Q2 2023 Acasti Pharma Inc Earnings Call

Good day and welcome to the a coffee pharma second quarter 'twenty twenty-three earnings event call.

All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note. This event is being recorded I would now like to turn the conference over to Robert Blum with Lytham partners. Please go ahead.

Alright. Thank you very much welcome to a coffee farmers second quarter fiscal 2023 conference call.

On the call with US. This afternoon is jammed Elv's, President and CEO , Bryan Ford Chief Financial Officer.

Monique Champagne VP of clinical affairs and for shock Coley, Chief commercial officer. Following management's prepared remarks, there will be a Q&A session should any questions remain after the call. Please contact me at 6028899700.

I'd also like to remind everyone that statements on this conference call that are not statements of historical or current facts constitute forward looking information within the meaning of Canadian securities laws and forward looking statements within the meaning of the U S. Private Securities Litigation Reform Act of 19, 595, and the Securities and Exchange Act of 1934.

Such forward looking statements involve known and unknown risks and uncertainties that could cause the actual results to be materially different from those expressed or implied by such forward looking statements.

In addition to statements, which explicitly describe such risks and uncertainties listeners are urged to consider statements labeled with terms such as belief expects intends anticipates potential should may will plans continue targeted or other similar expressions.

It could be uncertain and forward looking.

Sears are cautioned not to place undue reliance on these forward looking statements, which speak only 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 are planned phase III study for Gtx, one O four coffees other preclinical and clinical trial.

<unk> regulatory requirements or developments in the outcome of meetings with the F. D. A changes to clinical trial designs and regulatory pathways legislative regulatory political and economic developments and actual costs associated with the costs. These clinical trials as compared to management's current.

Vacations. The forward looking statements made during the conference call are expressly qualified in their entirety by the cautionary statement. The cautionary note regarding forward looking information section and the risk factors contained in the documents that have been filed and are filed by a coffee from time to time with us.

Securities and Exchange Commission and Canadian Securities regulators, which are available on Edgar at Www Dot FCC Dot Gov.

SEDAR at Www Dot SEDAR dot com and on the investors section of the a coffee website at www Dot a costly dot com. In addition, any forward looking statements represent of coffees views as of today and should not be relied upon as representing our views of any subsequent date.

Koskey undertakes no obligation to update such statements to reflect events that occur or circumstances that exist. After the date in which they were made except as required by applicable securities law I'd now like to turn the call over to John <unk>, President and CEO of a costly Jan. Please proceed.

Thank you Robert and thank you everyone for joining the call today, we're really excited to update you on the significant progress made during the second fiscal quarter to advance our three clinical program. We remain on track to initiate and enroll the first patient in our phase III safety study for Gtx 114 in the first.

Half of calendar 2023. This is a key milestone for the company and what is expected to be the final clinical step required to seek regulatory approval as a reminder, gtx one O. Four is our most advanced clinical program focused on developing and commercializing a novel formulation of Nimodipine.

For continuous IV infusion to treat patients suffering from sub arachnoid hemorrhage or sah I'll go into more details in a moment.

In timelines in the overall business opportunity for this program.

Also during the second fiscal quarter, we initiated two PK bridging studies one for Gtx 102, our novel concentrated Oro mucosal spray a beta matter zone intended to improve the neuro degenerative symptoms, they ataxia talented TCR or T <unk>.

In pediatric patients.

And one for Gtx, one O one our non narcotic tactical bio adhesive film forming the pivot came spray designed to treat postherpetic neuralgia or PHN.

Severe and often debilitating nerve pain that can persist following the shingles infection caused by the very solid zoster virus, the same virus declines as chicken chicken pox.

The Gtx 102, PK study is expected to be completed with top line results reported before yearend with positive results from this study we expect to initiate our phase III program in children with 80 in the second half of calendar 2023.

The Gtx one O. One single dose PK study is also expected to be completed by the end of calendar 2022 and is expected to provide important information on the dosing strengths in frequency ahead of the initiation of additional clinical studies Gtx one on one in humans plan next year.

