Q2 2023 Atossa Therapeutics Inc Earnings Call

August 14, 2023

Okay.

Good morning, ladies and gentlemen, thank you for standing by and welcome to Steatosis of Therapeutics Q2, 2023 Conference call. Please be advised today's conference is being recorded I would now like to hand, the comps over to your first speaker today, Eric Vinet, Vice President of Investor Investor and public relations. Mr. Van setting you may begin.

Thank you Kevin.

Everyone and welcome to what caused the second quarter of 2023, corporate and financial update conference call.

Earlier. This morning, we issued a press release, providing an overview of our recent corporate highlights and financial results for the quarter ended June 32023.

Press release can be accessed on the investor portion of our website at investors got it posted therapeutics Dot com.

Joining me on the call today are Dr. Steven Quay, a test as President and Chief Executive Officer, and Greg Weaver, Our executive Vice President and Chief Financial Officer.

During today's call, we will be making certain forward looking statements, which are subject to risks and uncertainties that may cause actual results to differ materially from the anticipated our estimated future results.

These forward looking statements are based on current information assumptions and expectations that are subject to change.

A description of potential risks can be found in our latest SEC disclosure documents and our press release.

You are cautioned not to place undue reliance on these forward looking statements and toasted disclaims any obligation to update these statements I will now turn the call over to Dr. Quay.

Thank you Eric and thank you to everyone, who joined the call today I'm very proud of the progress we've made in Q2.

From a clinical perspective, each of the three ongoing phase III trials investigating our proprietary Z and Oxford reached important milestones.

I'll start with the charisma Amdocs been trial, which is a randomized double blind placebo controlled efficacy study of oral <unk> in premenopausal women with measurable breast density. This is a single site trial at the Karolinska Institute in Stockholm led by Dr. Peer Hall one.

The world's foremost authorities in breast cancer epidemiology.

Participants in the study are randomized into one of three cohorts to receive placebo, one milligram or two milligrams of <unk> daily.

Participants, we will take a document for six months over the course of which mammograms are conducted to measure reduction in breast density.

Patients will also have a mammogram at 24 months to assess the durability of density changes.

Last month, we announced that 70% or 170 of the anticipated 240 patients have been enrolled in the trial.

We expect the study to fully enroll in the fourth quarter of this year and data to be available in mid 2024.

Now the graphic breast density is a growing health crisis between 40 and 50% of all women are estimated to have mammographic Lee dense breasts and there are currently no approved treatments.

Cancer in dense breast tissue, both appear white on a mammogram, which makes mammography less sensitive and more difficult to interpret.

As a result cancers are often larger more advanced and more difficult to treat when founded women with dense breast tissue.

Additionally, mammographic breast density is a strong independent predictor of breast cancer risk.

And women with the highest density are four to six times more likely to develop breast cancer compared to women with the least dense breasts.

Our vision for <unk> in the Mammographic breast density setting.

Is to both make mamograms more reliable and decrease the risk that women with dense breast tissue will develop cancer in their lifetimes.

In addition to our NPD trial, there are two additional ongoing phase II trials investigating <unk> in the new adjuvant setting, which is the window of time between the diagnosis and the primary treatment, which was estrogen sensitive breast cancer is almost always surgery plus radiation <unk> chemotherapy.

The intent of Neo adjuvant therapy is to slow the cancer growth or even shrink the cancer prior to surgery.

Doing this make surgery more effective and with breast cancer. It may alter the surgical approach, meaning some patients could have a lumpectomy instead of a mastectomy.

New adjuvant therapy has also been shown to reduce the likelihood that the cancer returns.

The first of the two neo adjuvant trials investigating and Oxford is being conducted through the I Spy network, which is a collaborative effort among academic investigators from major cancer research centers across the United States.

The I spy trial is enrolling newly diagnosed pre and post menopausal women.

With estrogen receptor positive breast cancer.

As a reminder, about 80% of all breast cancers are ER positive.

Patients in the study received daily treatment with 10 milligrams of <unk> for up to 24 weeks prior to surgery.

This is a smaller trial with only 20 subjects expected to participate and we announced in June .

<unk> was already 30% enrolled.

