Q2 2023 Lisata Therapeutics Inc Earnings Call

August 15, 2023

Speaker 2: Welcome to the La Sada Therapeutics second quarter 2023 Financial Results and Business Update Conference Call. Currently, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. To ask a question at that time, please press star 1-1 on your telephone. You will then hear an automated message advising you your hand is raised. As a reminder, the call is being recorded today, Tuesday, August 15, 2023. I will now turn the call over to John Mendito, Vice President of Investor Relations and Corporate Communications at La Sada. Please go ahead, sir. Thank you, operator, and good morning, everyone. Welcome to La Sada's second quarter 2023 Conference Call to discuss our financial results and the opportunity to provide a business update. Joining me today from our management team are Dr. David Mazza, President and Chief Executive Officer, Dr. Kristin Buck, Executive Vice President of Research and Development and Chief Financial Officer, and James Nisko, Vice President of Finance and Treasury.

Speaker 3: Yesterday, Monday, August 14th, we issued a press release after market trading closed, announcing our second quarter 2023 financial results, which is available under the investors and news section of the company website, along with the webcast replay of this call. If you have not received the news release or if you'd like to be added to the company's email distribution list, please email me at jmandito.com. Before we begin, I want to remind you that comments made by management during this conference call will contain forward-looking statements that involve risks and uncertainties related

Speaker 3: IQ, 8K, and 10K, which identify specific risk factors that may cause actual results or events that differ materially from those described in the forward-looking statements.

Speaker 3: Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, Tuesday, August 15, 2023.

Speaker 3: However, before moving on to the financial and clinical overview, we are pleased to announce a significant milestone in the form of a technology transfer agreement of our tumor penetrating nanocomplex or TPN platform with Impilotherapeutics Inc., a recently formed company led by David Slat, former LaSata chief business officer. The TPN platform targets intracellular delivery of RNA-based drugs to prevent solid tumor growth. TPN is designed so that it not only binds to proteins overexpressed on the surface of human cancer cells, but also passes through the membranes by way of a cell-penetrating peptide. Once inside the cells, the TPN is expected to release an RNA-based drug that is

Speaker 3: its potential impact in the field.

Speaker 3: With that, I now will turn the call over to James Nisko, our Vice President of Finance and Treasury, to review and provide commentary on our financial results. James? Thanks, Dave. Good morning, all. I'm pleased to join you today to present a summary of our second quarter, 2023 financial results, starting with operating expenses. Research and development expenses remained constant at approximately $3.2 million for the three months ended June 30, 2023, and three months ended June 30, 2022.

Speaker 3: Expenses this quarter were primarily due to study startup activities associated with the LISTA-1 bolster trial, enrollment activities for the LISTA-1 ASCEND study, and chemistry, manufacturing, and control activities for LISTA-1 to support all development activities.

Speaker 3: General and administrative expenses were approximately 3.7 million for the three months ended June 30th, 2023, compared to 3.5 million for the three months ended June 30th, 2022, representing an increase of 0.2 million or 6.5%.

Speaker 3: This was primarily due to severance costs associated with the elimination of the chief business officer position on May 1, 2023, partially offset by non-recurring merger related costs in the prior year.

Speaker 3: Overall, net losses were $4 million for the three months ended June 30, 2023, compared to $6.6 million for the three months ended June 30, 2022.

Speaker 3: a decrease of approximately 40%, primarily due to 2.2 million in non-dilutive funding received as an approved participant of the Technology Business Tax Certificate Transfer Program sponsored by the New Jersey Economic Development Authority.

Speaker 3: Turning now to our balance sheet and cash flow. As of June 30th, 2023, the company had cash, cash equivalents and marketable securities of approximately 57.6 million. The company is confident that its projected capital will fund its current proposed operations into the first quarter of 2026.

Speaker 3: encompassing anticipated data milestones from all its ongoing and planned clinical trials.

Speaker 3: This completes my financial overview, and I will now turn the call over to our Chief Medical Officer, Dr. Kristin Buck, for the review of our clinical development pipeline. Kristin? I'm Dr. Kristin Buck, and I'm here to discuss the clinical development pipeline.

Speaker 2: Thank you, James, and good morning, everyone. As those that follow us know, the SADA's pipeline is built on a portfolio of proprietary and patented technology that is grounded in strong scientific rationale and a body of published preclinical and early clinical data. Our platform technology is designed to address major impediments.

Speaker 2: to the successful treatment of advanced solid tumors in the context of increasing pharmacoeconomic pressures in the healthcare system.

