Navidea Biopharmaceuticals, Inc.

Thank you, and thank you all for joining us here today. This call is being webcast live on our website, ir.navidia.com, and a replay will be made available. There is an accompanying slide deck that is also being displayed. Following prepared remarks, we will be conducting a live question and answer session. NaVidia's chair of its board of directors, Mr. Alex Capello, its vice chair, Mr. Kim Scott, and its vice president of finance and administration, Erica Eves, are joining me on the call today. During the course of this conference call, we will be making forward-looking statements regarding future events and the future performance of the company. These events relate to our business plans to develop NVIDIA's molecular diagnostics and immunotherapeutics, which include clinical and regulatory developments and timing of clinical data readouts, along with capital resources and strategic matters, as well as the impact of the COVID-19 pandemic on NVIDIA's business operations. All of these statements are based on the beliefs and expectations of management as of today. These statements involve certain assumptions, risks, and uncertainties and could cause actual results to differ materially. We assume no obligation to revise or update forward-looking statements, whether as a result of new information, future events, or otherwise. Investors should read carefully the risks and uncertainties described within the Safe Harbor section of our website. as well as the risk factors included in the company's most recent quarterly and annual filing with the SEC. With that said, let's begin our update. During the second quarter of 2022 and since, we continue to work on financing for the company. We closed on a $2.5 million bridge loan from the company's vice chair of the board of directors, Mr. Scott, and last month the company completed a rights offering with the investment banking arm of Maxim Group. The company received aggregate gross cash proceeds of approximately 6.2 million in the rights offering. If exercised, additional gross proceeds of up to 11.6 million may be received through the exercise of warrants issued in the offering. The warrants are exercisable immediately, expire five years from the date of issuance, and have an exercise price of 50 cents per share. We also received an accelerated reimbursement payment of $800,000 for certain research and development expenses from a strategic partner. We continue to plan for additional capital raise in the coming months. We have advanced our clinical trials in rheumatoid arthritis as well as our pipeline and other diagnostic indications and in therapeutics. Overall, we've made good progress on our phase 2B trial in rheumatoid arthritis, or RA, comparing imaging to biopsy, and we announced the promising preliminary results and our ability to distinguish the fibroid pathotype from the non-fibroid in our first 11 evaluated patients. These strong early results support our hypotheses and provide great data in support of telmanicept imaging as a biomarker of CD206 expression in joints of patients with RA. We also continue to enroll into the RA Phase III and have recently opened up an additional nine sites for a total of 12 now open. We are also advancing our therapeutics and imaging applications through collaborative relationships with various well-known institutions and investigators across the globe, and we are growing and diligently maintaining the company's intellectual property. The team here works extremely hard and efficiently, and I'm very proud to be associated with this outstanding group of individuals. You may have seen our recent release about the termination of the Jubilant Memorandum of Understanding. This memorandum carried with it binding terms of exclusivity such that we could not entertain discussions or offers from other parties for the rights to our potential commercial product and RA. From the time of the original signing of the MOU to now, we have continued to advance Tolmanisept and RA into the Phase 2B and Phase 3 trials currently underway. The ending of the exclusivity period is a significant opportunity to speak to potential partners with advanced data in hand. In the Capital Royalty Group case, we announced a ruling awarding CRG's attorney fees on their breach of contract claims against NVIDIA and Macrophage Therapeutics. We are disappointed in the court's ruling and do not believe the law and the facts presented at the trial support this ruling. We are discussing our best course of action to pursue in response to this ruling. As we've said in the recent past, there are many things we are working on behind the scenes, and we will provide you with updates as soon as we are able and as appropriate. Now I'd like to provide more detail around the clinical updates. I'll begin with progress in our rheumatoid arthritis program. We continue to enroll into our phase three trial in RA. As I just mentioned, we recently announced that we have opened up nine new sites at the end of August and have enrolled 30 subjects to date. We've done this with about 16 total site months of enrollment. So our per site, per month enrollment rate is significantly greater than the average. The indications we are going for in RA, once again, are one, early prediction of treatment response to a new or first time anti-TNF-alpha therapy, and two, identification of RA patients with low level of localization of tolamycept who are less likely to respond to anti-TNF-alpha therapy. As we have discussed previously, there is a large unmet need for a reliable early predictor of whether or not a therapy is working in a patient with RA. Because if a drug is not working, the patient's disease is not being treated, and this can lead to long-term health consequences, along with unnecessary high drug costs for ineffective therapies that bring with them possible side effects. Our Phase III trial will establish the ability of technetium-99M tilmanisept imaging to serve as an early predictor of treatment response in RA patients switching to an anti-TNF-alpha therapy, addressing this unmet medical need. In NAV332, our comparison study of telmanisept imaging to joint biopsy, this trial remains in active recruitment. As we've announced and discussed previously, the preliminary results of this trial are promising. Our aim is to recruit patients with each of the three pathotypes of RA, to obtain comparative imaging and pathology results. And the trial is designed so that we enroll a minimum of four subjects in each of these three pathotypes of RA, fibroid, diffuse myeloid, and lymphomyeloid. So overall trial size has been expected to range between 12 to 24. To date, we have achieved the minimum or more in two out of three of the pathotype buckets. with patients having had both their imaging and joint biopsies completed. The primary objective of this study is to assess the relationship between joint-specific telmanicept uptake values and the pathobiology of RA-involved joint tissue. Knowledge of an individual RA patient's pathotype may be clinically important because it may predict to which RA therapy a patient is likely to respond. There is a growing body of literature suggesting that those patients with the fibroid type of RA are much less responsive to the anti-TNF-alpha drugs. And so a means of determining whether or not a patient has this particular pathotype is seen as extremely important to a number of key opinion leaders in rheumatology. As of this time, there is no reliable way of assessing a patient's pathotype of RA, other than by doing an invasive biopsy. And we have hypothesized that Telmanisept could provide this information. We previously discussed those preliminary results that I mentioned on the first 11 patients. These results indicated that telmanicept uptake in RA inflamed joints is able to discreetly differentiate patients with the fibroid pathotype, i.e. those with low macrophage involvement, from those having either the diffuse myeloid or the lymphomyeloid pathotypes of RA, i.e. those with high macrophage involvement. Seven of the subjects had relatively low levels of telmanicept uptake, All seven of these subjects were found to have the fibroid pathotype. Of the remaining four subjects, three had the diffuse myeloid pathotype and one had the lymphomyeloid. Furthermore, those subjects with either one of these two pathotypes had, on average, more than three times the telanosept uptake as the average subject with the fibroid pathotype. So we have been able to clearly classify patients as either fibroid or non-fibroid based on our imaging results taken before the biopsy in those 11 cases. These data also provide support for one of our indications in the Phase III trial, the ability to predict from a baseline scan alone whether a patient is likely to receive a meaningful clinical benefit from an anti-TNF-alpha therapy. Since, as I mentioned, there is increasing evidence that if a patient has a fibroid pathotype of RA, they are less likely to receive significant clinical benefit from anti-TNF-alpha therapy. You might recall that in our previously completed phase 2B study, NAV331, that contained a pilot arm looking at the efficacy of telmanisept imaging at early prediction of treatment response, those patients exhibiting a low level of