Q1 2022 Celcuity Inc Earnings Call
[music].
Good afternoon, and welcome to the <unk> first quarter 2022 financial results and corporate update conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
Please note this event is being recorded.
I'd now like to turn the conference over to Robert All with ICR Westlake. Please go ahead.
Thank you operator, good afternoon, everyone and welcome to sell acuity. Its first quarter 2022 financial results and business update webcast and conference call. Thank you for joining us.
Earlier today, So acuity incorporated released financial results for the first quarter ended March 31, 2020 to the press release can be found on the investors section of our website. Joining me on the call today are Brian Sullivan, <unk>, Chief Executive Officer, and co founder Vicky Hahn Chief Financial Officer.
As well as Igor Gorbachev ski Chief Medical Officer, who will be available during Q&A.
Before we begin I would like to remind listeners that our comments today will include some forward looking 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 projected.
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 companys 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 a table reconciling the non-GAAP financial measures to GAAP measures in today's press release and with that I'd like to turn the call over to Brian Sullivan, So acuity CEO .
Thank you Robert and good afternoon, everyone and thank you for joining us today as always we appreciate your continued support of cell acuity.
On this call we'll update you on our first quarter financial results and key activities over the next few months in particular will review the financing transaction, we announced this morning and the status of the clinical development program and pivotal phase III trial design for <unk>.
Today, we announced that we entered into a definitive securities purchase agreement with a premier group of biopharmaceutical investors in a private placement that is expected to result in the aggregate proceeds this acuity of $100 million.
Venrock health care capital partners as the lead Investor Commodore capital, New Enterprise Associates, Alright capital management <unk> capital Ni are also participating.
Investors will purchase shares of common stock and preferred stock at a price per share of $5 75, which is on an as converted to common stock basis.
For each share of common stock and each 110th of a share of preferred stock purchase investors will receive a warrant initially exercisable for preferred stock equivalent to 0.4 shares of common stock on an as converted basis.
The exercise price of the warrants will be at a 40% premium to the price paid by investors for the initial shares of common stock purchased in the private placement.
The preferred stock will be convertible into common stock at the holders election subject to certain limitations, such as beneficial ownership and the approval by the company's stockholders to increase the number of authorized shares of common stock sufficient to cover the shares of common stock issuable.
The warrants are initially exercisable for preferred stock and we will convert into warrants to purchase common stock. If the proposed increase in the company's authorized common stock as approved by stockholders.
The closing of the private placement is expected to occur shortly after the first patient enrolled in our forthcoming phase III study Victoria one received their first dose of treatment at a clinical site located in the United States provided that this occurs before December 31 2022.
Youll be able to find additional details regarding the private placement in a form 8-K that we will soon file with the SEC.
We're very pleased to have attracted such a well regarded group of investors in this very difficult equity capital market. The erosion in the value of clinical stage biopharmaceutical companies over the past six months and the corresponding drop in financing activity.
Significant uncertainty for companies like sell acuity.
There's uncertainty in turn can significantly undermine the company's ability to implement its clinical development programs in light of the uncertainty this challenging capital market creates we concluded that strengthening our balance sheet was paramount.
With the capital we expect to raise from this transaction, we believe we significantly enhance our ability to develop <unk> as a new therapeutic option for cancer patients and to create value for our shareholders.
Got it so listen targets <unk>, which is considered one of the most important and complex pathways involved in cancer blockading <unk> efficacious Leigh Anne safely, though has been challenging because of its structural complexity and its linkage to see key cellular metabolic processes.
<unk> been habits, all four class, one <unk> isoforms, and <unk>, one and <unk> two.
This is the optimal approach biologically because it avoids the cross activation of uninhibited subunits, and resulting drug resistance that can occur with <unk> isoform of <unk> specific inhibitors.
<unk> blockading the pathway also enhances the potential to induce synergistic inhibition with other targeted therapies, such as CDK four six inhibitors.
<unk> differentiated chemical structure, an intravenous formulation results in a very favorable pharmacokinetic profile. The drug has potent at low or sub animal or concentrations and can maintain pathway inhibition with a tiny fraction of a drug of drug compared to approved oral <unk> inhibitors.
Our results in a safety profile that compares very favorably against the proved isoform specific <unk> inhibitors.
