Q2 2023 TRACON Pharmaceuticals Inc Earnings Call
Okay.
Good day, ladies and gentlemen, and welcome to the Tracon Pharmaceuticals second quarter 2023 earnings Conference call. At this time all callers are in a listen only mode. After the speakers' presence. After the speaker's prepared remarks, we will conduct a question and answer session.
<unk> will be given at that time.
During today's call, we'll be making certain forward looking statements, including statements regarding expected timing of clinical trials and results of regulatory activities financing opportunity future expenses and cash runway.
Government plans and strategy.
And with the recovery of the war for my arbitration with Imap. These statements are subject to various risks that are described in our filings made with the securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31st 2022, and subsequent quarterly report.
On Form 10-Q.
You are cautioned not to place undue reliance on these forward looking statements.
And unless required by applicable law, we disclaim any obligation to update such statements.
Now I would like to turn the call over to Dr. Charles <unk>, President and CEO of Tracon Pharmaceuticals, Dr. Stuart.
Good afternoon, and thank you for joining <unk> second quarter 2023 financial results and business update call I will begin with an update on our pipeline and then review our recent activities following that Scott Brown, our Chief Financial Officer will discuss our financial results for the three and six months ended June .
32023.
Finally, we will conclude by taking your questions.
I'll begin with an update on our continued progress with the ongoing <unk> pivotal trial.
In June the data monitoring committee reviewed interim safety and efficacy data for more than 80 patients equally randomize cohort C of single agent <unk> treatment cohort D of Endo given in combination with your boy.
Patients in cohort C. We've got at least two on studies <unk> scans continued to demonstrate a double digit objective response rate assessed by investigator and blinded independent Central review.
And what was generally well tolerated without a single greater than grade two drug related adverse events.
The combination of <unk> with your voice did not demonstrate synergy when compared to single agent <unk> treatment and we therefore terminated enrollment in cohort D.
This decision has resulted in a reduction in travel cost and acceleration of the timeline to final and restart data.
We expect full accrual up to 80 patients in the cohort C. A treatment with single agent and in the fourth quarter and final data, including duration of response by mid 2024.
In addition, a protocol mandated DMC review will be conducted and reported after the 46 patients treated with <unk> has completed a minimum of 12 weeks of efficacy evaluations.
We expect the DMC review to occur this quarter as the analysts our trial has enrolled 180 patients to date, including 56 of the 80 expected patients in cohort C of single agent <unk> treatment.
This DMC review includes a futility threshold that has already been achieved based on responses seen to date.
As a reminder, the primary endpoint in <unk> is objective response rate by resist confirmed by blinded independent Central review.
Nine out of 80 objective responses or an 11.25% objective response rate.
Find the level of response that satisfies the primary endpoint of the study.
Two to stickley exceed the 4% objective response rate of both trio the only FDA approved treatment for patients with refractory UBS or MFS.
Therefore.
Double digit response rate at the time of interim analysis is meaningful indicating that we are on track to achieve the primary endpoint of the study.
Notably Vouchering as a drug with a black box warning for fatal liver toxicity.
I'll go and then we'll start therefore is to demonstrate that and but has the potential to be both safer and more efficacious than poetry ENT.
Based on data from trials of other checkpoint inhibitor refractory Ups's MFS were targeting a 15% response rate for single agent and vote for.
Furthermore, we plan to approach the FDA to discuss a BLA filing strategy as soon as we determined nine responses.
As a reminder, we have received fast track designation for <unk> in the sarcoma subtypes of UBS and MFS that have progressed on one or two prior lines of therapy and received orphan drug designation in soft tissue sarcoma based on activity observed in <unk>.
These designations provide important advantages that might expedite regulatory review and commercialization of vendor.
<unk> is designed to provide safety and efficacy data for the approval then but in the refractory sarcoma subtypes of UBS and MFS.
We also have a strategy for the approval in frontline sarcoma.
Based on expected synergy between <unk> and your boy, we licensed <unk> 001, a potential best in class <unk> four antibody from <unk> Biopharma in October 2021.
And began a phase one two clinical trial evaluating a triplet that included why it shows your one <unk> and docs groups with chemotherapy for the treatment of frontline sarcoma.
However.
Given the lack of synergy observed in <unk> between <unk> and the <unk> four antibody year boy.
And available data from patients treated with <unk> zero, one we have decided to end enrollment into the trial as originally designed.
We now plan to initiate a modified trial of <unk> in the frontline setting of common sarcoma subtypes, including UBS in MFS.
And completion of enrollment in the pivotal <unk> trial.
The goal of that modified trial will be to determine the types of sarcoma. The best respond to the combination of <unk> and doxorubicin.
Assuming positive results in the <unk> pivotal trial and potential accelerated approval of <unk>. We expect the FDA will require a randomized trial to demonstrate a survival benefit.
We now expect this potential phase III post approval trial will compare single agent doxorubicin.
<unk> services with <unk> with progression free survival.
