Q1 2024 TRACON Pharmaceuticals Inc Earnings Call
Okay.
Yes.
Good day, ladies and gentlemen, and welcome to Tracon Pharmaceuticals first quarter 2024 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 be given at that time.
During today's call, we will be making certain forward looking statements, including statements regarding expected timing of clinical trials and results regulatory activities plans for future clinical trials financing opportunities our development plans and strategies.
Central cost savings and other benefits deliverable through our product development platform or PDP.
The ability to enter into additional licensing agreements ability to generate non dilutive capital using the PDP.
Market size estimates.
Whether the company stock will remain listed on NASDAQ.
These statements are subject to various risks that are described in our filings made with the Securities Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2023, and subsequent quarterly reports on Form 10-Q.
Speaker Change: You are cautioned not to place undue reliance on these forward looking statements.
Speaker Change: Unless required by applicable law, we disclaim any obligation to update such statements.
Now I would like to turn the call over to Dr. Charles Stewart, President and CEO of Tracon Pharmaceuticals, Dr door.
Good afternoon, and thank you for joining <unk> first quarter 2024 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 months ended March 31 2024.
Finally, we will conclude by taking your questions.
Scott B. Brown: I will begin with an update on our continued progress with the ongoing phase II <unk> pivotal trial.
In April the independent data monitoring committee recommended the trial continue as planned.
Following a review of interim safety and efficacy data from 73 patients in cohort C of single agent <unk> treatment.
Scott B. Brown: The objective response rate in patients treated with single agent <unk> was 11% by investigator review.
And five 5% by blinded independent Central review or four responses.
Speaker Change: But mono therapy was generally well tolerated without a single drug related serious adverse event.
Importantly, median duration of response by independent Central review was greater than six months.
We have completed accrual of 82 patients dosed with <unk> as a single agent at 600 milligrams and expect to report final data in the third quarter.
As a reminder, in order to statistically exceed the 4% objective response rate of boot trend.
The only FDA approved treatment for patients with refractory UBS or MFS. The primary endpoint and then restart must show objective responses in nine out of 82 patients or an 11% objective response rate confirmed by independent Central review.
Median 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 road trip, a drug with a black box warning for fatal liver toxicity.
We plan to approach the FDA to discuss a BLA filing strategy. If we determined nine responses by independent Central review.
As a reminder, we have received fast track designation for <unk> and the <unk>.
Sarcoma subtypes of UBS and <unk>.
MFS that have progressed on one or two prior lines of therapy and.
<unk> received orphan drug designation in soft tissue sarcoma based.
Based on activity observed in <unk>.
These designations provide important advantages that might expedite regulatory review.
Yes.
<unk> is designed to provide safety and efficacy data in the refractory sarcoma subtypes of UBS and MFS.
We also have a strategy to pursue the approval in frontline sarcoma.
Dr Services is the most commonly approved therapy used for the treatment of newly diagnosed sarcoma patients.
We therefore plan to initiate a trial in <unk> service in the frontline setting of the common sarcoma subtypes, including UBS in MFS.
Following the completion of enrollment in the pivotal <unk> trial.
And prior to the expected BLA submission subject to positive results from endosarc, including achieving the primary endpoint.
Speaker Change: Because that trial will be to determine that subtypes of sarcoma that best respond to the combination of <unk> and doxorubicin.
Assuming positive results in the <unk> pivotal trial, we expect the FDA will require a randomized trial to demonstrate a survival benefit.
Speaker Change: We expect this potential phase III post approval trial will compare single agent doxorubicin to Doc services with <unk>.
Speaker Change: With progression free survival as the endpoint.
unknown: This trial would be expected to enroll patients with UBS and MFS as well as other sarcoma subtypes expected to respond to therapy with <unk> and dock services.
FDA: We expect to discuss the design of a frontline trial with the FDA at the time of a pre BLA meeting to review the expected submission of data from <unk> for potential accelerated approval.
Frankly sarcoma: Frankly sarcoma, assuming positive results from the <unk> pivotal trial.
Speaker Change: It is important to understand the sales potential in SAR come within but at parity pricing.
Speaker Change: Not solely the forecasted $200 million in peak annual.
Frankly sarcoma: Revenues anticipated if approved in refractory EPS in MFS.
Speaker Change: Our clinical development strategy designed to create the opportunity for <unk> to broadly benefit patients with sarcoma, and the frontline adjuvant and neo adjuvant settings by seeking supplemental BLA.