telmanisept uptake in their joints on their baseline scan had an almost 90% non-response rate to anti-TNF-alpha therapy using a clinical gold standard assessment. You can look for these preliminary results to be presented at an upcoming conference, along with full study results from this previous Phase IIb study, NAV331. Finally, these biopsy trials are notoriously slow recruiting, but in fact, our recruitment rate over our number of sites is faster than what our lead PI indicated he would expect. Specifically, in our planning phase, we were told that if we could open 10 sites for recruitment, we could achieve our enrollment figures in about 18 months. Due in large part to resources, as well as COVID and site reopening issues, we have only been able to open three to date for enrollment. From the opening of our first of three sites to now is 18 months. As usual, the clinical operations team has done a great job at exceeding expectations, where we've almost completed enrollment in the same time period with roughly a third of the sites. We continue to make very good progress in automating the image quantification as well, which will have significant benefit for the commercial product. We have the letter of intent and continue to work closely with MIM software on the full agreement for them to be our commercial partner for image quantification of telmanicept imaging in RA. Once again, MIM is a leading medical image software company based in Cleveland with a large footprint in the nuclear medicine space. They completed a pilot study using data from our trials demonstrating that they can develop a fully automated application that can robustly reproduce our quantitative imaging results using our proprietary algorithm. This will be important for rollout of a commercial product. The ability to perform the quantitative reads rapidly and reproducibly and at large scale through automated means is critical to large scale use of telmanosep for rheumatoid arthritis. Keep in mind that all of this, the imaging analysis methodology, as well as the data upon which it is built, including the normative database you've heard us discuss before, is not only critical to deriving the most accurate and sensitive objective read of our images, but it also serves as a significant barrier to entry to possible competitors in this space. We will continue to work with MIM to finalize the terms of the partnership and we'll make an announcement when done. In other areas of our diagnostics pipeline development, in cardiovascular disease, the group at Massachusetts General Hospital in Boston has published the results of the investigator-initiated atherosclerotic plaque imaging study that we helped to support. The data are promising in terms of localization of to sites of atherosclerotic plaque and were in line with what was reported in the pilot study we co-published with them previously. We press release the publication, and you can find reference to it there. Preclinical studies on Gallium-68 tilmanisept for PET imaging and related next-generation manisept imaging agents have progressed significantly through internal work at NVIDIA and through extramural collaborations with researchers at the University of Alabama at Birmingham or UAB. We have completed work on our NIH-funded preclinical studies for evaluating Gallium-68 tilmanisept and various new imaging agents similar to Comanisept in a mouse model of atherosclerosis. Work on another important set of preclinical imaging studies was completed and presented at the recent Society of Nuclear Medicine and Molecular Imaging meeting, and the manuscript is currently in peer review. This work looked at a method to increase the localization of our imaging agent to target tissues, while additional technology was designed to block off-target imaging agent localization to the liver. which is a major site of localization when telmanisept is administered intravenously. These studies were highly successful, showing that we can dramatically increase localization of a new telmanisept-like imaging agent to tumors while simultaneously significantly blocking off-target localization to the liver. On the therapeutic assets front, we are advancing our candidates in the oncology and anti-inflammatory spaces in preclinical studies. Work on new drug delivery constructs and new targeted payloads has progressed. These new constructs carry new drug payloads that may be more effective than doxorubicin for beneficially altering the immune status of tumor macrophages, for example. Results in mouse models have demonstrated that when administered alone or in combination with another cancer drug, these therapeutic constructs significantly reduce the rate of tumor growth. Some of these results covering new bisphosphonate payload constructs were recently presented at the tumor myeloid directed therapy summit meeting as well. This work is about advancing to a lead candidate for macrophage phenotype altering drugs for oncology indications. In vitro studies examining the ability of our dexamethasone constructs for inflammatory indications have shown positive results as well, demonstrating macrophage phenotype change These constructs will soon be tested in preclinical models. Preclinical studies are also ongoing in leishmaniasis. Leishmaniasis is a vector-borne chronic disease caused by a protozoan parasite that replicates in CD206 positive macrophages. It is transmitted to humans through the bite of infected sand flies found in parts of the tropics, subtropics, and southern Europe. Leishmaniasis is rare in the U.S., but in more tropical countries where the sand fly vectors are found, it is a common, serious, and potentially life-threatening disease. We published work in 2017 demonstrating that high CD206-expressing macrophages play a role in the dominant form of the disease. And recently, we have renewed preclinical studies with one of the world leaders in this area and have promising early results from two preclinical studies. A third replication study is currently underway. And so our therapeutic pipeline is robust and moving forward. That brings me to our overall intellectual property front. We received notification of issuance of patents from the USPTO for our patent application covering a Manisept-based therapeutic for leishmaniasis. We continued to submit new provisional applications and work on our pending applications as well. We have filed two new provisional patent applications, one describing a new degradable linker for dexamethasone and paclitaxel-containing MANACEP therapeutic constructs, and the other describing novel bisphosphonate-containing MANACEP constructs used in studies I mentioned a few minutes ago. These constructs are being evaluated preclinically for effects on macrophages and in animal models of oncology and inflammatory indications. We have filed five new provisional patents in total since December 30th of 2021. We also received a decision of grant for patent application in Japan for claims related to targeted delivery of a wide range of therapeutic payloads attached to MANICEP platform-based constructs using a degradable hydrozone linker. So we have an active IP protection strategy that we believe will provide needed protections and rights to both our current diagnostic and therapeutic agents as well as to our next generation molecules and disease indication. Now, on the drug manufacturing and supply front for both Lymphaseq and the RA product, we have been and continue to work with a new active pharmaceutical ingredient or API supplier as well as a final drug product supplier. We will keep you up to date as this progresses. But as of this time, we are advancing towards completion of these and readiness for clinical and commercial supply going forward. On the LymphoSeq Europe and rest of the world front, you might have seen our recent press release announcing publication of a manuscript by an Australian investigator using Tilmanisept. This was the first such study coming out of Australia, and this investigator and his colleagues are enthusiastic about using LymphoSeq in Australia going forward. We are also in early discussions about potentially licensing Lymphaseq Europe with possibilities for a long-term relationship with other diagnostic pipeline products as well. Prior challenges to penetrating that market were pricing and competition, but with appropriate pricing and a number of studies demonstrating the strengths of Lymphaseq and Sentinel lymph node indications, we feel there's an excellent opportunity there for the right partner. These are just some of the highlights of the last quarter that we wanted to touch on for this update. We remain largely focused on the RA pipeline, specifically the Phase 2B imaging to biopsy trial and the Phase 3, while we also continue to support and push for progress on our other diagnostic and therapeutic indications. As always, I want to thank the team here for their tireless efforts. to keep things moving and our network of clinical trial sites and academic research collaborators for all of their hard work. Our strategy remains to advance our pipeline products to key inflection points and seek appropriate partnerships for commercialization and marketing. So thank you. With that, I'd like to turn the call over to Erica for the financial updates. Erica?

