Q2 2022 Acasti Pharma Inc Earnings Call
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Thank you for holding ladies and gentlemen, and please remain on the line do your costs Pharma conference will begin shortly thank you for your patience.
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Good day, ladies and gentlemen, and welcome to the a coffee pharma second quarter 2022 earnings call.
At this time, all participants have been placed on a listen only mode and the floor will be opened for questions and comments after the presentation.
It's now my pleasure to turn the floor over to your host David Waldman of Investor Relations, Sir the floor is yours.
Thank you and good afternoon, everyone I'd like to welcome you to a coffee farmers fiscal 2022 second quarter conference call on the call with US. This afternoon are Jan <unk>, President and CEO, Dr. Pierre Lemieux, Chief Operating Officer, Canada, Chief Scientific Officer, and co founder Dr. George could tayo.
<unk> Chief operating Officer U S. Bryan <unk>, Chief Financial Officer, and Shaun Connolly VP of commercial operations.
We are planning for a Q&A session at the end of our prepared remarks, but if you have any remaining questions. After the call or would like any additional information about the company. Please contact crescendo communications at 2126711020, I'd also like to remind everyone that statements on this conference call that are not statements of historical or current back constitute forward looking information.
Asian within the meaning of the Canadian Securities laws and forward looking statements within the meaning of the U S. Private Securities Litigation Reform Act of 1995, The Securities Act of 1933, and the Securities Exchange Act of 1930 34, such forward looking statements involve known and unknown risks and uncertainties and other unknown factors that could cause the actual results of the cost.
You need to be materially different from historical results or from any future results expressed or implied by such forward looking statements. In addition to statements, which explicitly describe such risks and uncertainties readers are urged to consider statements labeled with the terms believes belief expects intends anticipates potential should may will plans continued targeted or other similar expressions.
To be uncertain and forward looking listeners.
Are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this conference call forward looking statements. During this conference call May include but are not limited to the success and timing of regulatory submissions of the PK bridging study for Gtx, one O four and of course, these other preclinical and clinical trials regulatory requirements or developments changes to clinical trial designs regulatory.
Pathways legislative regulatory political and economic developments across these projected cash position operating runway and the effects of COVID-19 on clinical programs and business operations.
The forward looking statements contained in this conference call are expressly qualified in their entirety by this cautionary statement. The cautionary note regarding forward looking information section contained into coffee last quarterly report on Form 10-Q, and most recent management's discussion and analysis, which are available on SEDAR at Www Dot SEDAR dot com on Edgar at Www Dot if you would.
Got it and on the investors section of the costs. These websites at Www data coffee farm a dot com all forward looking statements. In this conference call are made as of the date of this conference call are costs, you do not undertake to update any such forward looking statements, whether as a result of new information future events or otherwise except as required by law forward looking statements contained herein are also subject generally to us.
Functions and risks and uncertainties that are described from time to time and of course. These public securities filings with the Securities and Exchange Commission and the Canadian Securities Commission, including the latest quarterly for a four month Form 10-Q, and most recent MD&A. In addition, any forward looking statements represent a cost these views as of today and should not be relied upon as representing our views of any.
Subsequent date forecast you might update forward looking statements at some point in the future unless legally required under applicable securities law coffee, specifically disclaims any obligation to do so I'd now like to turn the call over to John D. L. Lisa. Please go ahead Jan.
Thank you, David and I'd like to welcome everyone on the call today.
Quarter was truly transformational for our coffee as you know we successfully completed the merger with great Therapeutics in August, creating a premier clinical stage specialty pharma company focused on rare and orphan diseases. We now have a diverse technology and product portfolio comprised of unique drug delivery capabilities.
And several clinical and preclinical stage drug assets, our lead clinical drug candidates have been specifically designed and formulated to enhance efficacy and safety by providing faster onset of action and reduce side effects, all while being more conveniently delivered which can ultimately increase patient compliance and.
Essentially lead to improved clinical outcomes. This acquisition brings us new and exciting opportunities and sizable orphan disease market with substantial unmet medical needs.
