Can-Fite Biopharma Ltd

quarter results and business update conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Kuntz of Investor Relations. Thank you, sir. You may begin.

Thank you. And good morning, everyone, and thanks for joining the CanFight third quarter 2020 conference call. Today, the company will provide a financial update for the quarter ended September 30, 2020, as well as the latest developments in CanFight's advanced stage clinical pipeline. On today's call are CanFight's CEO, Dr. Penina Fishman, and the company's CFO, Monty Farbstein. At the end of the call, we will have a question and answer session. We will start with a brief safe harbor statement. This conference call may contain forward-looking statements about CanFight's expectations, beliefs, or intentions regarding, among other things, market risks and uncertainties, its product development efforts, business financial condition, results of operations, strategies, or prospects. Forward-looking statements can be identified by the use of forward-looking words such as believe, expect, intend, plan, may, should, or anticipate, or other negatives or other variations of these words or other comparable words, or by the fact that these statements do not relate strictly to historical or current matters. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause CanFight's actual results to differ materially from any future results expressed or implied by the forward-looking statements. Now, with that out of the way, I will turn the call over to Dr. Penina Fishman. Please go ahead, Penina.

Thanks, Paul, and thank you all for participating in our call today. During the third quarter, we conducted an interim analysis of our phase 3 studies in the rheumatoid arthritis and psoriasis. The analysis has been conducted by two independent data monitoring committees, namely the IDMC. The company was blinded to the data. In early October, we announced the IDMC's recommendations as follows. We were very pleased to have a positive result in our psoriasis comfort trial. The IDMC recommended that we proceed with this phase three study of piclidenazole in the treatment of moderate to severe plaque psoriasis. The IDMC further recommended that we continue with the original sample size and drop one dose group based on the positive data. While the interim data continues to be blinded to coincide in this rising study, we consider the IDMC's recommendations highly encouraging. Because the optimal dose has now been identified, we believe the study can be concluded earlier than originally planned. The majority of costs associated with this Phase III comfort study have been previously paid. Piclidenazone is outlicensed for the indication of psoriasis in nine countries through agreements that include milestone payments and royalties on revenues upon regulatory approval. We believe that Piclidenazone has a clear value proposition in the psoriasis market based on its demonstrated safety and efficacy to date and the benefit of being an oral drug among a growing number of injectable biologics. All drugs are cost-effective and more convenient for the patient. Both of these factors are preferred by psoriasis patients based on a 2018 study published in an industrial journal. A different IDMC for our acrobat rheumatoid arthritis study recommended that we not continue the rheumatoid arthritis study. Based on this, we unblinded the data and conducted detailed analysis, which showed that although piclidenazole's efficacy was significantly superior to placebo, the study missed the primary endpoint, which was non-inferiority versus the comparator methotrexate. A graph summarizing the data is presented in today's press release that we have published earlier. Moving forward, we are putting more focus on our clinical programs that have shown promising data, including the psoriasis, NASH, and liver cancer. In further news on piclidenazone, we were pleased to receive both the FDA and the IRB's go-ahead for the phase 2 study of piclidenazone in the treatment of COVID-19. We expect to enroll our first patient before the end of the year. The 28-day study will enroll 40 patients hospitalized with moderate COVID-19 per the US NIH Coronavirus Disease 2019 Treatment Guidelines. The randomized double-blind study will evaluate the patients who will receive piclidenazone in addition to standard supportive care as compared to patients who receive standard supportive care with placebo. Piclidenazole's anti-inflammatory properties make it a promising candidate in the fight against this pandemic. We have also had some important developments with namodenozone. Dr. Isat Safadi, who was the principal investigator of our Phase II study of namodenozone in the treatment of nasal dneesh, delivered a late-breaking oral presentation at the American Association for the Study of Liver Diseases, AASOB, conference. Presenting to the world's leading scientists and health care professionals committed to preventing and curing liver diseases, Dr. Safadi concluded in his opinion, and I am citing him, Namodenozone's very impressive study data may be citing a promising drug for the treatment of mesh due to the combination of good efficacy and favorable safety. The AISLD organization is a very prestigious conference and we believe that being selected to present an oral aid breaking presentation indicates that the scientific community see our Namu Denso findings as particularly compelling. This brief was further reinforced when our presentation was selected as the best of believer meeting under the NASH category. At CanFight, we are very encouraged by the level of interest in namodenozone in the treatment of NASH from both the scientific and business communities. Further strengthening our IP portfolio, intellectual property portfolio, the European Patent Office issued a patent for namodenozone in the treatment of NASH. The patent claims include use of the A3 adenosine receptor The target of our platform technology in reducing ectopic fat accumulation, particularly in fatty liver, is manifested in NASH. During this third quarter, we completed development also of a cell-based assay to identify clinically active cannabis-derived compounds that bind to and activate our target, the A3 adenosine receptor. In addition to using this assay in the development of our own cannabis-derived compound-based therapeutics, we also plan to market the assay on a fee-for-service basis to researchers and other cannabis companies worldwide. I will now turn the call over to Moti Farbstein, our CFO, for a review of the financial results. Moti, please.

