have.
Okay.
Yes, thank you very much.
Youre welcome thanks for the questions.
Your next question comes from the line of Andrew Cooper from Raymond James Your line is open.
Hey, Thanks for the question and I apologize for any background noise from the airport.
But maybe just you know a lot's been asked I guess a high level one.
Can you just give some flavor.
Clearly what you've talked about is a lot of optionality a lot of different directions. You can go even within a given platform or one of the four kind of precision medicine initiatives. So.
Help us think about the latest and greatest on just sort of what's the.
What are the stage gating factors to where you think you can see more pharma partnership interest or.
What's the first kind of.
<unk> to follow on that you think can really get the ball rolling from that perspective.
Yes.
Happy to address that so if you take that.
Over the year.
Fluids, we've shed recording.
Monoclonal <unk>.
Okay.
Take the next step for us to show a similar levels of performance.
With more devices performing at that level.
And we believe that's very accessible.
The second part we need to show is obviously.
<unk>.
We have never Glu, Todd it's a peptide.
We want to show a similar performance that we've already seen.
As evidence of that without aluminum and finally, it would be very cool if we can deliver on <unk>.
Because.
That's a whole new application and this is in partnership so I wanted to be very clear.
Laser like focused on the <unk>.
At Illumina.
Exploiting the review choice and then behind the Pds.
Explore chain at Illumina again, so there's operating leverage in our programs, Okay, one drug basic.
Basically two different delivery modalities, one is very specific for inflammatory bowel disease is pan will chime in as a panel.
As an immune suppressant.
Tofacitinib, which again is a unique drug to treat ultra.
But in this case IPD. So that's that's our focus.
Our partners are also interested impacts or is there also interest in nucleic acids, and neuroscientists and a monoclonal and the list frankly is growing.
Okay.
Nope.
No.
Very helpful. Maybe just one more you know I don't want to focus too much on I think you've put into discontinued operations, but when we think about zero in the decision there.
What are what are the factors that make you swing one way or the other or is it now you think you can recognize just purely from that.
Sale perspective or are there some strategic dynamics when we think about <unk>. When we think about some of the other pieces that maybe come into play in there just help me think about.
And what we need to see and what we talked about whether that sales or not.
So we have a preference to divest the business.
However, as time goes on.
We're looking at it as a potential strategic opportunity.
Whereby we could.
Exploit preclude and therefore.
Through the <unk> channel.
So both are on track to although our bias presently is to divest the business.
Okay.
Yes.
I appreciate that and I'll stop there thanks for the questions.
Youre welcome. Thank you Andrew.
There are no more questions at this time pending the call back over to Mr. Harry <unk>.
Thank you all once again for participating on the call and thank you all for your interest in <unk>.
If you have any additional questions. Please feel free to contact us directly.
Have a good evening, everyone and thank you for listening.
Yes.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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Welcome to <unk> second quarter 2021 earnings call at this time all participants are in listen only mode. After the speaker presentation, there will be a question and answer session.
You ask a question. During this time you will need to press star one on your telephone keypad.
And if you require any further assistance please press star zero.
I will now turn the call over to Robert <unk>, managing director with Westlake IC are for identities Investor Relations firm. Thank you. Please go ahead.
Thank you operator, good afternoon, and welcome to <unk> second quarter 2021 financial results Conference call. Joining me on the call are Dr. Harry styles, <unk>, Chairman and Chief Executive Officer, and Eric <unk>, Chief Financial Officer, before I turn the call over to Dr. <unk> I would lie.
To remind you that today's call will include forward looking statements within the meaning of the federal securities laws, including but not limited to the types of statements identified as forward looking in our quarterly report on Form 10-Q that we will file later today and our subsequent periodic reports filed with the SEC.
Which will all be available on our website in the investors section.
These forward looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control. Please note that the actual results could differ materially from those projected in any forward looking statement.
For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking statements as well as risks related to our business. Please see our periodic reports filed with the SEC.
A slide deck with some supplemental information is also now on the website, but it will not be directly referenced by the speakers on the call today.
