Q2 2021 Celcuity Inc Earnings Call
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So day, ladies and gentlemen, and welcome to yourself acuity second quarter financial results Conference call. All lines have been placed on a listen only mode and the floor will be opened for your questions and comments. Following the presentation. If you should require assistance throughout the conference you May Press Star zero to reach a live operator at this time it is my pleasure.
Or to turn the floor over to Robert Who'll with Westwick ICR, Sir the floor is yours.
Thank you operator, good afternoon, everyone and welcome to <unk> second quarter 2021 financial results on business update webcast and conference call. Thank you for joining US earlier today. So acuity released financial results for the second quarter ended June 30th 2021day.
Press release can be found on the Investor Relations section of the company website. Joining me on the call today are Brian Sullivan. So acuity is chief Executive Officer, and co founder and Vicki Hahn Chief Financial Officer before we begin I would like to remind listeners that our comments today will have will include some forward look.
King statements. These statements involve a number of risks and uncertainties, which are outlined in today's press release and in our reports and filings with the SEC.
Actual events or results may differ materially from those projected in the forward looking statements such forward looking statements and their implications involve known and unknown risks uncertainties and other factors that may cause actual results or performance to differ materially from those projects.
On this call. We will also refer to non-GAAP financial measures. These non-GAAP measures are used by management to make strategic decisions forecast future results and evaluate the company's current performance.
Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the Companys ongoing core operations and prospects for the future you can find the table reconciling the non-GAAP financial measures to GAAP measures in today's press release with that I'd like to turn the call over.
To Brian Sullivan, So acuity CEO.
Thank you Robert Good afternoon, everyone and thank you for joining us today as always we appreciate your continued support for cell acuity.
On this call we'll update you on our second quarter financial results the status of our get analyst program. Some.
From recently reported clinical trial results and an update on our sales take me a companion diagnostic programs Vicky will follow my comments with a discussion of our financial results and then we'll open up the line for questions.
For many of you are aware of the transformational step that is how acuity took on April with the in licensing from Pfizer of Catholicism Pantheon, VK and Tau inhibitor.
<unk> is currently in clinical development to treat patients with ER positive <unk> negative advanced or metastatic breast cancer.
Under the terms other licensing agreement Pfizer provided to acuity with a worldwide license to develop and commercialize the dollar from south.
<unk> paid a license for a $5 million cash and $5 million of <unk> common stock as upfront payments.
Pfizer is eligible to receive up to $330 million of backend loaded development and sales based milestone payments and tiered royalties on potential sales.
We estimate that the potential annual market available for <unk> as a treatment for breast cancer was approximately $5 billion.
We also believe there are additional opportunities for $1 or to treat other tumor types that could further increase its market potential.
Our interest in getter was spurred by encouraging data obtained from the expansion portion of an ongoing phase <unk> clinical trial evaluating <unk> plus the CDK for 6 inhibitor I brands and an endocrine therapy.
As of January 11, 2021 data cutoff 53 of the 88 evaluable patients or 60%.
Ported to have had an objective response for the treatment regimen.
With all of this it was also generally well tolerated with the majority of treatment related adverse events or TRA, he's being grade 1 or 2 the most common grade 3 or grade for TRA related to get dollars, where stomatitis and rash and are considered to be manageable.
Relatively low tier a dropout rate of approximately 10% was reported.
And we expect to update this day in December on in conjunction with the San Antonio breast cancer Symposium.
We continue to plan and prepare for a type C meeting with the FDA later this year to get feedback on the design of our phase III clinical trial for Vitol on this subject.
Subject to FDA feedback, we would expect to initiate a phase III clinical trial evaluating <unk> in combination with high brands and an endocrine therapy on the first half of 2022.
To support our debt our development program. We closed 2 financing recently in early April so acuity entered into a debt financing agreement that can provide a $25 million in term loans. The first tranche of $15 million was funded at closing.
And in early July so acuity close the follow on equity offering that raised gross proceeds of approximately $56.3 million.
After the follow on offering so acuity had approximately $94.4 million of cash on hand.
As we've previously discussed our assessment of different <unk> inhibitors using ourselves taking our platform. Let us initially to approach Pfizer about our interest in pursuing a collaboration to evaluate good dollars.
Subsequent to that initial internal study and as part of our due diligence on debt as mechanism of action. We conducted additional studies to evaluate gotta Elisa <unk> Alpha inhibitor and novel Oclock Bcl inhibitor in breast and ovarian patients tumors using ourselves taking our platform.