Thus, we believe <unk> unique properties position it to realize the significant potential first envisioned for P. O K therapies. When the pathway is critical role in cancer was discovered.
The initial potential target population forget it's Elisa as patients with HR positive <unk> negative advanced breast cancer, whose disease progressed during treatment with the CDK four six therapy.
We estimate this represents over 100000 breast cancer patients globally on an annual basis.
To advance the development of Gannett's Elisa in March we announced the trial design for Victoria, one pivotal phase III clinical trial to evaluate the safety and efficacy of get up to listen in.
In combination with full vestron with or without <unk> in adults with HR positive <unk> negative it Brent advanced breast cancer, whose disease progressed, while receiving prior CDK four six therapy.
This open label randomized clinical trial will enroll subjects regardless of.
K <unk> status, while enabling separate evaluation of subjects according to their <unk> status.
Subjects, who meet eligibility criteria and do not have confirmed <unk> mutations will be randomly assigned on a one to one to one basis to receive a regimen of either get us Elisa polycyclic for best from an army.
Got it so let's have been full vesting in RMB or <unk>.
<unk> and RMC.
Subjects, who meet eligibility criteria and have confirmed victory <unk> mutations will be randomly assigned on a one to one basis to receive a regimen of either get up to elicit Pablo cyclical for investment in R&D or uplifts and for investment in arm E.
We are receiving the supply of power polycyclic for this trial from Pfizer at no cost to sell acuity.
The primary endpoints of the study are progression free survival for resist one one criteria as assessed by blinded independent Central review.
Primary PFS endpoints will be evaluated separately in subjects, who lack <unk> mutations and in those who have <unk> mutations. This multicenter international trials is expected to enroll patients at clinical sites across the U S Europe and Asia.
We expect to activate the Victoria one study in mid 2022 and that the next at the first patient receiving the first dose is expected to occur six to 10 months later.
There are roughly twice as many patients who lack <unk> mutations as those that happened and therefore PFS for the subject lacking picked <unk> mutations will be available earlier then the data.
From those who have <unk> mutations as a result, we expect that the primary analysis for pick <unk> non mutated patients in arms, a b and C.
It will be available in the second half of 2024 and.
And we expect data for the <unk> C. A mutated patients from arms DNA to be available in the first half of 2025.
There are limited options.
Limited efficacy for patients whose disease progressed on a CDK four six inhibitor current standard of care treatment includes.
Includes either a selective estrogen receptor degrader or <unk>, such as for restaurant or a regimen that combines an M Tor or pick three alpha targeted therapy with an endocrine therapy.
Finding more effective treatment for these patients is a significant unmet need.
To support our development efforts, we received fast track designation forget it's illicit for the treatment of patients with HR positive <unk> negative advanced breast cancer.
In January fast track designation is granted by the FDA for products.
Demonstrate the potential to address the serious unmet medical need.
This designation will enhance our ability to interact frequently with the FDA to discuss our development plan.
Yeah.
And now I'd, just like to take a few moments to discuss the diagnostic sides of our business.
Cigna are third generation diagnostic platform identifies the underlying cellular activity. This regulated pathway signaling that maybe driving a patient's tumor. So that are matching targeted therapy can be identified our strategy is to develop companion diagnostics that enable a pharmaceutical company to expand the number of patients eligible to receive their targeted therapy.
Our ongoing fact trials were negatively impacted by COVID-19 related delays during early 2022 now with the lower Covid case load enrollment activities are resuming for these trials and we expect to receive interim results from the fact, one in fact two trials in the first half of 2023.
I'd like now to turn the call over to Vicki Hahn our CFO .
To review our financial results.
Thank you, Brian and good afternoon, everyone I'll provide a brief overview of our financial results for the first quarter 2022, and I invite you to review the 10-Q, which will be filed today for a more detailed discussion.
Our first quarter net loss was $7 9 million or <unk> 53 per share compared to $2 8 million net loss or <unk> 25 per share for the first quarter of 2021.
Because these quarterly net losses include significant noncash items, including stock based compensation and interest. We also include in our press release non-GAAP adjusted net loss for the quarter ending March 31 2022.
