Q2 2023 SeaStar Medical Holding Corporation Earnings Call

Welcome to the C-STAR Medical Business Update Conference Call. At this time, all participants are in listen-only mode. Following management's prepared remarks, we will hold a Q&A session. To ask a question at that time, please press the star key, followed by the number 1 on your touch-tone phone.

If anyone has difficulty hearing the conference, please press star 0 for operator assistance. As a reminder, this conference is being recorded. I would now like to turn the conference over to Jody Kane. Please go ahead. Please Steve Bro echo at again

This is Jody Kane with LHA. Thank you for participating in today's call. Please note that a slide presentation to accompany management's prepared remarks is available on the webcast and on the events and presentations page of the investor section of the C-STAR Medical website.ese s

at cstarmedical.com. Joining me from CStar Medical are Eric Schlorf, Chief Executive Officer, and Dr. Kevin Chung, Chief Medical Officer. Turning to slide two, I'd like to remind listeners that comments made during this call by management will include forward-looking statements within the meaning of federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results. These statements represent the company's estimates based on the information available as of today. For a list and description of risks and uncertainties, please review CStar Medical's filings with the Securities and Exchange Commission at sec.gov. Furthermore, the content of this conference call contains information that is accurate only as of the date of the live broadcast, August 22nd, 2023. CStar Medical undertakes no obligation to revise or update any statement.

for our selective cyto-phoretic device or SCD and share the value proposition we envision with our technology including our insights into the commercial opportunity.

We are highly enthusiastic about the future of C-STAR Medical with multiple value-creating milestones expected over the next 24 months. These include the potential to begin commercialization of the SCD product candidate for children with acute kidney injury, or AKI.

complete enrollment in neutralized AKI, the adult AKI pivotal targeting a multi-billion dollar kidney market, and expand in the new indications through collaborations.

We understand there are challenges that lie ahead, but our experienced, dedicated team will continue to take proactive actions to meet these challenges and make sound business decisions based on the information available. We will continue to build our investor base and remain confident that we will attract financial partners who believe in our vision.

I want to begin by discussing the importance of our technology and why we are optimistic about our future. Described here on slide 4.

We are advancing an innovative platform that addresses the life-threatening consequences of a dysregulated immune response, which can result in the overproduction and activation of inflammatory cells, leading to hyperinflammation and ultimately creating what's called the cytokine storm.

This condition can result in organ failure and even death.

Our platform, the selective cytoforetic device or SCD, pictured here for the adult and pediatric indications is a cell-directed extracorporeal therapy that can target and neutralize the overactive effector cells to bring them back in a reparative state.

thus quelling the cytokine storm. Now I will introduce our Chief Medical Officer, Dr. Kevin Chung, to provide some details about our innovative platform therapy and discuss results of our completed clinical trials. Kevin. Thank you, Eric. If you can turn to slide five.

Inflammation is essential to the body's healing process. As Eric mentioned, the overactivation of inflammatory cells triggered by trauma, major surgery, or infection can send the body into a shock state and cause damage to a variety of distant organs such as the heart, lungs, or kidneys.

Less untreated, this dysregulated host response may result in multi-organ failure and even death.

This process is triggered early and once initiated continues long after the initial insult and has been shown to be responsible to the above mentioned damage to the body.

While a variety of tools are available to physicians to simply provide supportive care in the ICU, none can modify the inflammatory process once triggered.

and help repair the damage done by the cytokine storm.

I know from firsthand experience that these current treatment options are not enough.

There is a clear, urgent, clinical unmet need to address hyperinflammation at its source.

As a medical officer in the US Army, I was thrown into the critical care of combat casualties.

young American service members severely wounded during combat operations in Iraq and Afghanistan.

There is nothing that comes close to the destruction that human beings get subjected to than what the war wound go through.

Fresh out of fellowship training and critical care, I was assigned to the U.S. Army burn unit in San Antonio, where I became witness to the worst injuries imaginable.

That is where I gained an interest in novel life-saving technologies.

Being surrounded by so much morbidity and death in the burn unit, I learned to appreciate how limited we are in healthcare.

I learned that we needed better tools.