We presented the results for these studies at the ACR annual meeting in April.
The results showed that get inhibited 9 times more signaling test activity in tumors with hyperactive Ras network signaling on average and in a Elisa when evaluated at equal concentrations with the sales taking a test.
As I was taking a test also found that gotta inhibited 5 times more signaling activity when evaluated at 1 fifth the concentration of Inova listen.
This data supported our hypothesis that hyperactive ROST network signaling involves more than just the <unk> alpha isoform and that inhibiting all for class 1 PR through chaos of forms as well as <unk> wanted them for too is required to address it.
Our study also detected the synergistic cooperation between the <unk> and Bcl pathways, which suggest the potential patient benefits of combining get on with the Bcl inhibitor we.
We plan to conduct similar additional investigations using our sales cigna platform to identify classes of agents that may be appropriate to combine with <unk>.
Since we last reported to you results from a 17 patient phase 1 dose escalation study were published this study evaluated the safety and preliminary activity of debt combined with carboplatin or platinum based therapy and paclitaxel intense.
The intention was to explore the hypothesis that inhibition of the <unk> pathway can promote sensitivity to platinum based therapies. This is relevant because platinum therapies are the backbone of combination therapy for a wide range of tumors, including ovarian lung breast and bladder cancers.
Amongst the 17 patients evaluated 11 or 65% had an objective response.
These 11 responsive patients <unk> had a partial response and 3 had a complete response.
3 additional patients or 17% reported stable disease.
11 of the 17 patients enrolled had advanced ovarian cancer 10, with clear cell ovarian carcinoma, and 1 with low grade serous ovarian cancer.
Chris I'll ovarian cancer is a tumor type with poor prognosis generally considered to be chemo resistant.
On the 11 patients with ovarian cancer, 9 or 82% reported an objective response.
Among the 9 of 17 patients who had received prior platinum therapy for or 45% had a partial response for responders included 3 patients with ovarian cancer and 1 patient with non small cell lung cancer.
A drug combination was found to be tolerable for the manageable safety profile.
While the sample size is very small the data from the ovarian cancer patients is interesting Nonetheless, 9 of the 11 ovarian cancer patients or 82% had an objective response of the 7 patients with clear cell.
Ovarian cancer, who are platinum naive 6 or 86% had an objective response. This compares to objective response rates of 25% to 50% reported in other studies evaluating platinum therapy from platinum naive clear cell ovarian cancer patients. It's.
It's premature for us to assess the priority of pursuing further development of an indication in ovarian cancer, but nonetheless. The study provides additional preliminary evidence for the Dod elicit antitumor activity.
Now I'd like to move on to the diagnostic side of our business <unk>.
So acuity.
Our sales Cigna <unk> third generation diagnostic platform identifies the underlying cellular activity dysregulation pathway signaling that maybe driving a patients tumor so that are matching targeted therapy can be identified.
Since this regulated signaling is too complex for molecular tests to characterize and most patients on our platform can identify new treatment options for patients who lack actionable molecular biomarkers. Our strategy is to develop companion diagnostics that enable a pharmaceutical company to expand the number of patients eligible to receive their targeted therapy.
To achieve this we are collaborating with pharmaceutical companies to evaluate the efficacy of their targeted therapies in patient populations selected by our sales Cigna pathway activity test.
For the clinical trial results are favorable these collaborations may lead to advancement of a new indication that expands the market for the targeted therapy.
As an example, we believe there is a significant unmet need for new therapeutic options for her 2 negative breast cancer patients. Our research suggests that many of these patients have an undiagnosed and untreated disease mechanism.
I was taking a test has the potential to identify the disease mechanism for roughly 25% to 35% of these patients in the targeted therapy, most likely to benefit.
Earlier this year, we entered 2 new clinical trial collaborations in January as previously announced.
We entered a collaboration with the Sarah Cannon Research Institute and Pfizer for a phase II trial.
Trial is evaluating the efficacy and safety of 2 Pfizer targeted therapies in pro Pan her inhibitor in South Korea.
C met inhibitor in patients with previously treated metastatic her 2 negative breast cancer selected with our sales taking a test.
Patient enrollment is expected to begin this quarter and interim results are expected in the second half of 2022.
In March we entered into a clinical trial collaboration with MD Anderson, Novartis and Puma biotechnology to study a new drug regimen collaboration will evaluate the efficacy and safety and Novartis is C met inhibitor to breakdown and Puma is pan her inhibitor <unk> in patients with metastatic her 2 negative breast cancer selected by the sales Cigna plan.
