Q1 2022 Brickell Biotech Inc Earnings Call

[music].

Greetings and welcome to Brookdale Biotech, Inc quarter, one 2022 financial results conference call.

At this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.

I would now like to turn the conference over to your host Scott Russell lifestyle advisor, Thank you and over to you.

Thank you and good afternoon, everyone. Joining me on today's call are Brookfield, Chief Executive Officer, Rob Brown, President and Chief Operating Officer, Andy Scholar, Chief Financial Officer, Marshall <unk>, Chief Medical Officer, Dr. Monica Lewke before we begin I would like to remind everyone that this conference call and webcast will can.

Forward looking statements about the company. These forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ. Please note that these forward looking statements reflect our opinions only as of the date of this call. We will not undertake any obligation to revise or publicly released the results of any revisions to these forward looking statements in light of Newark.

Nation or future events.

Factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward looking statements are discussed in greater detail in our most recent filings on Form 10-K, and our other periodic reports on forms 10-Q, and 8-K filed with the SEC.

It is now my pleasure to turn the call over to the company's Chief Executive Officer, Rob Brown, Rob the floor is yours.

Thanks, Curt good afternoon, everyone and thank you for joining our call today.

This is an exciting time for us as a company as we recently completed a transaction that reflects our new business strategy and commitment to develop our pipeline of novel autoimmune and inflammatory therapy candidates.

Just last week, we announced the sale of soft <unk> bromide or SB for short to Bhutan X pharmaceuticals under the terms of the deal mechanics required all assets, primarily related to SB, which <unk> had developed successfully through phase III pivotal studies as a topical therapy for the treatment of primary acts.

Larry Hyperhidrosis.

In exchange, we received an upfront payment of $3 million at closing and anticipate receiving up to an additional $6 million in potential near term regulatory milestone payments over the next 18 months from both <unk>. The company is also eligible to receive success based regulatory and sales milestone payments.

Up to a $168 million as well as tiered earn out payments on net sales ranging from high high single digits to mid teen digits.

This transaction with <unk> allows us to immediately unlocked value of SB, while eliminating the significant investment required for brickell to move <unk> through the FDA review and commercialization.

We plan to directly invest the proceeds and potential future economics from this deal to continue advancing our pipeline of novel potential first in class therapies. This includes a first in human phase. One study that is set to start imminently for our lead <unk> inhibitor <unk> zero to the.

Development of our lead <unk> inhibitor, BVI 10, and the advancement of our next generation kinase inhibitors through early preclinical stage studies in 2022.

We believe our teams clinical and regulatory experience and track record of operational execution as shown by our ability to develop SB from an early preclinical stage through phase III in up to NDA submission is what positions brickell to lead the successful development of these promising new programs now.

I'd like to pass it over to Monica to provide an update on our ongoing pipeline activities moniker.

Monika I don't think we can hear you.

I'm sorry.

Is that better.

Yes, Hey, Robyn thanks.

Good afternoon, everyone and thank you.

Okay as Rob just mentioned our team is thrilled to now be fully focused on the advancement of our novel drug candidate.

Nina therapeutic space, including a potential first in class <unk> inhibitor <unk> two into the clinic and preclinical development of our novel <unk> inhibitors and next generation kinase inhibitor platform.

Our lead development stage program <unk> is a highly selective and orally bio available <unk> inhibitor that we plan to develop for the treatment of a broad range of autoimmune and inflammatory diseases.

Based on the scientifically robust data package and promising preclinical validation that's been observed with this compound to date.

We believe that <unk> dual mode of action modulating, both the adaptive and innate immune system because it represents a paradigm shift in the way. We currently treat these debilitating diseases.

As Rob touched upon we are on track to initiate the phase one clinical trial in BVI, which you're in Canada. Later this month, which we are calling <unk> 101 study or the 101 study.

During the first quarter of 2022, we successfully submitted a clinical trial application for Bebe Iot to health, Canada, and we have since received a no objection letter from the health authorities, which allows the 101 study to proceed as planned.

The 101 study is a randomized double blind placebo controlled trial designed to evaluate the safety Tolerability pharmacokinetics and pharmacodynamics of <unk> capsules in both healthy volunteers and such.

Objects with atopic dermatitis or <unk> for short.

Part one a of the study is a single ascending dose or sad assessment of BB Iot capsules for placebo.

The sad part of the study is expected to enroll up to 56 healthy volunteers across seven cohorts at one center.

<unk> of the study is a multiple ascending dose or mad assessment of BD, Iot capsules or placebo administered once daily over 14 days.

Part of the study is expected to enroll a total of 33 healthy volunteers across three cohorts also had one center.