I'll dive deeper into planned activities and the overall opportunities for both Gtx 102, and Gtx, one well I don't want to in a moment.

Perhaps most important in today's environment is that we finished the second fiscal quarter ending September 30th 2022 with about $35 million in cash cash equivalents and short term investments based on current projections. We believe this is sufficient capital to continue to fund operations through at least <unk>.

<unk> 2024, and will fund the advancement of Gtx, one O four well into phase III and allow us to advance Gtx 102 in one O. One two additional key inflection points.

Taking a step back and as a reminder, our strategy is to leverage the company's drug delivery technologies and capabilities to reformulate and repurpose marketed drugs for new orphan indications, where a significant unmet medical need exists the well understood efficacy and safety profiles of these marketed compounds.

<unk> provides the opportunity for us to utilize the Fda's section five O five b two regulatory pathway for the development of our reformulated drug candidates and therefore may potentially provide a shorter less risky and less costly path to regulatory approval for those not familiar under section 505.

Two if sufficient supportive of product safety and efficacy can be established either through previous FDA experience or sufficiently within the scientific literature. It may eliminate the need to conduct some of the preclinical and clinical studies that new drug candidates might otherwise require ended the five O <unk>.

<unk> pathway.

And as I've mentioned before all three of our drug candidates have already received orphan drug designation from the FDA and have the potential to be considered for SaaS track review and approval orphan drug designation provides for seven years of marketing exclusivity in the United States Post launch provided certain.

Conditions are met and 10 years in Europe . These rare diseases also typically involve clinical trials with fewer patients and provide market opportunities that often require a much smaller more targeted commercial infrastructure.

It's important to point out that the orphan diseases that are costly is targeted for drug development are well understood. Although these patient populations may remain poorly served by available therapies or for example in the case of our Gtx 102 for children with a T approved drug therapies do not yet.

Our aim is to effectively treat the debilitating symptoms that result from these underlying diseases with the ultimate goal of improving quality of life and outcomes for these patients and their families.

We believe that leveraging the section five O five btu regulatory pathway for the development of our reformulated versions of these drugs provides us with highly attractive opportunities in orphan disease indications with little or no current competition.

Okay. So let me now circle back to Gtx, one O four and I'll update you on the upcoming timelines milestones and what we see as the overall commercial opportunity as I mentioned Gtx. One O. Four is a novel formulation of numeric pain for IV infusion designed specifically for patients with subarachnoid hemorrhage or SaaS.

H, which is a condition caused by bleeding on the brain due to a ruptured aneurysm.

SaaS presents a life threatening emergency for the patient and our new proprietary IV drug formulation addresses a vital need in the critical care market that has seen little innovation in over 30 years. The condition of SaaS patients is so critical that 10% to 15% of them die before.

Are they ever reached the hospital and only about one third ultimately.

Survive another third of these patients require dependent care for the rest of their lives.

So to help address this very severe condition, we completed a phase one PK bridging study in May of 2022, which successfully met all of its endpoints. The primary objective of this study was to evaluate the relative bioavailability of our IV Gtx, one O four compared to oral <unk>.

<unk> capsules and healthy adult male and female subjects well the secondary objective was to assess its safety and tolerability.

Importantly, the inter and intra subject variability was much lower for Gtx, one O four as compared with oral Nimodipine, we believe that because of its better absorption profile and more consistent blood levels Gtx. One O four may provide physicians with a more reliable and <unk>.

<unk> treatment for patients patients with S. H.

This could be a key advantage as gtx one of four could help to reduce the incidence of hypotension events and visa spasm, which require immediate and costly intervention such as balloon angioplasty or the use of intra arterial vasopressors, which can lead to a worse outcome for the patient.

We've submitted a letter to the FDA to request a type C meeting to review and discuss the results of the PK bridging study and our proposed design for the Phase III safety study.