Thanks, Mike. Brief review of the second quarter results. Total net revenues for the second quarter of 2022 were $57,000 compared to $261,000 for the same period in 2021. Total net revenues for the first half of 2022 were $57,000 compared to $385,000 for the same period in 2021. The decrease was primarily due to the 2021 partial recovery of debts previously written off in 2015. the 2021 receipt of reimbursement from Cardinal Health of certain R&D costs, decreased grant revenue related to grants from the NIH supporting MANICEP development, and decreased license revenue from transitional sales of to MANICEP in Europe. Research and development expenses for the second quarter of 2022 were $1.7 million compared to $1.5 million for the same period in 2021. R&D expenses for the first half of 2022 were 2.9 million, compared to 2.7 million for the same period in 2021. The increase was primarily due to increased employee compensation, including incentive-based awards, and increased recruiting fees, offset by decreases in drug project expenses and regulatory consulting expenses. Selling general and administrative expenses for the second quarter of 2022 were 1.3 million, compared to $1.4 million for the same period in 2021. SG&A expenses for the first half of 2022 were $3.1 million, compared to $3.7 million for the same period in 2021. Decreases in employee compensation, including fringe benefits and incentive-based awards, travel, investor relations, general office expenses, facilities costs, and franchise taxes were offset by increases in insurance, director fees, losses on the abandonment of certain intellectual property, and legal and professional services. NVIDIA's net loss attributable to common stockholders for the second quarter of 2022 was 3 million or 10 cents per share compared to 2.7 million or 9 cents per share for the same period in 2021. NVIDIA's net loss attributable to common stockholders for the first half of 2022 was $6 million, or 20 cents per share, compared to $5.6 million, or 20 cents per share, for the same period in 2021. NVIDIA ended the second quarter of 2022 with $328,000 in cash and cash equivalents. As Mike mentioned previously, the company received aggregate gross cash proceeds of approximately $6.2 million in the recent rights offering. And this exercised additional gross proceeds of up to $11.6 million may be received through the exercise of warrants issued in the rights offering. The company estimates that it currently has enough cash to continue operations into the first quarter of 2023. And finally, as previously disclosed, the company is not currently in compliance with the NYSE Americans continued listing requirements related to stockholders' equity. The NYSE American has accepted the company's plan to regain compliance, and the company continues to provide quarterly updates to NYSE as required under the plan. The company has until July 28, 2023 to regain compliance with the stockholders' equity requirements. And now I'd like to turn it back over to Mike.

