Q3 2022 Biora Therapeutics Inc Earnings Call
[music].
Welcome to the <unk> Therapeutics third quarter 2022 earnings call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
To join the question queue you May Press Star then one on your telephone keypad.
Should you need assistance during the conference call you may signal, an operator by pressing star zero.
I will now turn the call over to Alexandra Human Associate director with life side, Visors, <unk> Investor Relations firm.
Thank you operator, good afternoon, and welcome to the <unk> Therapeutics third quarter 2022, corporate update and financial results Conference call.
Joining me on the call are Audi Mohan <unk>, Chief Executive Officer, and Eric just Barbie Chief Financial Officer.
Before I turn the call over to Mr. Mohanty I would like to remind you that today's call will include forward looking statements within the meaning of the federal securities laws, including but not limited to the types of statements identified as forward looking in our quarterly report on Form 10-Q that we will file later today and our subsequent reports filed with the SEC.
Which will all be available on our website in the investors section.
These forward looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control.
Well you know that the actual results could differ materially from those projected in any forward looking statement.
For a further description of the risks and uncertainties that could cause the actual results to differ materially from those expressed in the forward looking statements as well as the risks related to our business. Please see the company's periodic reports filed with the SEC.
With that I will now turn the call over to audio hunting the CEO of <unk> therapeutics.
Thanks, Alex.
And thank you everyone for joining us.
During the quarter, we continue to focus on execution and made important progress towards our R&D filing for PGM 600, we presented at key scientific conferences more detailed data from a device function studies for our targeted therapeutics program.
In our systemic therapeutics program, we continue to optimize our device and presented important new data at multiple scientific conferences.
While almost all our energy and focus is on our therapeutics pipeline, we remain committed to capturing value from our legacy assets through sale licensing or other agreements.
We recently completed a transaction with Roche to sell some of our legacy IP.
And earlier this year, we completed the spin out of our liquid biopsy assets to a company now funded by an experienced venture capital firm to further develop the program.
As those programs move forward towards key value inflection points, our stake in the assets could eventually result in meaningful financial returns by aura.
We continue to pursue opportunities to create further value with our other remaining legacy assets.
We also opportunistically raised incremental capital to extend our runway towards key data Readouts next year.
Eric will cover the details later in the call.
We're very happy with the continued support from our largest current investor theory, there or additional investment in borrower illustrates not only their commitment to the therapeutics programs, we're developing but also as I believe which we share that our stock is currently undervalued.
First let me cover our targeted therapeutics platform with our lead program in ulcerative colitis.
Annual global sales for U C drugs are estimated to be approximately $7 billion.
The inflammatory bowel disease or IBD space overall is about $19 billion globally.
Currently available therapeutics work by being taken up systemically throughout the body with a limited amount of reaching the disease area or tissue in the colon.
Moreover, most therapeutics are given via IV or needle based administration, which adds to the patient's burden.
Our lead program P. J F 600 does it proprietary liquid formulation of purpose isn't it in an easy to administer all device that can deliver drug to the colon using our targeted technology.
The device is approximately the size of our fish oil pills.
Our commercially available version of Tofacitinib is approved for the treatment of UC.
It was sudden it is administered orally and like other drugs that are orally delivered is mostly absorbed in the stomach or the upper Gi tract.
Whereas you see is a disease of the lower Gi tract.
Delivering drug topically epicyte of disease, where it is needed P. G 600 has the potential to improve efficacy and also limit systemic exposure to improve safety.
We're extremely pleased with the ongoing development of our targeted drug delivery device.
At the recent American College of Gastroenterology annual meeting we shared the results from our P. M. Six O two study.
This study assessed the safety and performance of the device and active UC patients.
Given the different geos physiology and disease activity in these patients. It is critical that the device performs as intended and can identify entry into the colon activate and released a payload in UC patients.
In this study the device was orally ingested by patients with active moderate to severe ulcerative colitis.
After identification of colon entry, we showed the device released the sealing solution payload that included radio isotopes.
Since the graphic imaging was used to independently indicate device localization and payload delivery targeted to the lower Gi tract.
The device was well tolerated in the study demonstrated that in all patients the device accurately identified entry into the colon triggered the release of a liquid payload and importantly achieved distribution across the entire lower colon.
The results of this study have been reviewed by world renowned gastroenterologist, including members of our IBD clinical Advisory Board.
Who have provided feedback that these results demonstrate the potential of the targeted therapeutics platform to transform management of ulcerative colitis.
Improving efficacy through increased drug concentration in the colon, while potentially minimizing the harmful side effects associated with high systemic drug uptake.
This successful study in ulcerative colitis patients supports the safety and performance of the device and is a key step in advancing our PGM 600 program.
We have now completed three successful human studies without device, which demonstrates the potential of the platform for localized delivery of drugs.
We're not aware of any other oral drug delivery technology that can accurately detect colon entry, especially in an environment of inflammation bleeding at highly variable mortality seen with patients who have UC.