Given the size of the I Spy network, which includes 41 of the largest cancer centers in the United States. We expect full enrollment either later this year or in early 2024.

The third phase two trial is the Evangeline study, which was profiled at the American Society of clinical oncology meeting in Chicago in June .

This is also a neo adjuvant study, although it differs from the I spy trial as only premenopausal women are being enrolled.

The vantage line trial will enroll up to 175 women.

The primary objective is to evaluate the endocrine sensitive disease rate measured by Ti 67, after four weeks of treatment with <unk> compared to treatment with current standard of care.

Which consists of an aromatase inhibitor plus ovarian function suppression.

<unk> seven is a measure of tumor cell proliferation or how fast the tumor is growing.

The importance of this is that studies have shown that <unk> 67 above 10% at the time of surgery confers a higher risk of recurrence and a worst survival rate in patients with early breast cancer.

The vantage line trials started with a six patient pharmacokinetic run in cohort, which is which was designed to determine if the 40 milligram dose deliver steady state plasma levels of between 501000 nanograms per milliliter, which is the optimal to target.

Protein kinase C beta inhibition, and enhanced and docs fence anti tumor mechanism of action.

We already know that the docs and binds to estrogen receptors in breast cells and stops the body's own natural estrogen from attaching to them. This cuts off the cancer's fuel source and prevents it from growing and spreading.

By further targeting PKC beta we expect <unk> to have an even greater anti tumor effect by both blocking the estrogen receptor and by inducing a pop doses, which is a cellular equivalent of a self destruct button.

This is where we could see not only slower progression, but also a reduction in the size of the tumor.

We recently received data from the initial 40 milligrams per day PK run in cohort.

As with our previous trials no treatment related safety or Tolerability issues were identified while the 40 milligram per day dose was well tolerated. It did not achieve optimal plasma concentrations, which means per the protocol. We are in the process of initiating a second dose level at 80 milligrams.

Based on concentration levels that you achieved at 40 milligrams per day, we expect the 80 milligram per day dose will deliver the desired steady state plasma concentrations.

Efficacy data was also captured as part of the PK run in including <unk> seven at baseline and at four weeks and Mris taken at diagnosis and again after 12 weeks of treatment.

We are extremely encouraged by these results and we hope to share them in detail at an upcoming medical conference.

Before I turn things over to Gregg for a financial update I wanted to touch on one additional project that we have recently announced which is a research partnership with Wild Cornell Medicine in New York City to study the potential of inducing estrogen receptor expression in triple negative breast cancer.

The term triple negative breast cancer refers to the fact that the cancer cells don't have either estrogen or progesterone receptors and also don't make any of the other receptors, including the human epidermal growth factor receptor two or <unk> protein.

The tumor cells, thus test negative on all three tests.

Triple negative breast cancer or <unk> accounts for about 10% to 15% of all breast cancers and it differs from other types of invasive breast cancer is it tends to grow and spread faster has fewer treatment options has a higher risk of recurrence. It tends to have a worse prognosis.

The goal of the research we are doing with wild Cornell is to determine if treating TN BC with extra sell their vessels carrying the estrogen receptor will change the cancer phenotype and turn on the estrogen receptor.

Converting the tumor to ER positive would make it sensitive to hormone therapy, including treatment with Z and Oxford. This was fundamentally transform the treatment approach and outlook for these patients.

With that I'll turn things over to Greg.

Greg recently joined Us as CFO , but he knows the company extremely well having served on the board for over 10 years. He is a seasoned financial executive with over 30 years of experience, leading finance operations and business development at several publicly traded biotech companies.

I am thrilled to have him as part of our executive team and will turn things over to him for a financial update Greg take it away.

Thank you, Steve and thank you to everyone for joining today's call.

This is our first earnings call as we reinvigorate our communications with investors in these quarterly calls will be an important pillar of that going forward.

From my perspective, as an investor in Tulsa.

Pivotal time for the company with Phase II trials in multiple settings <unk> is positioned to readout data over the next 12 to 18 months, providing investors with the opportunity to join in the value creation and innovation for breast cancer patients.

And looking ahead strategically our clinical development strategy.