Thank you, Erica. So we're now going to open it up for a question. Let me remind you that you have myself, the Chief Medical Officer, Mike Rozal, Erica Eves, VP of Finance and Administration, as well as our Chairman of the Board, Alex Capello, and our Vice Chair of the Board, Mr. Kim Scott, on the line, and as well as our Investor Relations person, Jeff Smith.

Thank you. At this time we will be conducting the 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 that your line is in the 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. We ask that you please limit yourself to two questions and then rejoin the queue if you have additional questions. One moment please while we poll for questions. Our first question comes from the line of Michael Okunowich with Maxim Group. Please proceed with your question.

Hey, guys. Thank you for taking my question. So I guess first I'd like to see if you could just discuss a bit about your commercial plans in light of the termination of the MOU with Jubilant and how the value of the program may have been impacted by the additional Phase 2b data as well as the market analysis, which have both emerged in the time since that was signed.

Thanks, Michael. Appreciate the question. I think the answer is embedded within the question, as I think you probably know. Very good. So we've advanced the program, as we've said, and you just reiterated, significantly since the original signing of that agreement. So that agreement was signed a couple of years ago, and we were If I recall correctly, in the early stages of our first Phase 2B study. So, we had a hypothesis with limited data in hand. And as such, the terms that were initially outlined, while beneficial, of course, to the company, were nowhere near what we'd be expecting to get at this stage of the program development. So, since that time, we've completed that Phase 2B. That data were supportive to move into the Phase 3. We met with the FDA, and they concurred with this assessment. We've also, as mentioned, begun and have announced the preliminary positive results to the Phase IIb study, giving us proof points for our mechanism of action of localization of telmanisept to macrophages in the joints of patients with RA, as well as being able to identify two distinct classes of pathotypes, at least, which helps us along the way towards a having a true biomarker of rheumatoid arthritis, a non-invasive biomarker or a virtual biopsy. So with the advances that we've done, we think we're in a much better position to have discussions and reap the concomitant benefits of having advanced the program significantly as we discuss a partnership with possible players or players in the field and possible partnerships. So with that exclusivity, we were unable, as you know, to even entertain discussions with other partners who had been following us as we advanced our program. So now we're in a position where we can have those discussions, entertain those, and since we've advanced further, we've de-risked the program significantly. And the further we go, the more we de-risk it, assuming things keep going on the trajectory that they are going, looking very positive. So that doesn't mean we turn away an offer now, but if we can keep going towards NDA submission, you know, the further we go, the better we are for where we might be in terms of a negotiation. So looking back on lymphocytes, for example, the deal with Cardinal was struck after approval of lymphocytes in North America, as well as in the EU, although Cardinal is not in the EU, or at least they're not a player in this space in the EU market. But since we advanced it so far to approval and we're actually running it, you know, doing the commercialization in the United States on our own, we were able to get a heavy inflator and great value for lymphocytic in North America in those negotiations. So we see something similar to that happening in the RA space. So I gave you a long-winded answer. Hopefully there's something in there that's meaningful. Okay?