We believe it's important to attain the fda's feedback and guidance before initiating the phase III safety study next year.

We expect to meet with the FDA by early January 2023, which should allow us to initiate the phase III safety study and enrolled the first patient. According to plan in the first half of 2023.

As mentioned the phase III safety study is expected to be the final step required to seek regulatory approval before submitting a new drug application to the FDA for Gtx, one O four for the treatment of S H patients.

We're extremely excited about the opportunity to bring a new treatment option to patients that suffer from the S. A H with an estimated 50000 patients per year in the United States alone based on our market research, we believe that Gtx one O. Four represents a total available market in the U S of more than $300 million.

The current standard of care is an orally administered drug called Nimodipine, which is approved by the FDA way back in 1988, Nimodipine is a potent calcium channel blocker that relaxes the blood vessels in the brain and lowers blood pressure to allow more oxygen oxygenated blood into the brain to enhance healing.

It's typically given throughout the entire period that the patient remains in the hospital, which can be up to three to four weeks or sometimes even longer depending on the severity of the patients condition.

Nimodipine is available in the U S. As an orally administered capsule or liquid which is problematic as many of these sah patients are not conscious or if they're awake. They have a hard time swallowing oral drugs. Consequently, nimodipine often must be delivered via nasogastric tube and the drug can stick to the inside of it.

The tube, which can result in significant variability in dosing.

Oral nimodipine has also poorly absorbed adding to the difficulty in controlling the blood pressure the patient for these reasons physicians, sometimes must reduce the dose or discontinuing nimodipine altogether, meaning the patient will not get the full benefit of the drug.

We believe the Gtx one O four delivered intravenously, it could be a game changer as a more convenient and efficient and precise way to delivering nimodipine directly into the patient's bloodstream.

Okay, let's transition now to Gtx 102, and I'll start with a brief program overview.

He takes one or two is a novel concentrated or all mucosal spray embedded in that the zone intended to improve the neurological symptoms of ataxia, telecheck TCR or T for which there are currently no FDA approved therapies a T is a progressive genetic neurodegenerative disorder that primarily.

<unk> young children, causing severe disability impairment of the immune system, and an increasing susceptibility to infections and cancers patients typically die in their mid twenties from complications of lung.

Well on the FX.

And in fact, approximately 4300 patients per year in the United States and.

And based on the number of treatable patients has a potential addressable market of about $150 million.

Gtx, one or two is comprised of a proprietary concentrated formulation of the glucocorticoid steroids betamethasone that can be sprayed conveniently over the tongue or the 80 patients who often have difficulty swallowing.

As I mentioned, a moment ago, we initiated a phase one PK bridging study in the third calendar quarter of 2022 to evaluate the comparative bioavailability pharmacokinetics and safety of our oral beta medicine spray Gtx 102, compared to an intramuscular injection and Dave.

And that's a zone the reference drug and to an oral solution a beta matter zone in 48 healthy subjects. The first subject first dose was administered on September 13th 2022.

This PK study as the next step in the clinical development pathway for Gtx 102, and is expected to be completed with topline results reported before calendar year end.

Look forward to sharing more with everyone in the coming weeks and this important study.

And finally, let's discuss the progress that our team has made on Gtx 101, our novel non narcotic thin film violate he use of topical <unk> spray designed to treat ph and the severe and often debilitating nerve pain that can persist following the shingles infection.

It's important to point out that market studies suggest a significant unmet need exists for treating these patients with ph and approximately 40% of patients who are prescribed the standard of care, which includes oral gabapentin and lidocaine patches experienced insufficient pain relief and gabapentin has unpleasant side effects.

Consequently, many of these patients end up being prescribed more potent drugs, such as opioids, which can be addictive.

The potential benefits of Gtx 101 could include faster onset of action, which is inherent in our active ingredient the pivot cane versus lidocaine as well as a longer duration of pain relief Gtx 101 can be conveniently spread on the skin wherever that pain is located and based on the PK.

