Q3 2023 TRACON Pharmaceuticals Inc Earnings Call

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Good day, ladies and gentlemen, and welcome to Tracon Pharmaceuticals third quarter 2023 earnings conference call. At this time, all callers are in a listen only mode.

After the Speakers' prepared remarks, we will conduct a question and answer session and instructions will follow 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 regulatory activities financing opportunities future expenses and cash runway into 2020 for our development plans and strategy potential costs.

These deliverable through our product development platform or P. D P ability to enter into additional licensing agreements and expectations regarding the and thoughtful about treatment continuing to generate a double digit objective response rates.

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 subsequently quarterly reports on Form 10-Q, you are cautioned not to place undue reliance on.

These forward looking statements unless required by applicable law, we disclaim any obligation to update such statements.

Now I'd like to turn the call over to Doctor, Charles to where president and CEO of Tracon Pharmaceuticals Doctor through work.

Good afternoon, and thank you for joining <unk> third 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 nine months ended September 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 September the data monitoring committee reviewed interim safety and efficacy data from 46 patients in cohort C. A single agent in the treatment.

Objective response rate and the initial 46 patients treated with single agent <unk> was 13% by investigator review and eight 7% by blinded independent Central review.

Our response rate assessed by Central review, all of which were confirmed responses.

<unk> satisfied the Prespecified futility rule and the mono therapy was generally well tolerated importantly.

Importantly, median duration of response by Central review was greater than six months.

The DMC recommended the study continue as planned and since then more than 20 additional patients have enrolled.

We are on track to complete accrual of the <unk> pivotal trial in the fourth quarter of 2023 and expect to release updated response rate data before the end of the year.

As a reminder, in order to satisfy typically exceed the 4% objective response rate of both treat the only FDA approved treatment for patients with refractory UBS or MFS. The primary endpoint in <unk> must show objective responses in nine out of 80 patients or an 11.25% objective.

Lance rate confirmed by Central review.

Medium duration of response of greater than six months as a key secondary endpoint.

Our goal in <unk> is to demonstrate that <unk> has the potential to be both safer and more efficacious than poetry drug with a black box warning for fatal liver toxicity.

Based on data from trials of other checkpoint inhibitors, and refractory <unk> or MFS were targeting a 15% response rate for single agent and the.

Furthermore, we plan to approach the FDA to discuss a BLA filing strategy as soon as we determine nine responses.

As a reminder, we have received fast track designation for <unk> in the sarcoma subtypes of UBS and MFS better progressed on one or two prior lines of therapy and.

<unk> 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 <unk>.

<unk> is designed to provide safety and efficacy data in the refractory sarcoma subtypes of <unk> PFS at MFS.

Also have a strategy for the approval in frontline sarcoma.

Dr. <unk> is the most common therapy used for the treatment of newly diagnosed sarcoma patients.

We therefore plan to initiate a trial and Dr. <unk> in the frontline setting of the common sarcoma subtypes, including UBS at MFS.

Following the completion of enrollment in the pivotal <unk> trial.

The goal of that trial will be determined the subtypes of sarcoma that best respond to the combination of <unk> and <unk>.

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 expect this potential phase III post approval trial will compare single agent doxorubicin to Doc services with Edinburgh with PFS as the end point.

This trial would be expected to enroll patients with UBS.

MFS as well as other sarcoma subtypes shown respond to therapy with <unk> 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 with NBA at parity pricing is not solely the forecasted $200 million in peak annual Endo revenues anticipated following approval in refractory UBS in MFS.

Our clinical development strategy is designed to create the opportunity for inventory broadly benefit patients with sarcoma in the frontline.

<unk> and new adjuvant settings by seeking supplemental.

Yes.

We will now turn to our DNA damage repair inhibitor Trc, one or two.

That is financially 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 phase III non squamous non small cell lung cancer in combination with chemo radiation.

The two arm trial will enroll 78 patients to assess the benefit of adding tiers do you want us to current standard of care treatment of Pemetrexed cisplatin and radiation therapy.

Followed by consolidated through value add maintenance treatment.

The primary endpoint of the trial is PFS.

And the trial is designed to detect an improvement in PFS at one year from 56% to 75%.

90 sites are open for enrollment in the U S and final results are expected in 2025.

I will now shift from our pipeline update to discuss our product development platform of Cerro Independent research, which we call our PDP.

We continue to expect to execute a license of our PDP to one or more companies this year with.

With the ideal partner being a company with an emerging pipeline, we plan to conduct multiple trials.

This offering would include our platform of advanced clinical trial management data management and safety reporting we would expect it would enable our collaborator to potentially conduct trials at a cost of less than one third of what they may otherwise pay a CRO.

Our license of the PDP would we expect it to a partner to run clinical trials as we do a tracon.

For an estimated cost of approximately $100000 per patient.

As the typical zero charges $300000 or more per patient the potential savings from licensing our PDP on a 100 patient trial could be up to approximately $20 million for a partner.

In addition to the expected advantages of increased speed of trial execution.