This is why I joined C-star Medical. Our approach targets the source of the dysregulated host response that is responsible for much of the organ failure that occurs after severe injury or severe infection.

Our first-in-class STD is designed to reprogram activated effector cells.

specifically neutrophils and monocytes.

which are the inflammatory cells that cause the cytokine storm.

By deactivating these key effector cells, the STD has been shown to bring about immune homeostasis.

Unlike other blood purification tools or drugs, the STD selectively targets the most highly activated pro-inflammatory neutrophils and monocytes and essentially neutralizes them.

without causing immune depletion or immunosuppression.

The STD has the potential to address hyper inflammation in a variety of acute and chronic large high-value indications.

Turning to slide six.

On the left-hand side of the slide is a graphic overview of the process by which the immune system can attack vital organs.

On the right, you see that our STD technology intervenes early in the process.

The STD therapy mimics nature by creating a unique microenvironment sequestering these highly activated effector cells and neutralizing them in a low calcium environment.

These cells are then returned back to the body through the blood and is signaled to focus on repair.

On slide 7, our device is integrated into existing hemodialysis equipment that is widely available in ICUs across the U.S.

It takes less than 15 minutes for critical care staff to attach our device into this equipment.

Now turning to slide eight.

The first indication we are pursuing with the STD is acute kidney injury, or AKI, requiring continuous kidney replacement therapy known as CKRT.

which is today's standard of care for support.

The patients we've treated with the STD were critically ill adults and children in the ITU who suffered an average of three organ failures and many were septic.

We did not limit study enrollment by body mass index and in fact we treated patients with BMIs over 40.

We also did not limit the type of disease or injury that caused hyper-inflammation, showing that STD treatment is disease agnostic.

We also observed in these five studies that our STD therapy reduces the mortality rate versus control patients by up to 50%. We observed a similar reduction in mortality in 22 patients in the COVID-19 study. Equally as impressive, treatment with the STD eliminated dialysis dependency at day 60 in all non-COVID AKI patients, both in adults and children. Thank you.

Again, no patient was on dialysis at 60 days post-treatment. All those patients had renal recovery. The clinical results in the pediatric patients are particularly noteworthy.

especially interim data from the PEDO2 study in children weighing between 10 to 20 kilos, where five out of the six patients survive.

resulting in an 83% survival rate.

About a quarter of pediatric AKI patients who enter the ICU stay there twice as long as pediatric patients without AKI.

Of those who do survive, many have long-term chronic complications. Now on slide 10. In reviewing the safety profile across our five completed AKI studies that included 151 critically ill patients with AKI, including half who were septic and involving greater than 800 device sessions and greater than 19,000 cumulative continuous exposure hours of treatment, we saw no device-related infections or device-related serious adverse events.

exposure hours of treatment in 16 patients. With that, I would like to turn the call back over to Eric Schlor. Thanks, Kevin. On slide 11, it's worth mentioning that most pharmaceutical companies pursue approvals for therapies in the adult population first. Once safety and efficacy are established, they are then encouraged and even incentivized to conduct pediatric studies. Had we also followed this pathway, we would be years away from getting the SCD to the market. However, given the highly promising data from our pediatric SCD study, we would be more than happy

who have few treatment options and the US addressable population of about 4,000 patients, which is well within the 8,000 patient HDE criteria. Importantly, we chose the HDE pathway as a means to bring these important life-saving and quality of life results to critically ill children as quickly as possible, thereby also allowing us to get the SED quickly into the market and into the hands of practicing clinicians.

There are challenges associated with this pathway for our therapeutic device. To our knowledge, our submission is among a very few and could possibly be the only case in which a medical device for a pediatric patient population is under review by the FDA Center for Biologics Evaluation and Research, or CBER.

rather than the Center for Devices and Radiologic Health or CDRH. Additionally, our submission is being reviewed through the HDE, which is not the typical regulatory pathway. We believe the FDA has appropriately set a very high bar in its evaluation of the SCD pediatric device given the vulnerability of these critically ill children in the ICU.

That said, we are confident that the SCD pediatric device will meet or even exceed the high standards set by the FDA, and we continue to believe that we will gain approval by the end of 2023.

Also on this slide, I want to begin to discuss considerable differences between our adult and pediatric AKI programs.