I'm really pleased to report that in the short time since completing the merger we have achieved meaningful progress both in terms of clinical development and business operations, we swiftly and smoothly integrated the grace and pleased with the coffee and we're now laser focused on advancing our clinical pipeline.
And immediately following the closing of the acquisition, we commenced enrollment for our pivotal called pivotal pivotal pharmacy pharmacokinetic bridging study for Gtx, one O four our novel aqueous formulation of Nimodipine, that's being developed as an IV infusion for patients experiencing subarachnoid.
Hemorrhage or S. H that was triggered by an aneurysm.
Important study as the next required step in the proposed five O five b two regulatory pathway.
It is being conducted in 50 healthy subjects at a single center randomized two period crossover study.
The primary objective of this study is to evaluate and compare the relative bioavailability of Gtx one O four with the currently marketed oral nimodipine capsules, which are the standard of care.
The second objective is to assess the safety and Tolerability of Gtx, one of four as compared to oral nimodipine capsules.
The study protocol subjects will be randomized assigned to a in a one to one ratio to one of two treatment sequences with a crossover design.
So group a will switch to group B, where gtx one O. Four is administered first or group b well switch to great Bay, where oral nimodipine capsules are administered first in both groups Gtx one for Nimodipine will be administered intravenously over a 72 hour period and Nimodipine will be administered orally.
Via 230 milligram capsules with water every four hours for 72 hours.
Throughout the study we will be conducting safety evaluations, which will include capturing any treatment emergent adverse events serious adverse events electrocardiogram data clinical laboratory evaluations physical examinations and resting vital signs, which will include very importantly blood pressure.
Next will be admitted to the clinical research unit or the C are you on the day prior to dosing and they will remain domiciled in the C are you for the duration of each study period again. The goal of this pivotal study is to achieve blood levels with our gtx one of them for IV nimodipine formulation that are comparable to the oral form of.
The drug that is in routine use today.
Previously announced we expect to report results during the first half of calendar 2022.
Based on the previous encouraging results from our PK study conducted by Grace we remain optimistic that this pivotal PK study will achieve its primary and secondary endpoints. Following the data readout and its subsequent review with the FDA, we intend to determine the final design of our planned phase III safety study for <unk>.
T X one O four.
Assuming the PK study and the FDA meetings proceed as planned we intend to commence the phase III study in the second half of next year calendar 2022.
With the PK study and the initiation of the Phase III safety study are very important near term and very meaningful catalysts for the company.
As a reminder, S. H is a rare and life threatening medical emergency where bleeding that occurs over the surface of the brain in the subarachnoid space between the brain and the skull.
It's estimated to affect about 50000 patients per year, representing an estimated addressable market of more than $300 million in the United States alone.
S. H typically occurs quickly and the key to patient survival is prompt medical intervention normally it requires immediate surgery and on average about two weeks and in neuro intensive care unit to try to prevent death and reduce the risk of long term disability patients typically remain on the motive pain throughout their stay.
In the neuro ICU.
Nimodipine is currently only available in an oral dosage form in the United States and many of these patients.
Come into the hospital unconscious or have a hard time swallowing during their hospital stay therefore, we believe gtx one O four delivered intravenously could be a much more convenient and efficient way to deliver nimodipine and importantly, because of its better absorption profile and more consistent blood levels Gtx.
One O four could potentially provide physicians with a more effective tool for hypertension management.
This advantage is really important as gtx, one O four could help to reduce the incidence of visa spasm, which requires immediate aggressive and costly intervention and can lead to worse outcomes for the patient.
Also please note that Gtx one O four has been granted orphan drug designation status by the FDA.
This provides us with the potential for seven years of market exclusivity in the United States provided that we see a similar safety profile to oral nimodipine. Upon completion of the phase III study. We could then expect to proceed with the filing of an NDA using the orphan drug designation and the five O five.
Two pathway, we're very excited about Gtx, one O fourth potential and we look forward to updating you as we progress towards the achievement of these important near term catalysts.
Now regarding our other two clinical candidates Gtx, one O one and Gtx 102, we've recently been awarded for composition of matter patents between the two drugs.
The European patent office, the Chinese patent office and the Mexican patent office, all have issued composition of matter patents for Gtx, One O one which is our novel bio adhesive film forming topical spray formulation of bupivacaine.