As previously shared we're planning a phase one single and multiple ascending dose study to evaluate safety Tolerability pharmacokinetics and pharmacodynamics of PGM 600.
We expect that the single ascending dose study will include 24 healthy volunteers and evaluate drug concentration in serum and fee season.
The multiple ascending dose study is also planned to include 24 healthy volunteers with repeat daily dosing for seven days and then addition to drug concentrations in serum and feces. We will also measure drug concentrations in colon tissue.
Two different doses of PGM 600, a plant for both studies five and 10 milligrams of Tofacitinib daily.
These doses are well below the commercially approved induction dose of Tofacitinib at 10 milligrams twice daily.
We have included a dog run before a clinical study design and the corporate presentation on our website.
We have shown important data on the correlation between tissue concentration of purpose isn't it and improve patient outcomes.
If the clinical data generated in our phase one trial confirms that we can safely achieve high tissue concentrations just as we have seen with PGM 600 in preclinical studies.
We believe there's a high likelihood of improving remission rates in UC patients compared to current therapies.
Because of the well known therapeutic profile of Tofacitinib and standard oral formulations, we believe our development risks for pizza and 600 are reduced.
Soon after the phase one trial is completed we plan to move into a disease Interventional study, where we will evaluate clinical remission. After eight weeks treatment with P. G. M 600 inactive UC patients.
We received constructive feedback from the FDA earlier this year that help clarify our next steps and we have been able to incorporate suggestions generally aligned with our development plans.
We're continuing active engagement with the agency over the next few months as we prepare to file our R&D early next year.
We know that a vast majority of UC patients are still suffering with a large unmet need.
Our solution can potentially solve one of the main gaps of all the current therapeutic options, which is the inability to get enough drug to the disease tissue.
So we're keen to move this program forward expeditiously, while ensuring that we follow the necessary regulatory and clinical steps.
Next I'll cover our systemic therapeutics platform.
During the third quarter, we continued development of our systemic delivery device.
As mentioned before we have seen very encouraging data from this platform early in the year.
Over the last several months, we've been moving forward with development of the device to evolve from a.
Research grade device to a clinical grade device.
Our ongoing improvements and evolution of the device will ensure sourcing of parts from suppliers that can meet the stringent regulatory requirements for medical human use.
We had expected to complete these improvements in late summer. However, some supplier sourcing challenges affected our timelines by a few weeks having.
Having worked through the supply issues were not moving forward with our studies and hope to complete these in the coming months.
If successful these data could be sufficient to progress our program towards our goal of expanding our pharma collaborations and partnership discussions.
As a reminder, our systemic therapeutics platform aims to facilitate oral administration of drugs that would otherwise require injection or infusion.
Our solution is an oral device, which provides liquid jet delivery of large molecules to the small intestine to maximize systemic uptake.
The platform has the potential to deliver a broad range of large molecules such as proteins peptides of nucleic acids without complex formulation.
We believe this platform can help improve disease management and associated patient outcomes reduce intravenous infusion costs help expand the market for drugs across a range of chronic use indications and helped bio therapeutics, such as motor clothes become more competitive with small molecule substitutes.
During the third quarter, we presented data on both our preclinical model development as well as other key data at scientific conferences, including the American College of Gastroenterology annual scientific meeting controlled release Society annual meeting.
The Parenteral drug Association universe of Prefilled, syringes and injection devices conference.
As we progress our clinical grade device, we're conducting animal studies to ensure that we can generate data.
That is similar to the data generated with our research grade device.
We expect to continue to evolve the device and generate data in the coming months, our collaborators continue to be very supportive of her work on this platform.
We believe that achieving 10% to 15% bioavailability through oral delivery would enable our platform to be commercially viable with a broad range of large molecules and we believe the data from these studies could be sufficient to progress our collaborations and potential new partnerships into next stages.
To summarize some of our anticipated upcoming milestones for both platforms.
We plan to initiate a tox study with PGM 600. After we obtain final feedback from the FDA on our study protocols later this year.
And based on the results intend to file in R&D in Q1 2023 to support the initiation of a phase one study.
We expect to start having interim data around mid next year and to complete the study by Q3 23.
We're continuing to optimize our next generation systemic therapeutics device to support additional preclinical data generation, but Q1, 'twenty three and based on the additional data we expect to expand our collaborations during the remainder of 2023.
Finally, we expect to initiate our phase II trial for <unk> 600, after completion of phase one next year.
With that I'll now turn the call over to Eric Thus far basis for a discussion of our financial results and capital market activities.
Thanks, Eddie and good afternoon, everyone.
Our near term focus remains optimizing capstone relocation to our therapeutics pipeline and extending our cash runway.
We recently announced a registered direct financing lease.
Raised $9 $7 million in total with 6 million in gross proceeds from an existing investor.
Cerium reinvested $3 $7 million from the interest on the convertible notes to ensure the company's funds are located in priority to our programs.
The continued commitment by our investors to support by our US key programs is very encouraging.
