Q2 2022 Celcuity Inc Earnings Call
[music].
Good afternoon, and welcome to sell Q achieved second quarter 2022 financial results conference call.
At this time participants are in listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance. Please press Star then 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 Robert Pease go ahead Sir.
Thank you operator, good afternoon, everyone and welcome to sell acuity second 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 second quarter ended June 30th 2022.
The press release can be found on the investors section of the company website joining.
Joining me on the call today are Brian Sullivan, <unk>, Chief Executive Officer, and co founder.
Vicki Hahn, Chief Financial Officer, as well as Igor Gorbachev's, Chief Medical Officer, who will be available during the Q&A.
Before we begin I would like to remind investors 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 results.
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 company's current performance.
Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the company's 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 CEO upsell QAD.
Thanks, Robert Good afternoon, everyone and thank you for joining us today as always we really appreciate your continued support of cell acuity.
I'm happy to report that over the past few months. Our team has made significant progress on a variety of fronts to advance the development of get up to listen.
On this call well review the regulatory status of <unk> clinical development program, our pivotal phase III trial in breast cancer and our recent financing activity.
In July the U S food and drug administration or F. D. A granted breakthrough therapy designation to sell acuity lead drug product candidate gathered solicit an investigational pan <unk> inhibitor for the treatment of HR positive <unk> negative locally advanced inoperable or metastatic breast cancer that has progressed after.
With the CDK four six inhibitor in combination with a non steroidal aromatase inhibitor.
Breakthrough therapy designation is intended to expedite the review of drugs that the agency believes have significant potential in treating serious diseases with unmet medical need and offers the potential to receive an accelerated review if relevant criteria are met.
We look forward to collaborating closely with the agency as we seek to advance the therapy to the clinic as quickly as possible get up the lesser previously received fast track designation from the FDA in January 2022.
In our submission seeking breakthrough status, we provided detailed clinical safety and pharmacological data with a focus on our early phase study evaluating <unk> in combination with polycyclic for best friend and patients with advanced breast cancer, whose disease progressed on a CDK four six inhibitor. This study reported very promising efficacy with.
High objective response rate and extended progression free survival period, and safety data compared favorably to the currently available therapies for advanced breast cancer or cancer patients in the second line setting.
The initial potential target patient population forget until they're so those patients with HR positive her two 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.
Current standard of care for these patients includes endocrine therapies, such as full bathroom and regimens that combined for investment with either an <unk> specific or a <unk> alpha specific targeted therapy.
These therapies offer only modest progression fee survival periods and in the case of the approved pediatric alpha inhibitor, a very challenging safety profile.
The <unk> pathway is considered one of the most important pathways involved in cancer blockading theatrics or efficacious land safely, though has been challenging because of its structural complexity and its linkage to key cellular metabolic processes yet.
Yes, that's a lesser inhibits all four class one P S. Okay isoforms, and the <unk>, one and <unk> two subunits.
This is a biologically optimal approach because it limits the potential for cross activation of uninhibited isoforms are sub units and the resulting drug resistance that can occur with PFS as a form of MTR specific inhibitors.
<unk> block hitting the pathway also enhances the potential to induce synergistic inhibition with other targeted therapies, such as CDK four six inhibitors.
Got it to lesser differentiated chemical structure, an intravenous formulation results in a very favorable pharmacokinetic profile. The drug has potent against the various P. S. Okay isoforms and MTR sub units at low or sub an animal or concentrations.
And is able to maintain pathway inhibition with a tiny fraction of drug compared to approved oral <unk> inhibitors. This rapidly. This results in a safety profile that compares very favorably against the proved isoform specific the <unk> inhibitors last.
Thus, we believe get us Elisa unique properties position it to realize the significant potential first envisioned for P. S. Okay therapies and the pathway is critical role in cancer was discovered.
To advance the development of gadgets Elisa, we're conducting a pivotal phase III clinical trial known as Victoria, one to evaluate the safety and efficacy of <unk> in combination with fed Sylvester with or without polycyclic in adults with HR positive her two negative advanced breast cancer, whose disease progressed, while receiving prior CDK four six therapy.
This open label randomized clinical trial will enroll subjects, regardless of pick <unk> status, while enabling separate evaluation of subjects. According to their P. S K status the.
The clinical trial protocol. We described in May included five arms with three arms evaluating patients lacking picked <unk> mutations in two arms evaluating patients with <unk> mutations at that time, we had received feedback from the FDA on our study design, but we were still waiting to receive feedback from the European medicines agency or EMA.