For the breast density in the new adjuvant breast cancer indications includes forming alliances for future phase III development and commercialization.

So the clinical data continues to mature one of the key objectives. We have is to build relationships with prospective partners and brokering alliances, it's something I've done previously in my career and look forward to leveraging that experience here.

Okay, let's turn to the financial update beginning with cash.

The end of Q2 total cash position was $99 4 million as compared to $104 million at March 31, and $111 million at year end 2022.

Six month year to date change in cash was $11 5 million $4 five used in Q2 7 million in Q1.

So as we model cash runway.

Going forward you can clearly see the multiyear resources available to drive our multiple phase II clinical programs to the next significant value inflection points and through to completion.

The strong cash position. We have is also strategically important longer term as we position ourselves to invest in that phase III registration trials and potentially to consider adding to the pipeline.

Let's move to the comparison of the three month numbers ended June 30, with total operating expenses of $7 8 million.

For the three months ended June 30, an increase of $1 2 million from the three months ended June 30 of the prior year.

R&D expense for the three months ended June 32023, $3 7 million compared to $3 4 million same quarter. Prior year. The increase of just under 300000, primarily due to increased spending on clinical trials and non clinical activities.

G&A expense for the three months ended June 30 was $4 1 million compared to $3 2 million for the same quarter. Prior year. The increase of just under $1 million due to G&A compensation expense, which increased primarily due to severance costs to our former CFO .

The increase in overall compensation.

Along with legal and professional fees, increasing due primarily to higher patent activity, Parisien, doxepin, and higher investor relations and accounting fees.

Interest income was $1 million for the three months ended June 30th sharp increase compared to prior year due to a higher average invested balance and higher earned interest rates.

And noncash charges in the second quarter included an impairment charge, we booked for $2 9 million on an investment.

Dynamic cell therapies or DCT.

And a noncash stock compensation charges of $1 6 million.

And finally on the acute on the quarterly numbers net loss of $9 8 million for the second quarter compared with a net loss of $6 3 million in the first quarter and $6 7 million for the comparative second quarter of last year.

Pivoting to the six months ended June 30 numbers.

Total operating expenses of $14 9 million for the six months, which is an increase of $3 5 million from the prior year with R&D expenses for the six months of $7 2 million compared to $4 9 million for the same quarter prior year, the increase of $2 $3 million due primarily to increased spending.

Of roughly $1 $8 million related to document clinical trial cost and increased API drug product formulation and development costs.

Also due to fluctuations in R&D compensation expense attributable to noncash stock based comp and a decrease in some year over year costs related to prior year payments, which were made to establish alliances with several research institutions.

Pivoting to G&A expenses for the six months ended June 30 totaled $7 7 million, an increase of $1 3 million compared to the prior year $6 4 million for the key fluctuations again being the compensation expense increase in part attributable to the increase in overall compensation of roughly 900000.

A decrease in noncash stock based comp and an increase in the.

The severance cost for our exiting CFO .

And also again legal and professional fees increased due to higher activity in both areas.

Interest income for the six months $1 8 million.

Also increased related to higher average balances invested in higher average interest rates.

The noncash charges for the six months included the Q2 impairment charge on the investment in DCT and noncash stock compensation.

The net loss for the six months of $16 1 million.

And compared to a net loss of $11 5 million year to date prior year.

And then one additional topic that touch on is that we announced a share repurchase program in June to purchase up to 10 million shares of our common stock.

Program is authorized through the year end 2023.

And the rationale for the program is to recognize in our view the disconnect.

And the market value of a tuition shares in.

In Q2, 2023 repurchased just under 120000 shares of stock.

At a cost of approximately $150000 and to date, we purchased approximately 840000 shares per $1 million.

Activity has no material impact on our operating cash runway.

Thank you for your attention I'll turn the call back to Steve.

Steve you are on mute.

I'm sorry can you hear me.

Good navigation.

Thank you Greg.

And from a clinical development perspective, we expect to see data from all three of our ongoing phase II trials over the next 12 to 24 months. This data along with feedback from the FDA will allow us to design phase III protocols, which will support strategic business development alliances.