And the PK schedule will need to be confirmed in our clinical trials.

We believe <unk> hundred one has the potential to be a disruptive therapy as a non opioid analgesic for ph and patients who suffer from this debilitating pain.

On July 26, 2022, we initiated the PK bridging study to evaluate the relative bioavailability of Gtx 101, compared to the reference listed drug <unk> and 48 healthy subjects. The PK study as the next step in our clinical development pathway for Gtx 101.

The PK study is expected to be completed by the end of calendar 2022 as planned and is expected to provide important information on the dose and dosing frequency for additional clinical studies of Gtx one O. One in humans in 2023, I look forward to sharing more with everyone in the coming weeks in this study.

So let me recap quickly quickly before I turn it over to Brian for a quick review of our Q2 numbers.

First we expect to receive guidance from the FDA on our proposed phase III safety study design for Gtx, one O four in the form of a type C meeting no later than early in the first calendar quarter of 2023. This should allow us to initiate the phase III safety study and begin enrolling the first patient is planned in the <unk>.

First half of 2023.

The study is expected to take about 18 months to complete and is expected to be the final clinical step required to seek approval under the $505 two regulatory pathway.

The PK bridging study of Gtx 102 was initiated on September 13th 2022, and we expect to report out topline results on schedule next month before the end of calendar 2022.

Assuming the PK bridging study meets its primary endpoint, we expect that the final development step is to conduct a phase III safety and efficacy trial in <unk> patients. We plan to request a type b meeting with the FDA. Following the completion of the PK study to confirm the phase III study design and the phase III studies.

Expected to be initiated in the second half of 2023.

If both studies met their primary endpoints and NDA filing for Gtx, one O. Two under section 500, <unk> two would follow.

The single dose study of Gtx 101 with.

It was initiated on July 26, 2022 in healthy human volunteers. This PK study as the next step in our proposed 505 Btu regulatory pathway for Gtx, one on one and the PK study is expected to be completed by the end of calendar 'twenty 2022, as planned and should provide important information on the Doe.

Ross and dosing frequency for additional clinical studies of Gtx, one on one in humans in 2023.

And finally, it's important to note that we finished the second fiscal quarter ending September 30th 2022 with about $35 million in cash cash equivalents and short term investments. We continue to believe that this is sufficient capital to fund operations through at least March of 'twenty 'twenty four allowing for the advancement of one O four well.

<unk> phase three and advancing Gtx 102 in one O one to key value inflection points.

We're very excited about the prospects ahead for the company and we look forward to keeping you apprised of our progress towards our many milestones this new fiscal year.

Like to now turn the call over to Brian <unk>, Our CFO to review our financial results and at the conclusion of Brian's remarks, we'll open the call for your questions Brian .

Please note that unless otherwise indicated all financial numbers that we discussed are denominated in U S dollars.

Actual reported conformance to U S GAAP guidelines.

We should also note that we are a clinical stage company. Thus, we do not yet generate revenue or have any cost of goods.

Research and development expenses net of government assistance for the three months ended September 32.

2022 totaled $3 3 million compared with <unk> 6 million for the three months ended September 32021.

Our research and development during the quarter ended September 32020 to focus primarily on advancing our clinical development program for Gtx 100, or 102 and 101 drug candidates.

Generally theres been sort of expense for the quarter ended September 32022 were $1 6 million compared to $2 9 million for the quarter ended September 32021.

Decrease was the result of decreased legal tax accounting and other professional fees.

We incurred in connection with the great work.

The decrease in professional fees was partially offset by an increase in salaries and benefits due to the renewed accruals for employee incentive bonus program.

Loss from operating activities for the quarter ended September 32012 was $5 1 million compared to three.

$3 6 million loss for the quarter ended.

September 32021.

Net loss and total comprehensive loss.

For the quarter September 32022, with $4 9 million or <unk> 11 loss per share compared to net income of $1 million.

<unk> per share.

Net income of <unk> <unk> per share for the quarter ended in 2021.