In late May we received e-mails feedback to our protocol, which included a recommendation that the study arms for pick <unk> mutated patients mirror. The same study arms or pick three H C. A non mutated patients and response to the feedback we modified the protocol to include an additional study arm to evaluate <unk> plus full restroom and 50 patients.
Who have picked <unk> mutations.
Victory <unk> mutated patients will now be randomized on a one to one to one basis to receive either get us Elisa plus Pablo cyclical for restaurants.
Got it to elicit possible restaurant or the control uplifts have been full restaurant.
Once 50 picture you see a mutated patients are enrolled to the ghetto solicit plus full western arm subsequent patients will be randomized on a one to one basis to receive either get it's Elisa plus barbour cyclic and for best friend.
Or alpha Lipsett plausible best friend.
Subjects without confirm pick three CF mutations will continue to be randomly assigned on a one to one to one basis to receive a regiment of either get it get us Elisa Pablo cichlid been full restaurant.
For our may get up to listen for western RMB or full restaurant RMC.
No changes were made to the primary endpoints and we continue to expect data for the picture you see a non muted mutated patients to be available in the second half of 2024 and data for the pick <unk> mutated patients to be available in the first half of 2025.
We're also excited to report that the updated clinical trial protocol that includes the additional arm was submitted to the FDA and received no comments and Central Institutional review board or IRB approval was received with US we remain on track to dose the first patient in the next few months.
Dosing the first patient in any study is a significant milestone for us will be doubly significant since it will trigger the closing of the $100 million private placement, we announced earlier. This year provided that is occurs on or before December 31, 2022 <unk>.
Investors in the private placement included Venrock Health care capital Partners, New Enterprise Associates are a capital management, Commodore capital <unk> capital and myself.
We also made additional progress strengthening our balance sheet. This past week, our debt financing agreement with Novartis capital partners was amended to provide cell acuity was up to $75 million in term loans of $50 million increase from the original debt financing agreement. So acuity received $15 million at the closing of the original agreement in <unk>.
April 2021.
So acuity will now be able to draw an additional $20 million following the closing of the $100 million.
Private placement.
So acuity will also then be able to draw on two additional tranches of $10 million, each and one additional tranche of $20 million upon achievement of certain clinical trial and financing milestones.
So acuity is entitled to make interest only payments through April 25, or if certain conditions are met through April 2026, the loans will mature in April 2027, and the sixth anniversary of the initial funding that.
Now I'd like to move on to the diagnostic sides of our business.
So I'll Sigma so acuity third generation diagnostic platform identifies the underlying cellular activity dysregulation pathway signaling that maybe driving a patient's tumor so that a 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 are ongoing fact trials were negatively impacted by COVID-19 related delays during late 2021 in early 2022, now with a lower Covid case role load enrollment activities have resumed for these trials and we expect.
Interim results from the fact, one and two trials mid 2023.
With that I'd like to turn the call over to Vicki Han to review our financial results.
Thank you, Brian and good afternoon everybody.
I'll provide a brief overview of our financial results for the second quarter of 2022, and I invite you to review, our 10-Q, which will be filed tomorrow for a more detailed discussion.
Second quarter net loss was 10 million or <unk> 67 per share compared to 14 million net loss or $1 11 per share for the second quarter of 2021.
Because these quarterly net losses include significant noncash items, including stock based compensation issuance of common stock in 2021 and interest. We also included in our press release non-GAAP adjusted net loss for the quarter ending June 32022.
Our non-GAAP adjusted net loss was $8 3 million or <unk> 55 per share for the second quarter of 'twenty two.
Compared to non-GAAP adjusted net loss of $8 3 million or 66 cents per share for the second quarter of 2021.
R&D expenses were $8 4 million for the second quarter of 2022 compared to $13 1 million for the second quarter of 2021.
The approximately $4 7 million decrease during the second quarter of 2022 compared to the second quarter of 2021 reflects a 10 million dollar reduction and get it to Elisa licensing related expenses, partially offset by increases of $5 3 million and other RF.
<unk> expenses.
Of the $5 3 million increase in R&D, one 5 million was related to increased employee and consulting expenses of which <unk> 5 million was in the form of noncash stock based compensation.
The remaining $3 8 million increase in R&D expenses.
Primarily related to cost for existing clinical trials and productivity is supporting the initiation of the Victoria one pivotal trial.
G&A expenses were $1 2 million for the second quarter 2022, compared to <unk> 6 million for the same period in 2021.
The approximately <unk> 6 million increase in G&A during the second quarter of 2022 compared to the second quarter of 2021, Ross primarily from approximately <unk> 5 million of noncash stock based compensation.