Short term you can expect to hear from us with enrollment updates and other developments you should also expect these quarterly update calls to continue with our next one being our Q3 call in November .

I would now like to ask the operator to open the call for Q&A. Thank you operator thank.

Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.

Our first question comes from Jason Mccarthy with Maxim Group. Your line is open.

Hey, Thanks, sorry about that it took me a second to get off mute. There. This is Michael <unk> on the line for Jason. Thank you so much for taking my questions today.

Great. Thanks, Michael.

Alright, So I guess first off I'd, just like to see with the.

Charisma endoscopy trial approaching full enrollment by year end and completion in 2024.

Could you just remind us there a certain level of density reduction or some upper threshold you need to cross.

To consider it a meaningful.

Result, where youll get an improvement early detection or reduction incidence of breast cancer I'm trying to get how you evaluate a meaningful reduction in breast density.

Yes.

It's a great question Michael there are two main measures of density.

On the Mamograms themselves and then I will discuss the concept of statistical significance and clinical significance, which comes up in every single clinical trial of any drug you'd be involved with so first the first measurement endpoint.

Radiologists have for almost two decades used a ABCD categorization of approximately quartile, where a is the lowest density and D has the highest density.

There is an abundance of research results looking at those density measurements and for example, the effect on sensitivity of finding cancers. The effect on five year incidence of cancers going forward. So.

The long history in Mammographic density is that ABCD categorization now we've gotten to the point, where we now have 510 cleared.

Measurements, which are quantitative the machine does it for you with software those give you a score from zero to 100, and so we have less long term experience with those but they do map onto what you would expect where a radiologist calling abreast with.

The machine calls at zero to 25 $26 to $50 51 to 70 576 to 100 so.

The biggest winners are when you cross the thresholds.

Between groups, because that's the highest level statistical significance will probably require a pretty small amount, perhaps three or 4% will be enough the breast.

In these premenopausal women.

The rest will be changing less than 1% per year, when they get near menopause and youll see a five or 6% drop over a couple of years, but so statistical significance would be would be a couple of percent clinical significance will be larger drops and perhaps changes in the ABCD categorization.

Alright, Thank you for that I do appreciate the additional clarity there.

And then in terms of the <unk>.

Badgley.

Study I'd like to see how many sites you plan to open in Canada, and how many would that bring it to total.

Yes.

We have one site in Canada, which was the requirement for getting the filing and getting permission to go forward. There will continue to recruit additional trials.

And we are always recruiting trials.

Centers into this trial on an ongoing basis. So we haven't disclosed the number of centers that are open currently but there is a website that you can go to if you have patients with premenopausal ER positive breast cancer, the Evangeline trial website.

Alright. Thank you then one last one for me and I'll hop back into the queue. So you guys have a fairly impressive cash balance right. Now are there any plans to expand the early or mid stage pipeline with additional M&A or are you focused on deploying that capital pretty much purely to get this current status studies.

Do those readouts over the next 12 to 24 months.

Yes, Thanks, Michael Great question, I'm going to let Greg weigh in on that if he would.

Happy to Michael Great question.

We're blessed with a very strong balance sheet and.

As I look at is in my first weeks here as the CFO really strategically positions us to not only fully fund the current.

Protocols execute on on the.

Trials that we've just discussed and four two in through completion, but it appears to me that theres additional bandwidth here to seriously consider.

Adding to the pipeline and so as we as we go forward will be.

Just with some discretion, having a look to be honest and I would just say.

We don't have any disclosures at this time, except that there is an intent to to take a look at the landscape and see what might be a good strategic fit for us.

Alright, Thank you very much and congrats on the progress this quarter.

Excellent thanks for joining us.

One of them are for our next question.

Our next question comes from Edward <unk> with the Sydney.

Capital Your line is open.

Yes, congratulations on the progress my question is on dynamic cell therapy, what drove the impairment charge this quarter.

Yes. Thank you for your question I'll, let Greg go into that it's a it's a financial analysis exercise.

Yes.

Hey, good morning.

The.

Dynamic cell therapies investment was made into their car T business as a strategic investment.

Second half of last year.

The accounting treatment for GAAP is to take a look at the fundamentals of the actual.