1 and this is the second clinical trial to treat patients diagnosed with hyperactive her 2 on C met signaling breast cancers with matching targeted therapies.
Enrollment is expected to begin in the third quarter of this year.
<unk> now has 5 clinical trial collaborations in place and we expect to announce additional collaborations by the end of this year.
The ongoing back on in fact, 2 trials that's acuity is conducting.
We are evaluating anti <unk> therapies in early stage for 2 negative breast cancer patients. The goal of each of these trials to demonstrate the breast cancer patients identified by ourselves Cigna <unk> pathway tests obtain a higher rate of pathological complete response to new adjuvant anti her to drug treatment than from current standard of care chemotherapy patients.
We receive a pathological complete response to the new adjuvant drug treatment are less likely to have their cancer recur. So we believe ourselves taking a test can play a significant role in extending the lives of many breast cancer patients. We continue to expect interim results from our Fabs..1 in fact in trials in late 2021 on early 2022.
We are excited about these collaborations and the opportunity to work for some of the worlds most prominent cancer research centers.
Additional collaboration discussions in progress on our goal is to announce new agreements in coming months I'd like to turn the call over now to <unk> to review our financial results.
Thank you, Brian and good afternoon, everyone.
Provide a brief overview of our financial results for the second quarter of 2021, and I invite you to review our 10-Q filed in the next day or 2 for a more detailed discussion.
Our second quarter net loss was $14 million or $1.11 loss per share compared to $2.2 million net loss or <unk> 21 loss per share for the second quarter of 2020.
Because these quarterly net losses include a significant non cash items stock based compensation the issuance of common stock and interest. We also included in our press release non-GAAP adjusted net loss for the quarter ending June 32021.
Our non-GAAP adjusted net loss was $8.3 million or 60.
66 cents.
Loss per share for the second quarter of 2021 compared to non-GAAP adjusted net loss of $1.8 million or 17 cents loss per share for the second quarter of 2020.
R&D expenses increased approximately $11.3 million during the second quarter of 2021 compared to the second quarter of 2020. This was primarily the result of a $10 million upfront license fee related to the execution of the Pfizer agreement.
The $10 million included $5 million of noncash expense for the issuance of stock the remaining increase in expenses related to compensation clinical validation and laboratory studies and legal expenses.
The approximate $2 million increase in G&A during the second quarter of 2021 compared to the second quarter of 2020 arose primarily from higher professional fees associated with being a public company director and officer insurance and non cash stock based.
<unk>.
Net cash used in operating activities for the second quarter of 2021 with $7.6 million compared to $1.6 million for the second quarter of 2020 day.
This was the result of non-GAAP adjusted net loss of $8.3 million offset $5.6 million of working capital changes.
Of the $6 million increase in cash used for operating activities 5 million, what's the cash portion of the upfront license fee paid to Pfizer.
We ended the quarter with approximately $41.6 million of cash and cash equivalents compared to cash cash equivalents from $11.6 million on December 31.2020.
This included net proceeds of $14.4 million related to debt financing agreement.
The follow on equity offering we closed on July 1.2021 resulted in gross proceeds of approximately $56.3 million. After the follow on offering South acuity had approximately $94.4 million of cash on hand.
Yes.
Thank you Vicky I'm very excited about the progress we made this quarter the opportunity to develop the data.
Significantly expands the markets, we are addressing the potential value, we can create for our shareholders and the impact we can have to extend the lives of cancer patients.
The 3 new studies, we expect to activate on the diagnostic side of our company further buttresses the opportunity our sales taking a platform offers and our successful financing activities in 2021 provide us with the additional capital needed to fund our development programs as they advance on the clinic.
Operator, I'd like now to open the call for questions.
Thank you the floor is now open for questions. If you do have a question. Please press star 1 on your telephone keypad at this time.
A speaker phone we asked it while posing your question you pick up your handset to provide the best sound quality again, ladies and gentlemen, if you do have a question or comment. Please press star 1 on your telephone keypad at this time, we will take our first question from Chad Messer with Needham <unk> Company. Please go ahead Sir.
Okay.
Thank you good evening and thank you for taking my questions.
Our cash out from us.
Alright.
If we could just start out with your data list.
You mentioned you expected data update at.
San Antonio breast.
Would you maybe.
Maybe set the stage a little bit for <unk>.
What we should be looking for there in terms of.
I don't know additional patient follow up.
Et cetera.
Sure so.
The data that we presented in <unk>.