Those funds will help the company work towards important clinical milestones coming up in 2023, which as you just highlighted.
Separately in the face of challenging markets. The start of many smaller public companies, especially in biotech I have not been performing well irrespective of progress in their development or clinical activities and buyer is no exception.
We firmly believe our programs are progressing well as Andy described earlier, but it may take time for our stock price to properly reflect the value we generate from our programs as a result, following our last capital raise we filed last week, a preliminary proxy statement to seek approval from our shareholders.
To effect, a reverse stock split to ensure compliance with NASDAQ requirements and enhance our public company profile.
Management and our board believe this is a necessary path forward in the face of Unproduced precedented and difficult capital market conditions.
We believe this exercise as procedural in nature. It doesn't change the way stockholders should look at value and preserve investors approached unity to generate a return on their investment as we generate data and achieve important milestones.
Moving now to our financial performance for the third quarter.
We are a focused organization with a much reduced cash burn profile operating expenses, excluding stock based compensation expenses were $11 $8 million in the third quarter of 2022, a reduction of $1 1 million compared to Q2 as we continue to align the company organization to a more focus needs.
As a result, we are meeting our original goal of having monthly operating cash burn at or below $4 million.
Most specifically G&A expenses in the third quarter were $8 $1 million, including $1 $3 million in stock based compensation expense, a slight reduction compared to Q2, while R&D expenses in the third quarter was $5 $8 million, including zero point $8 million in stock based compensation expense as well.
We mentioned in our previous call. We expect R&D expenses was mainly track our clinical studies workflow and combined with further G&A cost savings, we maintain our expectation.
Kind of ending the year with a monthly operating cash burn of less than $4 million.
We had a cash balance of $37 $1 million as of September 30th 2022, and combined with the additional $9 7 million capital raise just recently, we have extended our runway towards key data Readouts in Q3 next year, thanks to a reduced cash burn.
With that I will now turn the call over back to Eddie.
Thanks, Eric <unk> continues to make good progress in both our targeted therapeutics and systemic therapeutics programs. We're excited about a number of our near term milestones. We look forward to providing further updates as we continue to generate more data.
With that operator.
We're now ready for questions.
Thank you.
We will now begin the question answer session.
The question queue, you May Press Star then one on your telephone keypad.
Here at Cowen acknowledging your request.
We're using a speakerphone please pick up your handset before pressing any keys.
To withdraw your question. Please press Star then two.
We will pause for a moment as callers join the queue.
The first question comes from Gerald Jeez with H C Wainwright.
Please go ahead, hey, guys. Good afternoon, thanks for taking the question.
A few questions a couple of them are logistical so first with regard to the I N. D. Obviously, you mentioned the Tox study is there anything else, that's outstanding or that might be considered a rate limiting step at this point besides tox.
Okay.
No.
Great simple [laughter].
Okay.
Yeah, No I love it as simple as great.
And then when you look towards the multiple ascending dose study or even the sad as part of the phase one or phase one two.
Is the FDA, requiring any time delays between patients for safety observations.
No actually.
This is why the previous interaction was great.
Well, it's going to be pretty smooth. This out you know, we're getting the serum and Pcs, we're not really waiting we're taking small wait like a few days between the sad and Mad which is again typical.
But no waiting between patients.
Okay, that's great and then.
When you look towards the Mad and you talked about getting a cold and tissue samples I guess can you talk a little bit about the process. You know the commonality of the procedure just to give sort of listen there is a little bit of a teaser if you will.
Yeah.
Well so in the Mad like you mentioned, our intention is to not just get serum and in Pcs, but also.
And a couple of points get some biopsies so get a tissue sample. So that we can actually check what concentration of drug in that tissue.
That procedure itself is really not that uncommon, it's pretty it's not common to do it for UC patients, but it is common perceived medical procedure done routinely.
In so many different settings that its really nothing unique and special about it other than we just want a little bit of tissue like they normally do any other.
Ambling.
And so here's where we think the big.
Value will be in what we provide which is <unk>.
Getting a tissue concentration like what we've shown matters in UC patients with some of the paper has been published so straightforward, but really important because that's what flags or separates us from everybody else right that we could get drug into the tissue, where others came on and we have a.
Target we're shooting for that is also well known in terms of drug concentration in the tissue simple procedure extremely valuable data.
Got it got it and then my last question just sort of switching gears to the.
The legacy company I guess, obviously, you've already established a track record in being able to monetize.
The past so I guess, what with regard to what's remaining can you describe I guess the level of maturity of the discussions with regard to the legacy assets.
And let me just verify so regard the level of maturity of conversations.
Yes, I've conversation sorry, okay.
No that's fine because we there's a lot of IP, it's all over the place some a little bit meeting a little bit more work some fairly mature.
We have had several conversations some are.
I've been going on for a while and have progressed quite well.
In these kinds of conversations you you'd never know it can happen in a couple of weeks it could take a couple of months, but these are not really long term.