Business under investment and in this case.

The account is considered.

<unk> cash runway for that investment business is.

Less than a year and as they looked at that they run it through their <unk>.

Parameters for investment carrying value on the balance sheet and recommended an impairment charge to be booked against that so it's a noncash evaluation.

We still think that there is a value on that investment and they continue to carry going forward.

Great and then my next question is on the three trials that is going on right now how would you characterize patient enrollment.

<unk> faster or slower than you expected.

Always a good question I've got seven approved drugs in about 30 clinical trials under my belt and I can say pretty definitively that there's a high correlation between good enrollment and a successful drug after FDA approval and marketing so.

With respect to the I spy trial and new adjuvant.

Already we indicated that we had 30% enrollment within a couple of months.

<unk>.

As trial in its Carolyn Ski Institute in breast density accruing right on schedule.

Despite the Swedish culture, I guess, where they take.

You take a full month off in the summer for example, things like that so it's rolling enrolling very well.

And there is.

Yes.

There is a buzz about the about the trial the Evangeline trial.

Happy to get the Mayo clinic.

Because.

Again, we're trying to see if we can we can step into the standard of care, which is effective and safe, but has a quality of life issue. So it's sort of a third leg of a stool in clinical development with ovarian function suppression. So that is the standard of care now, but it produces an extremely strong decrement in the stack.

<unk> of care for these patients we're seeing if our <unk> is so strong at stopping the estrogen.

The estrogen receptor that it can tolerate the upregulation of estrogen that happens in women have functioning ovaries in the presence of hormonal therapy.

So if we can achieve the same same equivalent efficacy the same safety profile.

In a an improved quality of life it will be a game changer. So all three of the trials have the the.

Denied.

Statistically significant additions of being.

<unk> really really strong strong trials.

Great well, thanks for answering my questions and I wish you guys. Good luck. Thank you.

Thank you.

Im not showing any further questions at this time I'd like to turn the call back over to Dr. Quay for any closing remarks.

Well I want to thank everyone for listening into our analysts for their questions. We appreciate the support and look forward to next quarter's call with you in November .

Until then take care and you can now disconnect.

This concludes today's conference call. Thank you for joining US you may now disconnect your lines that have a wonderful day.

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Good morning, ladies and gentlemen, thank you for standing by and welcome to the <unk> Therapeutics Q2, 2023 conference call. Please be advised today's conference is being recorded I would now like to hand, the conference over to your first speaker today, Eric <unk>, Vice President of Investor Investor and public relations. Mr. Van Zanten you may begin.

Thank you Kevin.

Good morning, everyone and welcome to <unk> second quarter, 2023, corporate and financial update conference call.

Earlier. This morning, we issued a press release provided an overview of our recent corporate highlights and financial results for the quarter ended June 32023.

Press release can be accessed on the investor portion of our website at investors got it posted therapeutics Dot com.

Joining me on the call today are Dr. Steven Quay, Ptosis, President and Chief Executive Officer, and Greg Weaver, Our executive Vice President and Chief Financial Officer.

These forward looking statements are based on current information assumptions and expectations that are subject to change.

A description of potential risks can be found in our latest SEC disclosure documents and our press release.

You are cautioned not to place undue reliance on these forward looking statements and are toasted disclaims any obligation to update these statements I will now turn the call over to Dr. Quay.

Thank you Eric and thank you to everyone, who joined the call today I am very proud of the progress we've made in Q2.

From a clinical perspective, each of the three ongoing phase III trials investigating our proprietary Z and Oxford reached important milestones.

I'll start with the charisma Amdocs for trial, which is a randomized double blind placebo controlled efficacy study of oral <unk> in premenopausal women with measurable breast density. This is a single site trial at the Karolinska Institute in Stockholm led by Dr. Pair Hall one.

The world's foremost authorities in breast cancer epidemiology.

<unk> participants in the study are randomized into one of three cohorts to receive placebo, one milligram or two milligrams of <unk> daily.

Participants, we will take a document for six months over the course of which Mamograms are conducted to measure reduction in breast density.

Patients will also have a mammogram at 24 months to assess the durability of density changes.