April that was based on the January cutoff was fairly mature from a follow up standpoint. So we don't expect there to be significant movement in those metrics.
The data that we'll be presenting and we hope to present at San Antonio would cover a kind of a wider range of metrics debt.
Typically used to evaluate the efficacy.
Efficacy of drugs duration of treatment.
<unk> of response for.
Uh huh.
Highlights of potential different subgroups, depending on the other way stratification was defined so just I guess I would say, we will put further detail behind some of the numbers, where the topline numbers don't change wouldn't expect to change significantly.
Okay, Alright, that's helpful.
It's always good to get more details.
And then just on the so taking the platform. So look I understandably a lot of the focus here has been on broadening.
The patient base for existing drugs makes sense, great commercial opportunity you guys have some good data there but.
It seems like the platform would also have a lot of applications a little bit earlier on and you've got a bunch of partners you've talked about potential new.
New partnerships just wondering about your prioritization for thinking on sales Sigma.
As it way during earlier development your own drugs.
Obviously for good analysts, if youre kind of doing that already but.
As a way to.
I dunno optimize drug development.
Earlier on just.
Just your thoughts on maybe some color around discussions you may be having.
Sure now that's a great question 1 other factors, we balance is likelihood of success of the drug and our initial strategy was to focus on drugs either approved already.
So there wasn't the risk of.
The drug not advancing or drugs that had already presented very favorable data. So that we could assess that the likelihood of the drug advancing would be high so that we were taking.
On risk in a sense off the table for our initial collaborations.
Going forward, though is we have now a fairly good range of studies in process. It allows us to be a little bit more flexible and potentially do work with pharma as you suggested where we can help evaluate.
Drugs.
And drug combinations.
For drug on an earlier stage as you know on I think what you're alluding to 1 of the biggest challenges for many of these drugs is developing a reliable web stratify the patient population.
<unk> had some of those conversations.
Overtime I would expect that the.
Conversations like that would.
Would lead to some form of collaboration.
<unk> project, but it is an area that.
It could be helpful. We want to avoid though I mean, just the only.
Down side of this activity and this is why we haven't rushed into it.
Is that you can risk, becoming a essentially a contract research organization, where youre doing.
<unk> work, but.
You typically pay it is almost similar to on the basis of a grant.
And it may or may not necessarily result in commercial activity.
That's a risk we could take but we just have to balance.
Being utilized as an extra lab by pharmaceutical company and would want to enter into agreements that.
It would clearly be pointed in a bigger direction than just providing.
Data for the translational team.
Alright, yes.
Great understood and I think.
The value the value of your data will have to speak for itself over time as you generate it. Thanks for the answer to this growth.
Youre welcome.
We'll take our next question from Boris <unk> with Cowen. Please go ahead.
Yeah.
Great My for.
First question, maybe on the list for future development I'm just curious what are the key questions for the FDA on the study design for pivotal trial is it just not going to be an add on to <unk> brands endocrine therapies is there kind of more moving pieces here.
So whenever you are advancing.
Our pivotal study.
It's almost.
Expected on in fact, I don't know if required is the right word, but certainly expected that youll meet with the FDA review.
Your clinical.
Clinical trial design.
Engage in a discussion that covers other topics.
1 is relevant.
Yes.
Discuss prior to the activation of a pivotal.
Pivotal study.
But there are questions that every sponsor would asking agency, which is to confirm that the endpoint is 1 that they will accept confirm the patient population is 1 that accept your assumption about benefit that you're baking into the statistical analysis plan the acceptability of the controls assumptions.
And other kind of somewhat detailed considerations that would get reflected in the statistical and.
<unk> plan or in the protocol.
Got it okay, but it doesn't sound like there's any kind of significant controversy or anything it's more of a routine.
We've also seen but again I mean, there's always you again I don't want to.
The traffic on fall into a sale. It's all routine and then something comes up I mean, you have these meetings for a reason to essentially have a on an open discussion with the agency and get feedback on.
And depending on what the feedback is you respond accordingly.
But we don't think theres anything in what we're proposing that as.
Yeah.
Controversial, but you just have to expect that you may get questions or request and you adjust accordingly, thats why it hasnt meeting.
Got it.
Last question on <unk>, So I'll take net that's on breast cancer.
It is the regulatory path for a test like this.
So for the first test that.
Debt, we would lets say pursue in parallel as a companion diagnostic with.
The matching therapeutic.
Seek.
PMA or pre market approval.
For the diagnostic.