For the treatment of Postherpetic neuralgia or PHN.
And as a reminder, ph N is a persistent and often debilitating neuropathic pain, which is caused by nerve damage from the shingles virus in fact, it's so often cited.
As the leading cause of suicide in chronic pain patients over the age of 70.
It's also been reported that ph and affects approximately 150000 patients per year in the United States alone.
Which represents an estimated addressable market of about $400 million.
So based on encouraging results from our phase one PK study conducted previously by Grace, We believe that Gtx 100 one's biphasic delivery mechanism has the potential for rapid onset as well as continuous pain relief for up to eight hours. This could be a significant improvement over the standard of care and it could potentially.
We provide physicians and patients with an opioid sparing alternative as bupivacaine is well understood it's safe and it's a non habit, forming non narcotic analgesic.
No we plan to conduct a single and multiple ascending dose or sad Mad studies.
With Gtx one O. One next year and we expect to report those results by the end of calendar 2022. Furthermore, we intend to initiate a phase two study shortly after reporting the sad Mad data.
Now turning to Gtx 102, the Japanese patent office recently granted a costly a composition of matter patent for this novel concentrated easy to use oral mucosal spray formulation of beta mechanism.
We're developing this to improve the neurological symptoms of ataxia challenge Acacia or a T.
Now a T is a progressive neurodegenerative genetic disease, that's typically diagnosed in children at a very young age it causes severe disability as it affects many parts of the body, including areas of the brain, which impact their motor function and their speech.
He is also associated with the weakening of the immune system predisposing. These patients to infection and cancers. Sadly 80 patients typically die in their mid twenties. This disease. Unfortunately affects about 4300 patients per year in the United States, creating an estimated addressable market of about 150.
Millions of dollars.
Now based on an independent study conducted in Italy, with an oral liquid form of beta mechanism. We believe gtx 102 novel concentrated oral mucosal spray formulation has the potential to simplify drug administration and improve the symptoms of a T <unk>.
Routing posture and gait disturbance as well as kinetic and speech functions. Therefore, we believe that Gtx one O four could address very important unmet medical need as no.
No FDA approved pharmacotherapy is currently exist.
In the near term, we plan to conduct a pharmacokinetic bridging study comparing blood levels of Gtx 102 to a reference product containing beta mechanism.
We anticipate reporting those results by the end of next year. Assuming this trial is successful. We would then move forward quickly to conduct a confirmatory phase III safety and efficacy trial in patients with a T.
These newly granted composition of matter patents are very important additions to our already strong and established intellectual property portfolio as they provide protection beyond 2036 and create potential opportunities for partnering in these major international markets.
I hope you're as pleased as we are by the meaningful progress that has already been made and the two short months since we completed the merger we look forward to reporting on progress.
Next quarter as we continue to advance our lead drug candidates through clinical development and ultimately to commercialization.
So with those operating updates I'll now turn the call over to Brian <unk>, our CFO to discuss discuss our financial results for fiscal Q2, Brian.
Thank you Jan and good afternoon, everyone.
Turning to our results for the quarter R&D expenses before depreciation amortization and stock based compensation expenses for the three months ended September 30 of 2021 total points.
Five 5 million compared to eight 1 million.
For the three months ended September 32020.
And that decrease was mainly attributable to the reduction in professional fees within the research and development departments associated with the completed trilogy trials as well as the reversal of prior period provision after assessments.
Correspondence from tax authorities.
Significant R&D costs in Q2 related to the acquired assets from.
Grace as these programs only began to ramp up.
As of September of 2021.
General and admin expenses before stock based compensation expenses for the three months ended September 32021 were $2 9 million compared to $1 1 million for the three months.
As of September 32, 22020.
This increase was a result of increased legal tax and accounting.
And the other professional fees related to the grid therapeutics transaction.
Loss from operating activities for the three months ended September 32021 was $3 6 billion.
<unk> to a loss of $8 million for the three months ended September 32020.
The reduction was mainly due to a reduction in R&D and sales and marketing expenses offset by an increase in general and admin expenses as a result of increased legal.