Last month, we announced that 70% or 170 of the anticipated 240 patients have been enrolled in the trial.

We expect the study to fully enroll in the fourth quarter of this year and data to be available in mid 2024.

Now the graphic breast density is a growing health crisis between 40 and 50% of all women are estimated to have mammographic Lee dense breasts and there are currently no approved treatments.

Cancer in dense breast tissue, both appear white on a mammogram, which makes mammography less sensitive and more difficult to interpret.

As a result cancers are often larger more advanced and more difficult to treat when founded women with dense breast tissue.

Additionally, mammographic breast density is a strong independent predictor of breast cancer risk.

Women with the highest density are four to six times more likely to develop breast cancer compared to women with the least dense breasts.

Our vision for <unk> in the Mammographic breast density setting.

As to both make mamograms more reliable and decrease the risk that women with dense breast tissue will develop cancer in their lifetimes.

In addition to our Mbd trial, there are two additional ongoing phase II trials investigating <unk> in the neo adjuvant setting, which is the window of time between the diagnosis and the primary treatment.

Which with estrogen sensitive breast cancer is almost always surgery plus radiation <unk> chemotherapy.

The intent of Neo adjuvant therapy is to slow the cancer growth or even shrink the cancer prior to surgery.

Doing this make surgery more effective and with breast cancer. It may alter the surgical approach, meaning some patients could have a lumpectomy instead of a mastectomy.

<unk> therapy has also been shown to reduce the likelihood that the cancer returns.

The first of the two neo adjuvant trials, the desk to getting into Oxford is being conducted to the I Spy network, which is a collaborative effort among academic investigators from major cancer research centers across the United States.

The I spy trial is enrolling newly diagnosed pre and post menopausal women with estrogen receptor positive breast cancer.

As a reminder, about 80% of all breast cancers are ER positive.

Patients in the study received daily treatment with 10 milligrams of <unk> for up to 24 weeks prior to surgery.

This is a smaller trial with only 20 subjects expected to participate and we announced in June .

<unk> was already 30% enrolled.

Given the size of the ice by network, which includes 41 of the largest cancer centers in the United States. We expect full enrollment either later this year or in early 2024.

The third phase two trial is the Evangeline study, which was profiled at the American Society of clinical oncology meeting in Chicago in June .

This is also a neo adjuvant study, although it differs from the I spy trial is only premenopausal women are being enrolled.

The vantage line trial will enroll up to 175 women.

The primary objective is to evaluate the endocrine sensitive disease rate measured by <unk> 67. After four weeks of treatment with <unk> compared to treatment with current standard of care, which consists of an aromatase inhibitor plus ovarian function suppression.

<unk> seven is a measure of tumor cell proliferation or how fast the tumor is growing the.

The importance of this is that studies have shown that <unk> hundred 67 above 10% at the time of surgery confers a higher risk of recurrence and a worst survival rate in patients with early breast cancer.

Protein kinase C beta inhibition and enhanced <unk> anti tumor mechanism of action.

We already know that <unk> binds to estrogen receptors in breast cells and stops the body's own natural estrogen from attaching to them. This cutoff, the cancer's fuel source and prevents it from growing and spreading.

This is where we could see not only slower progression, but also a reduction in the size of the tumor.

We recently received data from the initial 40 milligrams per day PK run in cohort.

As with our previous trials no treatment related safety or Tolerability issues were identified.

While the 40 milligram per day dose was well tolerated it did not achieve optimal plasma concentrations, which means per the protocol. We are in the process of initiating a second dose level at 80 milligrams.

Based on concentration levels that you achieved at 40 milligrams per day, we expect the 80 milligram per day dose will deliver the desired steady state plasma concentrations.

Efficacy data was also captured as part of the PK run in including key ICT seven at baseline and at four weeks and Mris taken at diagnosis and again after 12 weeks of <unk>.

Treatment.

We are extremely encouraged by these results and we hope to share them in detail at an upcoming medical conference.

The tumor cells, thus test negative on all three tests.

Converting the tumor to ER positive would make it sensitive to hormone therapy, including treatment with <unk>. This was fundamentally transformed the treatment approach and outlook for these patients.