Among them are the FDA pathways for approval, which are completely independent of each other and the proprietary characteristics that differ between the STD pediatric and STD adult devices.

These two devices are completely different products. The pediatric device is called the SCD-PED or PED. The adult is called the SCD adult and meant for different patient populations. Although notably, their mechanism of action is the same. More on this in a minute.

Another difference is the size of the addressable patient population with a considerably larger opportunity in the adult AKI, which I'll detail in a couple slides. While we address a smaller commercial opportunity in the pediatric AKI market, I want to reiterate that we are deeply committed to bringing the potential life-saving benefits of this therapy to critically ill children.

Moving on to slide 12. In June 2022, we submitted an HDE application for the SCD pediatric device.

following nearly a year of working collaboratively with the SEVER group. Responding to questions and providing support information, we were surprised in May to receive a letter from the FDA indicating that the application was not approvable in its current form. The letter outlined specific guidance as to how the application may be amended and resubmitted.

in our engaging and ongoing discussions with the agency.

In addition to providing more information, we have provided further support in the form of written testimonials we've received from clinicians who have firsthand experience using our device to improve clinical outcomes in pediatric patients from parents of children in the ICU.

who attest to the role of the SCD in their child's recovery, and from a national professional society of pediatric nephrologists expressing their concern with the not-approvable letter, urging FDA to ensure this device is made accessible to the pediatric nephrology and critical care community.

Turning now to slide 13.

This chart provides more detail about the different parameters of the FCD.

PED and SCD adult devices as well as the different approval pathway. While the pictures are not intended to show the actual devices.

sizes, you can see the considerable different parameters for the membrane surface area and priming volume between the two devices. Moving on to slide 14, as I mentioned, both the SCD pediatric and SCD adult devices work with the same mechanism of action. Our studies show a similar reduction in mortality in both the pediatric and the adult devices.

robust safety data in both populations with no device-related serious adverse events or infections, no attributable immunosuppression, and as mentioned earlier, both devices can be readily integrated into the CKRT machines by hospital staffs in about 15 minutes. Turning to slide 15, while we remain fully committed to our HDE submission to the SCD pediatric device to vulnerable and underserved children with AKI, the addressable adult AKI market is significantly larger, in fact, about 50 times the size of the addressable pediatric AKI market, with more than 200,000 cases per year in the U.S. On slide 16, we've outlined the financial value proposition for adopting the pediatric SCD by a single leading children's hospital, which is based on the assumptions that our therapeutic device reduces mortality by half and dialysis dependency by a third. For the year 2022, this...

These data support the SCD's value proposition in reducing health care costs. As you can see, patients who develop AKI are more likely to need dialysis, with that likelihood increasing with the severity of disease. The cost for each patient per year on dialysis is about $100,000 per year. The total cost of a full course of the SCD treatment, which is 3 to 7 days of therapy, will cost $10,000 to $20,000 range.

Now, I turn it back over to Kevin to provide some details of the neutralized AKI study, as well as how the team has been deepening and broadening the science. Kevin?

Thank you, Eric.

Now turning to slide 18, let me now discuss our progress in expanding use of the STD to adult patients with acute kidney injury.

I'm proud to say that the adult STD device received FDA breakthrough designation last year.

This designation is awarded to a therapy to treat a serious or life-threatening condition with preliminary clinical evidence indicating it may demonstrate substantial improvement over available therapies and the clinically significant endpoints.

Our pivotal neutralized AKI trial is expected to enroll up to 200 patients at up to 30 U.S. medical centers. This trial's primary endpoint is a composite of 90-day mortality or dialysis dependency of patients treated with the SCD therapy in addition to CKRT as standard of care compared with the control group receiving only CKRT alone. Primary endpoints include mortality at 28 days, ICU-free days in the first 28 days, major adverse kidney events at day 90, and dialysis dependency at 1 year.

The study will also include subgroup analyses to explore the effectiveness of SCD adult therapy in AKI patients with sepsis and acute respiratory distress syndrome.

On slide 19, as a progress update, we just activated our third trial site yesterday.