Our tax accounting and other professional fees related to the grids transaction for the three months ended September 32021.
The company also recognized a $5 3 million of impairment charges included $3 7 million related to the intangible assets.
One 6 million related to production of lab equipment.
So the Supreme program and that was back in 2020.
Net income for the three months ended September 32021 was $1 million or roughly three cents or three cents a share.
Compared to a net loss of $6 1 million for four or <unk> 52 per share.
Hmm.
For the three months ended September 32020.
The increase resulted primarily from a gain of $4 5 million.
Due mostly to a decrease in the fair value of the derivative warrant liability as well as a decrease in R&D expenses for the trilogy phase III clinical trial clinical program for Supreme was completed.
Cash cash equivalents and short term investments totaled $50 8 million as of.
September 32021, compared to $11 6 million in cash and cash equivalents.
September 30 of 2020.
Based on management's current projections of cash he believes that our existing cash provides at least two years of operating runway.
Also during the quarter as Jan mentioned earlier, we completed the acquisition of the merger with <unk>.
<unk> therapeutics through the issuance of 18.2 million shares.
How to value of $68 8 million.
Upon completion of the transaction.
The company recognized acquired intangible assets of $65 2 million primarily related to the development assets.
Great.
Finally in addition to our quarterly filings I can report that we also filed a prospectus supplement related to our existing at the market or ATM facility to update our disclosures and restore available capacity to 75 million under.
Under the terms of the related sales agreements and prospect to supplement the cash we may from time to time issuance of common shares.
Get offering value of up to $75 million.
I would remind our shareholders that we currently have an estimated two years of operating capital that will fund several major catalysts, including the completion of our Gtx one O four program.
This filing of the ATM prospectus supplement was simply good housekeeping.
<unk> to regain the active status of the facility following the merger.
We have no obligation or plans to use the ATM in the future.
We would only use it prudently and opportunistically with a goal to minimize shareholder dilution.
With that I'll now turn the call back over to Chad.
Yeah Yeah.
Super Thanks, Brian that concludes our prepared remarks, now I'd like to open the call to any questions. Operator, do we have any in the queue.
Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we ask that while posing your question you. Please pick up your handset listening on speaker phone to provide optimum sound quality.
Please hold while we poll for questions.
Your first question for today is coming from Nicole Kaufman.
Our affiliation and pose your question.
Hi, Thank you and with the Black Ridge capital.
I congratulate you guys on the progress so far I do have a few questions first.
First Jim do you mind elaborating on the importance of the PK study and then the expected timing of the phase three.
Gtx went out for.
Sure. Thanks.
Thanks, Nicole appreciate the question.
And thanks for attending today.
I assume you're referring to gtx, one O for our IV formulation of Nimodipine is that correct.
Correct, Yeah. So that study is well underway, we referred to it as a pivot pivotal trial.
The key here is again being able to compare our blood levels of our IV infusion to the orally.
Administered nimodipine and if we can show Oh.
Comparison between the two then we'll be able to proceed directly to our phase III safety study.
And again the PK study is underway, we expect results in the first half of next year, and we would expect them to be able to start the phase III safety study in the second half of next year, So certainly before year end.
Great and then a follow on to that what would be your commercial strategy following approval.
Yeah. So great question, so with Gtx, one O four it's where we're targeting a fairly concentrated market will be focused on the major neuro ICU centers around the country.
We believe that we can reach those centers ourselves with a small very targeted commercial team.
We feel that we can do that very cost effectively.
And it gives us control of the product.
So that would be our plan with Gtx one O four.
I think it would be our plan as well with Gtx 102, there that's even a smaller more concentrated market theirs.
Probably about a dozen centers in the United States that treat these kids with a T. The most.
<unk> Centre is Johns Hopkins are they probably treat about 50% of the patients in the United States and we're very pleased that they're working with us and will be part of our clinical trial program.
So I think it'll be very easy for us to reach those markets directly ourselves on the other hand Gtx. One O. One is it is a very large market and the positions that are primarily prescribing.
Our P C P's primary care physicians.
And so for Gtx one O one.
We will likely seek a commercial partnership in the United States and as we well outside of the U S really for all of our our drug assets.