With that I'll turn things over to Greg.

Greg recently joined Us as CFO , but he knows the company extremely well having served on our board for over 10 years. He is a seasoned financial executive with over 30 years of experience, leading finance operations and business development at several publicly traded biotech companies.

I am thrilled to have him as part of our executive team and I will turn things over to him for a financial update Greg take it away.

Okay. Thank you, Steve and thank you to everyone for joining today's call.

This is our first earnings call as we reinvigorate our communications with investors in these quarterly calls will be an important pillar of that going forward.

From my perspective, as an investor in the Tulsa.

And looking ahead strategically our clinical development strategy.

For the breast density in the new adjuvant breast cancer indications includes forming alliances for future phase III development and commercialization.

So as the clinical data continues to mature one of the key objectives. We have is to build relationships with prospective partners and brokering alliances, it's something I've done previously in my career and look forward to leveraging that experience here.

Okay, let's turn to the financial update the beginning with cash.

The end of Q2 total cash position was $99 4 million as compared to $104 million at March 31, and $111 million at year end 2022.

Six month year to date change in cash was $11 5 million $4 five used in Q2 7 million in Q1.

So as we model cash runway going forward you can clearly see the multi year resources available to drive our multiple phase III clinical programs through their next significant value inflection points and through to completion.

The strong cash position. We have is also strategically important longer term as we position ourselves to invest in the phase III registration trials and potentially to consider adding to the pipeline.

Let's move to the comparison to the three month numbers ended June 30, with total operating expenses of $7 8 million.

For the three months ended June 30, an increase of $1 2 million from the three months ended June 30 of the prior year.

G&A expense for the three months ended June 30 was $4 1 million compared to $3 2 million for the same quarter prior year the.

The increase of just under $1 million.

Due to G&A compensation expense, which increased primarily due to severance costs to our former CFO .

The increase in overall compensation, along with legal and professional fees, increasing due primarily the higher patent activity, Parisien, doxepin and higher investor relations and accounting fees.

Interest income was $1 million for the three months ended June 30th sharp increase compared to prior year due to the higher average invested balance and higher earned interest rates.

And noncash charges in the second quarter included an impairment charge, we booked for $2 9 million on an investment in dynamic cell therapies our DCT.

And a noncash stock compensation charge of $1 6 million.

And finally on the coupon.

Quarterly numbers, our net loss of $9 8 million for the second quarter compared with a net loss of $6 3 million in the first quarter and $6 7 million for the comparative second quarter of last year.

Pivoting to the six months ended June 30 numbers.

<unk> of roughly $1 $8 million related to document clinical trial cost and increased API drug product formulation and development costs.

A decrease in noncash stock based comp and an increase in the.

The severance cost for our exiting CFO .

And also again legal and professional fees increased due to higher activity in both areas.

Interest income for the six months $1 $8 million.

So increased related to higher average balances invested in higher average interest rates.

The noncash charges for the six months included the Q2 impairment charge on the investment and DCT and noncash stock compensation.

The net loss for the six months of $16 1 million.

And that compared to the net loss of $11 $5 million year to date prior year.

And then one additional topic that touch on is that we announced a share repurchase program in June to purchase up to 10 million shares of our common stock. This program is authorized through the year end 2023.

The rationale for the program as a recognized in our view the disconnect in the market value of a tuition shares in.

In Q2, 2023 repurchased just under 120000 shares of stock.

At a cost of approximately $150000 and to date, we purchased approximately 840000 shares per $1 million.

This activity has no material impact on our operating cash runway.

Thank you for your attention I'll turn the call back to Steve Steve.

Steve you are on mute.

I'm sorry can you hear me.

Good navigation.

Thank you Greg.

I would now like to ask the operator to open the call for Q&A. Thank you operator thank.

Our first question comes from Jason Mccarthy with Maxim Group. Your line is open.

Hey, Jason sorry about that it took me a second to get off mute. There. This is Michael <unk> on the line for Jason. Thank you so much for taking my questions today.

Great. Thanks, Michael.

Alright, So I guess first off I'd, just like to see with the.