Net cash used in operating activities for the second quarter of 2022 with $11 3 million compared to $7 6 million for the second quarter of 2021.
This was a result, non-GAAP adjusted net loss of $8 3 million.
And working capital changes of approximately $3 1 million offset by depreciation expense of <unk> 1 million.
We ended the quarter with approximately $66 9 million of cash and cash equivalents compared to cash and cash equivalents of $84 3 million on December 31 2021.
I will now hand, the call back to the operator for questions.
Thank you ma'am.
Ladies and gentlemen at this time, we will be conducting a question and answer session.
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The first question is from Maury Raycroft from Jefferies.
Hi, Congrats congrats on the progress and thanks for taking my questions I was going to add.
Good morning.
I was going to ask one on the arm. As addition, just if you can talk more about how that suggestion came about from EMEA and do you have specific expectations for that arm relative to RMB, where EMEA seems to be focused and potentially compared to RMB E, which is the Apple Apple is it.
<unk> progressed or a combo.
Sure.
So we received the written feedback and response to request for scientific advice and Thats a process thats laid out.
Companies used to get input about various clinical topics, including clinical trial design.
And so we submitted that and receive that feedback in late may and the feedback.
As written form and central it essentially.
Recommended.
We mirror the study design.
That we're using in the non mutated.
Patients.
And.
And so it's fairly straightforward in totality, then we'll have <unk>.
<unk> 50 patients and mutated group 117, and the non mutated group and that will provide the sufficient.
Sufficient data that the regulatory.
Feedback was looking for.
As far as the comparisons so.
Arm <unk> actually.
And.
<unk> in the mutated group will be R&D versus arm F.
Similar to an analysis or a comparison of arm a versus RMB.
There won't be a comparison with a formal test for.
Comparing <unk> versus <unk>.
There'll be exploratory analysis, but that's not a formal endpoint.
Got it okay. That's helpful.
The other question I had was just.
With breakthrough therapy designation in hand, do you need to do you plan on meeting with FDA soon.
What is your plan for interactions over the course of the phase III.
We expect to have ongoing discussions with the FDA. There is a variety of topics sponsors want to get the feedback from the agency on a range of a variety of topics from CMC topics or pharmacology topics in and you do all that anticipation of to help ensure that your preparation for.
What you hope to be in a new drug application.
Is in order.
And so with breakthrough the timelines to get those meetings of the frequency of those meetings is increased and so we already have plans in place to get feedback, but it's really less about seeking specific direction is more about ensuring that what we've done to date aligns with what their expectations are.
Got it Okay and maybe last quick question just.
I'm wondering if you can remind me where you're at with good analysts have drug supply and are there any other gating factors.
That you can comment on prior to starting dosing for the phase III.
No. So the manufacturing is in place and.
So the drug supply and logistics around that have been developed and so the gating item is really just related to the work sites have to do once essentially the protocol has been finalized central IRB is reviewed of protocol and provided.
Approval of it.
It's quite a complex undertaking at these sites smaller sites tend to be able to move more quickly they may have fewer steps.
But significant amount of training logistical coordination has to be put in place. So those activities are ongoing now with a number of the <unk>.
Sites that we've selected and so you go from a phase that runs in parallel to your protocol Finalization in your regulatory interaction of identifying sites and then began qualifying them and thats a formal process to ensure they can comply with D C.
Good clinical practice guidelines et cetera.
And then you begin the specific process of engaging with them not least of which is negotiating contracts and budgets and again, depending on the institution those can be.
Quicker take a long time.
As part of the process and we take all of those into account each site essentially has its own timeline and budget.
And we plan accordingly.
Until those those are the activities that we're focused on right now and so we're on track with what we have been discussing that we've.
<unk> initiated the trial and study activities with the sites and finalizing all of the.
Operational aspects and mostly its the site on site shoulders too.
Finalize.
Yep contracts.
<unk> b available for training.
Got it okay. That's helpful. Thanks for taking my questions you're welcome. Thank you.
The next question, we have is from Boris <unk> from Cowen.
Great. Thanks for taking my questions first I would like to focus maybe on the cell signaling assay could you just remind us when you need to show in the fact, one in fact, two studies to gain approval and maybe kind of more broadly can you describe where in a course of therapy.
Cigna has to be administered to the patient sure. So these studies are evaluating early stage patients who are receiving new adjuvant treatment.
And with the goal of.
Achieving a pathological complete response, that's the <unk>.
Primary endpoint.
And in this setting.
