Q2 2021 Vyant Bio Inc Earnings Call
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Good afternoon, and welcome to the VI at Bio second quarter 2021 conference call and webcast today August 16th 2021 the company filed its quarterly report for the quarter ended June 30, 2021 on Form 10-Q issued a press release summarizing the results and provided an over.
Do you have the activities in the second quarter. Today's discussion is being recorded and will be available for replay a replay of today's webcast will be available on the bio bio website. Following today's call. Alternatively, the link can be sent to you by contacting IR at via the bio Dotcom all participants on this line.
We'll be in a listen only mode. During the presentation. The presentation will be followed by a question and answer session.
At this time I would now like to turn the conference over to Jay Roberts, Chief Executive Officer of Bio Bio. Please go ahead Sir.
Thank you operator, and thank you all for joining.
The conference call and webcast for the second quarter of 2021.
We're pleased to be having completed our first full quarter as buying buyout.
I think the merger activities between the former cancer genetics and <unk> XR completed we have directed our full focus on executing on our business plans.
It's also a great pleasure to speak with you today and share our enthusiasm and to give you some insight into how we envision the near term future of buy and bill.
Additionally, we are going to present, the financial results for the second quarter.
As of June 32021.
On the call with me today is <unk> Chief Financial Officer, Andy We're friends.
Following the Safe Harbor statement I will provide a strategic overview.
Based on recent corporate developments and the vision I had then Andy will take us through a brief financial update and discuss key accounting matters for the second quarter.
Some closing remarks, and the neuro open up the lines for questions I'll now turn the call over to our CFO Andy My friends.
Thank you Jay and welcome to all we'd like to remind everyone that various comments about future expectations.
Land and prospects constitute forward looking.
For purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of 1995.
<unk> bio cautions that these forward looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated including risks described in the company's filings with the SEC.
Any forward looking statements made on this call speak only of today's date Monday August 16.2021.
Bio does not intend to update any of these forward looking statements to reflect events or circumstances that would occur. After todays date. This conference call is also being recorded for audio rebroadcast on buying bio's website at Www <unk>.
<unk> bio dot com.
With that I would like to turn the call back over to Jay Robert J.
Thanks, Andy.
Well begin the presentation I think it's important to remind everyone that the second quarter was the first full quarter. Our company has operated as buying bio.
The integration has gone smoothly and operations are fully running.
<unk> is an emerging biotech.
Knowledge the company focused on discovering novel Therapeutics, and offering future partner Derisk clinical programs.
Efficacy efficiency cost savings and greater speed to market within the drug discovery industry.
We had a very productive quarter and made huge strides in several areas in the short period since we last reported.
Early in the second quarter, we received an issued U S patent for the use of steroids and organoid using the screening assay for drug discovery, an important addition to our developing IP portfolio we have.
The strategic collaboration with her days Bayou ancillary yet to emerge and privately held companies that fit nicely into our strategic plan.
To supplement our data science and technology teams and unique avatar clinical trials with primary patient derived cell lines.
We completed a large screening of AI generated novel compounds for Ret syndrome, which is an iteration stages now.
Also in the second quarter, we elevated a new in vivo tox screening disease model.
Progress compound screening programs for neuro degenerative disorders and begin the development of an AI based molecule in biologic creation for in vitro testing.
So needless to say I'm incredibly proud of our team has done so much in so little time.
I'd like to focus your attention to a couple of these accomplishments.
First obtaining a key patent and second starting the collaboration agreement.
On July 13th our wholly owned subsidiary Monarch was issued a U S patent, which covers a unique approach to applying human induced pluripotent stem cells or Ips CS is a powerful tool to illuminate the biology of complex human cell types, such as those of the central nervous system one of our two primary.
Focus areas.
The other focus area being oncology.
We believe that drug discovery needs to progressively evolve given that the traditional methods and models for predicting the safest effective drugs have underperformed.
This is about evidenced by the billions of dollars in years of time, it takes to bring novel drugs to market.
The issuance of this patent continues to provide us with increasing focus for our business on converging and impactful approach to drug discovery.
With data science, and biology, driven technology is at the core with engineering disciplines and regulatory expertise.
Okay.
On the strategic side on April 22nd via bio entered into a collaborative partnership with our days buyout and filaria.
To introduce a process to rapidly design redesign and optimize biological drug candidates using artificial intelligence and in vitro patient cell based avatar clinical trials.
The goal of the collaboration is not only to design candidates that are likely to be successful in clinical trials, but it's also been assessed for efficacy and numerous patient specific cell based models before even making it to the clinic.
The relationship with <unk> to continue to progress first with data that defines the binding affinity and function.