With that I will now turn the call over to Dr. Harry Stylee, Chairman and CEO of progenitor.
Thank you Robert and thank you all for joining us this afternoon.
Second quarter, the company initiated a transformation there it ticked up materially materially reducing its burn rate well, it's accelerating the transition to an innovation that I just wanted to a company focused on its oral delivery of bio molecules.
IBD platforms.
<unk> also successfully completed the program a full validation studies for its <unk> assay in parallel advanced our single molecule detection platform and is committed to making technical and commercial progress with these programs, including with partners.
We also continue to explore various financing options, including generating non dilutive capital Erica CFO will shortly elaborate on our financial operating performance.
First we recently announced the successful completion of the validation study Proguanil pool for our precluded a rule out test for preeclampsia.
As noted previously <unk> achieved the primary hazard ratio endpoint of the study protocol and demonstrated strong performance.
The results of our validation study are currently being drafted by the independent.
Pendant principal investigators for submission to a peer reviewed journal.
As a result as a result, we are limited in our ability to provide more detail regarding specific results. Here. However, I can assure you that we are really pleased that the test performance.
As intended to be used clinically was consistent with what we observed in our pro once you know and verification and pre validation set.
Performance gives preclude the potential to transform patient management globally by enabling physicians to preeclampsia, a movement with signs and symptoms of preeclampsia further.
Further <unk> just recently received an important patent allowance for one of the key assays and Arnaud will preclude you test. This constitutes a further strengthening of I'm, Brian pre Covid your IP portfolio.
The <unk> test is a multi analyte immuno diagnostic laboratory developed test that is operationally ready for commercialization.
As a reminder, preeclampsia is the second most common cause of maternal mortality in the U S with more than 700000 women presenting each year with signs and symptoms of possible preeclampsia. The most effective treatment for preeclampsia is typically deliveries most often premature.
<unk> is a global challenge and effective operator independent tests that AIDS in the management of this complex disorder.
Simply not currently available.
<unk> also has potential in IBD immuno diagnostic kit, which can better serve the global community.
Our preference is to identify commercial partners that can facilitate physician patient access and reimbursement in partnership with us in the U S market and do the same for the CE IBD for the global markets.
I could not be more excited about the potential for this test to close activity change clinical practice in the management of freight trends here and to generate economic benefit to the health system.
I want to take this opportunity to congratulate the team and our other stakeholders for a successful Creek <unk> validation study.
Whilst we continue to support that preclude a test development at this stage of our transformation, we are prioritizing our capital allocation to advancing our complementary or robust therapeutic drug system or <unk>, followed by a drug delivery system or DDS platforms. We expect this year to generate key prepay.
Integral in clinical feasibility data, especially for our drug product line, primarily with our prototype autonomous devices and to further advance our platform technology. As a reminder, we have effectively contracted the manufacturer of IPO, including Adalimumab.
Let's start with our oral bio therapeutics program.
The goal of this program is to achieve oral delivery and to maximize systemic distribution advisor acoustics, especially monoclonal antibodies, but also other proteins peptides display curses and potentially vaccines as the GI tract is host to the majority of the immune system.
In total we're targeting a vast 250 billion market that is primed for these oral delivery solution.
During the second quarter of 2021, we initiated preclinical studies of our lead candidate <unk>.
<unk> Ob won at Illumina monoclonal.
Subject to the BLA pathway and PGN <unk> <unk> tied a peptide lightly the fiber phy <unk> pathway.
Each of lodging for the first time on prototype autonomous Obs and our swine model.
Although our own design.
The goal of these studies is to demonstrate part availability of our lead <unk> drug candidates within our tone on list <unk> and defined as operating.
<unk> and that of the preclinical models.
Initial data with the prototype <unk> is very promising as opposed to the potential for the OLED is to achieve industry, leading vulnerability for proteins peptides another bond molecules.
Despite expected normal performance variability at this early stage of development.