Well. Thank you very much I appreciate the detailed response Chad.
I look forward to hearing more developments from your guys I'll jump back in the queue that have further question. Yeah. Thanks, Nicole appreciate it have a good day.
Once again, if there are any questions or comments. Please press star one.
You do have a follow up question coming from Nicole Nicole Your line is live.
Hi, again I do have another question. So thanks for taking me again.
I think you do have sufficient cash or can you explain how you're going to be deploying that and your plans for it yeah.
Yeah sure I'm happy to happy to do that yeah. It's.
It's difficult to precisely estimate the total cost of each of these programs at this point. We we don't have final designs. For example for the Phase you know phase III programs for free to these products.
But we will be getting that a tremendous amount of input from the FDA over the next year as we complete our phase one PK programs and getting input into.
The phase threes in the case of Gtx, one O four and and one O one O two.
With Gtx 101, we do expect we will proceed to a phase two next year, but the current cash that we have we believe is adequate to take us through complete development through phase III of Gtx, one O four and it should significantly advance both gtx one.
One O two and and one O. One so I don't know if that answered your question Nicole can I expand on that.
No I think that's great that that's essentially answered my question I. Appreciate the time that you bet yeah. Thanks again.
Okay.
I would now like to turn the floor back over.
To Jim Caldwell Your line is live.
Thank you Hello, Tien tsin.
Just wondering if you could outline what's happening with Capri.
And the second question is to we have some investment firms that were following our Kashi beforehand with Capri and just wondering if they're still on the scene.
Yeah, Thanks, Jim Great to hear your voice.
Thanks for the question.
With Kukri, you know what I can tell you is you know as we've stated previously we are we are continuing to evaluate several strategic options are for Capri.
And those are progressing.
We will continue to keep you apprised as this this progress process progresses.
So we'll keep you posted on that and then your second question yes.
Yes, we're very very hopeful that we'll be able to pick up coverage analysts coverage with some additional firms in the near future, but I really don't have a I can't really comment on the timing and because I don't have any insight into the timing at this point.
Okay. Thank you then.
Thanks, Jim.
Your next question is coming from Sean kind of event.
Your line is live.
Hey, good afternoon.
It's coming from a shareholder question I have for you is we were going back and forth with the Investor Relations teams I'm, even yourself on several calls.
There's a lot of shareholders impacted with that a reverse stock split.
The plan moving forward to kind of recoup some of that right and not being that you guys said that it would be absolute last resort or what.
What did you guys do prior to that before it became a last resort.
What's the rate you're speaking of the reverse split yeah, we we.
Worked with NASDAQ to try to delay the implementation, hoping that the market would react to the news of our merger with Grace.
That did not happen and we simply ran out of time the in order to maintain our listing NASDAQ required that we get our share price back up above the dollar.
So we really had to implement that in the end you know at.
At the time that we did and now honestly all we can do I think is really focus on execution.
And I hope you can see that we've made significant progress in the last two months just since the merger.
We have a number of studies either underway or about to start a these are very important catalysts for the company and I think.
Have the potential to to create a lot of value as we go forward and you know it's it's also up to us to get the word out I mean, what I'm. Realizing that is that so many of our investors really don't understand the the the the the new business of a costly you know they're not familiar with the <unk>.
I said I think we've got to get out and we've got to you know educate we've got to communicate and.
And we are doing that now we're going to a number of conferences.
We've been to several just since the acquisition was completed.
We have participated in a number of of.
Interviews, we we've had a couple of publications.
So you know, we just need to do more of that Sean you know and I I think if we can show in a very short period of time for example, I mentioned that we'll have our PK results in the first half of next year. If we can start showing results with with additional studies following that one.
Then I think you know the company will.
Should be able to significantly improve our value.
I know, it's frustrating we're all frustrated over it but we really did the best we could to.
Postpone doing the reverse split to the very last moment.
Yeah.
I heard the same thing prior to the reverse split, but again I'm all in with you guys got my fingers crossed.
Yeah, well you know just just.
Let's see what we are we definitely plan to show you. We can execute a we've got a great team and we're well underway with the PK trial and as I mentioned to Nicole. This is really a pivotal study. These results are very important you know the safety of Nimodipine.