Finally, part two of the 101 study will compare <unk> to placebo in patients with moderate to severe atopic dermatitis over 28 days of dosing.

This part of the study is expected to enroll approximately 40 patients across 12 centers and will also include a preliminary assessment of efficacy as an initial model for inflammatory disease.

With patient enrollment expected to start in the coming weeks. We currently anticipate reporting topline results from the sad Mad parts of this 101 study by early 2023.

With respect to our <unk> inhibitor program in the first quarter of this year, we acquired exclusive global rights to our portfolio of novel potent orally available <unk> inhibitor.

<unk> Biopharma clients at an established drug discovery company in Japan.

Gang, which stands for stimulator of interferon genes is a well known mediator of innate immune responses.

<unk> signaling gang is linked to a number of high unmet need disease ranging from autoimmune.

And inflammatory disorders, such as systemic lupus erythematosus, non alcoholic scatter hepatitis or Nash and dermatomyositis as well as rare genetic interfering apathy.

Several established pharmaceutical companies are currently investing in this space and we're looking forward to developing next generation <unk> inhibitors that we believe are differentiated through their covalent inhibition of <unk>.

<unk>.

Preclinical development activities are already underway for our lead scoring inhibitor BVI 10, which has shown strong proof of mechanism, resulting in significant reduction of key pro inflammatory cytokines and a favorable favorable initial PK tox and safety pharmacology profile.

We expect to continue to conduct these activities throughout the rest of this year to enable starting IMD, enabling studies for BVA can in 2023.

Before I hand, the call over to Bert to review the financials I would like to briefly touch on our library of next generation kinase inhibitors, which includes hundreds of new chemical entities that inhibit the Derek Bell RK to ttk on quick kinases importantly, inhibiting these kinase at Hudson.

Promising outcomes in numerous model designed to mimic a broad range of different conditions within the autoimmune neuro inflammatory oncology and rare disease spaces.

We are conducting research to identify characterize and optimize these novel kinase inhibitors with the goal of progressing them.

Potential treatment options for debilitating diseases within some of these high impact impacted deal.

I would now like to pass the call over to Bert to provide financial overview birds.

We can't we can't hear you.

Hello.

We can hear you again.

Please go ahead.

Okay.

Yeah.

Thanks, Monica and good day, good day to everyone on the call before I provide a summary of the first quarter 2022 financial results I want to encourage you to read our full.

Consolidated financial statements.

And MD&A contained in our report on Form 10-Q, which can be accessed through the investors section of our website once filed with the SEC.

Starting with cash the company reported $17 3 million in cash and cash equivalents as of March 31 2022.

Earlier this month <unk>.

<unk> 3 million in upfront fees related to the purchase agreement with photonics for SP as well as reimbursement for certain development expenses incurred by brickell relating to SP.

We expect our cash and cash equivalents as of March 31, combined with upfront fees, we received from both <unk> and other potential near term regulatory milestone payments related to the purchase agreement.

Will support our operations for at least the next 12 months.

Revenue for the first quarter of 2022 was approximately 92000 <unk>.

Compared to 17000 for the first quarter of the prior year.

Both of which consisted of royalty revenue, we recognized from the sales of the clock or SP gel, 5% in Japan by our partner Kotkin.

R&D expenses were $6 million for the first quarter of 2022 compared to $6 1 million.

First quarter of 2021.

During the first quarter of 'twenty, two we incurred a $3 3 million reduction in clinical costs related to the U S phase III pivotal clinical program for SB gel, 15% was which was.

<unk> completed in the fourth quarter of 2021.

This decrease was almost fully offset by increases of $2 million and upfront costs related to <unk> acquisition of the Sting inhibitor platform from Cornell.

$7 million in development costs related to BVI zero too.

And $4 million related to personnel and other expenses.

G&A totaled $3 5 million for the first quarter of this year.

<unk> 3 million for the first quarter of the prior year.

This increase was primarily due to higher compensation related expenses professional fees insurance and other miscellaneous expenses are.

Our net loss for the first quarter was $9 4 million.

Compared to $9 million for the same period last year.

And with that I'll turn the call back.

Rob for closing remarks, Rob.

Thanks for the financial recap and update Bert This past year was a defining one in our company's evolution as we executed on our new business strategy by acquiring and now developing a pipeline of novel drug candidates with broad potential in the field of immunology and inflammation.

Looking forward, we have several important near term milestones over the next few quarters and beyond that we believe present, a significant opportunity to create value for our shareholders. This includes the sad Mad topline results from the 101 study of <unk> zero, two and further development and characterization of the <unk> inhibitor.