We recently demonstrated in a Swan modal a significant drug was detected in approximately half the animals in a test group, achieving an average global liquidity or approximately 15% to a maximum of 44% of IV for at Illumina. Following a single dose highlighting the <unk>.
As the potential for this program.
This is an unprecedented performance for a monoclonal antibody.
We continue to make rapid progress in tweaking the prototype delivery platform, including formulations refining in our animal models and developing our understanding of likely performance in humans.
We believe that on average profitability of around 10%, 15% of IV with repeat dosing will produce satisfactory for a large number of bio molecules. We anticipate that we will meet that we will meet almost slightly exceed this range.
We believe the over to Es platform can number one help improve patient compliance and lower IV infusion costs to help expand the market for GOP agonist another drugs across a range of chronic use indications three hello, biotherapeutic session monoclonal has become more competitive.
A small molecule substitutes and finally, we have the potential to target and treat a range of pathologies, especially liver diseases.
Our strategy is to advance our own pipeline, while continuing to partner with third parties leveraging their drug candidates and resources to make <unk> a leader in the oral delivery of biotherapeutics.
As we are using known drugs with established safety and efficacy profiles. We believe we should be able to generate compelling bioavailability data in animal models and provide clinical proof of concept with first in man studies.
In parallel our first two <unk> partnerships with major pharma are advancing as expected.
While the <unk> is designed to achieve over delivery and to maximize systemic distribution of biotherapeutics.
<unk> is designed to treat Gi localized disease with minimal systemic breakthrough.
<unk> program is to deliver solid utilized heico's pharmaceuticals to specific locations along the GI track initially to treat inflammatory bowel disease or IBD.
We are developing drug device combination products.
That deliver proprietary seed utilized formulations of drugs.
<unk> to the side of disease in the Gi tract, thereby maximizing the available dose and tissue and.
In achieving pan colonic distribution.
We are first targeting the estimated $15 billion of IBD market without Attunity drugs PGM 001 at Illumina, a monoclonal antibody and PGM 600, Tofacitinib, a small molecule normally absorbed in the stomach and the upper Gi tract.
Our initial focus being ulcerative colitis or UC.
Whilst the novel route of administration for the aluminum is through the BLA BLA regulatory pathway. We believe that sentiment device combination can exploit the 505 btu pathway and allow us to take advantage of the primary data and potentially benefit from a relatively short path to a commercial ASP.
Yet.
We continue to believe we have the potential with this platform to achieve rapid induction superior clinical remission rates and reduced safety events for the treatment of IBD and collections.
As a reminder, during the first quarter, we completed our first clinical study with the prototype autonomous DVS successfully valuation capsule safety targeting and Tolerability and the Guestroom Stein will track of 12 normal healthy volunteers.
No safety issues were reported.
We're specifically targeting the segment of the Gi tract with disease burden.
Have the potential to maximize the drug exposure at the <unk> site, and many more systemic exposure and off target organ effects.
We also completed during that period, a preclinical study evaluating the safety Tolerability and PK PD effects of a seven day administration and dogs, a PGM 600, so utilized surface intimate delivered by DDS at doses of 25, Megs or 10.
<unk> per day with direct comparison to a standard orally administered sentiment tablet at 10 milligrams per day over a week we.
We were able to show that.
The DDS can function as intended and the majority of cases and achieve tissue tofacitinib levels and tissue to plasma ratios of Tofacitinib along the length of the colon and these were at least 25% to 50 times higher respectively with PJM 600 at 10 milligrams daily.
Compared to the standard oral tablet formulation at the same dose.
These results demonstrate that pgn's six hundred's proprietary liquid formulation and targeted delivery can achieve Penn colonial distribution and facilitate <unk> penetration.
We made further progress during the second quarter, and then ongoing clinical feasibility study in patients with ulcerative colitis, using the monoclonal biotherapeutic humira delivered by enemy, Panama, which I vote proxies for our PGM 001 at Illumina.
Tds platform.
First of all subjects have completed the dosage regimen and initial results are quite promising next month, we expect to finalize the design of a first human feasibility studies delivering tomorrow with the GDS as well as the design of the first human feasibility study with Pjm's et cetera, we both clinical feasibility study.