Cash cash equivalents.

Short term investments totaled $34 9 million.

As of September 30, compared to $43 7 million.

And cash cash equivalents.

And short term investments at March 31, 2022.

As Jim mentioned, we will continue to believe that we have sufficient capital to fund operations through at least March 2024, which will include the ability to fund our lead asset Gtx 104, well into phase III.

102 in one spot.

Yes.

Well I'll start with.

I'll now turn the call back over to Jeff.

Thanks, Brian before I turn it over to the operator for questions I wanted to let everyone know we'll be participating in the Investor Summit Conference Tomorrow. If we don't already have a one on one meetings scheduled with you and you would like to arrange a meeting with US. Please reach out to Robert Blum and he can coordinate getting a meeting scheduled with that.

I'd like to now turn the call over to the operator, Jason can you open it up for questions.

Thank you we will now begin the question and answer session and ask a question you May Press Star then one on your Touchtone phone.

Youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

Our first question comes from Leland yourself from Oppenheimer. Please go ahead.

Hey, good afternoon, and thanks for taking my questions.

Just a question on one O four I know, it's some time away, but just as you think about approaching the commercial market.

You know for the opportunity in sah.

Access those.

Patients out there in hospitals in ICU and so forth.

The structure do you plan to deploy in terms of commercial organization and field reps, if you're able to speak to that yeah.

Yeah. Thank you Leila and thanks for being on the call today Yeah.

The really nice thing about this market is that it's highly concentrated you know these patients present typically to a major health care Center.

With with usually a stroke I see you know ICU stroke, a unit and Theres about a roughly 1400 of those those centers around the country.

It's interesting because it's a typical 80 20 rule or in this case about 70% actually of the patients are treated in about 400 of those centers.

We really believe that we can commercialize gtx, one or one O for ourselves.

We think we can do this initially with just you know roughly 15 to 20 reps.

And then grow organically is as sales grow so we obviously, we'd be targeting some of the larger centers around the country.

And I should mention by the way that we already have relationships with many of these centers. We expect you know a number of them too.

B to participate in our phase III safety study.

And we will be recruiting patients for us. So you know if we have a successful study and and the drug gets approved we would expect fairly rapid adoption I should mention that we are.

We remain open to other potential partnering opportunities not just in the U S. But certainly outside of the U S. We think there's I'm really in a very attractive market for example in China.

So we have discussions just beginning.

You know and for for potential partnership opportunities.

In in.

Asia as well as potentially in Europe as well.

Yeah.

Thank you.

Great and then just to confirm so we'll see the windows.

It sounds like sometime next month, so we look forward to doing that.

Thanks, very much for taking the questions.

Yeah, sorry, I didn't catch the last part you cut out there were you asking about one O two.

Just confirming that we will see the top line by year end, yes, absolutely. Yes, we're planning to report out that study should we should have the topline results before the end of December . So we will report that out as soon as we get the results.

I look forward to it thanks, so much thanks Leland.

Again, if you have a question. Please press Star then one.

Our next question comes from Ohio.

<unk> caused me from B Riley Securities. Please go ahead.

Yes. Thank you good afternoon, John and team and congratulations on another productive quarter and thanks for taking my question just a couple here, maybe if we can start with.

Something that you were going over and the recap there could you just remind us what.

What we can expect sort of potential filings for each of the programs and then sort of lay in your current.

Our balance sheet and capital requirements to do that you know on the call.

Next up during.

During the time of the one O four filing I know the runway through there, but for the other programs as well.

Sure Yeah. So we have you know we.

We have disclosed that we would.

Expect that the Gtx one O. Four study, we'll will start as planned in the first half of next year actually in the second quarter, we would.

Expect to see the first patient in.

That study is expected to enroll about 100 patients.

We'll have two arms it'll it'll 50.

<unk> 50 of those patients will be on the oral nimodipine and 50, roughly 50 on our I V. D. T. G T X one O four.