Speaker 2: We appreciate the critical importance of generating meaningful clinical data to advance our platform technology, and I can assure you that our entire organization has this goal top of mind in everything we do. With that, I will now provide an overview of our lead product candidate, LSTA1, LISTA1.

Speaker 2: for the treatment of advanced solid tumors in combination with other anti-cancer agents. Despite advances in cancer therapy today, many solid tumors remain difficult to effectively treat.

Speaker 4: cancers such as pancreatic cancer, gastric cancers, and other solid tumor cancers.

Speaker 4: are surrounded by a dense fibrotic tissue known as the stroma which limits access of most pharmacotherapy to the tumor.

Speaker 4: Many tumors also exhibit a hostile tumor microenvironment, or TME, which suppresses a patient's immune system and makes it less effective in fighting cancer.

Speaker 4: The combination of dense stroma and a hostile tumor microenvironment negatively impacts the ability of many cytotoxic agents and immunotherapies to effectively treat these cancers. This coupled with the fact that most anti-cancer therapies are not efficient in targeting only cancer tissue defines the major challenge.

Speaker 4: of maximizing effectiveness and safety in the treatment of solid tumors. To combat this, Lassata's approach is to activate the C-End Rule, or SEND-R system, a naturally occurring active transport system to selectively deliver anti-cancer drugs through the stoma and into the tumor. Lassata's lead product candidate, Lissa 1.

Speaker 4: is an investigational drug that actuates the SEND-R active transport mechanism while also having the potential to modify the tumor microenvironment and make it less immunosuppressive. LISTA-1 targets tumor, vascular, endothelial cells as well as tumor cells themselves.

Speaker 4: based on its affinity for alpha-Z, beta-3, and beta-5 integrins that are upregulated on these cells, but not on healthy tissue.

Speaker 4: LISTA-1 is a 9-aminoacid cyclic internalizing RGD peptide that, once found in these integrins, is cleaved by proteases expressed in the tumor microenvironment to release a peptide fragment called the SendR fragment. The SendR fragment then has high affinity for and binds to an adjacent receptor called Noropilin-1, also upregulated on tumor endothelial and tumor cells, to activate the SendCN rule active transport pathway and furry anti-cancer drugs more efficiently into solid tumors. Additionally, LISTA-1 has been shown in a range of preclinical models to modify the tumor microenvironment, making it less hostile to immune cells and adding to the efficacy of anti-cancer drugs used against solid tumors. These results come internally from LASATA and from collaborators and research groups around the world and have been the subject of over 300 scientific publications. Along with our collaborators, we have amassed significant non-clinical data demonstrating enhanced delivery of a range of emerging anti-cancer therapies, including immunotherapies and RNA-based therapeutics.

Speaker 4: Clinically, LISTA-1 has demonstrated favorable safety, tolerability, and activity to enhance delivery of standard of care chemotherapy for patients with metastatic pancreatic cancer. Our development programs are designed to exploit the potential of LISTA-1 to enhance a variety of anti-cancer treatment modalities in a range of solid tumors. Currently, LISTA-1 is the subject of about a dozen planned or active clinical trials globally for the treatment of various solid tumors.

Speaker 4: Let me touch on a few of these individually. The ASCEND trial is a 155-patient, double-blind, randomized, placebo-controlled clinical trial evaluating LISTA-1 in combination with gemcitabine and NAD-pactl-taxel in patients with metastatic pancreatic ductal adenocarcinoma.

Speaker 4: The trial is being conducted at up to 40 sites in Australia and New Zealand, led by the Australian Gastrointestinal Cancer Trials Group or AGITG.

Survival after diagnosis these days as is.

They'll only around nine or so months and less than <unk>.

10, or so percent of the people diagnosed survive out to five years. So it's a really devastating and lethal disease, even with the current chemotherapy treatments were looking to substantially improve that of course, and so ultimately cancer, while quality of life and progression free survival are important endpoints.

What we're looking to do ultimately is to extend overall survival in a meaningful way and now I will turn to Christy to see if she would like to provide some additional color.

Thanks, Steve I would only add a few caveats, we are definitely looking to improve overall survival.

Patient populations, which we're studying.

Horrible diagnoses and prognoses.

So while overall survival will predict the outcome, we're looking at progression free survival, how long the patient stays well before their tumor progresses.

The most important part is not enhancing the toxic side effects that these drugs.

Because we are targeting the tumors.