In the in the way we're thinking it's.
Fairly near term is where we hope that we will have some things.
Great I appreciate all the extra details guys. Thanks a lot.
Thanks, Joe.
The next question comes from Julian Harrison with BTG.
Please go ahead.
Hi, Thank you for taking my questions and apologies if I Miss any of it back onto the call two minutes late first on your systemic delivery platform I'm wondering how soon you can't to clinical testing.
Sometime next year seem reasonable at this point and also wondering if the benchmark from a PK standpoint areas at all across different payload beyond antibodies. How much have you characterized at this point thanks.
Hum.
Yeah. That's an interesting question Julien. So you are correct that the bioavailability will vary depending on the molecules.
Some of it is how much bioavailability is necessary for it to be commercially viable, but some of it is also the dosing regimen could change. So for example for a couple of our molecules, we're pretty familiar with.
What kind of requirements. They would had they are commercially available drugs that are currently injected and we can get a very similar profile to that with 10% to 15% daily dose for some others like monoclonal <unk> et cetera.
Frequent dosing would be sufficient at the same 10% to 15% bioavailability. Each of these molecules are different we have at least four or five different molecules.
Data.
And in all of those.
Some amount of.
Consistency is that in general 10% to 15% makes it commercially viable what then possible with a higher bioavailability could be less frequent dosing for some even with the same bioavailability you could change the dosing regimen. So it's a key.
Combination of different things depending on the molecule.
As far as <unk>.
Progress our focus as we said right is.
In a capital efficient way move our company forward towards significant inflection and that means making sure we get our targeted program into the clinic when that trial. So the systemic side, we're focusing on this generation of data in the coming months that would allow us to progress our collaboration maybe.
<unk> new conversations.
And the collaboration that we have.
And we think that that could lead to significant.
Value creation, and so that would be a neutral focus we do have some data where we could have a clinical ready conversation with the FDA, but that's not the priority our priority would be let's make sure we get this clinical grade.
Device ready get the data in a way that we can say the data now is similar to the.
<unk> clinical device.
That would allow us to expand the conversations and Thats, our focus with the systemic program.
Okay, great. Thanks very much.
The next question comes from my Ackman Tani with B Riley Securities.
Please go ahead.
Hi, yes, thank you for taking my questions today.
Congratulations on the success over the past quarter.
Two questions here. The first one centered around your R&D I know you touched on that a little bit already.
I think we just want a little bit of clarification on what may be less.
In order to come to full alignment with the FDA I know you said that you were generally in line with the development plan and I'm curious if there's a.
What may be occurring over the next couple of months to get an alignment and not just any additional color you have would be.
Sure.
Yeah, I mean, you know with the FDA, it's always better not to say there is a 100% until they give you the approval to the R&D. So we're pretty good we feel pretty good we have filed our talks protocol with them just to be safe extra safe maintain a conversation. So we want to do this completely.
With full interaction.
[noise] open conversation with them, we feel that.
It's going well.
So as soon as we have that basket.
Sometime soon we'll run the actual Tox study, who want to own. The Tox study you have to get a report and that's the final piece that will go into an <unk> filing. So we expect still to be able to do all of this in Q1 of the coming year.
No really reason to worry about anything other than just getting these things executed.
Yeah.
Okay I appreciate it.
Makes sense.
And then my second question actually is centered around your G. L E delivery GOP one delivery.
B or systemic therapeutic platform I was curious in regards to the patents.
If this is specific for only GOP, one single agonists or D. C actually has expanded out to say.
<unk>.
<unk>, one glucagon or G. L P kipp.
Glucagon, a triple agonist or something of that sort.
And then I know your current study.
You're currently working with Liraglutide I'm curious if this.
<unk> has the potential to be expanded for Sam or even potentially like a CAGR of semi.
Dual formulation of that sort.
Any extra color would be great.
Okay.
Okay. So.
The first the GOP one pattern.
We're pretty excited it's a pretty broad patents. So it covers.
A lot of which you mentioned, which is it is not specific to the one molecule that we have it is.
A broad coverage.
All GOP ones delivered there.
<unk>.
Tissue.
Orally so it does cover dual <unk>.
All of the things he said it covers all of those so yes. It covers dual recovers it's very broad.
We have the patent on final I mean, you can read it.
And even through our website. So all the details of that all the questions. You asked very valid it is quite exciting that its that broaden it covers all those different aspects.
Initially try to stay a little bit focus to generate data with <unk>.
<unk> focused molecule, but all of those dual and trips are possible.
Ed.
We will be opportunities for us to expand.
Yeah.
Got it.
I'll leave it there I appreciate you taking our questions and congratulations again.
Thank you.
This concludes the question answer session.
I would like to turn the conference back over to I D Mohanty for any closing remarks.
Yeah.
Thank you all once again for joining us.
We are really excited about our progress and look forward to keeping you updated on all the all of our progress. Thank you.
This concludes today's conference call you may disconnect your lines. Thank.