And pace of enrollment that we enjoy tracon running trials using our in house team.

Turning now to an update on the arbitration work from Imap as you May remember, we collected $22 million from I Mab in July in satisfaction of the arbitration award of which $4 $4 million were disputed and had been held in a client trust account by our attorneys predicated on discussions as to the amount of success.

Space deferred legal fees the firm was two <unk>.

In September we successfully received $2 million from the client Trust. In addition to the write off of approximately $300000.

Boys from the attorneys.

This brings the total amount of net proceeds from the arbitration to $9 $1 million and the matter is now closed.

At this time, Scott will provide an update on our financials.

Thank you Charles and good afternoon, everyone.

Collaboration revenue was zero and $9 million for the three and nine months ended September 32023, compared to zero for the comparable periods of 2022 the increase in revenue for the nine month period is related to the pre specified $9 million termination fee for the T. J for 309 license in.

Junction with their previously announced arbitration outcome with I Mab.

<unk> research and development expenses were $2 3 million and $10 8 million for the three and nine months ended September 32023.

Compared to $4 1 million and $10 million for the comparable periods of 2022.

The decrease in the three months period was due to enrollment only in cohort C of <unk> with the corresponding termination of cohort D of the MSR pivotal trial.

General and administrative expenses were $1 3 million and $5 5 million for the three and nine months ended September 32023, compared.

Compared to $2 3 million and $12 million for the comparable periods of 2022, the decrease was due to lower legal expenses.

Our net income was $10 8 million for the three months ended September 32023, and our net loss was $4 million for the nine months ended September 32023, compared to net losses of $6 4 million at $22 1 million for the comparable periods of 2022.

We recorded other income of $13 million in the three and nine months ended September 32023, due to the arbitration award being collected in the third quarter.

Included in the $22 million Arbitration award was the $9 million pre specified termination fee payable by imap under the T. J <unk> 309 agreement, which we recognize as revenue in Q2 of this year.

Turning to the balance sheet at September 32023, our cash cash equivalents and restricted cash totaled $7 8 million compared to $17 5 million at December 31, 2022.

With that I will turn the call back over to Charles.

Thank you Scott.

As you have heard our corporate strategy is proceeding as planned allow me to recap two key expected events.

First later this quarter, we expect to report updated response rate data from the <unk> pivotal trial.

Second later this quarter, we expect to license our unique product development platform to enable one or more companies to benefit from our capabilities and realized for themselves. The substantial clinical trial time and cost savings, we enjoyed tracon, while allowing <unk> to generate non dilutive capital.

Thank you for your time and attention and we are now available to answer your questions.

Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Ed White from H C. Wainwright.

Hi, Charles Hi, Scott, Thanks for taking my questions.

Okay.

Just on the blinded independent Central review that we've seen so far of eight 7%.

Is it possible for that number to go up based on the.

Investigate a review meeting some of the investigator review patients to be converted to a b ICR patient.

So I think there are two important data sets Ed and thanks for your question. So within the initial 46 patients that was the basis for the DMC review in September.

To your point there were six responses by investigator review for those were confirmed by Central review. It is possible that a patient in that database could subsidiary can become a response by Central review.

I think more importantly is the consideration of the next 20 plus patients that enrolled since that time and that's really I think the focal point of the update we expect to provide later this year.

And our goal in that case would be to see the response rate by central view with the additional patients to recover to the endpoint of the study which is a low double digit response rate.

And if you don't hit that low double digit response rates would you still proceed to the frontline study or would you.

<unk>.

Yes.

Not proceeds at all with development of the drug.

Yes, it's great question I think the key focal point right now is really focusing on <unk>. So our focus right now is completing the enrollment of <unk> assessing the updated response rate data in the patients that are enrolled subsequent to the DMC review that was announced in September.

And based on that our expectations to recover the double digit response rate, but further development of <unk> for instance, the frontline setting it's predicated on achieving that response rate in the current MSR trial.

Okay. Thanks, Charles and perhaps just a question on that on the PDP, how should we be thinking about the potential revenue from that would there be revenue generated.

If the license deal was signed this year or is it possible that if a deal is signed this year year wouldn't record revenue until next year.

Excellent question. So our expectation is to license the platform to one or more companies enter receive revenue in the same timeframe.

Non dilutive capital as a basis for licensing the knowhow that enables our company to.

Really become a CR independent company as we are and see some significant savings. So we both expect the license to one or more companies to happen. This year, but also we expect the.

But none of the capital that would accompany that license to come in this year as well. So I appreciate the question.

Thanks, Charles and our last question if I may.

With the cash of $7 8 million what is your cash runway.

So our run rate right now is into 2024 with the expectation that by Consummating a license deal or deals. In addition onto capital will push us further into 2024.

Based on the deals being consummated.

Okay, great. Thanks for taking my questions.

Really appreciate the questions. Thank you Ed always a pleasure.

Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

At this time I would now like to turn the conference back over to Dr. <unk> for closing remarks.

Thank you very much we appreciate your time and attention and look forward to speaking with you again next quarter.

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

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