Instead of over blasting the patient, let's say to toxic we're trying to target the tumors. So display to toxic and immunotherapies are specific will be going into the tumor. So therefore, Steve we're looking to increased progression free survival and overall survival without enhancing toxic side effects of the standard of care drugs.

Okay.

It obviously makes sense.

Along those same lines.

You've talked about you've got them.

A number of different partners.

Clinicians researchers that are working with you across the globe.

How how would you categorize the.

The level of interest because you can't obviously do everything given the fact that you're maximizing your resources, which are still a small company how how do you decide on what programs initiatives collaborators youre going to go forward with.

And.

In terms of what else you would like to expand to.

Given the resources and everything else are always possible given the number of queries and I'm sure you probably are seeing and ill hop back in the queue. After that thank you.

Thanks, Steve once again, I will provide some general commentary and turn to Christian for some specifics but.

When we embarked upon our development plan creation Kristen.

And her team as well.

Large number of key opinion leaders, who were consulted came up with a list of solid tumors, where we felt that the presence of stroma. The lack of a satisfactory outcome with current standard of care and.

And then also toxic side effects or combined to leave an opportunity for an unmet medical need and an improvement in their list of one could make a difference and that's how we started and chosen which tumor types to initially work on we've chosen our partners very very simply and pragmatically we choose.

People, who are not only enthusiastic but who are pragmatic and can actually operate in the clinic and I don't mean physically operate on a patient but execute in the clinic and get clinical trials done they can enroll efficiently effectively that can follow the protocols and in some cases, they contribute some or all.

All of the capital needed to allow us to move forward in a manner that will advance the development status of the compound from a regulatory perspective, not just provide interesting data to Wright medical Journal papers, and so that's basically how it chosen what we're working on and with whom were were.

Working but kristie can add to that and also that we have a list of things that we'd like to do should we find additional resources in the near future that might allow us to do so Christine would you like to add some color.

Actually Dave I think you did a really great job in answering that.

Described before how we chose the tumor types, we chosen they're very difficult to treat cancers with hostile tumor microenvironment with dense stroma, where the standard of care today is just suboptimal.

And when we explored with key opinion leaders around the world, where they felt our technology would work best we landed on the list of cancers in which we're currently studying.

I think as Dave mentioned, we arent picking.

Sites investigators et cetera based on their scientific rigor in understanding that this drug needs to get through registration as soon as possible.

And our partners, we ensure that we are doing our drug development in the most capital efficient way, we can and so we're seeking funding by alternative means.

And allowing our drug to be exploited both in pancreatic cancer and other solid tumors.

Got it all again, thanks for taking the question and the.

Answers.

Thanks, and if I may I'll, just add one additional commentary I once again.

Pass it back to Kristen when you when you talked about Steve.

The medical community is reacting and what the level of enthusiasm is that you can provide some real insight to that based on our recent <unk> conference in June .

Sure Dave we the team visited the Astro conference in June to socialize, the bolster trial, which is the solid tumor trial in cholangiocarcinoma head and neck and esophageal carcinoma.

We had tremendous interest from kols across the United States and around the world, including China.

Wanting to evaluate our product not only in the bolster trial, but in other trials, where they felt this asset would be most effective.

It's very heartening to see that the news is getting out that this drug has the ability to be a platform play.

And that we have really interesting pis, who are eager to be part of our study.

Sure.

Thank you.

Our next question.

Comes from Pete Enderlin.

And then Lynn with Amazing partners. Your line is open.

Good morning, Thanks for taking my questions and congratulations on the multiplicity of programs that you're standing up at this point.

First question is.

Does the cash runway that you projected of close to 11 quarters.

Include some assumption about milestone payments.

Good morning, Pete Thanks, Thanks, very much for your kind words.

At this point, our cash projections do not include any projections of incoming capital, except perhaps for the remaining available capital for which we are eligible from the New Jersey NOL program, but we are not looking at milestones what we have.

Not considered milestone payments capital races, where any other.

Our M&A deals in that projection, so it's a very conservative projections.

And over that.

Three year.

Period.

Is it possible that there will be some milestone payments or are you just sort of not.

I mean, we're not counting on it but what are the ones that could happen in that timeframe.

Yes, there are we have.

Publicly announced license deal with <unk> pharmaceutical in China, which has development and regulatory milestones.

And there is I would say a.

A reasonable possibility that some of those milestones could be achieved over the course of the next several years.

Okay, and then on the transfer of the TPN.

Technology.