And that process is somewhat similar it's certainly less cumbersome or burdensome than getting a submitting a new drug application, but it requires you to have provide data.
That supports the stability of the test and the repeatability.
And the controls that you have in place for for performing the test we had a pre submission meeting with the FDA already.
Previewed the data that we've generated to date, we also got input on other data that they would like to see which again, we for the most part anticipated.
And so that submission would occur.
Clinical data was available supporting the new indication and that we would go in parallel we would go to the CVR H, the diagnostic or device side.
Drug sponsor would go.
To the drug division and those groups have a guidance document that.
Yes.
Directs or at least recommends how they assess those.
2 datasets in parallel so that the.
A decision on the PMA on the CTX.
Coincide if favorable with.
The review of the new drug application or in this case, let's say a label expansion.
Got it thanks for taking my question.
Oh, you're welcome.
As a reminder, ladies and gentlemen, if you do have a question or comment. Please press star 1 on your telephone keypad at this time again, that's star 1 on your telephone keypad to queue up for a question.
Well take our next question from Alex Nowak with Craig Hallum Capital Group. Please go ahead.
Great. Good afternoon, everyone can you Brian can you provide an update on how enrollment is tracking in the fact, 1 and 2 studies it doesn't bear on changing enrollment rates at all or is everything pretty much moving along.
Along relatively well with prior targets.
So I think.
So things are proceeding consistent with what we reported last time, we haven't gotten a report of disruptions due to <unk>.
Hospital activity treating patients with Delta variant.
Yeah.
But I guess.
Yes.
Kind of an ongoing question, but so far we haven't gotten any.
The signals that that that could be disruptive to us.
Understood. That's good and then can you expand on the new collaborations that you've mentioned on the diagnostics side that could come later this year or just any sense on the pathways for the targets there.
Yeah.
This is Ben that we really don't get into details until we have something that we can announce and so.
Follow similar hypothesis for what we're doing which is to identify patients who could benefit from treatment.
They wouldn't otherwise be eligible for.
And looking at different indications and different drugs to debt.
Again expand the potential opportunity, we'll increase the odds of our overall success.
Understood makes sense and then just last question on the press release mentions in the milestones section without conducting a lifecycle development plan update on go next year could you maybe expand on this and is this when you would consider moving into other targets like ovarian cancer and if not how are you assessing the ovarian cancer opera.
Saturday with the day, just talked about alongside breast cancer and when would you consider running a study in ovarian cancer.
Yes.
Most other a couple of questions there.
Ill answer the last question first because it will help support.
Question on the lifecycle development plan.
The data reported in this study was interesting.
Ovarian cancer is.
It's been on our radar for a variety of reasons.
And the state of support for that but there are a lot of factors that you consider.
When you're developing lifecycle plan.
You have to factor in the state.
The unmet need the size of the population the on how actionable population might be.
The competitive environment and what's on the horizon.
Youre taking into accounts future developments until you don't get blindsided.
And then the biological rationale and the support that you might have both internally or externally.
2.
Justify taking that step so all of that analysis essentially goes into.
Identifying key criteria. So that we can prioritize tumor types that we think are most likely to involve yesterday <unk> and those patients could most likely benefit.
Sure.
And unmet need in the threshold that we think would be reasonably obtain reasonably.
Beatable, we've talked in the past about the role of.
Or rather the evidence that suggests perhaps at the <unk> and <unk> pathways generally cooperate.
Or have been found to cooperate in non clinical models for preclinical models.
So prostate cancer would certainly be 1 of the tumor types, we will deep.
Deeply investigated as a potential opportunity for ovarian cancer would be on that list as well.
But until we complete the analysis.
It's premature to the preview anything because again a lot of debt as a sort through and in a lot of factors to balance and way before.
Decide which direction to go but ultimately.
The result of that analysis for it.
Would be a decision too.
Proceed and evaluate and phase <unk> studies.
That would allow you to test the hypothesis in a reasonably efficient and cost effective way.
And that data then would provide further evidence or not of the potential opportunity to pursue.
The indication that we were evaluating.
In those studies.
Alright understood it makes sense, thanks, Brian and Vicky.
Youre welcome.
That concludes our question and answer session will turn the floor back to Mr. Sullivan for closing remarks.
Well. Thank you all for attending and appreciate your interest in our company and look forward to reporting to you on the future and look forward to potentially speaking with some of you at the upcoming conferences take care.
Ladies and gentlemen, this does conclude today's teleconference. We thank you again for your participation you may disconnect. Your lines at this time and have a great day.
Yeah.
Hum.
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