Pathological complete responses associated with longer disease free recurrence periods and so.
The study is designed to.
Identify where to obtain.
A significant increase in that pathological complete response rate in the populations that we're studying.
And if successful if we meet the endpoint at that point, we would engage with our collaborator in let's say genentech or Puma.
<unk>.
Develop a more formal regulatory plan, which would involve both of us going to the agency since we would pursue.
PMA process, they would pursue essentially a label expansion process NDA.
<unk> to expand the label.
And that work is kind of subject to.
Specific direction that you get from the agency.
And so with the data we would have in.
We hope to have expect to have.
All of next year that would give us the basis for having those discussions.
Got it.
And in terms of.
I guess you partially answered in terms of point it would be administered in term of.
Of course of therapy, it would be just at two newly diagnosed patients yes.
These are right. So the fact, one and two trials.
These women would receive.
The therapies that.
We're studying and in the case of fact walnuts herceptin.
Jetta and chemotherapy.
What's the standard of care for her two positive patients in the new adjuvant setting and what we would be doing or what our test is doing is identifying patients who are her two negative. They are they have normally expressed or two in non amplified and then we.
We would be treating them with what is essentially the standard of care.
A regimen that her two positive patients receive currently these patients.
If they receive a chemotherapy new adjuvant with the goal of shrinking the tumor to make.
<unk>.
Possible more successful surgery.
Or ideally eliminate to tumor completely which is a pathological complete response.
These patients who are for HR positive.
The typical or expected.
Rate of pathological complete response is only 10%.
And so if we could double that rate that would be very significant given the importance or the benefit to patients who do get a pathological complete response with chemotherapy.
Great and my last question on the Victoria trial.
This is the rationale if I understand it correctly, if a given talbot's cyclic to patients who had already progressed on a CDK four six inhibitor.
Yes.
Oh, well the rationale for that sorry, the mechanism so the mechanistic rationale.
Yeah, I'm, sorry bar, so you cut out there.
Yes, that's what I was asking what is the mechanistic rationale for getting Pablo <unk> sure.
So these patients.
Well I'll step back to what we think is the disease mechanism involved in these women's cancer.
15 years ago.
Our hypothesis was that this was solely estrogen driven.
And.
The development of better endocrine therapies was the prime focus of.
Drug development.
Work was done to the tube and discovered that estrogen pathways or.
Cooperative with cell cycle pathways and that led to the development of CDK four six.
Inhibitors and those were eventually approved and proved to be fantastically beneficial to patients.
But obviously these patients are cured.
Patients will eventually progressed the tumors will become resistant to these drugs and so research has been done over the past 10 15 years to understand what that resistance mechanisms mechanism is and I think there's a reasonable consensus out there certainly.
A recognition that the <unk> pathway is involved and so with our early phase data. We studied early lines first line patients in second line patients in the first line setting we showed that when you add is get us elissa to Paolo cyclic and Letrozole.
We induce.
We reported a higher rate objective response rate, 85% than had been reported.
In the <unk>.
<unk> to the Registrational study for polycyclic Letrozole.
We interpreted those results again those are different trials.
It really noncompetitive, but the numbers are the result of far enough apart, but you can draw some inferences and the inference we drew.
Was that <unk> intrinsically involved when you add that up to this population.
Perfect.
<unk> pathways involved and then in the second line setting what wasn't what was compelling about the data what we the inference, we drew from that data well that even though the patients have progressed most of the month polycyclic because that's.
It has 70% 80% share of the CDK four six market.
So even though these patients have received <unk> and.
And progressed on their CDK four six androgen therapy, when you add it together they had a significantly significant.
In response to that 63% response rate and the Registrational data that was reported in the Paloma three trial, which was polycyclic.
For Western reported only 25% response rate. So you saw between these two studies again can't directly compare them, but the differences are big enough.
To be interesting.
63% response rate versus 25% response rate again, suggesting this activity. So what additional research that's been done non clinically is found that these patients have become resistant to CDK four six and androgen essentially cell tumor tumors are adapting to <unk>.
Primary reliance on P. S scam towards progress and allow us this tumor continue proliferating.
When you blockade that you could potentially then reactivate the CDK four six pathway, which means in term that would become a resistance mechanism. So CDK <unk> pathway. That's actually resolved we think has been.
It.
It's consistent with the reduction in efficacy that's been found with Everolimus and uplifts. It in patients that have received prior CDK four six therapy. The data that's been reported for epilepsy for instance in patients who are post CDK four six treatment is substantially lower than what was reported in patients who hadn't received CDK.