That's right. No, no, I appreciate as much color as you can give. Yeah. I'd like to follow up on that point. Without getting into anything that you're unable to disclose, I'd like to see if you could just review who are some of the potential commercial partners that might be a fit. Obviously, there are the big nuclear pharmacies like Cardinal and Jubilant, but are there any other big players in that space, or is there potential for other companies, maybe those in inflammatory disease or diagnostics, who would make a viable partner for the product?

Yeah, great question. So indeed, you've hit upon two of those, of course. In the nuclear pharmaceutical space, in addition to the two you mentioned, for example, there's Curium that has a worldwide reach. There's also Lantheus Medical Imaging, and there are several others as well. But also, as you mentioned, we certainly would not close the door on something with a large pharma player who has traction in the inflammatory space domain and in rheumatoid arthritis specifically or an interest in that area. And as you said, I can't reveal things, but all of these are possible opportunities for partnerships for us in one way or another.

All right. Thank you very much. I appreciate you taking my questions, and I'll hop back in the queue.

Sure. Thank you.

Thank you. And our next question comes from the line of Fred Zaino with Keystone. Please proceed with your question.

Hey, how are you? Just a couple of quick questions. The $800,000 payment that you received from that third party, is there more to come? And if so, how much? And then I believe there's a sales milestone cardinal payment somewhere in the $10 million. I'm just curious if you could shed any color on that.

Yeah, without breaking confidentiality, I think I can say that there are. So this was an accelerated payment, and there is the potential for another milestone-based payment in our R&D development related to that agreement. So that is something that could be coming down the road. And in terms of the cardinal milestone, we do receive their annual sales figures for Lymphaseq, we are not at liberty to disclose those, but there is the potential if and when they hit the $100 million in sales, net sales, in one of their fiscal years that we would get a $10 million milestone. And that remains a possibility, and that's about all I can say right now.

Right. Any plans to hire a CEO?

Yeah, so what our strategy had been was to in consultation with a search firm that we had hired was to wait until the company was sufficiently capitalized to recruit a CEO of a caliber that could then take us into the next level. So with where we are now, the board will be having discussions and determine if that should be opened up now or what the next step should be.

One final question. I appreciate everything. Perfect. The cash gives you the runway to Q1 2023. Do you think there's any substantial or meaningful catalyst that you'll be able to achieve in that timeframe, maybe final results from 332 or something there that allows you to raise more capital?

Yeah, exactly. I think you've hit upon one of the big ones. Potentially the closeout of 332 with the results there. milestones in the recruitment in the phase three, of course, and additionally some milestones in the development of the therapeutic assays. But the two big ones are likely the NAV332 results and then advancement of the phase three, you know, maybe the first 50 or 100 patients as we go more towards completion.

Great. Thanks so much. Great job.

Thank you.

Thank you. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. And our next question comes from the line of Mike Raschiel with A Private Investor. Please proceed with your question.

Yes. Thanks, Dr. Rosal and Erica, for all your hard work and your staff. It's really appreciated. Dr. Rosal, you said there have been 30 people in the phase 3-33 already. Have they just been imaged, or have they also started the 213-day assessment?

Yeah, a handful of those, pardon the semi-pun. Hey, Mike, by the way, thanks for the question. A handful of those are still finalizing the screening, but they're enrolled. The majority of those have been imaged and are proceeding. We have Several of those this month are reaching their six-month milestone, and so that's a big event. And there are something on the order of 13 who've achieved the 12-week or three-month milestone. So things are progressing.

All right. Follow-up question on that. Do you see with opening those nine additional sites, will that give you enough runway, assuming the funding is there, obviously? to still be on your targets of mid-2023, early 2024?

Yeah, that's a great question. You know, we're always... We have a very... You know, me aside, we have a very high-performing team, and we have great sites that we've chosen for very good reasons. So as I've mentioned and alluded to in the past, our recruitment rate is several-fold, one to two... I'm sorry, two to three times what the normal recruitment rate is for RA trials, and in some cases it's been... four times at individual sites. So we know what we're doing. We can open up the right sites and they're motivated to get patients. It's always been for us about resources and that filters down to how many sites we can open. With that said, we're pushing the envelope here, but opening these 12 sites, if we can maintain these very high recruitment rates that we've seen in the phase three in our first three sites, and already we know that several of those sites we've just opened, have identified, in some cases, five or six patients they're going to bring in in the next month. If those sites can ramp up quickly as it looks like they can because they've been preparing and recruit at an accelerated rate, we could still be on target for that guidance. Optimally, we'd like more funding in order to open up more sites because that's how we built that model. But we have these sites that are overperforming. And if they continue to do it, right now that is still achievable. Don't, you know, don't, you know, our miles may vary, right, but we will do our best. But it's still within the ballpark with these 12 sites, especially if they keep going the way they look like they're starting.

Okay. Third question, then I'll come back in. On the 332 at the last conference call, there was 11 completed sites. And there were several potentials. So any of those potentials progressed yet to the biopsy stage, or are you still screening on 332?