Are there any potential royalties included in that.

As such it should be possible.

Sales eventuate.

And so the TPN deal as a typical deal in that we have transferred.

The asset to another party, which will finance its development and we've retained.

A portion of ownership in that and we expect this will also have the ability to achieve future.

Benefit from sales and other deals should they occur.

Other than the ownership portion would you actually have an is it written into the agreement that there would be ROI.

Royalties.

Off the top of my head I don't recall that.

At this point, Steve, but John can get back to you post meeting after we go back to the contract that was just recently signed.

I don't recall if it has.

Specific royalties it just starts with the substantial equity ownership in PLO, Okay, and can I ask one more do you want me to jump back in the queue.

Oh go ahead go ahead and finish up here okay.

Yes.

The press release mentioned.

Possible conditional approvals.

Central.

The question first is our protocols for.

For conditional approval in various regulatory agencies around the world pretty similar or.

Would it vary a lot.

Which country you're talking about.

Well.

In General you would expect that the <unk>.

Medical scientific results efficacy and safety should drive some level of consistency of evaluation and decision in regulatory authorities around the world, but in reality each regulatory authority, whether it be the European Medicines Association drug administration.

The the GTA in Australia.

The Chinese authorities NHL Bellevue in Japan, whatever whatever they tend to take their own decisions based upon situations, which involve of course safety and efficacy.

They have to take into about Intuit, pharmacodynamic and even sometimes political considerations within their countries. So.

We would hope that there would be something that will have consistency and we will of course.

Explore the opportunity for conditional approvals in all the major <unk>.

Registration areas of the growth should that opportunity arise.

And does that.

I mean, how many different agencies do you contemplate approaching initially for that kind of in the.

Program.

I'll at least well if we're going to we'll approach the Australian agency of course will approach the FDA most likely eventually.

China, I guess too right.

But China is being handled by our licensee achieve so.

They have their own development program, which does include the accelerated path that they call. The innovation pathway contemplation. So I think they are pursuing that to the extent that they can as well.

Okay. Thank you very much for the information.

You are welcome Pete and I can clarify right now the current transfer agreement does not include specifics of royalty. It's just our ownership in the company that will provide us the financial upside should the product be successful.

Okay. Thanks, a lot.

Okay.

Thank you.

And our next question.

Will come from Ken Oliver with Brookline capital markets. Your line is open.

Great. Thank you and good morning.

Two or three questions.

Quickly beyond the elimination of the Chief Chief business Officer position.

Were there other actions of consequence taken to reduce expenses.

So good morning.

Yes, we made the conscious decision to dish.

To streamline our efforts in R&D to basically D.

And so anything that was preclinical exploratory are fundamental.

Supporting.

Was eliminated we also refined christine's clinical operations organization to better suit the execution of the trials that we are doing now in comparison to the trials that we might have been doing several years ago.

Great and.

There was not any mentioned and the status of the Morpheus program with Roche do you have any incremental insight into.

The status of the program on their front.

Really nothing new since our last quarterly update at this point the program remains on hold pending internal decisions.

<unk> needs to take.

Based on I think their overall development strategy with <unk>. So we're just on standby waiting.

Okay, Great and then my last call or question relates to <unk>.

Cisplatin and.

It's in.

The impact on the bolster trial, but.

I think just flattens also being used in the ascend trial that seems to be moving on just can.

Can you talk about.

Hey.

Whether we should have any concerns about any of your other trials that would use chemotherapies.

Or is it really just limited to bolster at this point.

I believe we can say first of all with confidence that this patent is not part of the standard of care that's being tested in ascend.

Combination of Gemcitabine and Nab Paclitaxel. So the cisplatin shortage is not impacting ascent I believe at this point really it's just the cholangiocarcinoma arm of bolster that is the major impact Kristen is there any other thing that I'm forgetting as it relates to the use of cisplatin in any of our trials.

No you are correct and we have procured the cisplatin into be able to supply our bolstered trial right.

Great.

Great Thats all Michael those are all my questions. Thank you Kevin.

Thank you.

This concludes the question and answer session I will turn the call back to Dr. Romano for closing remarks.

Well again, thank you all for participating in today's call. We look forward to speaking with you again during our next quarterly conference call.

<unk> to provide updates on our achievements and progress we remain grateful for your continued interest and support stay well and have a great day.

This concludes today's conference call. Thank you for participating you may now disconnect.

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Q2 2023 Lisata Therapeutics Inc Earnings Call

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