These anticipated to initiate in first half in 2022 pending IRB approvals.
You'll hear more about this study likely in the September timeframe.
Crohns and Colitis Foundation is also helping fund the development of the DDS for the treatment of IBD and we recently published a peer reviewed article regarding the DDS.
We believe that GDS platform will materially advanced treatment of GI disease, initially for IBD and you see our.
Our strategy begins with transforming established drugs with known efficacy and safety profiles, but has the potential to materially enhance any competitive with drugs directed at <unk> Gi looks like disease and in this instance, enable new effective IBD treatment regimens, such as rapid induction and extending to.
Drug combination therapies.
While we're focused on our drug pipeline and delivery platforms. We have moved the RFS in Pdx, two primarily engineering development of second generation builds to support larger scale manufacturing and with this focus we have limited preclinical clinical studies at this time.
We have discussed the C verification for <unk> in the past continue to be excited by its vast.
Potential we are also evaluating the utility of the Rss from purely acts in IBD Dave.
Data from our studies and from existing literature illustrate that TNF levels and the alumina mucosa of IBD patients may vary tremendously from patient to patient over time further new pathways for inflammation could supersede for example, TNF.
Media Asia.
We believe that we can measure TNF another cytokines in situ using the Rss or <unk>.
We can optimize as a consequence, we can optimize patient selection for clinical studies establish a more precise dosing regimen and help with patient monitoring for disease progression.
We believe that such a capability may further contribute to a superior response rate for our trucks and the ability for physicians to most closely monitor the patient for disease progression.
Completing our innovation pipeline update with a single molecule detection platform, we recently established.
Coefficient of variation using genomic DNA has.
Approximately <unk>, 5%, which is supportive of an <unk> assay performance equivalent to next generation sequencing.
We certainly intend to report our performance for detecting <unk> hundred 21, 18, or 13, Aneuploidy and a successful preference today is the part of the platform, especially within IPG test providers.
We continue to believe a single owner single molecule detection platform has the potential to reduce niv Chi direct cogs by up to 50% and achieve equivalent performance to traditional next generation sequencing.
Should also be noted that this platform is expected to be capable of detecting and counting specific DNA RNA epigenetic as well as protein targets with high sensitivity and low cost as such the platform may prove ideal for liquid biopsy applications in oncology.
And now I will discuss our progress with the operational performance of our business transformation.
As we mentioned in our corporate update in June we officially closed.
ARPA commercial laboratory and refocused resources towards our innovation pipeline.
While its business closures are difficult on a number of levels. The changes we implemented have already achieved a $97 million reduction.
Our new operating expenses run rates and supports improved control of our burn rate.
We will provide more details later on this call.
As I mentioned earlier, we prioritize our capital allocation.
Towards our drug device platform programs of secondarily towards a refinement of our <unk> test and single molecule detection platforms. As you can see we are on track to significantly moderate our cash burn requirements again gained considerable more control over our cash burn rate and we will continue to pursue.
New partnerships and asset divestitures that have the potential to strengthen our balance sheet.
Our result in risk sharing.
These goes when fully realized will extend our runway materially and reduce our dependency on the capital markets.
In parallel <unk>.
Laboratory operations continued to perform while we explore potential divestiture of that operation to generate non dilutive capital of Arrow's business is performing well in terms of volume demand and we will update you. When we have new developments. We may also choose to continue to operate the avera business and exploit it.
Obgyn channel four preclude and non sequencing NRT SEC.
Is that proves to be optimal.
While I am pleased to share that we settled a lawsuit with natera through a cashless agreement. We are pleased to have resolved the dispute amicably and that we are able to avoid further legal costs and diversion of resources.
In summary, our <unk> innovation pipeline is progressing well with both the <unk> and the DDS now available as prototype autonomous devices that are enabling key studies to be performed.
In fact, our programs and partnership opportunities.
I'm also very excited about the successful outcome for the precluded pro one of Formalization study results, which we expect to be published as soon as practicable.