Program, including <unk> 10, and our next generation kinase inhibitor platform. This concludes the prepared remarks now I'd like to ask the operator to open the call up for questions operator.

Thank you.

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One moment, please why do we poll for questions.

Sure.

Okay.

Okay.

So the first question comes from the line of Tim Lugo with William Blair. Thank you and please go ahead.

Hey, guys. This is lachlan on for Tim Thanks for taking my questions.

I noticed the language change around the phase one readout from late this year or around year end two early by early 2023, and just wanted to.

Yes.

Any more color on if something has slipped and the timeline is a little or maybe just.

What's behind the change in the language there.

And then <unk>.

On the manufacturing of BVI Zurich, two can you just maybe remind us.

Some of the details of that where it's made.

How the supply chain is.

And how much you have.

If you already have it manufactured.

For the phase one.

Yeah sure. Thanks, Thank you for the for the questions. Yeah, we had been guiding to.

The end of the year.

We've broadened that just a little bit and it's primarily because of the study starting a few weeks later than than we had initially intended we've always guided to start in Q2, but our hope had been to get it started in early earlier earlier little at the end of April and that really has been a challenge because of the supply chain challenge with the product given some of the things that are going on.

In terms of the supply chain for this product, we really haven't provided that guidance, but we.

We do we do get the we do have all the materials made for the study they're in Canada now and we're just going through the process of getting that steady ready. So there shouldnt be any more problems with that we certainly our goal is certainly to get the study done by the end of the year, but with a few weeks we lost in the supply chain, we've decided to give that guidance a little more a little.

More breathing room.

Okay got it.

Okay.

The next question comes from the line of.

Trevor on grid with Oppenheimer.

Please go ahead.

Hey, guys. Good afternoon, thanks for taking the question.

A couple of quick ones for me.

So do you have any idea if R&D and SG&A are going to move.

Move down for the rest of the year do you have any expectation now the SBA is kind of off the books.

And then two do you know how.

Youre going to evaluate the preliminary efficacy measures.

With the part two.

Of the <unk> study thanks.

Let me do the first part of that and I'll ask Monica to to answer the second part of that on the R&D and the SG&A clearly the first quarter. The R&D was higher than then it will be in the coming quarters, we had a $2 million fee for for the coroner acquisition. So Thats BVI 10. In addition, there are some.

Front payments, we made to get started with the BVI zero two phase one program. So we would anticipate that the R&D expenses would would reduce quite substantially over the next few quarters.

The SG&A there will be some things probably not is as significant.

<unk> as you see in the R&D line, given given those one time events in the first quarter as well as obviously, we now have.

Some suffering bromide expenses that would show up in R&D off our books.

And being covered by photonics at this stage of the game in terms of the evaluation of the efficacy first off let me just say that remember this is a safety study and at the 28 day window. So we are going to do be doing some we're going to be doing some efficacy measures, but it is not the primary purpose of that part of the study, but we certainly hope to see some results and with that let me turn it over to.

Monica to answer the question more specifically.

Alright, Thanks, Rob.

And thanks for pointing out that this is a safety study we're really excited to learn about the PK also with this drug during all phases of this part one during the part two which you specifically asked about.

That's why we chose patient population, which has ongoing inflammation. So we're able to assess the impact.

<unk> on multiple measures of inflammation, so not only will we be looking at clinical endpoints for atopic dermatitis, which you are probably familiar with such as the composite endpoint of easy and.

Our body surface area involvement and things as such we will also be looking at PD markers on cells.

Measuring different markers ex vivo will be looking at the activity on the targets themselves darkly may in particular.

Also look at the insight to inflammatory cell population that will be assessed by biopsy and we'll also be looking at our results from tape stripping. So they can see any impact on <unk>.

Hey.

Okay, great Yeah. Thank you.

Thanks for taking the question appreciate it yes.

Yes, Trevor one last comment on that one remember, it's only 28 days, so we're not necessarily trying to see optimal efficacy.

But rather we're trying to see signals in early early indications of efficacy.

During that during that part two of the phase one.

Sure. Thanks.

Okay.

Okay.

Thank you.

Ladies and gentlemen, we have reached the end of question and answer session.

I would like to turn the call back to Rob Brown, Chief Executive Officer for closing remarks. Thank you.

Thanks for taking the time this afternoon to listen to our update we are enthused about what the future holds for brickell as a biotech exploring cutting edge treatment alternatives for patients suffering from debilitating autoimmune and inflammatory conditions, we look forward to sharing additional updates on our development progress moving forward as always please.

Feel free to reach out to us at anytime with further questions have a great day.

Thank you.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.