And then a subsequent focus on efficacy results as the near term milestone.
We look to accomplish these goals in the next four to five months and we expect that progress to eventual result in the identification of a lead therapeutic.
The collaboration capitalizes on the unique capabilities of each company to design.
When you factor in test small protein therapeutics.
Multiple biomarkers derived from home whole genome sequencing of patient populations.
Using proprietary artificial intelligence, where das is generating in silica protein sequences designed to bind specific disease targets. These sequences optimize around binding function and performance services a blueprint for the collaborative teams experts in in vitro and NV.
But critical clinical.
Drug discovery to produce the protein and rapidly iterate the structure using a highly efficient expression system.
Using celerity is patient specific cell model cohorts, the purified protein will be critically evaluated for target binding.
And further optimized to improve performance across an array of disease specific genetic biomarker expressing cells.
<unk> objective will be to deliver regulatory readiness.
Maximally Derisked drug candidate.
The combined solution will provide data in human based insights not usually available until after a costly clinical trial.
Yeah.
Disease indications of high importance to us initially well be focusing on oncology as the project evolves the therapeutic derisking strategy.
Further incorporate the human based biology, and analytical software from our wholly owned subsidiary stem on X.
The <unk> will be leading data science and scientific teams, we look forward to keeping our shareholders and others in the industry.
As we continue our progress.
Now, let me turn the call over to Andy for a financial update Andy.
Yeah.
Thank you Teri Hello, everyone and thank you again for joining our call today I will review our balance sheet as of June 32021.
Financial results for the second quarter of 2021.
The months was deemed to have acquired cancer genetics.
Accounting purposes, and the merger closed on March 30th 2021 the company.
Quarter 2021 post merger financial results are compared with the second quarter.
They solely on its two months' operations.
Therefore, the U S GAAP reporting for the company does not include the public company costs and the vivo farm operations persist Stanley all of the first quarter of 2021 as well as the 2023 and six month periods ended June 32020.
Given the differences in pre and post merger operations and cost structure I'm glad to report three items in my report first Q2, 2021 GAAP results.
Second expectation regarding our ongoing research and development spending SG&A and public company cost structure and third total revenues for the three and six months ended June 32021, as compared with the same 2020 periods on an actual and pro forma basis.
First Doug.
When he reviews the results for the second quarter of 2021.
Cash and cash equivalents totaled $26.5 million as of June 32021, which provides a cash runway into the first half of 2023.
Operationally.
The three months ended June 32021.
<unk> revenues were $1.9 billion.
Cost of goods sold service aggregate $1 million, resulting in a cost of goods sold a 56% of service revenues.
Cost of goods sold product aggregated $345000, resulting in a cost of goods sold margin deficit of 229000.
As we've mentioned previously our product manufacturing capabilities currently have excess capacity to support future growth.
Research and development expenses were $910000 for the three months ended June 30th selling.
Selling general and administrative expenses were $3.7 million.
SG&A expenses included public company cost of $2.3 million of which 620000 or non cash expenses for stock based compensation amortization and depreciation.
Second regarding our ongoing spending.
We expect research and development expenses to increase in the second half of 2021, so at least $1.5 million and up to $2 million per quarter.
SG&A costs are not expected to change materially in the second half of 2021. However, such costs include approximately $650000 per quarter, and noncash expenses related to depreciation amortization and stock based compensation as well as approximately.
$200000 per quarter in prepaid insurance amortization.
Finally.
While the company execute drug development strategy for long term growth. The company currently generates revenue from its demo farm is to monarch subsidiaries.
On an actual basis revenues were $1.9 billion and $2.2 million for the three and six months ended June 32021, respectively, as compared with 99002 hundred $57000 for the respective prior year periods.
Two of them by deep deeper insights to the revenue trends on a pro forma basis and assuming the merger occurred on January 1st.
<unk> 'twenty.
Pro forma revenues for the three and six months ended June 32021 were $1.9 million and $3.8 million, respectively, as compared with $1.5 million and $3.1 million.
In the prior year respective periods.
On a pro forma basis revenues increased by 26 and 21% in the current year, three and six months periods as compared with the same prior year periods.
The pro forma information is presented solely for informational purposes and is not necessarily indicated as the combined results of operations or financial position that might have been achieved for the periods or dates indicated nor is it necessary indicators of future results of the company.
I have a close for now and hand, the patient back over to Jay Roberts for closing remarks Jay.
Thanks, Andy.
As we come to the final part of this presentation I would like to conclude with the following takeaways.
First I'd like to reiterate how pleased we are now that the merger with stem Onyx has been completed.
We're focused on rapidly identifying small and large molecule therapeutics.