Is well accepted so the fact that all of that we have to do after this pivotal PK trial is a safety study.
You know it bodes well for our ability to get approval of Gtx one O four.
So you know we we we've just got to keep putting one foot ahead of the other here in and I think we've got the team to do it we've got some exciting asset so youre going to see a number of catalysts over the next year that I think you know hopefully will make a difference and we appreciate you hanging in there.
Alright, thank you.
Okay.
Your next question is coming from Sahil Kazmi Your line is live.
Hi, John and team. Thanks, so much for taking our questions and congratulations on all the progress just a couple of brief one from US I'm curious about how you're thinking about the commercial potential here across both.
More than one or two and how that might differ across the different geographies, whether it be in the U S or the EU are there certain prescribers youre targeting and just in general how should we think about the ramp as we go into the PK study.
And then into 2023.
Great.
Thank you for joining today appreciate it.
You know I'll turn this question over to push on a per shot is our VP of commercial operations.
Sean can you respond on the commercial question.
Yes.
Sure happy to Hi style.
So you know in terms of well I'll just take them one at a time when all four and then one or two.
What else was Jan alluded to the market is fairly concentrated.
Through the comprehensive and advanced stroke centers in the country.
We believe based on the segmentation in the market analysis that we.
Conducted.
There are about 400 such centers in the country.
That handle about 70% of the patient volume.
So without with a relatively.
A small footprint of Salesforce highly experienced hospital.
Based sales force.
We believe we can cover.
A major portion of the market.
Gtx 100 score, which is an IV formulation of Nimodipine, we believe has.
Outside the U S as well.
There is the intravenous formulation of nimodipine available in certain geographies.
In Europe. However, there are significant benefits to our formulation the biggest one being that it can be peripheral you infused as opposed to a.
Central line, which adds a lot of complexity.
Bedside.
So we believe that.
There is a strong value proposition outside the U S.
Opportunistically, we plan on partnering for a dose or such opportunities.
Gtx 102 words again, John mentioned, that's a very that's a much smaller.
Market.
From a clinical perspective there.
There are about a dozen such centers in the country. So with a relatively small sales force, we can capture a lot of the value and and uncover cover those markets similar to 104, our plans are to partner with international Biopharma too.
To take our drug to those markets.
Does that help answer the question.
Yeah no. Thanks, so much that's great and then just just a brief follow up on one O four.
From our perspective, it looks like a relatively derisked path forward here, but if you can talk about.
Pending the PK study a little bit more color on what that sort of phase III pivotal safety study might look like from a design perspective, and maybe when you plan to read that out as well.
Yeah. So.
Give you a brief.
The answer here and then its peer or George you know could could jump in.
You know ultimately we're going to have to sit down with the FDA, but preliminary discussions would indicate that we would need maybe about 100 patients. So it's not a big study and again the important.
The focus of the study is going to be on safety and and again, what we've seen so far with the IV form of of Nimodipine is that it may in fact, even be.
More safe or have a reduced number of adverse events as compared to the oral simply because it's easier to control the administration and you see less variability in terms of blood levels.
So so this could be important I think the other the other thing to mention is while it's not required for the design of this study.
We do want to collect some pharmacodynamic endpoint data.
Because we do believe that this will be a very important aspect or benefit of of our IV formulation. For example, you know we we believe that it's going to require less nursing time less prone to medication errors.
Certainly want to capture whether you know there was a reduction in the any sort of rescue therapy that's required.
And ultimately you know does it lead to a shorter stay in the ICU do these patients are the outcomes better. So these are the sorts of things that we want to collect it wont be designed as an outcome trial, but we will be able to collect.
Data.
As I described and then or our thoughts would be to try to publish that data.
Excellent. Thanks, so much and once again congrats on the progress we look forward to following the story.
Yeah. Thanks, I really appreciate it.
Take care.
Yeah.
There are no more questions in queue.
Okay. Thank you operator, and again I want to thank everyone for joining us today I appreciate your being here with us and we really look forward to continuing to provide you with further updates in the very near future.
So with that I'll wish you a good day. Thank you.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Yeah.
Okay.