Our non-GAAP , our non-GAAP adjusted net loss of <unk> 7 million or <unk> 47 per share for the first quarter of 2022 compared to non-GAAP adjusted net loss of $2 3 million or 21 per share for the first quarter of 2021.
R&D expenses were $6 7 million for the first quarter of 2022 compared to $2 2 million for the first quarter of 2021.
Approximately $4 $5 million increase during the first quarter of 2022 comps.
Compared to the first quarter of 2021 resulted primarily from the development of <unk>.
Employee related expenses, including consulting fees accounted for $1 6 million, including <unk> 2 million in noncash stock based compensation. The remaining increase of $2 9 million is related to costs for existing clinical trials and for activities supporting the.
Asian the.
Victoria, one pivotal trial.
General and administrative expenses were <unk> 8 million for the first quarter of 2022 compared to <unk> 6 million for the same period in 2021.
The approximately two.
$2 million increase in G&A during the first quarter of 2022 compared to the first quarter of 2021 arose primarily from employee related expenses, including <unk> 1 million in noncash stock based compensation.
Net cash used in operating activities for the first quarter of 2022 was $5 9 million compared to $2 5 million for the first quarter of 2021.
This was the result of non-GAAP adjusted net loss of 7 million offset by working capital changes of approximately 1 million and depreciation expense of $1 million.
We ended the quarter with approximately $78 3 million of cash and cash equivalents compared to cash and cash equivalents of $84 3 million on December 31 2021.
Today as Brian mentioned earlier, we entered into a securities purchase agreement with investors via a pipe for gross proceeds of $100 million. The funding moving occur in conjunction with the date that a patient enrolled in Victoria, one received their first dose of treatment.
Including the additional proceeds from the pipe, we expect our cash will support our activities through the back half of 2025.
I will now hand, the call back to Brian .
Vicky.
We believe get us unless it was great potential to provide more effective treatment for women with breast cancer as well as other cancers in the future and we've built an incredibly talented team of drug developers with deep experience in guiding drug candidates through pivotal phase III clinical trials. We are hopeful this will represent the first of many opportunities for us to impact the lives of cancer patients.
<unk>.
Operator, I'd like now to open the call for questions.
Now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Speakerphone, please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
The first question comes from Maury Raycroft of Jefferies. Please go ahead.
Hi, Congrats on the update and thanks for taking my questions.
Well I'll start off just wondering if you could talk more about progress you've made with preparation to get the phase III started in middle of 'twenty two.
And you've mentioned potential for 175 sites in 15 countries can you talk more about the plan for site rollout on a country by country basis.
Sure.
Thanks for the question Mark.
So our preparation is on track.
We.
We're laying the groundwork to be able to initiate the study.
And the next.
A few months.
And then to begin enrollment activities.
Once the sites are activated.
I will focus initially on <unk>.
Countries in U S and in Asia, which can have shorter.
Regulatory timelines and then move out to the rest of Europe , and so you know as as is the case with any of these studies the sites rollout over.
The extended period of time, we've incorporated that site rollout timeline.
Our enrollment projections and.
Our determination of when we expect to get primary analysis.
In the.
Second half of 2024.
Got it and maybe just a quick follow up on that one getting that first patient dose is that going to be in the U S or do you think it could be at an Asia site.
Most likely the U S. Okay, Okay and then.
With the new financing just wondering if you can clarify if you'll invest in developing good analysts who have outside of the phase III.
I think on the last call you mentioned a potential lifecycle development update in the first half of 'twenty two and just wondering if you could talk more about about that sure.
Sure.
They are financing.
<unk>.
We think a great event for us because it certainly gives us our balance sheet provides flexibility.
It.
Allows us to have some margin for error, which I think in this environment everybody is looking for.
But it also allows us to think about the next steps and other indications and it is possible to initiate a phase <unk> studies relatively small scale that can be.
Yes.
Confirming or not but essentially allow you to generate data.
And different indications and so this funding will.
Allow us to begin that type of work as well.
Got it okay and that could start this year potentially or is that something that we wait to learn more about next year.
We haven't provided details on that and as far as the lifecycle development plan.
With this financing and with.
The focus on the phase III.
We'll probably provide lifecycle update closer to sometime in the third quarter.
Got it okay. Okay, Congrats again and thanks for taking my questions.
Awesome. Thanks.