Charisma doxepin trial approaching full enrollment by year end and completion in 2024.

Could you just remind us a certain level of density reduction or some upper threshold you need to cross.

To consider it a meaningful.

Result, where youll get an improvement early detection or reduction incidence of breast cancer I'm trying to get how you evaluate a meaningful reduction in breast density.

Yes.

It's a great question Michael there are two main measures of density.

On the Mamograms themselves and then I'll discuss the concept of statistical significance and clinical significance, which comes up in every single clinical trial of any drug you'd be involved with so first the first measurement endpoint.

Radiologists have for almost two decades used a b C D.

Categorization of approximately quartile, where a is the lowest density and D has the highest density.

The long history in Mammographic density is that ABCD categorization now we've gotten to the point, where we now have 510 cleared.

Measurements, which are quantitative the machine does it for you with software those give you a score from zero to 100.

So we have less long term experience with those but they do map onto what you would expect where a radiologist, calling abreast a machine called zero to 25 $26 to $50 51 to 70 576 to 100 so.

The biggest winners are when you cross the threshold.

Yes.

<unk> groups, because that's the highest level statistical significance will probably require a pretty small amount, perhaps three or 4% will be enough the breast in.

In these premenopausal women.

Alright, Thank you for that and I do appreciate the additional clarity there.

And then in terms of the Evangeline.

I would like to see how many sites you plan to open in Canada, and how many would that bring it to total.

Yes, I mean, we.

We.

Have one site in Canada, which was the requirement for getting the filing and getting permission to go forward. There will continue to accrue additional trials.

And we are always recruiting trials.

Alright. Thank you then one last one for me and I'll hop back into the queue.

Guys have a fairly impressive cash balance right now are there any plans to expand the early or mid stage pipeline with additional M&A or are you focused on deploying that capital pretty much purely to get this current status studies through those readouts over the next 12 to 24 months.

Yeah. Thanks, Michael Great question, I'm going to let Greg weigh in on that if he would.

Happy to Michael Great question.

With very strong balance sheet and.

As I look at is in my first weeks here as the CFO really strategically positions us to not only fully fund the current.

Protocols execute on on the <unk>.

Trials that we've just discussed and four two in through completion, but it appears to me that theres additional bandwidth here to seriously consider adding to the pipeline and so as we as we go forward will be.

With some discretion, having a look to be honest and I would just say.

We don't have any disclosures at this time, except that there is an intent to take a look at the landscape and see what might be a good strategic fit for us.

Alright, Thank you very much and congrats on the progress this quarter.

Excellent thanks for joining us.

One of them are for next question.

Our next question comes from Edward <unk> with the Sydney.

Capital Your line is open.

Yes, congratulations on the progress my question is on dynamic cell therapy, what drove the impairment charge this quarter.

Yes. Thank you for your question I'll, let Greg go into that it's a it's a financial analysis.

Yes.

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Thank you Kevin.

Morning, everyone and welcome to <unk> second quarter, 2023, corporate and financial update conference call.

Earlier. This morning, we issued a press release provided an overview of our recent corporate highlights and financial results for the quarter ended June 32023.

The press release can be accessed on the investor portion of our website at investors got it posted therapeutics Dot com.

Joining me on the call today are Dr. Steven Quay, Ptosis, President and Chief Executive Officer, and Greg Weaver, Our executive Vice President and Chief Financial Officer.

These forward looking statements are based on current information assumptions and expectations that are subject to change.

A description of potential risks can be found in our latest SEC disclosure documents and our press release.

You are cautioned not to place undue reliance on these forward looking statements and toasted disclaims any obligation to update these statements I will now turn the call over to Dr. Quay.

Thank you Eric and thank you to everyone, who joined the call today I am very proud of the progress we've made in Q2.

From a clinical perspective, each of the three ongoing phase III trials investigating our proprietary Z and Oxford reached important milestones.

I'll start with the charisma Amdocs can trial, which is a randomized double blind placebo controlled efficacy study of oral <unk> in premenopausal women with measurable breast density.

This is a single site trial at the Karolinska Institute in Stockholm led by Dr. Peer Hall, one of the world's foremost authorities in breast cancer epidemiology.