We are also advancing a single molecule platform and expect to have additional updates soon.
In addition to the material reduction in operating expenses and caused a control of capital utilization, we anticipate multiple key catalyst this year and beyond.
With that I'll now turn the call over to Eric <unk> for a discussion of our financial results for the second quarter of 2021.
Harry and good afternoon, everyone I will provide a brief overview of our financial results and also invite you to review our second quarter financial release.
<unk> 10-Q for a more detailed description.
As we progress and accompanies transition the shift away from monetary testing operations will change our revenue profile and as a result, our financial picture. Consequently, we are also shifting our focus from revenues to concentrate on managing cash burn and more precisely ensuring that we completed the company's transformation.
And optimized capital allocation towards our innovation pipeline.
I am happy to confirm that we've now secured a reduction of $97 million in net operating expenses annual run rate to be realized in the second half of the year and I have also a line of sight on an additional $50 million reduction between now and the end of Q4.2021, when the remaining lab activities that are currently.
Still required to support the operations of our affiliate I expect it to be eliminated assuming that we can successfully monetize the asset in the interim we are aiming to maximize <unk> revenue performance.
While we reported $18.7 million in revenue in the second quarter of 2021 from discontinued operations $8.6 million of which came from apparel.
Our focus is now shifting to our operating an SDA cost management activities.
Total operating expenses were $46 million in the second quarter of 2021, and as we gradually reduce spend associated with our lab operations during the second half.
We expect total operating expenses before stock based compensation expenses to reach less than $25 million by the fourth quarter more importantly, our monthly run rate operating expenses before stock based compensation expenses.
Expected to reduce from the $15 million level during the first half of 2021 to reach less than $7 million by the end of the fourth quarter, the majority of which to be allocated to R&D illustrating the benefit of the company's focus on our innovation pipeline.
That's been profile sales and marketing expenses, mostly presented in discontinued operations.
<unk> to go from approximately $28 million in the first half of 2021 to approximately $8 million in the second half as we continue to support our global commercial operations and be eliminated if we complete the divestiture of our lab operations.
<unk> expenses in the second quarter were $20.7 million and before stock based compensation expenses are expected to be approximately $25 million in Q3, as we absorb the company transition cost during the quarter and reduced to $11 million in Q4 in line with our overall cost reduction profile.
Bill.
R&D expenses were $13.4 million in the second quarter and I expect it to remain generally at current levels, but gradually shift towards our precision medicine drug programs in the later part of 2021 and into 'twenty two as they become the central focus of our capital allocation, but we also expect to maintain.
A stage gated data driven approach to new capital commitments.
In parallel we expect to gradually reduce and shift our women's health program R&D spending from completion of existing studies and development towards partnership support activities, including reimbursement as a result, our R&D expenses before stock based compensation expenses are expected to be approximately 12 million.
In Q3 and $10 million in Q4.
During the second quarter, we raised $40 million in gross proceeds through a private placement and had a cash balance of $67 million at the end of the second quarter.
With that I will now turn the call back over to Henry.
Thank you Eric.
Our transformation is advancing as expected at this juncture and we have already realized the $97 million reduction in operating expenses run rate with more on the way soon.
We are sharpening our focus on disrupting the buyer molecule market through oral delivery via the <unk> and potentially achieve revenue reductions superior response rates and fewer safety issues with the GDS platform and the treatment of IBD colitis.
Recently received funding from the Crohns and Colitis Foundation to advance the Dts and have published on the platform potential.
We have two complementary disruptive drug platforms that will power and differentiate our clinical pipeline and which we believe will provide sufficient optionality for new partnerships with pharma, especially as we generate data on.
I'm also especially proud of our collective efforts and successfully advancing pre cleared through the pro Bono for validation study.
Test approved for preeclampsia have proven elusive until development of pre studio, which promises to be a powerful tool in helping physicians manage patients with signs of symptoms of preeclampsia and as a consequence potentially generate a multibillion dollar market in the U S alone and disrupt the reproductive health channel.