The endpoint.
This trial would be expected trial patients with UBS in MFS as well as other sarcoma subtypes shown to respond to therapy with Denver and doxorubicin.
We expect to discuss the design of a frontline trial with the FDA at the time of our expected pre BLA meeting to review the expected submission of data from <unk> for potential accelerated approval of <unk> in refractory sarcoma.
It is important to understand the sales potential in sarcoma and bad parity pricing is not solely the forecasted $200 million in peak annual.
Our revenues anticipated final approval in refractory <unk> MFS.
Our clinical development strategy is designed to create the opportunity for <unk> to broadly benefit patients with sarcoma, and the frontline adjuvant and neo adjuvant settings by seeking supplemental.
Oh a approvals.
We will now turn to our DNA damage repair inhibitor Trc, one or two that is supported through a cooperative research and development agreement with the National Cancer Institute.
The NCI is sponsoring an ongoing randomized phase II trial, assessing trc, one or two in stage III non squamous non small cell lung cancer in combination with chemo radiation.
The two arm trial will enroll 70 patients to assess the benefit of adding Trc wanted to current standard of care treatment of Pemetrexed cisplatin and radiation therapy, followed by consolidated to value map maintenance treatment.
The primary endpoint of the trial is progression free survival and the trial designed to detect an improvement in PFS at one year from 56% to 75%.
Nine sites are open for enrollment in the U S and final results are expected in 2025.
Next I will provide an update on the collection of our arbitration award from Imap.
On April 24th we Werent form the tribunal ruled in our favor for certain claims and rendered a war to tracon and the aggregate amount of approximately $23 million.
Among other findings that tribunal declared the T. J <unk> nine trial, complete which entitled Tracon to $9 million and also awarded legal fees and costs to Tracon.
In July we collected $22 million from IMF and satisfaction of the International Chamber of Commerce Award to Tracon announced in April .
$10 5 million collected amount was used to repay our litigation financing facility in full and.
And net proceeds collected to date of $7 $1 million are expected to fund the company's operations as currently planned into the first half of 2024.
An additional $4 4 million of the Arbitration award remains in our client Trust account administered by our law firm at this time.
The disbursement of which is predicated on discussions as to the amount of success based deferred legal fees. The firm is due.
Following these discussions disbursement of all or a portion of that amount is expected later this year.
We expect to further extend our runway by securing non dilutive capital through leveraging our CRO independent product development platform that we believe positions us as one of the most efficient clinical development organizations.
As an example of our efficiency our fully burden per patient cost for dosing patients in the <unk> trial is less than $90000 per patient.
This compares favorably with typical zero bid estimates of $300000 for patients that may be even more expensive change order to charges are considered.
In addition by managing all regulatory filings internally, we believe we significantly shortened trial duration by expanding the approval protocol amendments and consent forms.
We also emphasize quality through the use of a team of reliable sight monitors who are highly experienced with relevant oncology response criteria to ensure accurate data reporting.
These attributes of our product development platform have been the basis for capital Infusions from partners like Johnson <unk> Johnson, who have collaborated with us to run trials of the drug candidates. Our current focus is to work with companies in one or two ways first by replacing a CEO to lower their anticipated cost, but still generate a substantial profit for tracon.
And two to teach our operational capabilities to a company with an emerging pipeline, who plans to conduct multiple trials.
This offering would include our platform of advanced clinical trial management data management and safety reporting that will enable our collaborator to conduct trials at a cost of less than one third of what they may otherwise paid to our CFO .
Leveraging our cost efficient zero independent product development platform to generate non dilutive capital before the end of this year is a top priority for the company.
In that regard. Please note the corrected press release, and let me reiterate we expect to generate non dilutive capital before end of this year by leveraging our cero independent product development platform.
At this time, Scott will provide an update on our financials.
Thank you Charles and good afternoon, everyone.
Collaboration revenue was $9 million for the three and six months ended June 32023, compared to zero for the comparable periods of 2022.
The increase in revenue was from the pre specified $9 million termination fee for the T. J <unk> hundred 39, our <unk> license in conjunction with the arbitration outcome.
<unk> research and development expenses were $3 5 million and $8 5 million for the three and six months ended June 32023.
Compared to $2 9 million and $5 9 million for the comparable periods of 2022.
The increase was related to and the purchased in the first quarter of 2023 as well as higher enrollment in <unk>.
General and administrative expenses were $1 9 million and $4 3 million for the three and six months ended June 32023.
Compared to $3 3 million at $9 8 million for the comparable periods of 2022.
The decrease was due to lower legal expenses.
We incurred a success fee of $4 4 million in the three and six months ended June 32023 related to legal fees for the arbitration and collection of the award in July .
As Charles mentioned this amount remains in our client trust account administered by our law firm that is first one of which is predicated on discussions SD amount to US is success based deferred legal fees. The firm is due.
Following these discussions disbursement of all or a portion of that amount is expected later this year.
Our net loss was $6 $3 million at $14 8 million for the three and six months ended June 32023.