For updated site activation and status, please go to clinicaltrials.gov and type in neutralize AKI in the search. For more information onocrine- elaborated Sillery congregation returns, please visit

We are working diligently to qualify additional medical centers to join this trial and expect the activation of several more sites in the coming weeks. Our goal is to increase the number of sites to between 20 and 30.

We also have two patients enrolled at this time.

With the activation of additional sites, we anticipate enrollment at a quicker pace.

Our target is to enroll one patient per site per month.

We plan to provide periodic updates on site activation and patient enrollment as this important trial progresses.

We are optimistic about a favorable outcome with the adult AKI trial having previously demonstrated success in the same patient population.

Based on the results of the neutralized AKI trial, we will submit an application under a premarket approval pathway.

or PMA. We anticipate regulatory approval in the first half of 2025 and commercialization in the second half of 2025.

Now, moving on to slide 20.

We are taking other measures to showcase our technology aimed at creating awareness and support in the medical community.

This includes assembling a board of scientific advisors who offer insight and vital guidance on additional developmental programs for our technology.

Our advisors are the world's leading experts in nephrology and critical care medicine and represents both adults and pediatric disciplines across multiple, renowned institutions globally.

They include pediatric experts such as Dr. Stu Goldstein.

from Cincinnati Children's, recently named the number one children's hospital in the United States. Dr. Raj Basu and Teresa Mathes from Lurie's in Chicago. Dr. David Askinazi from the University of Alabama, Birmingham.

Our adult nephrology and critical experts include Dr. Kathleen Lu from UC San Diego, Dr. Sean Bagshaw from the University of Alberta, and Dr. Jay Koiner from the University of Chicago

We also have translational science experts such as Dr. Sara Fobel from the University of Colorado, Dr. Andrew Paczynski from the University of Uncarnate Word and Dr. Mark Jeske from the Hamilton Health Sciences.

to help guide our research efforts. We will be issuing a more detailed press release on our SIB, SAB in the near future.

We are also focusing on publications and peer-reviewed journals, presentations of data at scientific conferences and highlighting compassionate and emergency use cases.

Of note, we recently got two of our abstracts accepted to the Association of the American Society of Nephrology Kidney Week in 2023 later this year in November . And we'll provide more information on these within the coming weeks.

We have also approached government agencies for potential non-dilutive funding grants and currently work with advocacy groups and associations to garner further support.

With that, I'd like to turn the call back to Eric Schlorf.

Thanks, Kevin.

Turning to slide 21, while we are addressing AKI as our first target indication, we are also exploring other potential applications.

for our technology in conjunction with the University of Michigan. This includes a broad range of both acute and chronic indications involving dysregulated immune processes where pro-inflammatory, activated neutrophils, and monocytes may contribute to disease progression or severity.

As you can see, some of these represent large future market opportunities.

On slide 22, I want to mention that we are prepared for commercializing the STD pediatric device subject to FDA approval through a license and distribution agreement with New Welles. Our initial focus will be on the top 50 US hospitals that treat pediatric AKI patients.

We selected to partner with New Wellis based on their sales forces, establish relationships with nephrologists and intensive care physicians who are trained in pediatric extracorporeal therapy.

Our New Welles partnership has the added advantage of allowing our team at C-STAR Medical to focus on additional clinical applications without the expense of hiring and training a commercial team.

To summarize, on slide 23, we have a proprietary technology that has shown significant benefit against an unmet clinical need. We are diligently working toward approval of our HDE, followed by a commercial launch in pediatric AKI patients.

We're enrolling patients and activating medical sites in our ongoing pivotal neutralized AKI trial in adults that addresses a different regulatory pathway in a significantly larger patient population.

We are working toward generating clinical data in support of demonstrating the economic value of our technology.

Our technology has a potential application in multiple acute and chronic high value indications.

And importantly, we have a dedicated world-class team that is focused on execution of our business strategy and achieving our goal of improving patient outcomes and saving lives.

In summary, we are highly enthusiastic about the future of C-STAR Medical with multiple value creating milestones expected over the next 24 months.

These include the potential to begin commercialization of the SCD product candidate for children with AKI, complete enrollment in neutralized AKI, which is the AKI pivotal study targeting a multi-billion dollar kidney market, and expand into new indications through collaborations.