Thank you for participating and have a pleasant day.
Yeah.
[noise].
Yes.
Yeah.
[noise].
Yes.
Yeah.
[music].
[music].
[music].
Welcome to the <unk> Therapeutics third quarter 2022 earnings call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
To join the question queue you May Press Star then one on your telephone keypad.
Should you need assistance during the conference call you may signal, an operator by pressing star zero.
I will now turn the call over to Alexandra Sherman Associate director with Lifesize Advisors, <unk> Investor Relations firm.
Thank you operator, good afternoon, and welcome to the <unk> Therapeutics third quarter 2022, corporate update and financial results Conference call.
Joining me on the call are Audi Mohan <unk>, Chief Executive Officer, and Eric just far as Chief Financial Officer.
Before I turn the call over to Mr. Mohanty I would like to remind you that today's call will include forward looking statements within the meaning of the federal securities laws, including but not limited to the types of statements identified as forward looking in our quarterly report on Form 10-Q that we will file later today and our subsequent reports filed with the SEC.
Which will all be available on our website in the investors section.
These forward looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control.
You know that the actual results could differ materially from those projected in any forward looking statement.
For a further description of the risks and uncertainties that could cause the actual results to differ materially from those expressed in the forward looking statements as well as the risks related to our business. Please see the Companys periodic reports filed with the SEC.
With that I will now turn the call over to audio hunting.
<unk> biotherapeutics.
Thanks, Alex.
And thank you everyone for joining us.
During the quarter, we continue to focus on execution and made important progress towards IND filing for PGM 600, we presented at key scientific conferences more detailed data from our device function studies for our targeted therapeutics program.
In our systemic therapeutics program, we continue to optimize our device and presented important new data at multiple scientific conferences.
While almost all our energy and focus is on our therapeutics pipeline, we remain committed to capturing value from our legacy assets through sale licensing or other agreements.
We recently completed a transaction with Roche to sell some of our legacy IP and.
And earlier this year, we completed the spin out of our liquid biopsy assets to a company now funded by an experienced venture capital firm to further develop the program.
As those programs move forward towards key value inflection points, our stake in the assets could eventually result in meaningful financial return to <unk>.
We continue to pursue opportunities to create further value with our other remaining legacy assets.
We also opportunistically raised incremental capital to extend our runway towards key data Readouts next year.
Eric will cover the details later in the call.
We're very happy with the continued support from our largest current investor a theory.
There are additional investment in borrower illustrates not only their commitment to the therapeutics programs, we're developing but also I believe which we share that our stock is currently undervalued.
First let me cover our targeted therapeutics platform with our lead program in ulcerative colitis.
Annual global sales for U C drugs are estimated to be approximately $7 billion.
As the inflammatory bowel disease or IBD space overall is about $19 billion globally.
Currently available therapeutics work by being taken up systemically throughout the body with a limited amount, reaching the disease area or tissue in the colon.
Moreover, most therapeutics are given via IV or needle based administration, which adds to the patient's burden.
Our lead program PGM 600 is a proprietary liquid formulation of <unk> and.
In an easy to administer all device that can deliver drug to the colon using our targeted technology.
The device is approximately the size of our fish oil pills.
Our commercially available version after the settlement is approved for the treatment of UC.
Tofacitinib is administered orally and like other drugs that are orally delivered is mostly absorbed in the stomach or the upper Gi tract, whereas you see is a disease of the lower Gi tract.
Delivering drug topically at the site of disease, where it is needed PGM 600 has the potential to improve efficacy and also limit systemic exposure to improve safety.
We're extremely pleased with the ongoing development of our targeted drug delivery device.
At the recent American College of Gastroenterology annual meeting we shared the results from our <unk> study.
This study assessed the safety and performance of the device and active UC patients.
Given the different Gi physiology and disease activity in these patients. It is critical that the device performs as intended and can identify entry into the colon activate and released a payload in UC patients.
In this study the device was orally ingested by patients with active moderate to severe ulcerative colitis.
After identification of colon entry, we showed the device released the saline solution payload that included radio isotopes.
Since the graphic imaging was used to independently indicate device localization and payload delivery targeted to the lower Gi tract.
The device was well tolerated in the study demonstrated that in all patients the device accurately identified entry into the colon triggered the release of a liquid payload and importantly achieved distribution across the entire lower colon.
The results of this study have been reviewed by world renowned gastroenterologist, including members of our IBD clinical Advisory Board.
Who have provided feedback that these results demonstrate the potential of targeted therapeutics platform to transform management of ulcerative colitis.
Improving efficacy through increased drug concentration in the colon, while potentially minimizing the harmful side effects associated with high systemic drug uptake.
This successful study in ulcerative colitis patients supports the safety and performance of the device and is a key step in advancing our PGM 600 program.
We have now completed three successful human studies with our device, which demonstrates the potential of the platform for localized delivery of drugs.
We're not aware of any other oral drug delivery technology that can accurately detect colon entry, especially in an environment of inflammation bleeding and highly variable mortality seen with patients who have UC.