Thank you, Penina. Revenues for the nine months ended September 30, 20, were $0.61 million compared with $1.84 million for the third period of 19. The decrease in revenues mainly due to the recognition of lower portion of advance payment received under distribution agreements from GEDRO, CKD Pharmaceuticals, and Cypher Pharmaceuticals. Research and development expenses for the nine months ended September 30, 20, were $9.05 million compared with $7.01 million for the same period of 19. Research and development expenses for the nine months as ended September 30, 20 compromised primarily of expenses associated with the phase two studies of four namodenozone in the treatment of national liver cancer, as well as expenses for the ongoing phase three studies of ticlidenazone in the treatment of rheumatoid arthritis and psoriasis. The increase is primarily due to the increased cost associated with the accelerating rate of enrollment of patients for the phase three studies of piclidenazole for the treatment of rheumatoid arthritis and psoriasis. General and administrative expenses were $2.14 million for the nine months ending September 30, 20, compared to $2.22 million for the same period in 19. The decrease is primarily due to decrease in professional services and travel expenses, which was partially offset by the increase in salaries and related benefits and insurance expenses. Financial expenses net for the nine months ended September 30, 2020, was $0.22 million compared to $0.44 million for the same period in 2019. The decrease in financial expenses net is mainly due to the fair valuation of the investment in Wise Pharma Inc., shares which is classified under short-term investment. Kempite net loss for the nine months ended September 30, 2020, was 10.81 million compared with the net loss of 7.8 million for the nine months ended September 30, 20, was 10.81 million compared with the net loss of 7.84 million for the same period in 19. 10.69 million at December 31, 19. The increase in cash during the nine months ended September 30, 20 is due to an aggregate of 17.68 million net proceeds received through warrant exercises transaction in January 20, a public offering in February 20, partial exercise in March, April, and May 20 of warrants issued in February 20 public offering, and registered direct offering in June and July 20, which was offset by net cash used in operating activities of $10.16 million. I will now turn the call over to Paul for our Q&A session.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, if you would like to ask a question, press star 1 on your telephone keypad. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Peter Levine with Ameriprise. Please proceed with your question.

Hi. Thank you for the call. I'd like to know when do you feel or when do you think the psoriasis study will be completed and when will a Phase III trial start for namodonazine?

Two good questions. Thank you, Peter. Basically, regarding this crisis, we are doing all the preparatory work to continue enrollment, and we assume that enrollment will be done in a couple of months. As we mentioned, most of the expenses have been already paid, so we are ready to go for it. And after we will enroll the last patient, we will wait until he will complete the treatment. So we may assume that it will take like 10 months, maximum 12, to complete the psoriasis study and to come up with the data. Regarding the NASH, we are doing now all the thinking work with a couple of key opinion leaders who are really the leaders in the NASH arena and did the same work with a few companies which have been successful and with those which unfortunately failed. And we will come up with an announcement when we will complete this preparatory work for the next national clinical study. Thank you.

As a reminder, if you would like to ask a question, press star 1 on your telephone keypad. One moment please while we re-poll for any additional questions. Thank you. Our next question comes from the line of Ralph Mardini, a private investor. Please receive your question.

Yes. Good evening, Dr. Fishman. I just had a few questions here with regards to the RA study. Now, I know now that you've terminated that. I'd like to know first, what was the total cost of that study for the

I will refer this question to Moti Farbstein, our CFO.

Thank you, Rod, for the question. The costs were between $5 million to $6 million in the interim analysis.

Thank you very much, and I'd like to know, I know there's a patent that you've been approved for namodenosine and treatment of NASH in Europe. Have you considered filing one in the U.S., or what is your approach on this?

Of course, we will include the U.S. when we will make more progress. Of course, we need to liaise also with each one of the agencies And absolutely, in order to register the drug, and as I mentioned a couple of times during the company last calls, we always work in parallel with the EMA and the FDA, and patients from both continents will be included in our phase three clinical studies before we will register the drug with each one of the agencies.

Okay, well, thank you very much. And lastly, can you maybe elaborate on the fee-for-service basis on the development of assay for cannabis-derived compounds? What do you mean by a fee-for-service basis?

Okay, thank you very much for this very good question. Basically, CanFight came across very interesting findings that cannabis does not work only through the cannabis receptors. It acts also through our receptor. We have came up with a patent which basically cover all the uses of looking at the efficacy of cannabis through our target, the H3 adenosine receptor. So we can get a sample of cannabis or its ingredients and tell the one who is the holder of the sample if his sample can be efficacious in lots of clinical situations like inflammation, like cancer, like liver disease, so on and so forth. So this is what I meant, FIFO service. We developed a very unique assay which can tell if a cannabis or a cannabis derivative is clinically efficacious. So this is what I meant when I mentioned FIFO service.

Very well. Thank you for explaining that part. And lastly, I know you have provided many presentations within the last few months for partnerships. How is that going? Maybe you want to share, has there been positive feedback? Is there a plan put forward by your team? Maybe you can shed some light for investors out there.

Sure. First of all, our team is putting a lot of effort in order to create more partnerships. As you know, CanFight will never market its own drug. We are looking for partners that will do it when our drugs, which have a very unique profile of both efficacy and very good safety, will be launched to the market. I cannot tell you more. As a CEO, of course, I will always be very positive. This is what I can always communicate, but will not dive into any details, but you will hear it in one of our forthcoming PRs. So I said more than I could say.

Thank you very much, Dr. Frischman, and that's a good sign. I hope the best for you guys, and thanks again for the quarter update.

Thank you very much. Thank you.

We have no further questions at this time. I would now like to turn the floor back over to management for closing comments.

Thank you. By the end of this year, we expect to commence patient enrollment in our Phase II COVID-19 study. Looking ahead to 2021, we intend to continue our Thrive This Phase III study. We intend to initiate a pivotal Phase III study in liver cancer and also initiate the next study in nasal mesh. Thank you, everyone, for joining us today, and have a good day. Bye-bye.

Ladies and gentlemen this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.