We now have the opportunity to optimize its commercialization in the U S and global markets ideally through partnerships.
Future milestone as we discussed today and as presented in our support materials supporting materials are expected to enhance value as we made progress with our innovation pipeline.
A number of innovations address fast markets and in certain instances has the potential to be commercially transformative. We are excited by the continued reduction of our cash burn rate near term potential and the new focus on Optionality, we provide for future value creation.
So with that operator, we are now ready for questions.
At this time I would like to remind everyone in order to ask your questions. Please.
Please press Star then the number one on your telephone keypad.
Again, Thats star one on your telephone keypad.
For just a moment to compile the Q&A roster.
Yeah.
Your first question comes from the line of Steven Mah from Piper Sandler Your line is open.
Great. Thanks, operator, and thanks for taking the questions.
Thanks Steven.
Hey, how are you doing.
Yes, so just a few questions on <unk>.
Can you give us a sense for the stature of the journal that your principal investigators intend to submit the <unk>.
David here.
I believe they are going for.
A very top.
General clinical journal.
Very top.
Obgyn MSM Journal.
Accounts can be specific.
As you are actually not permitted tonight many journals.
Yes.
Getting in China for the different tiers. So it sounds like it's one of the top top tier journals.
Yes.
Okay.
And just continuing on <unk>.
Erica does the Opex guidance I just gave does that include the any sort of scaling up.
For the <unk> launch.
So what it includes is the support work.
The work that we would do with commercial partners.
To get the test ready for commercialization.
Including work on reagents and supporting basically the the.
Clinical utility study that we would need to do in part in partnership.
Okay and so the Opex does include.
Expenses for the clinical utility studies.
For our share are part of the clinical utility study correct.
Okay got it.
But just to be clear you don't have any partners yet right.
Not yet, but the team is obviously progressing very well and we had to wait until we have the actual validation study results in order to have a real conversation with the partners that we have already had either conversations that we've been approached by.
And the other thing that is actually conducive there is the increase in our IP portfolio strength. So Harry talked about this as well so all of this basically.
Triangulates to being in a good position to have those conversations.
Okay got it and <unk>.
Do you guys have any sense for win win pre including <unk> launch or is that is that predicated with getting a partner commercial partner. So there is no you go.
But not launch it on your on your own am I understanding that correctly.
We're not likely to launch their own.
Predicated on a partner.
Okay got it.
Alright, and then my last question and then I'll hop back in the queue.
So looking at the $5 million in revenue it looks like the <unk> revenue was put into discontinued ops.
Have that correctly.
That is correct. So all the lab.
Generated revenues are showed in discontinued operations.
Nicky.
Assets are either discontinued or held for sale and have been and you see there are the cost reimbursement that we are benefiting from the pharma partnerships when we run the feasibility studies.
Okay got it okay. So <unk> has actually moved into into the held for sale status now from an accounting that's active.
That is correct.
And Youll see this in defining when the Q is filed shortly.
Yes.
Okay, Alright, alright, thank you.
Yes, thanks for the questions.
Your next question comes from the line of Catherine Schulte from Baird. Your line is open.
Hey, guys.
Just staying on the topic of preclude you.
You mentioned conversations with potential partners I guess, when do you think weekend here of potential announcement around that.
It's going to be sometime next year.
Slightly.
Okay, and then on exploring strategic alternatives for the apparel business I guess, how are those conversations progressing.
And when could we hear an update there.
If we choose to transact it should be this year, if we decide to do to retain the business.
You'll hear this year as well.
Okay.
Moving to precision medicine, just had there Randy.
Ronnie Therapeutics IPO.
How far ahead are they in terms of timing and development and then just from a technical perspective, how does your platform differentiate itself versus Zahrani pill capsule.
And I believe they talked about bioavailability in the range of 40% to 78%. So just wondering why you think.
Personal might be proficient.
Well that's for a specific drug which is highly bio available.
The <unk> technology is actually very limited you'd have to cope crystallize your drug.
Good clothes oxidize formulation.