As previously shared we're planning a phase one single and multiple ascending dose study to evaluate safety Tolerability pharmacokinetics and pharmacodynamics of PGM 600, we.
We expect that the single ascending dose study will include 24 healthy volunteers and evaluate drug concentration in serum and fee season.
The multiple ascending dose study is also planned to include 24 healthy volunteers with repeat daily dosing for seven days and in addition to drug concentrations in serum in phases. We will also measure drug concentrations in colon tissue.
Two different doses of PGM 600, a plan for both studies.
Five and 10 milligrams of Tofacitinib daily.
These doses are well below the commercially approved induction dose of Tofacitinib at 10 milligrams twice daily.
I've included a diagram of our clinical study design and the corporate presentation on our website.
We have shown important data on the correlation between tissue concentration of Tofacitinib and improve patient outcomes.
If the clinical data generated in our phase one trial confirms that we can safely achieve high tissue concentrations just as we've seen with PGM 600 in preclinical studies, we believe there's a high likelihood of improving remission rates in UC patients compared to current therapies.
Because of the well known therapeutic profile of Tofacitinib and standard oral formulations, we believe.
Our development risks for PGM 600 are reduced.
Soon after the phase one trial is completed we plan to move into a disease Interventional study, where we will evaluate clinical remission. After eight weeks treatment with PGM 600 inactive UC patients.
We received constructive feedback from the FDA earlier this year that help clarify our next steps and we have been able to incorporate suggestions generally aligned with our development plans.
We're continuing active engagement with the agency over the next few months as we prepare to file our R&D early next year.
We know that a vast majority of UC patients are still suffering with a large unmet need.
Our solution can potentially solve one of the main gaps of all the current therapeutic options, which is the inability to get enough drug to the disease tissue.
So we are keen to move this program forward expeditiously, while ensuring that we follow the necessary regulatory and clinical steps.
Next I'll cover our systemic therapeutics platform.
During the third quarter, we continued development of our systemic delivery device.
I mentioned before we have seen very encouraging data from this platform early in the year.
Over the last several months, we've been moving forward with development of the device to evolve from a research grade device to a clinical grade device.
Our ongoing improvements and evolution of the device will ensure sourcing of parts from suppliers that can meet the stringent regulatory requirements for medical human use.
We had expected to complete these improvements in late summer. However, some supplier sourcing challenges affected our timelines by a few weeks having.
Having worked through the supply issues were now moving forward with our studies and hope to complete these in the coming months.
If successful these data could be sufficient to progress our program towards our goal of expanding our pharma collaborations and partnership discussions.
As a reminder, our systemic therapeutics platform aims to facilitate oral administration of drugs that would otherwise require injection or infusion.
Our solution is an oral device, which provides liquid jet delivery of large molecules to the small intestine to maximize systemic uptake.
The platform has the potential to deliver a broad range of large molecules such as proteins peptides of nucleic acids without complex re formulation.
We believe this platform can help improve disease management and associated patient outcomes reduce intravenous infusion costs help expand the market for drugs across a range of chronic use indications and helped bio therapeutics, such as motor clothes become more competitive with small molecule substitutes.
During the third quarter, we presented data on both our preclinical model development as well as other key data at scientific conferences, including the American College of Gastroenterology annual scientific meeting controlled release Society annual meeting.
And the parental drug Association universe of Prefilled, syringes and injection devices conference.
As we progress our clinical grade device, we're conducting animal studies to ensure that we can generate data.
That is similar to the data generated with our research grade device.
We expect to continue to evolve the device and generate data in the coming months, our collaborators continue to be very supportive of our work on this platform.
We believe that achieving 10% to 15% bioavailability through oral delivery would enable our platform to be commercially viable with a broad range of large molecules and we believe the data from these studies could be sufficient to progress our collaborations and potential new partnerships into next stages.
To summarize some of our anticipated upcoming milestones for both platforms.
We plan to initiate a tox study with PGM 600. After we obtain final feedback from the FDA on our study protocols later this year.
And based on the results intend to file an IND in Q1 2023 to support the initiation of a phase one study.
We expect to start having interim data around mid next year and to complete the study by Q3 23.
We're continuing to optimize our next generation systemic therapeutics device to support additional preclinical data generation by Q1, 'twenty three and based on the additional data we expect to expand our collaborations during the remainder of 2023.
Finally, we expect to initiate our phase II trial for <unk> 600, after completion of phase one next year.
With that I'll now turn the call over to Eric <unk> for a discussion of our financial results and capital market activities.
Thanks, Eddie and good afternoon, everyone.
Our near term focus remains optimizing capital allocation to our therapeutics pipeline and extending our cash runway.
We recently announced a registered direct financing, we raised $9 7 million in total with $6 million in gross proceeds from an existing investor.
<unk> reinvested $3 $7 million from the interest on the convertible notes to ensure the company's funds are located in priority to our programs.