Yeah, no, we have more. I just, you know, I debated giving the numbers on those. It becomes kind of a counting game. And, of course, we have to think about when we release the data carefully, both related to kind of breaking the seal of the trial. Usually you do these at defined time points. And then I don't want to speak too much on the data itself because, one, it's not finalized and validated yet, and, two, we want to, you know, eventually publish these data. And so the more you talk about data, the less, you know, the more difficult it becomes to publish, or at least in principle, you're not supposed to be publishing data that you've discussed in great detail. So anyway, with that said, we have advanced. Some of those patients have been recruited into the trial and imaged and biopsied. So we have more patients. In terms of the buckets, as I mentioned, we need to fill out one more of the pathotype buckets. And then the plan is to look at those data and determine what we have found. Can we discriminate between the three pathotypes? Or is it a fibroid, non-fibroid, which is very important? And then we'll look at the correlations of the macrophage number and density across all those subjects with our imaging signal. And the more data we have for that, the better.

On the LS, you said that you couldn't disclose the cells per the cardinal agreement. But in your presentations, you had about, there had been about 600,000 injections. Do you still see that number accelerating at a reasonable rate on the number of injections in the U.S.?

The number is above that now. We do know where that is. It's It's not greatly above that number now, but it has gone up. It's hard to say what's going to happen with the trajectory just from my looking at it. There were things going on in COVID and supply chain issues that impacted the medical field at large, not just the nuclear medicine field or Sentinel lymph node. assessment field, although it did implicate those or impact those. So with all that said, it looks like the trajectory is good. They have a good percentage of the market share, but it's hard to predict, you know, is it plateauing or is it going up? And I've probably said as much as I can say.

Thank you. And our next question comes from the line of Michael Okunowich with Maxim Group. Please proceed with your question.

Hey, thank you for getting back to me. I just had one more I'd like to follow up on the enrollment side for the phase three. If I'm interpreting from your slides correctly, it seemed like there's a decent bit of variability in the total number. I think it was 198 to 672. Could you discuss what factors would contribute to the total size of the trial just related to how the phenotypes break down during your enrollment?

Great question. What it relates to is the number of responders and non-responders to the anti-TNF alpha therapeutics. So we need, if you look at sensitivity and specificity, NPV and PPV truth tables, you can model these out, the number of samples you need in each one of those boxes, and your power of the study if you fill those boxes in with a certain number of patients. all of that is independent of whatever we're doing here, our diagnostic. But relative to our diagnostic, what's important is the number of anti-TNF-alpha responders and non-responders. We need about 100 in each of those two buckets. We need 100 non-responders and 100 responders. And that's why the bottom of it is 198. If we have a a breakdown where we're at about 100 of each. Obviously, it's not exactly 100. That's why it's not 200, but it's close. So if we have about 100 and 100 and we have no dropouts, then we're done and we can analyze the data. If the breakdown of the non-responders to the responders is more like we've seen in our previous Phase 2b trial or like some of the literature where there are many more non-responders to the anti-TNFs than responders, then our trial size will need to grow. So we modeled out kind of the worst case ratio, and that's how we get to 672. And on top of that, there's a 10% to 15% dropout rate baked into that. So the worst case is if we have maybe the worst ratio that has been seen for non-responders to responders, we'd have a trial size of 672. Best case is 100 to 100 for a total of 200. If you look across all therapeutic trials in rheumatoid arthritis with anti-TNF-alpha therapies, at the ACR50 response level, you get about a 40% on average responder rate and a 60% non-responder. So that with dropouts would give us about a 300-person trial. So I've said a lot, but the range is in there for those reasons, and what we're doing Michael, is we're looking, as we go, we have the clinical outcomes, right? So we're looking at the three-month clinical outcome to give us an idea of where our trajectory is going, to give us an idea of where we are and how the trial size is going to look at the end of the day. You know, how many do we need to keep collecting and recruiting? We're looking at the three-month as a surrogate of the six-month outcome so that we can identify you know, stop recruiting into the trial earlier rather than later when we know or think we know we've recruited enough of responders and non-responders. So really, it's all about the responders. We need to have about 100 responders, and I single those out because more patients than not are not responders to anti-TNF alphas. So we're at the mercy of the drugs themselves, and we're going to monitor it as we go.

All right, thank you. I really appreciate the additional insight on that.

Yeah, you're welcome.

And our next question comes from the line of Addy English, a private investor. Please proceed with your question.

Hey, Dr. Rose. Well, thanks for taking my call, and congratulations to the team for your progress. I want to go back. My question goes back to some comments that were made in April of this year on the finance call that we had. were some very encouraging and positive comments made about work that was going on with the investment banker and potentially having the collateral that the company needed to make a loan to achieve the long-term and large financing that we need to go forward and then we had the s1 which really fell short of the 35 million that I believe is closer to the figure that's needed for the long-term financing of all your projects and pipeline. I wonder if you could tell me what has happened since April that's now changed your funding strategy of a larger loan and our larger capital being brought into the company.