It is unique and idiosyncratic.
We have the ability to.
To use a variety of formulations and solution.
So thats, a very promising and distinct advantage. The other of course is that <unk>.
15% bioavailability is here's what we believe you need to achieve in order to be able to deliver a large number of drugs using our platform. However.
We expect to be superior to that level of performance the.
The other of course is.
We've already demonstrated an ability to deliver monoclonal anti.
Antibodies.
And.
As far as we're aware no other entity has shown that capability.
And that's just the beginning for us.
Okay.
Okay.
Variety of ways that we believe we're going to be very.
Very well differentiated from close Ronny and others.
And we believe that technology is going to become.
As a consequence more closer in.
And we will be able to address a broader range of biotherapeutics.
And in a much more faithful away.
Okay.
Great. Thank you.
Youre welcome.
Again for anyone else, who wants to ask questions. You May press star one on your telephone keypad.
Your next question comes from the line of my Yang from Anthony from B Riley Securities. Your line is open.
Well, thank you for taking our questions.
Sure.
Manny congrats on the progress on multiple fronts.
Manuel will answer here.
Why the newco.
Great.
First of all for one year.
What other disease indications.
The next stop powerfully are all BD and the DBS platform and I have another follow up question. Thank you.
Okay, sorry for the <unk>.
But es platform, we decided to use drugs that are very accomplished.
Hi.
The evidence of efficacy and safety profiles.
Okay.
Off patent within what I'll call. The early development cycle of our technology.
That's one.
Because the technology is new.
Want to isolate as much of any <unk>.
Variation to the technology and also the drug in technology. So we initially were targeting.
An antibody, which is representative of many other antibodies and many other disease areas. It happens to be at Illumina, we choose.
Similar to.
Humira, which is the world's largest selling drugs and has broad utility in.
Also new disorders.
And oral delivery capability could provide profound advantages, especially over the 15 or so biosimilar companies that are going through conventional routes.
The other thing is that market is still projected post exploration of these pounds for humira is still projected to be a $14 billion to $15 billion global market.
<unk>.
Hopefully beautifully positioned to deliver an oral formulation of <unk>, which is in its own right potentially very exciting but also.
But also as an example of other monoclonal <unk> in other diseases behind that.
Assessing a drug called Liraglutide.
<unk> one agonists.
Stone is vitanza.
One of novo's or drugs.
And that could take advantage of the <unk> pathway and what's exciting here, assuming assuming we could exploit the primary clinical data as it could.
Emerge as a as a follow on to <unk>.
And both the glucose management market.
As well as the cardiovascular indications market and potentially the obesity market now that's predicated on cheap debt.
We see compelling data that we're seeing for dealing with that molecule.
And then also the.
We're allowed to leverage fully the.
Primaries clinical data.
<unk> today now of course literally chart is an example of a peptide not just as a <unk> one agonist, but insulins for example, and many many other peptides. So if you see our approach is we're taking a platform approach.
Our lead drugs are examples of our Clos, but at the same time.
Immense commercial potential in their own right.
Okay damped behind that.
While you can see.
There is a very large number of potential candidates for example that we can exploit.
And you can begin to look at.
Treatment of Gila Hemophiliac shifting jets everyday human growth hormones by the oral route.
There's many other antibodies and many other peptides. The other exciting feature is we have a partnership with <unk>, where we're exploring outside of LNG to deliver antisense.
And there is also just also potential interest if that goes well.
To deliver mrna vaccines by the oral route.
Okay. So thats the versatility of our platform.
<unk>.
Catherine asked the question a distinct advantage we have is that we.
We're able to work with liquid formulations.
Conventionally formulated but could take advantage of our formulation repertoire.
So thats, the OWS and <unk>.
Working towards generating the data that is of the right caliber that will lead to broader partnerships with a follow up.
Partners and with new pharma partners.
There's plenty of opportunity for more than one entity in this space, we really are on the ground floor.
Yes, that's very helpful.
Maybe my follow up is all of the.
Alright.