Treat central nervous system in oncology related disorders.
We had a very productive quarter, which we strengthened our intellectual property.
We progressed, our pipeline and finding exciting collaborative partnership to build long term shareholder value.
We continue to be actively looking at new out licensing and partnership opportunities.
With World class capabilities in data science, biological and chemical Sciences Engineering and regulatory affairs.
Well positioned to advance internal and partnered programs, we continue to forge an innovative pathway for drug discovery.
Potential result in higher quality and faster drug development with <unk>.
I invite Angela friends to join me as we open up the lines for Q&A.
Thank you the floor is now open for questions for those of you who have joined by webcast. You can submit your questions through the webcast tool by clicking on the ask a question button on the left side of your screen then type your question into the Textbox and hit sense. If he would like to ask a question over the phone. Please press star one on your telephone.
At this time.
If you're using a speaker phone, we ask that while posing your question you pick up your handset to provide the best sound quality.
Again, ladies and gentlemen, if you would like to ask a question over the phone. Please press star one on your telephone keypad at this time, we will take our first question from Robert Leboyer with Noble capital. Please go ahead.
Hi, and congratulations on all the progress that you've made in the past quarter. One of the questions that I had was how you see the business developing between products and services and what the future of the.
The company's business development might look like.
Thank you for joining great to hear from you.
Thank you so much so.
As we think about the business.
Relative to products and services, we as you know we have a legacy service business that both companies. When we merged together was able to combine through the integration activities and we are going forward to continue to provide access to those same services and products to our existing customers and to new customers.
Do see that that part of our business will continue to grow.
With that we use that really is an opportunity for us to.
To learn to perfect our capabilities.
With the full intention to be able to recognize that those capabilities lead us to.
No drive deeper partnerships with biotech and pharma partners.
And increase our capability set ultimately.
Driving the speed at which we can identify novel therapeutic compounds into categories that we're focused on.
Okay, Great and do you see any.
The idea of the service business versus product business any.
Split in terms of the emphasis of the company.
So the focus is really on our drug discovery side of our business.
So products and services get combined as a solution set.
We've continued to be.
Aggressive those type of initiatives and we think that that'll allow us to sort of expand the footprint that we have within existing customers. When you think about the real focus in terms of the future of the company. It certainly is focused on our R&D efforts to discover and identify novel Therapeutics.
A big part of how we'll continue to make key investments in the company going forward.
Okay, great. Thank you very much.
We'll take our next question from Ben Hayner with Alliance Global Partners. Please go ahead.
Good afternoon, gentlemen, thanks for taking the questions.
So first off for me and I apologize if I missed a little.
Little bit of a color commentary here.
Yes.
Not often that you see a newly issued patent is kind of the first highlight.
Quarterly press release.
I'm, just kind of considering that apparently.
It would seem that you guys really think of that patent.
Nation, all are very important.
Piece of IP. It also sounds like it's fairly broad.
Are there are there.
Other opportunity there are opportunities to.
You would think about licensing some of that technology are there others that might be infringing upon that you keep it to yourself.
What's kind of the.
The strategy, there and maybe a little bit more color on the depend itself or the IP itself, yes.
Thanks, Ben Thanks, very much so.
We think it's important and what was the reason that we put at the top and we do recognize that it's at the core of it.
<unk> unique patient derived IPSA use.
Cell based patient cell based assays and that's a big part, we think of being able to rapidly iterate.
We moved through the drug discovery process and some of the methodologies that the company had created we think actually are incredibly unique in terms of how we approach. It. So we do think that it's an important aspect of how we use of this capability for drug discovery.
And we also think obviously there is.
There is some amount of use of other types of steroid or Oregon or technologies for purposes of drug screening and we think that this is going to give us a strong position when it comes to out licensing access toward disease models.
A big part of our strategy. So we think that from clearly from a defensive perspective, we think that's important.
Evaluate the landscape as we kind of look across the.
Across the globe in terms of other potential infringers.
On that front as well and we have a we've engaged legal counsel to help us to support some of those efforts and we're doing a pretty clear. So a careful landscape review as we speak now that the patent has been issued.
Okay.
Really it is.
And the enabler of the kind of a rapid feedback loop and designing the these compounds.
Hey, guys.
It is the last of our patents are all type of asset although there may be some.
So you might be able to.
Several license too.
Right.
Yes, we think it's you know obviously it was put together fairly broad.
By intention and we think the sort of the application.
Clearly, it's down the middle for us in terms of our strategic plan and we will continue to be very important in terms of how we further develop.
Our capabilities.
And obviously, we want to continue to protect the investments that we've made and that we fully intend to continue to invest in.