Four six treatment and so the the non clinical data suggest them that these patients when they're PFS came through a pathway blockade.
Well, they're tumor cells will.
The CDK four six pathway will be reactivated which in turn means there'll be re sensitized.
To treatment with CDK four six therapy, so essentially know what what we kind of think of as Theres a triad of pathways that are involved.
Estrogen receptor pathway CDK four six <unk>.
And that the most beneficial potential treatment week.
Please.
Is.
Synchronized.
Inhibition of all of those pathways simultaneously.
And that's consistent with the data we had in our second line arms as well as the first line arms and so they and we think this is.
A strategy that could be effective in other tumor areas, where the PFS or Cam Torres.
A resistance mechanism, where its involved in the disease intrinsically.
And that may be that we can extend the benefit patients get from their prior therapy, if that pathway inhibitors blockading a pathway that's cooperative with <unk> that we can extend potentially the treatment benefit of the drug that was used in the first line setting which is essentially what we're doing now essentially saying.
Maintain the pressure on the tumor.
On these pathways with Pollo and four vessels in this case.
And then blockade this escape route.
Essentially put the equivalent of a clamp on the signaling thats driving proliferation.
Okay. Thank you very much for the detailed answer to my question.
Yes.
Great. Thank you very much youre welcome.
Thank you Nick.
Question, we have is from Gill from Needham.
Okay.
Hey, Joe.
Hi.
Yes, Hi, this is a channel for Gil Thank you for taking our questions.
So we just wanted to ask if the new arm.
Offer any benefit on a regulatory perspective or.
Hmm.
That would put us up.
If the readout for arm Mrs.
And the other pathways other items. Thanks.
Thanks for your question.
Well since you have a.
It recommended we add the arm, we think it's helpful to add the arm and and.
Yes, our recommendation they had.
It makes logical sense, we were not surprised by the request.
We felt the data in the non mutated population forget our full vesting with sufficient EMA thought.
Supplementing that data with mutated patients.
Would be useful.
We agreed and so thats really the rationale for moving forward with that arm as far as the tests. There really is no formal test or hurdle that that arm has to achieve.
So it's essentially part of a requirement that you demonstrate allowed.
Allow the agency to see the individual contribution of different drugs to a treatment benefit.
Okay.
Thank you.
Youre welcome.
Thank you ladies and gentlemen, just a reminder, if you would like to ask a question. Please press star and then one now.
The next question, we have is from Alex Nowak from Craig Hallum.
Great. Good afternoon, everyone. This is connor on for Alex Thanks for taking the questions. I guess first how is the team thinking about modeling clinical trial enrollment architect like how quickly do you think you can enroll these sites and start dosing and then are there any internal goals. The team has talked about for hitting those enrollment numbers.
Sure sure as we've indicated we expect to dose the first patient in the next few months. So we think it's imminent.
Activities are underway a variety of sites to get them.
Going.
As far as the enrollment path.
Again, we think the number that we're driving towards.
Is it where the days we're driving towards.
When theres sufficient events that have occurred.
The.
Trigger the primary analysis and that takes into account enrollment number of patients rate of enrollment rate.
Rate of events and that's ultimately the.
How the statistical analysis plan is.
Structured it's not it's less about the number of patients per se as much as the number of patients that allow you to do this comparison between the progression free survival.
In the different arms that youre analyzing.
And we're projecting to have that data available.
Yeah.
Second half of 'twenty four for the Wild type population first half of 'twenty five and the.
Mutated population.
Perfect that makes sense. Thank you.
Then just another quick one are there any kind of like additional staffing needs as you kind of ramp up or.
So we.
Over the past.
15 months, we built out our senior team I think.
I'm very happy we were able to find some great people on in a short period of time, they're doing a fantastic job.
And in turn.
Built a group of folks who perform specific functions that support the study.
Support the operations in general and I would say that team has been built and so there may be additional folks performing more.
Less senior <unk>.
<unk> functions, but we don't expect a dramatic increase in our head count going forward, we think the.
The team required to execute.
Victoria, One studies in place and then working full steam ahead.
Yeah, that's great. Thanks for the update congrats on the progress.
You're welcome thank you.
Thank you.
Ladies and gentlemen, we have reached the industrial question and answer session I would like to turn the call back to Brian Sullivan for closing remarks.
Well, thank you for attending our call.
We look forward to continuing to update you and.
I will say goodbye.
Thank you, Sir ladies and gentlemen.
This concludes today's conference. Thank you for joining US you may now disconnect your lines.
Yeah.
Yeah.
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Okay.
Okay.
Yes.
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