<unk> visibility.
Our partner <unk>.
The key point for line bioavailability or weather.
In Europe preclinical model close to their accumulation results.
Do you have any preference.
Our model our animals.
So I'll give you a general response. So one is the general goal is about 15%, but average bioavailability with about 50% CV coefficient of variation.
So as you can see there is a high tolerance.
Two.
Variability.
Thats very much drug dependent.
Dosing regimen dependent and PK dependent.
What I've shared with you is.
Essentially one of the targets now.
We have to develop models.
For example.
So we are developing.
Porcine models as well as.
Canine models.
And.
And that helps us not just demonstrate the potential of the technology, but also helps us fine tune the parameters so that we could extrapolate.
Demand, which is really our goal here too.
A way when you are at this stage of development of preclinical stage.
Have to demonstrate performance in an animal model that is related.
You can learn from and humans, but ultimately.
The help inform the human case the other great feature of our technology is we can shoot sorry.
So it's like a digital technology, we can tune a variety of parameters. So we're not locked in a very rigid pathway, we have the ability to choose various parameters to help optimize deliver.
Delivery.
For a particular drug.
And in particular species.
And thats another powerful feature that we have.
Okay.
Yes, thank you very much.
Youre welcome thanks for the questions.
Your next question comes from the line of Andrew Cooper from Raymond James Your line is open.
Alright, Thanks for the question and I apologize for any background noise from the airport.
But maybe just you know a lot's been asked I guess a high level one.
Can you just give some flavor I think clearly what you've talked about is a lot of optionality a lot of different directions. You can go even within.
Even platform or one of the four kind of precision medicine initiatives. So.
Help us think about the latest and greatest on just sort of what's the what are the stage gating factor as to where you think you can see more pharma partnership interest or.
What's the first.
Domino to fall on that you think can really get the ball rolling from that perspective.
Yes.
Happy to address that so if you take the.
Year over year.
Performance, we've shed recording.
Monoclonal <unk>.
Okay.
Take the next step for us to show similar levels of performance.
With more devices performing at that level.
And we believe thats very accessible.
The second part we need to show is obviously.
<unk>.
We have never Glu, Todd it's a peptide.
We want to show a similar performance that we've already seen.
As evidence of that without aluminum and finally, it would be very true if we can deliver LNG.
Because.
That's a whole new application and this is in partnership so I wanted to be very clear.
Laser like focused on the OLED.
At Illumina.
Exploiting the revenue chart and then behind the Pds.
Explore chain at Illumina again, so there's operating leverage in our programs, but I'll tell you one drug pricing.
Basically two different delivery modalities, one is very specific for inflammatory bowel disease. The other is pan ultra immune panel.
As an immune suppressant.
Tofacitinib, which again is a unique drug to treat ultra.
But in this case IBD so that's.
That's our focus.
Our partners are also interested impact us there also interest in nucleic acids, and Neuroscientists and a monoclonal <unk> and the list frankly is growing okay.
I'll stop there.
No. That's super helpful. Maybe just one more I don't want to focus too much on I think you've put into discontinued operations.
When we think about zero in the decision there.
What are what are the factors that may swing, one way or the other or is it now you think you can recognize just purely from.
From a sale perspective or are there some strategic dynamics when we think about <unk>. When we think about some of the other pieces.
That maybe come into play and Theyre just help me think about it.
And what we need to see and what we don't know whether that sales or not.
So we have a preference to divest the business.
As time goes on.
Sure.
We're looking at it as a potential strategic opportunity.
Whereby we could.
Exploit preclude.
And therefore.
Through the <unk> channel.
So both are attractive although our bias presently is to divest the business.
Okay.
Yes.
I appreciate that and I'll stop there thanks for the questions.
Youre welcome. Thank you Andrew.
There are no more questions at this time pending the call back over to Mr. Harry Sally.
Thank you all once again for participating on the call and thank you all for your interest in <unk>.
If you have any additional questions. Please feel free to contact us directly.
Have a good evening, everyone and thank you for listening.
Yes.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.