The development and commercialization of other similar kinds of disease models, using the same kind of platform.
Frankly, the opportunities are endless if you think about the numbers of diseases, even in just simply across CNS and oncology.
It gives us many many shots on goal. So we think that it is it is center in central Tomorrow to our strategic plan into our future.
Okay. That's definitely helpful and then.
When you talk about the avatar clinical trials.
It's the right way to think about it as youre looking at groups with say certain genetic mutations.
Or is that something that you can kind of take down to the individual patient level.
Or is there kind of an example, you could say like pace.
Patient with a b C or X y Z.
Mutation, we build an avatar of that and then kind of it.
Use that for R.
Our screening and development.
Implication of these potential therapeutics.
Yes, so the tumor cell collection process is that the individual patient level. So it allows us and why that's important it gives us a broad look at multiple sources of data.
About a specific patient and so it was we it was.
We bring those tumors into the.
In vitro to the lab environment. We're also bringing you know a meaningful amount of genomic and genetic related data.
Centric to the patient that allows our our AI and machine learning systems to be able to continue to get better insights and giving us better data there as we do the design in this particular cases we.
For the iterate on the design of very specific proteins that are intended to create this binding capability too.
The specific growth of the tumors within.
And then the sort of test environment.
Okay.
How do you ensure that an individual patient level that.
Youre not going to take a drug through the FDA just on the basis of an individual patient.
Do you have a sense of.
How many similar patients you need identifier.
Kind of any.
Because without it.
We're going to rely upon that's okay, we're not going to rely upon that data, but there's there's a population of the patient cohort population. So it's not just one individual patients. So we've got numerous patient cells that are coming into this particular iteration.
The research.
And so it does give us again better insight as you cut across the more number of cohorts that are in the in the population base ultimately.
It is helpful to us to be able to use.
The insight and the data to be able to continue to do the iteration of the design of the protein and Thats really its purpose, obviously will be taking.
Once we've identified the lead candidate will be taking it through very typical kind of optimization processes.
Manufacturing and other and then ultimately the preclinical.
Studies that allow us to continue to check through the to check the boxes on both safety and efficacy.
In animals clinical trials as we put packages.
Packages together to get to the regulatory community.
Okay.
That makes a lot of sense, that's all I had thanks for taking my question gentlemen.
Ben Thank you.
And it will pass the floor over to Andy with friends for questions that have come in over the web.
Thank you very much Karen we did have a question that came in over the web related to the breakout of our services revenue between the historical beautiful farm business and <unk> business and I think one of the.
Purpose of all things that we have done here is trying to use that as an integrated reporting.
Process between two especially as we go to market with.
With innovation.
Of the.
Organized.
With the Abbvie.
Evil farm business and some of the joint projects, we are doing internally to to provide I would say expanded surface upstream offerings for that segment of the business. So as we look forward.
What I would say that we were not playing on.
Providing separate disclosure.
Other than what I can tell you that obviously the majority of the increase in the overall services revenue came from year over year came from the people of farm business.
Yeah.
We also got a second question that came in here.
Providing some color on the progress in the anticipated timeframe for any licensing agreements associated with.
Either or disease models or.
Our drugs Jay do you want to take that one.
Yes, I think.
Way to think about it is.
We're heading into.
Multiple pilot programs at this point and we think that gives us.
Kind of the starting point, but we've.
Been actively engaged in discussions with potential out licensing partners.
Four.
A short period of time post the merger.
And I'd say that we're making really good progress obviously, our intention would be.
Sent that we get to a signed agreement of course, we'll be communicating that very clearly to investors.
For our shareholders.
So I think that the.
The answer really is stay tuned we're making good progress. It's part of it was making sure that we had our fundamentals right that we had our feet underneath us post merger.
And we've accomplished all of that quite successfully in fact.
In the second quarter and as we head into the middle of the third quarter.
Very much heads down on what we think is the next most logical step it's important to our strategy.
Okay.
Okay.
As a reminder, ladies and gentlemen, if you'd like to ask a question over the phone you May press star one on your telephone keypad at this time again that was star one if you'd like to queue up for a question over the phone.
Are there any more questions over the web.
Okay.
Operator, it looks like that's it so I think we can.
It can move forward on <unk> at this point in time.
And we have no one else queued up over the phone.
We do not.
Okay, well so thank you operator, and thank you all for joining the call today.
We're very happy with our progress so far is an emerging global drug discovery company that is rapidly identifying small and large molecule therapeutics to treat CNS and oncology related diseases.
We look forward to keeping everyone informed of our progress along the way.
Thanks, very much for joining the call today and have a great evening.
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.
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