Sure, Eddie. Thanks for the question. I'll tackle it, and then I'll open up the line to our board members as well if they want to chime in. So indeed, what the board and management did as well were a high level of due diligence, working closely with our investment banks, and looking at all possibilities for raising sufficient funds to have the capital to get us across the goal line. The long and the short of it is for various reasons, including the market, and some of this I'm relating to you from what we've been told by our investment bankers, we are where we are now. And so what the board has to do is now work with our investment bank and close out the rest of the capital raise, raise the rest of the money so that we can have the resources to get ourselves where we need to be so that we'll be in a great position to not just advance these products, but also to make big business partnership deals and get the return on the investment that folks like you deserve. So the board, I know, has gone through a great deal of due diligence working with the investment bank and the forces at play. And this is where we are now, and they are now working closely, having many meetings and discussions about what are the next steps. So with that said, maybe if you want, I'll just say, Alex, if you'd like to chime in, and then maybe Kim, up to you.

I'll let Kim respond because he's been dealing with all three investment banks. whereas I have not.

Thanks, Alex. Yeah, this is Kim. Eddie, yes, I have been running with financing and working with different banks to try and get the $35 million, which is totally funded all the way through the period of time to get the NDA submitted. There has been a number of, problems. There were a number of problems since April. Martin Market, other things that have happened that we probably can't really express right now, but at this point, we have the commitment of Maxim to finish out what they started and get us the additional funding. Those talks will be ongoing and moving forward, but it was a good start to get 6.2 million, and hopefully we'll get the balance of it in the near future. Thanks, Kim.

Thank you. I have another question, if I may. Going to the third-party assessment on the RA product and the revenue charts, those charts show that it's possible to receive $41 million of revenue in 2024 on that program. Other charts that were published in July with your timeline on the RA says the IND for the product won't get filed until late 2024. So has that revenue projection shifted due to some of the delays in the 333?

I mean, it could. By the way, I wouldn't call those delays in 333. It's also, it's an NDA submission. I mean, you know, the plan is to, has been, or the guidance has been to have full enrollment in 2023. There's a six-month tail on the trial folks, right? So once they enroll, we follow them for six months up to a maximum of 213 days, as Mike Rocchielli pointed out. And then What we need to do then is write up the final data. This, depending on the team size and the resources we can throw at it, this takes anywhere from three to six months to get all that together and to file for the NDA. And then you have the NDA process. So there's a little bit of flex in there because things may push a quarter or so here and there or more. But as we've made these projections, we've had our best You know, we put our best foot forward in terms of predicting. And if there are discrepancies in those, they came about over, you know, some time and based on when we thought we could ramp up opening of the trial site. So that would get to your delay comma, you know, opening up the maximum number. So, yeah, there's some flex in those. If they don't exactly align, it's because over time things might shift a little, only because we haven't had the the full amount of money to fully fan the flames as you, as you pointed out. Does that make sense?

Yeah.

Yeah. And Eddie, this is, this is Kim again. Um, I just want to make it crystal clear that the board is, is committed to finish the phase two trials and phase two trial and the phase three trial. And that's where, where our focus is and our majority of our money's going. and we continue to watch our pennies, and we continue to find money where we can find money, like that $800,000 that came in. Mike worked really hard on that. And so I think that, you know, with the money, this too shall pass, and we will look at this as just a little blip on the back end from a standpoint of getting the Phase III trial done. going all the way to NDA and approval of the drug for rheumatoid arthritis.

Got it. Got it. One more question if I could, Mike.

Sure.

The July prospectus had the timeline on it and it suggested that the 332 would complete in the third quarter, which that's just a few weeks from now. And I noticed that the Queen Mary site still isn't recruiting

are you still on track to complete 332 this month yeah no at that it's it's a good question at that stage again based on the the enrollment trajectory uh that was where things were looking but again these things you know can vary over time recruitment can can wax and wane and then we can't control who walks through the door so we still want to fill in all those buckets we've also discussed frankly speaking we've discussed internally over whether a sufficient number has already been accrued so that we could stop the trial and, you know, make do with the data we have because we already have a compelling story, we think. However, in order to meet the full objectives of the trial, and we think this is important for several reasons, including discussions we're having with possible partners, we think it's important to complete the trial as originally intended. And so we just need to keep it going until we get all those people we need to get walking through the door. It's really hard to map these trials out when not only can you not control recruitment, but you don't know who you got until you get them, right? And so that's the tricky part. So we're doing our best to enroll as rapidly as we can. I work with the sites. So does Rachel Hershey, our lead of our clinical trial ops is in constant communication. We brainstormed with the PIs of these sites recently. to talk about recruitment and how it's looking and what we can do. And as you mentioned, the Queen Mary site, I mentioned way back when, when we were told that that site could be opened up quickly, it turned out, and this is not an excuse, it is out of our hands, there were internal milestones and processes that they had to put in place that they're still working on finishing up. And sometimes you get this with academic sites where their own, and I'm not throwing them under the bus, but their own internal processes are such that they have delays they didn't even anticipate. So that site has been delayed for longer than I'd like because of these internal processes. And again, maybe too much info here, but I remember working at Novartis and even here at NVIDIA, there have been academic sites that have taken us one and a half years to open up And at Novartis, actually, there were a couple of very famous sites we stopped working with because we could never open them up. And isn't that amazing? But in any event, we're working hard with the Queen Mary. I'd like to get them open. So we've done all we can, and we're asking them if we can do anything more. So we're going to keep running that trial until we finish it, and I think it's going to pay dividends for the company and for investors like yourself. So please be patient with us.