We expect it'll take about a year to enroll those patients and with a short follow up period. The whole study is expected to take about 18 months.

So we would expect to wrap up the study if we were able to start mid next year, we'd expect to wrap up the study towards the end of 'twenty 'twenty four.

And then file in in early 'twenty five.

And again, we hope will get fast track review on this but assuming you know a 10 month review.

Review cycle, which would be the conservative we would expect to have approval before the end of 2025.

And I'll I'll turn it over to Brian with regards to your balance sheet question, Brian do you want to take that one.

Sure.

I'm not exactly certain what what you meant by the balance sheet.

Capital requirements you are just looking for.

How much is going to be required to complete the program yeah.

Yeah. So more just understanding how we can think about the burn going forward at that 5 million number that we're seeing this quarter as some of the studies get into these larger safety studies or should we expect sort of along the same trajectory.

Yeah, Okay, So my expectation and our expectation.

Our long run burn rate is about $2 million a month.

That's kind of.

Take that from looking at our 35 million it will last us through the next 18 months through March of 'twenty four.

Beyond that as well.

<unk> commercialized I would expect our burn rate to increase a little bit.

Just to cover the cost of commercialization and the build out of <unk>.

Our commercial infrastructure.

But.

At the same time, we'll be looking at other ways too.

Monetize in response to to support the commercialization effort.

Excellent and then maybe one more for Jan our precise if he's on the call as well could you remind us of some of the market research that has been generated from the 101 program.

Sure Yeah, maybe I'll turn that over 2% you want to cover that one.

Yes, happy to Hi style.

So earlier this year, we refreshed our market assessment primary research or Gtx one on one.

This is for post herpetic neuralgia and the results. The findings were astounding to put it mildly I guess.

We we interviewed over 250 primary care physicians and pain specialists.

Specifically socialize the target product profile for Gtx 101, and it was an overwhelming response.

Even in light of.

The lidocaine patches as you know is mostly the standard of care with the gabapentin and as Jim had mentioned both of them.

Have unmet needs out there, which came out very clearly in the in the survey findings.

These physicians.

The perception was Gtx 101 wood would meet.

You need out there in terms of faster analgesia as well as.

A potential drug that would be.

More convenient to use and apply.

So it validated our hypothesis that there is a unmet need for ph fan out there.

That Gtx 101 wood wood, so still very very nicely.

The other aspect of our primary research was to look at reimbursement.

And what the impact of <unk> vaccine is on the overall lidocaine patch market and just to remind everyone that lidocaine patches have.

The only approved indication is for Postherpetic neuralgia.

And what we found was only a 10th of <unk>.

Scripts are being written for the patches majority of.

The others are for back pain, osteoarthritis diabetic peripheral neuropathy.

And.

And over half the incidences.

The major insurance companies are routinely a pooling.

Those those prescriptions for the non PHN pain indications. So so the market opportunity, we think for Gtx 101 is.

This is a very attractive.

With PHN as well as beyond for extension opportunities.

Shouldn't Rex was during the period <unk> was launched.

We analyzed the uptick curve of the lidocaine patches and they have grown at a healthy CAGR of 7% so.

These non PHN indications as well that that we believe is a robust driver for for Gtx 101.

So I'll just pause here.

Do you have any further questions or Jan if you'd like to add anything.

I thought that was a good summary, Chris Sean Thank you.

No. That's fantastic. Thank you so much for that additional color and protecting all of our questions. When you look forward to seeing some of the data by the end of the year. Yeah. I think so how I would really appreciate you being on the call today.

Absolutely. Thanks.

There are no more questions in the question queue. This concludes our question and answer session I'd like to turn the conference back over to management for any closing remarks, okay. Thank you Jason I appreciate it I want to thank everyone for taking the time to be with US today on the call. We're really excited about the progress we're making to deliver.

New treatments to thousands of patients who currently lack of effective therapies and we really look forward to updating you on our progress towards several key milestones coming in the next few months. So thanks again and I wish you all a great day take care.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

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