Compared to $6 2 million and $15 7 million for the comparable periods of 2022.
We will record a gain of $13 million related to the collection of the arbitration award in the third quarter of this year.
And had this has been recognized in the three and six months ended June 32023.
It would have resulted in net income of $6 7 million for the three months period and a net loss of $1 8 million in the six month period on a pro forma basis.
Turning to the balance sheet at June 32023, our cash cash equivalents and restricted cash totaled $1 9 million compared to $17 5 million at December 31, 2022.
As Charles mentioned, we collected the arbitration award in July and net proceeds to date are approximately $7 1 million.
Which had this been a collected prior to June 32023 would've resulted in ending cash of $9 million on a pro forma basis.
With the award collected we expect our current capital resources to fund the company into early 2024.
With that I will turn the call back over to Charles.
Thank you Scott as you've heard our corporate strategy is proceeding as planned allow me to recap two key expected events first in the third quarter. We expect to report the second and final mandated DMC interim efficacy assessment and Endosarc that includes the first 46 patients dosed with 600 milligrams of <unk>.
Near term Ft assessment includes a futility threshold that has already been achieved based on responses seen to date.
Second this year, we also expect to further leverage our unique product development platform to enable companies to benefit from our capabilities and realized for themselves. The substantial clinical trial time and cost savings, we enjoyed tracon, well, allowing tracon to generate non dilutive capital.
Thank you for your time and attention and we are now available to answer your questions.
And thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
And one moment for our first question.
Okay.
And our first question comes from Joel Beatty from Baird. Your line is now open.
Great. Thanks for taking my questions.
The first question is on e-commerce.
That futility threshold.
For the second interim efficacy assessment has already than not.
Can you elaborate on exactly what that means does that mean that earlier point in time, you saw the percent response needed to hit that.
<unk> are you actually kind of.
The numerator.
You were looking to see.
Nominate our headwind creditex.
Yes, Joe Thanks for the question so with respect to the futility threshold at the 46 patient evaluation, we need at least three responses in order to meet the threshold facility bar and we had disclosed even at the DMC review in June that based on the data at that time, which continues to be the case, we've exceeded that threshold.
<unk>.
Perfect and then.
Those all confirmed responses.
Yes, we disclosed at the June meeting that.
<unk> seen confirmed responses both by investigator and.
Central review that generated double digit response rates.
Terrific and then and thinking ahead to the final analysis.
Is that something that you anticipate announcing kind of at the end of the trial or could you announce it earlier.
Earlier point in time once I believe it's nine responses have been seen.
No great question, John and I'm glad you brought this up so we had been very I think general about response rates, saying, we'd seen double digit response rates both of the DMC meeting.
That was in December then also in June .
Because we didn't want to bias potential.
The accrual or we didn't want to bias patients who may be assigned in a randomized trial to one arm versus another where if there were a differential response rate in a report that response rate in a patient doesn't get assigned to that preferred arm. If you will they might drop out of the study.
As you know now we're dosing a single arm trial based on the single arm being the cohort C of single agent <unk>, So with respect to moving forward, but I don't feel like we're restricted with respect to disclosing <unk>.
Exact response rates so going forward do you expect us to disclose exact response rates because we don't have to it will protect the integrity of the randomization.
Given we no longer enrolling the cohort of <unk> plus <unk>.
Great. Thanks, So to answer your question do you expect us to report data moving forward.
On a more routine basis script explicit response rates that here.
Heretofore, we were unable to report.
And thank you.
And if you would like to ask a question that is star one one again, if you would like to ask a question that is star one one.
And one second for our next question.
And our next question comes from Ed White from H C. Wainwright.
Good afternoon, and thanks for taking my question.
Just a couple of questions for Scott.
How should we be thinking of research and development costs going forward.
Now that the car combo arm of this study will not be has been discontinued.
There are some costs that we will see in the third quarter four four.
Sort of ramping down the trial. So we should see more of an impact in the fourth quarter, how should we be thinking of that.
Yes. Thanks for the question, Yes, I mean, we will see some impact in the third quarter and the fourth quarter, but not too much I mean, I would expect them to go down slightly but not that much considering.
Per patient cost is so low.
Yes.
<unk>.
Okay. Thank you and then another question on expenses.
How should we be thinking of.
General and administrative costs going forward now that the arbitrations over access sort of the run rate that we saw this quarter.
We think that Thats.
We're going to continue like that or any guidance you can give us there would be appreciated. Thank you.
Yes, I would expect this.
The amount that we had in Q2 to be our costs going forward. It should be right around there barring any anything else until we do ramp up commercial activities once we file for.
Potential approval of Denver.
Okay. Thanks for taking my questions.
Thanks, Ed.
Thank you.
And I am showing no further questions I would now like to turn the call back over to Dr. <unk> for closing remarks.
Thank you for your time and attention and we look forward to updating you next quarter have a great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
Yes.
Okay.
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Okay.