Thank you, and our next question comes from the line of Mike Rachiel, a private investor. Please proceed with your question.

Yeah, this is follow-up. Dr. Rozal, can you provide any more color or depth on the two oncology-related preclinical trials ongoing that you're currently planning 2024 or earlier INDs? One is the M1, M2, and can you provide any more color on those?

Sure. What we're doing is we're doing, right now, we're doing preclinical studies to select our lead candidate to move first towards IND for first in human studies. And so, you've heard me mention the various new payloads, new constructs. We have the docs manuscript construct that has some promising preliminary results. There are reasons to believe that some of our other newer therapeutic payload constructs would have and will have superior efficacy, and so we've been advancing those as well pre-clinically, and we're getting very close to a phase where we can say this is our lead and these are our other candidates that we will also continue to advance behind those. Things are moving. We'll be looking to do some investigator-initiated studies to help us advance towards IND and possibly investigator-initiated INDs. So we'll work closely with research collaborators at well-known institutions who can help us get these into humans more rapidly and do those first human studies rapidly as well. And then on the inflammatory side, or for inflammatory indications, we've worked quite hard to optimize the dexamethasone-containing constructs so that we can then put those into animal models and advance those towards INDs as well. And in addition, there's the leishmaniasis. So again, I want to be clear that we're very focused in our strategy. We develop our lead candidates by going through chemistry, in vitro, in vivo, towards human, right? We're doing that in the oncology space. We're doing it in parallel in the inflammatory space. And we have our studies ongoing, as I mentioned, in the leishmaniasis space, for example. And so that may also go towards an IND in the next one or two years as well, depending on how these studies that we're currently carrying out go. So when that slide was crafted, it was really about taking an immunotherapy for cancer to IND, as well as an anti-inflammatory. And at the end of the day, optimistically, it might be more than one immunotherapy, give or take a year between the two, and maybe an anti-inflammatory and maybe leishmaniasis. There's quite a bit of potential with this molecule and what we can do with it, right? It's adaptable We target this key player, the macrophage. We've shown we can alter the phenotype of the macrophages in ways that can have significant consequences for therapeutic benefit. We've shown this in the preclinical world. We continue to do it. As you know and others know, in general, the macrophage domain is a hot area growing, and big and small pharma are starting to pay more attention to the macrophage. as a key player in disease, in a wide variety of diseases. And the cool thing is we're this little company in Ohio that is really at the forefront of this hot area of medicine. What we need are the resources to keep us at the forefront and move us forward so that we can, you know, get to the goal line the way we'd like to.

So, good? Yes. Yeah, I think that's great. And to me, being a total novice but studying this, the potential is so strong. And like you said, the external world is starting to wake up to it, no matter where you look, all the way from ratioing to admired type of targeting. But wouldn't you think that that is positioning you to have people start knocking on your door, if not already, in the near future? Is that not positioning you for that, would you think?

Yes, it is. Yes. So, you know, when I first started at NVIDIA, the therapeutics were, we couldn't focus on them quite as much as we wanted to or as much as we wanted to because of ongoing litigation. Over the last couple of years, we've been in a much better position where we can, you know, release the great potential of our team onto the potential of the molecule in this domain, the therapeutic domain broadly. So what's been happening is that we've been accumulating data We're starting to have our coming-out parties where we're, you know, presenting abstracts now. We're having conversations. I can't get into details with players in this space. And, indeed, there is a growing recognition not just of the macrophage, importance of the macrophage, but in what we can do in the domain of the macrophage as a company with our molecule. So that's happening, and it may not happen as quickly as any of us would like, But it is happening, and I think if we can keep our momentum going and maybe ramp it up, big things will happen, you know, sooner rather than later. That's just my personal opinion.

Okay. At this time, we have reached the end of the question and answer session. And I would now like to turn the call back over to Dr. Rozal for any closing remarks.

Thank you. I'd like to thank you all for taking the time to participate in today's call. and to ask, for those of you who asked questions, thank you for the questions. The team remains dedicated to getting things done here moving forward. We're working closely with our board of directors and we look forward to next discussions as the months, the days and months ahead proceed. So thanks again and with that, we'll close the call.