Next question comes from Gil Blum of Needham <unk> Company. Please go ahead.
And Oh My God My congratulations on a successful financing.
Well just to make sure I heard this correctly so timeline for the pivotal data is now second half 'twenty four and full data in the first half of 2005 I get that right.
Well the we have two primary analysis. So we will have the primary analysis for the picture you see a wild type patients patients who lack mutations in the <unk>.
Half 'twenty four and then.
Separate.
Mary endpoint data for patients with <unk> mutations in the first part of 2025.
Okay. Okay. Thanks, thanks for the clarification.
I know this is maybe a little.
Hum.
So just from the cash run rate perspective, it seems.
Run rate all the way through this readout.
Does that lead with sufficient cash for strategic Optionality.
After the first readout.
Well.
We are.
We plan to have cash.
In excess of what's needed to achieve our first primary readout, but obviously one of the purposes of the cash is just to make sure we are.
Have sufficient cash to handle bumps in the road not that we're anticipating them, but just you know again, we want to have a robust balance sheet and once we have the primary analysis.
If it is favorable as we hope.
Yeah, we would.
The likelihood of a variety of options that we could consider.
Okay that makes sense.
This is really good man like me.
This financing limit in any way.
Strategic options for monetization.
Future revenues and get that unless it sorry.
Sorry, no no. This is no no no.
No no. This is the financing that will end up.
With the issuance of what will ultimately be common shares and there's no restrictions in.
Or other strengths associated with it so it doesn't.
Yes.
Create any restrictions on our ability to make decisions in the future.
Okay, just wanted to make sure.
I knew that was unlikely thank.
Thank you.
Youre welcome.
As a reminder, if you have a question. Please press star one. The next question comes from Alex Nowak of Craig Hallum Capital Group. Please go ahead.
Great and good afternoon, everyone. This is connor on for Alex I guess, a couple of weeks back the FDA had a discussion.
Meeting on <unk>, three K trials kind of happening around the country.
And it seemed pretty obvious that the meeting was kind of only applicable to hematological drugs and the outcome of the meeting was really requiring a trial design like like yours, but.
I guess is there any sort of read through to data from that meeting.
No. Thanks for the question.
So does that mean it was very explicitly focused on a particular class.
<unk> Delta inhibitors that are designed in.
Intended for Hematological indications.
And the focus of the meeting was around the regulatory pathway accelerated approval, but those drugs had used to initially.
Get it approved for marketing.
One of the obligations associated with an accelerated approval is doing a follow on randomized study to confirm the findings.
I don't think any of those drugs had done confirmatory studies and so I think the agency was highlighting a concern.
These drug companies haven't followed through with our commitments.
Our.
Embedded in the accelerated approval process. Those drugs also have a different safety profile than our drug and in those.
A variety of other factors, but really.
Our drug nor uplifts of which is a <unk> alpha inhibitor, that's approved for breast cancer.
Those are drugs werent part of that conversation and the reason is that we're we're pursuing a normal regulatory path for approval.
Sure.
The syndication.
And we're doing a randomized study and those none of those drugs.
Matt that those conditions, they did accelerated approvals with single arm studies.
Okay, alright that makes sense.
And then I guess on the self Cigna side can we expect any updates here. This.
This year on an upcoming collaborations and things like that or just the focus really really remain.
So for now.
Well I mean, we have the trials ongoing and we're continuing to pursue those we also have studies that we'll be pursuing that combined.
Combined sell stigma and get them so that will be.
Pink something that could be very interesting.
And then obviously are the.
The budget that we're spending and the opportunity at hand with again solicit. We think is in the near term the most significant opportunity we have.
Yeah no that.
It makes perfect sense.
One for Vicki just a real quick one following the placement announced this morning.
Just want to make sure my math is correct what is the new fully diluted share count.
That will have those details in the 8-K that will follow that.
We'll be filing later today or tomorrow.
Okay.
Thank you for the update.
Youre welcome.
Seeing that there are no further questions I would like to turn the conference back over to Brian Sullivan for closing remarks.
Great well. Thank you again for participating in our call today, we will be at the Craig Hallum and Jefferies Investor conferences in June and hope to have a chance to run into some of you there.
If any additional questions. Please feel free to contact us and hope everyone has a good evening goodbye.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.