Speaker Change: We will now turn to our DNA damage repair inhibitor Trc, one or two.
Speaker Change: That is financially supported through a cooperative research and development agreement with the National Cancer Institute.
Speaker Change: The NCI is sponsoring an ongoing randomized phase II trial, assessing trc, one or two in stage III non squamous non small cell lung cancer in combination with chemo radiation.
NCI: The two arm trial wound rose 78 patients to assess the benefit of adding Trc went up to two current standard of care treatment of Pemetrexed cisplatin and radiation therapy.
NCI: Followed by consolidated or value may have maintenance treatment with.
Speaker Change: The primary endpoint of the trial is progression free survival.
Speaker Change: And the trial is designed to detect an improvement in PFS at one year for 56% to 75%.
Speaker Change: <unk> sites are now open for enrollment in the U S and final results are expected in 2025.
Speaker Change: Yeah.
Speaker Change: I will now shift from our pipeline update to discuss our product development platform or PDP of CRO independent research.
Charles P. Theuer: We executed a license of our PDP for an upfront payment of $3 million in November of last year to a biotech company that recognize the value of internalizing its clinical operations to reap the benefits of zero independent clinical trial implementation that we enjoyed tracon.
Charles P. Theuer: The license of the PDP is expected to allow them to run clinical trials as we do at Tracon.
Speaker Change: For an estimated cost of approximately $100000 per patient for oncology trials.
CFO: As a typical CFO charges $300000 or more per patient in this indication.
CFO: 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 expected advantages of increased speed of trial execution and pace of enrollment that we enjoyed tracon by running trials using our in house team.
Speaker Change: As we have noted in the past we expect to further supplement our cash position through opportunities for non dilutive capital enabled through our CRO independent PDP.
Speaker Change: That we believe positions us as one of the most efficient clinical development organizations.
CFO: We expect to continue to leverage our platform in two ways that provide perpetual potential non dilutive capital to tracon.
CFO: First we plan to continue to evaluate drug candidates whereby tracon captures revenue.
Charles P. Theuer: By performing clinical trials at a lower fixed cost compared to zero, but still at a premium to our cost using a pay for performance model.
Speaker Change: This is an aligned structure, we used in the past for example, with Johnson <unk> Johnson.
Speaker Change: Second we plan to continue to execute non transferable licenses to our PDP, whereby we are paid to share our proprietary capabilities and knowhow to enable another companies independently internalized clinical operations and use these new capabilities to avoid contracting with zero to execute clinical trials.
Charles P. Theuer: As has been the experience at Tracon, we believe such an investment to result in substantial time and cost savings for our partner.
Charles P. Theuer: We believe that overtime, a PDP has earned strong credibility as a compelling solution for companies, who wish to become CFO of independent and reap the rewards of conducting trials faster at higher quality and lower cost compared to trial typically contracted crows.
NASDAQ: As previously previously announced on March 7th 2024, we had a hearing with NASDAQ regarding a letter of noncompliance that we received on June eight 2023 regarding two deficiencies.
Speaker Change: We presented a compliance plan to cure deficiencies to NASDAQ at the hearing on March 7th.
Speaker Change: On March 20th the NASDAQ hearings panel granted our request for continued listing on the NASDAQ capital market subject to us regaining compliance with all applicable continued listing requirements.
unknown: We affected a reverse stock split on April 9th to cure one of the NASDAQ deficiencies.
Speaker Change: And are considering alternative secured the other NASDAQ deficiency, which requires us to have a market value for a listed securities of at least $35 million or meet the stockholders' equity requirement of $2 5 million by June <unk>.
Scott: At this time, Scott will provide an update on our financials.
Scott: Thank you Charles and good afternoon, everyone.
Scott: <unk> research and development expenses were $1 9 million for the three months ended March 31 2024.
Scott Smith: Compared to $5 million for the comparable period of 2023.
Scott: The decrease was due to termination of cohort.
Speaker Change: The <unk> pivotal trial in 2023.
Charles P. Theuer: General and administrative expenses were $1 4 million for the three months ended March 31, 2024, compared to $2 3 million for the comparable period of 2023. The decrease was due to lower legal expenses.
Speaker Change: Our net loss was $3 2 million for the three months ended March 31, 2024, compared to $8 5 million for the comparable period of 2023.