The continued commitment by our investors to support by our US key programs is very encouraging.
Those funds will help the company work towards important clinical milestones coming up in 2023, which as you just highlighted.
Separately in the face of challenging markets the start of many smaller public companies, especially in biotech.
Not being performing well irrespective of progress in their development or clinical activities and <unk> is no exception.
We firmly believe our programs are progressing well as Andy described earlier, but it may take time for our stock price to properly reflect the value we generate from our programs as a result.
Knowing our last capital raise we filed last week, a preliminary proxy statement to seek approval from our shareholders to effect a reverse stock split to ensure compliance with NASDAQ requirements and enhance our public company profile.
Management and our board believe this has the necessary path forward in the face of Unproduced, precedented and difficult capital market conditions.
We believe this exercise as procedural in nature doesn't change the way stockholders should look at value and preserve investors approach unity to generate a return on their investment as we generate data and achieve important milestones.
Moving now to our financial performance for the third quarter.
We are a focused organization with a much reduced cash burn profile operating expenses, excluding stock based compensation expenses were $11 $8 million in the third quarter of 2022, a reduction of $1 1 million compared to Q2 as we continue to align the organization to a more focused needs.
As a result, we are meeting our original goal of having monthly operating cash burn at or below $4 million.
More specifically G&A expenses in the third quarter were $8 1 million, including $1 3 million in stock based compensation expense, a slight reduction compared to Q2, while R&D expenses in the third quarter was $5 $8 million, including zero point $8 million in stock based compensation expense.
As we mentioned in our previous call. We expect R&D expenses were mainly track our clinical studies workflow and combined with further G&A cost savings, we maintain our expectation of ending the year with our monthly operating cash burn of less than $4 million.
We had a cash balance of $37 $1 million as of September 32022, and combined with the additional $9 7 million capital raise just recently, we have extended our runway towards key data Readouts in Q3 next year, thanks to a reduced cash burn.
With that I will now turn the call over back to Andy.
Thanks, Eric.
<unk> continues to make good progress in both our targeted therapeutics and systemic therapeutics programs. We're excited about a number of our near term milestones. We look forward to providing further updates as we continue to generate more data with that operator, we're now ready for questions.
Thank you.
We will now begin the question answer session.
Joining the question queue you May Press Star then one on your telephone keypad.
Here at Cowen acknowledging your request.
You are using a speakerphone please pick up your handset before pressing any keys.
Draw. Your question. Please press Star then two.
We will pause for a moment of callers join the queue.
The first question comes from Joseph <unk> with H C Wainwright.
Please go ahead, hey, guys. Good afternoon. Thanks for taking the question a few questions. A couple of them are logistical. So first with regard to the <unk>. Obviously you mentioned the Tox study is there anything else, that's outstanding or that might be considered a rate limiting step at this point besides tox.
No.
Great simple answer.
Okay.
Yeah, No I love it as simple as great.
And then when you look towards the multiple ascending dose study or even the sad.
As part of the phase one or phase one two.
Is the FDA requiring any <unk>.
<unk> delays between patients for safety observations.
No actually so this is why that previous interaction was great.
Well, it's going to be pretty smooth the SaaS.
Getting the serum and Pcs, we're not really waiting, but we are taking small wait like a few days between the sad and Mad which is again typical.
But no waiting between patients.
Okay, that's great and then.
When you look towards the Mad and you talked about getting colon tissue samples I guess can you talk a little bit about the process.
Commonality of the procedure just to give sort of listeners a little bit of a teaser if you will.
Yeah.
Well so in the pad like you mentioned, our intention that as did not just get serum and Ccs, but also.
And a couple of points get some biopsies so get a tissue sample. So that we can actually check what concentration of drug in that tissue.
That procedure itself is really not that uncommon, it's pretty it's not common to do it for UC patients, but it is common perceived medical procedure done routinely.
In so many different settings that its really nothing unique and special about it other than we just want a little bit of tissue like they normally do any other.
Sampling.
And so here's where we think the big.
Value that will be in what we provide which is <unk>.
Getting a tissue concentration like what we've shown matters in UC patients with some of the papers that are published so straightforward, but really important because that's what flags or separates us from everybody else right that we can get drug into the tissue, where others cannot and we had a.
Target we're shooting for that is also well known in terms of drug concentration in the tissue simple procedure extremely valuable data.
Got it got it and then my last question just sort of switching gears to the.
The legacy company I guess, obviously, you've already established a track record in being able to monetize.
In the past so I guess, what with regard to what's remaining can you describe I guess the level of maturity of the discussions with regard to the legacy assets.
And let me just verify so regard the level of maturity of conversations.
Yes, it's a conversation sorry.
Okay.
Yes, no that's fine because we there's.
Theres a lot of IP, it's all over the place some a little bit meeting a little bit more work some fairly mature.
We have had several conversations some are.
They have been going on for a while and have progressed quite well.
But these kinds of conversations you'd never know it can happen in a couple of weeks that could take a couple of months, but these are not really long term.