We understand there are challenges that lie ahead, but our experienced, dedicated team will continue to take proactive actions to meet these challenges and make sound business decisions based on the information available. We will continue to build our investor base and remain confident that we will attract financial partners.

who believe in our vision. With that overview and update, Operator, we are now ready to take questions.

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Today's first question comes from Anthony with Maxing Group. Please go ahead. Hello.

Thank you. That was a good overview Eric and Kevin really appreciate it. You know with with the compelling data that you have for both adults.

and pediatrics as well as the safety data because I think you mentioned there were no serious

at ADs adverse events on either the adults or the pediatrics.

and with reducing mortality by up to 50 percent.

and not any of these patients needing dialysis after day 60. I'm curious what the, in your opinion at least, if the FDA hasn't outlined exactly what else they're looking for. In your opinion, what else do you think the FDA needs or is requiring to Finance Pow Swiss

Is it just more patience to confirm what you've already witnessed in both the adult and the pediatric population? Or is it something else that I'm missing?

patients to confirm what you've already witnessed in both the adult and the pediatric population or is it something else that I'm missing? Thank you.

Thanks Anthony for the question. Yeah you know I think you come back to what you've said which is

It is, you know, it's really probable benefit in case in the HDE, probable benefit in safety, which we've shown. There are some slight manufacturing differences between the processes, between the products, and that's kind of where a lot of the focus has been. But as we look at this and we see what the community is researching, you know,

We strongly believe that.

in the current form that this should be something that we move forward with.

But you know obviously we will work closely with the FDA to find you know the win-win for everybody.

Okay, and then just to follow up, you did mention, Eric, that you do expect

I guess based on your current conversations with the FDA, that whatever hurdles remain, you think

C-STAR Medical can overcome and you do expect before the end of the year FDA approval, correct? Yeah, thanks Anthony. Yes, we are reaffirming that that guidance that based on the information we have today.

In the discussions that we've had, we still believe that we should be successful at getting the approval of that HDE by year-end.

And then lastly before I jump back in queue you did reference that the the adult aka aka Population is much greater Can you just remind us what you know how much larger the adult population is?

And then on the pediatric side, you're working with Newellis. After, you know, obviously I know you're enrolling patients and you're expanding the sites to 20 to 30. What commercialization could look like on the adult side and how you would pursue that? Or is that too early to say at this point?

Yeah, I would say that's on the second question that's probably too early to say but obviously you know we're going to we're going to be focused on with once we have FDA approval for the HD you obviously we're going to be focused on ramping up and launching that you know we've worked very closely with

what was your first question again Anthony? Just on the difference in the size of the population. Yeah I mean look the population difference as you can see is is dramatic so you know if you can kind of start to do some market assessment.

We say there's about 4,000 children, you know, that meet the criteria for this and the treatment cost that we're looking at is between 10 and 20,000. So you can do the math. It's about what, 40 to 80 million. You can then do the math to see what.

200,000 looks like kind of in that same range and it's obviously not in millions but it's in billions and we believe that it's very achievable especially when you look at some of the data that came out of the children's hospital example where we showed about $50,000 goes spent on each one of those patients.

we're not even attributing the additional annuity stream which I'd call you know dialysis every year. So there's obviously we're looking at ways to be able to gain rapid adoption of this just purely based on some of the economics.

Okay, excellent. Thank you for all of that. Kevin, thank you for your explanations as well. And I'll turn it back over to the queue. Thank you.

Thank you for all of that. Kevin, thank you for your explanations as well. And I'll turn it back over to the queue. Thank you. Great.

Thank you. Seeing no further questions at this time, I would like to turn the conference back over to Eric Schlor for closing remarks.

Thank you, operator. I want to mention that we're participating in the Dawson James Small Cap Growth Conference, which begins to be held on October 12th in Jupiter, Florida. We invite those of you attending this conference to meet with us. Thank you once again for joining us today and for your interest in C-STAR Medical.

We are excited about the many opportunities we have with our technology, and we will keep you updated on developments along the way. Thanks again, and have a great afternoon.

Thank you. The conference has now concluded.

Thank you for your participation. You may now disconnect your lines.