Speaker Change: Turning to the balance sheet at March 31, 2024, our cash cash equivalents and restricted cash totaled $8 million compared to $8 6 million at December 31, 2023.
Speaker Change: With that I will turn the call back over to Charles.
Charles P. Theuer: Thank you Scott.
Charles P. Theuer: As you have heard our corporate strategy is proceeding as planned allow me to recap two key expected events.
Charles P. Theuer: First in the third quarter, we expect to report final data from the <unk> pivotal trial.
Charles P. Theuer: Second we expect to continue to leverage our product development platform to generate non dilutive capital through either an additional license or by capturing revenue by replacing a CRO next <unk> clinical trials for partners at a lower cost compared to a CRO, but still at a premium to our cost using a pay for performance model.
Charles P. Theuer: Thank you for your time and attention and we are now available to answer your questions.
Charles P. Theuer: Thank you.
Speaker Change: I ask a question. Please press star one one on your telephone and wait for your name to be announced towards draw. Your question. Please press star one again one moment. Please for our first question.
Charles P. Theuer: And our first question comes from the line of James Molloy with Alliance Global partners.
Charles P. Theuer: Yes.
Matt: Hi, guys. This is Matt <unk> on for Jim Malloy.
Ted: Hi, Ted.
Matt: Couple of questions first regarding the PDP.
Ted: Can you go over a little bit more about the margins you would expect.
Ted: On a clinical trial that you guys would run through PDP.
Ted: For you guys and for your clients.
Ted: I appreciate the question. Thanks, so much.
Speaker Change: I can give you. An example that serves as a precedent case for example, we have run in the past the phase one trial for imap, whereby we repaid $9 million to conduct a clinical trial again, a phase one trial. Our total expense for that trial was a bit under $3 million. So in other words, we can run a trial at <unk>.
Speaker Change: $100000 of patient in oncology.
Speaker Change: Zero is a bidding those trials at roughly $300000 per patient.
Speaker Change: So for example for a 30 patient trial, if we can do it at $3 million, which is $100000 per patient and we can guarantee the total cost of the trial to a partner at.
Speaker Change: At $300000 of patient, which for 30 patients is about $9 million.
Speaker Change: It's a benefit to our partner because thats a guaranteed price it won't go up which is.
Speaker Change: So on change orders.
Speaker Change: So bid price of 300000 hours the patient could go up substantially beyond that will guarantee of 300000 of patient knowing the profit margin there is about 200% for us.
Speaker Change: Got it alright.
Speaker Change: Thank you.
Speaker Change: And then could you go over.
Speaker Change: Uh huh.
Speaker Change: Potential solutions in terms of like regaining compliance with the minimums by early June I think you had talked about and how that would align with.
Speaker Change: The timeline for the final <unk> data.
Speaker Change: Yeah, Great question, so with respect to the NASDAQ compliance to do one or two things either increase the market cap to $35 million or regain compliance to increase in the stockholder equity to $2 5 million. Our preferred approach is to leverage the PDP that if we can leverage the PDP and gain revenue by for instance, as you just pointed out doing a trial.
Speaker Change: As someone else, including a significant upfront payment to do that or by licensing the PDP as we did in November that's the preferred option for us too.
Speaker Change: Have cap will come to the company that would potentially cure the stockholder equity deficit.
Speaker Change: Other options would potentially be fundraising as well, but our preferred approach clearly is leveraging the PDP through business development.
Speaker Change: Gotcha, Okay and can you go over.
Speaker Change: That would align with like the timeline for <unk>.
Speaker Change: And so.
Speaker Change: Yes, sorry.
Speaker Change: No I appreciate the question sorry, yes, so and to start data, we're expecting final data in Q3. So that's.
Speaker Change: This past June is when Q3 starts we haven't given a more definitive timing within Q3.
Speaker Change: But I wouldn't expect it to be just after the NASDAQ compliance date of June 30.
Speaker Change: Okay got it alright. Thank you for your questions I appreciate it.
Speaker Change: Thanks for the questions.
Speaker Change: Thank you once again, ladies and gentlemen to ask a question. Please press star one on your telephone.
Speaker Change: Thanks for the questions so with that I'll hand, the call back over to CEO and President Dr. Charles Stewart for any closing remarks.
Speaker Change: I'd like to thank the audience for your time and attention and your questions and we look forward to talking with you again next quarter.
Speaker Change: Ladies and gentlemen, thank you for participating this does conclude today's program and you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].