In the way we're thinking it's.
Fairly near term is where we hope that we will have some things.
Great I appreciate all the extra details guys. Thanks a lot.
Thanks, Tim.
The next question comes from Julian Harrison with BTG.
Please go ahead.
Alright, Thank you for taking my questions and apologies if I missed any of this they got to the call came and Thats played I'm curious on your systemic delivery platform are wondering how soon you can enter clinical testing.
Sometime next year seem reasonable at this point and also wondering if the benchmark from a PK standpoint areas at all across different payload beyond antibody is how much have you characterized at this point. Thanks.
Yeah.
Yeah. That's an interesting question Julien. So you are correct that the bioavailability will vary depending on molecules.
Some of it is how much bioavailability is necessary for it to be commercially viable, but some of it is also the dosing regimen could change. So for example for a couple of our molecules, we're pretty familiar with.
What kind of requirements. They would had they are commercially available drugs that are currently injected and we can get a very similar profile to that with 10% to 15% daily dose for some others like monoclonal <unk> et cetera are less frequent dosing would be sufficient at the <unk>.
10% to 15% bioavailability.
Each of these molecules are different we have at least four or five different molecules.
Data and all of those.
Some amount of.
Consistency in that in general, 10% to 15% makes it commercially viable what that's possible with a higher bioavailability could be less frequent dosing for some EBIT with the same bioavailability.
You could change the dosing regimen. So it's a combination of different things depending on the molecule.
As far as progress.
Our focus as we said right is.
In a capital efficient way move our company forward towards significant inflection and that means making sure we get our targeted program into the clinic when that trial. So the systemic side, we're focusing on this generation of data in the coming months that would allow us to progress our collaboration maybe start new.
Conversations expand the collaboration that we have.
And we think that that could lead to significant value creation and so that would be our near term focus we do have some data where we could have a clinical ready conversation with the FDA, but that's not the priority our priority would be.
Let's make sure we get this clinical grade <unk>.
Device ready get the data in a way that we can say the data now is similar to the.
Pre clinical device.
And that would allow us to expand the conversation that that's our focus with the systemic program.
Okay, great. Thanks very much.
The next question comes from my Ackman Tani with B Riley Securities.
Please go ahead.
Hi, yes. Thank you for taking my questions today, just as we went on for Matt.
Congratulations on the success over the past quarter.
I think I have two questions here. The first one centered around your <unk> I know you've touched on that a little bit already.
Just want a little bit of clarification on what may be less.
In order to come to full alignment with the FDA I know you said that you were generally in line with the development plan I'm curious if there is.
What may be occurring over the next couple of months to get an alignment and not just any additional color would.
It would be.
Sure.
Yes.
With the FDA, it's always better not to say there is a 100% of until they give you the approval to the RMB. So we're pretty good we feel pretty good we have filed our talks protocol with them just to be safe extra safe maintain a conversation. So we want to do this completely with full interaction.
Open conversation with them, we feel that.
It's going well.
So as soon as we have that back.
Sometime soon we'll run the actual Tox study. So one thing on the Tox study to get a report and that's the final piece that will go into in ILD filings. So we expect still to be able to do all of this in Q1 of the coming year.
No really reason to <unk>.
Worried about anything other than just getting these things executed.
Okay I appreciate it.
Makes sense.
And then my second question actually is centered around your GOP delivery GOP one delivery.
<unk> systemic therapeutic platform I was curious in regards to the patents.
If this is specific for only.
Only GOP, one single agonists or if this actually has expanded out to say.
<unk>.
<unk>, one glucagon or DLP give glucagon, a triple agonist or something of that sort.
And then I know you're current study.
You are currently working with Lira Glu time Im curious if this.
<unk> has the potential to be expanded for some or even potentially like a CAGR of semi.
Dual formulation of that sort.
Any extra color would be great.
Okay. So.
First the GOP one pattern.
We're pretty excited it's a pretty broad patents. So it covers.
A lot of which you mentioned, which is not specific to the one molecule that we have it is a.
Broad coverage.
All <unk> delivered.
Who.
Tissue.
Orally.
No.
It does cover duo and so.
All of the things is that it covers all of those so yes. It covers dual recovers it's very broad.
Can we have the patent on file with the U K you can read it.
And even through our website. So all the details of that all the questions. You asked very valid it is quite exciting that its that broaden it covers all those different aspects.
Initially try to stay a little bit focus to generate data with a focused molecule, but all of those dual and trips are possible.
Ed.
We'll be up opportunities for us to expand.
Got it.
I'll leave it there I appreciate you taking my questions and congratulations again.
Thank you.
This concludes the question answer session.
I would like to turn the conference back over to <unk> Mohanty for any closing remarks.
Yeah.
Thank you all once again for joining us.
We are really excited about our progress and look forward to keeping you updated on all the all of our progress. Thank you.
This concludes today's conference call you may disconnect your lines. Thank.
Thank you for participating and have a pleasant day.