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spk05: Greetings. Welcome to Biomix fourth quarter and full year 2021 financial results and corporate update conference call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to Marina Wolfson, Senior Vice President of Finance. Ms. Wolfson, you may now begin.
spk00: Thank you, and welcome to the Biomics fourth quarter and full year 2021 financial results and corporate update conference call. The news release became available just after 6.30 a.m. Eastern time today and can be found on our website at biomics.com. A replay of this call will be available on the investor section of our website. Before we begin, I'd like to review the Safe Harbor provision. All statements on this call that are not factual historic statements may be deemed forward-looking statements. For instance, we're using forward-looking statements when we discuss on the conference call potential market opportunities, the design, aim, expected timing, and interim and final results of our preclinical and clinical trials, the sufficiency of our existing cash, cash equivalents, and short-term deposits, the potential receipt of additional cash if milestones are met, the potential benefits of our product candidates, and potential growth in shareholder value. Except as required by law, we do not undertake to update forward-looking statements. The full Safe Harbor provision, including risks that could cause actual results to differ from these forward-looking statements, are outlined in today's press release, which, as noted earlier, is on our website. Joining me on the call this morning is Jonathan Solomon, Chief Executive Officer of Biomics. With that, I will turn the call over to Jonathan.
spk06: Thank you, Marina, and good morning, everyone. Let me begin by saying that I believe biomics is now entering the most exciting period in our company's seven-year history. With proof-of-concept data expected within the next 12 months in both our cystic fibrosis and atopic dermatitis programs, we are poised to generate readouts that could have significant impact on the value of our company. At the same time, with the recent equity investment from Maruhu and the Cystic Fibrosis Foundation, We are also well-positioned financially, with existing cash expected to take us at least until the end of 2023. Additional tranches of up to $15 million under our existing loan agreement may further extend our cash runway into mid-2024. Let me now provide a brief update on each program, starting with BX004 and cystic fibrosis. BX004 is our novel phage candidate that is being developed for the treatment of chronic respiratory infection caused by pseudomonas arginosa, or P. arginosa, a main contributor to morbidity and mortality in patients with CF. Chronic P. arginosa infection leads to epithelial surface damage and airway plugging, progressively impairing pulmonary function. CF patients chronically infected by P. arginosa show a steeper lung function decline, a higher number of pulmonary exacerbations, more hospital admissions, and a higher mortality than PR-Ginosa-free patients. PR-Ginosa infections usually start in childhood and following prolonged and repeated broad-spectrum antibiotic courses, enhanced resistant to antibiotics develops and leads to the appearance of multidrug-resistant strains, MDR. Studies have shown that about 80% of CF patients are chronically colonized by PR-Ginosa by the age of 20. And the eight-year risk of death was found to be 2.6 times higher in patients with pyrogynosis versus those without it. Research has also shown that continued colonization of pyrogynosis eventually results in a point where the infection can no longer be controlled, which is further characterized by the expression of biofilm-forming genes within the bacteria itself. Biofilm and its assemblage of surface-associated microbial cells enclose an extracellular polymetric substance and one of the leading causes for antibiotic resistance. In preclinical studies, BX004 not only demonstrated activity against antibiotic-resistant strains of pyuridinosa, but also showed the ability to penetrate biofilm. We therefore believe BX004 holds significant potential to address this life-threatening infection in CF patients. the opportunity to address this unmet medical need is also significant. With an estimated 30,000 CF patients in the U.S. and 80,000 worldwide, chronic antibiotic-resistant bacterial infection remains one of the most challenging medical conditions in CF patients. P. aeruginosa is the most common and detrimental bacteria in lung infections of CF patients, and it is estimated that approximately 30 to 50 percent of these patients suffer from chronic infection due to this bacterium. Part 1 of this trial will evaluate the safety, pharmacokinetics, and microbiological clinical activity of BX004 in 8 CF patients in a single ascending dose and multiple dose design. Part 2 of the trial will evaluate the safety and efficacy of BX004 in 24 CF patients who will be randomized to receive treatment or placebo cohort in a 2 to 1 ratio. Sites are now open, though we are seeing slower enrollment due to the recent COVID wave. So to be conservative, we now expect the readout from part one of the study in third quarter of 2022 and the readout from part two in first quarter of 2023. We are also proud to have the support of the Cystic Fibrosis Foundation for the development of BX004. In January, we announced a therapeutic development award from the foundation in support of our ongoing phase one B2A study. The award is structured as an equity investment And in December, the foundation made its initial investment of $3 million in Biomics common stock. Upon completion of patient dosing in Part 1 of the study, Biomics would have the right to receive the second tranche of $2 million. Now let me turn to the atopic dermatitis program. We are developing BX005 as a topical phage product candidate targeting staphylococcal oris, or staph oris, a bacterium associated with the development and exacerbation of inflammation in atopic dermatitis. By reducing staph aureus burden, we believe BX005 has the potential to shift the skin microbiome composition to its baseline state, leading to clinical improvement. Atopic dermatitis not only represents a significant unmet need, but the commercial opportunity remains attractive, with the current therapeutic market valued at $5 billion, which is expected to triple over the next few years. Given the size of the market opportunity, we recognize the importance of developing strategic relationships to maximize the value of this program. Last quarter, we announced an agreement with Maruhu for BX005. As the largest dermatology-focused company in Japan, Maruhu brings exceptional expertise in this therapeutic area, and we are very pleased to have their support for our program. Similar to the CF Foundation, Maruhu's financial support for BX005 program came in the form of an equity investment in biomics. Maruhu purchased $3 million of our common stock at a premium to the market share price. Funding from this investment is intended primarily to support the planned Phase 1-2 study. We anticipate initial data in the fourth quarter of 2022. With respect to our other programs, our IBD product candidate is expected to enter the clinic next year, and we also expect to build out a preclinical effort surrounding our colorectal cancer product candidate in 2023 as well. I'd now like to turn over the call to Marina Wilson, our Senior Vice President of Finance and Operations, to cover our financial results for the fourth quarter and full year results.
spk00: Thank you, Jonathan. As a reminder, the financial information is available in the press release we issued earlier today and also in more detail in our Form 10-K, which will be filed later today. I will walk you through some of our brief highlights. As of December 31st, 2021, cash balance and short-term deposits were $63.1 million compared to $57.1 million as of December 31st, 2020. The increase was primarily due to net cash provided by financing activities partially offset by net cash used in operating activities. Research and development expenses net were $22.7 million in 2021 compared to $19.4 million for the prior year. The increase was primarily due to increased expenses related to conducting preclinical and clinical trials of our product candidates and an increase in salaries and related expenses mainly due to the growth in the number of employees in research and development and clinical activities offset by higher levels of grants from the Israeli Innovation Authority. General administrative expenses were $11.3 million in 2021, compared to $9.3 million for the prior year. The increase was primarily due to an increase in expenses associated with operating as a public company, such as directors' and officers' insurance, listing fees, and investor relations activity, and also due to an increase in stock-based compensation salaries and related expenses, mainly due to the growth in the number of employees and due to an increase in rent and related operational expenses resulting from moving into our new facility. Net loss was $36.2 million for 2021 compared to $30.1 million for the prior year. Net cash used in operating activities was $27.6 million for the year ended December 31, 2021, compared to $24.4 million for the same period in 2020. We estimate that existing cash, cash equivalents, and short-term deposits will be sufficient to fund the company's current operating plan through the end of 2023. Additional tranches that would become available to the company under its venture debt facility upon satisfaction of certain specified milestones can further extend the company's cash runway through the first half of 2024. And now I'll turn the call back over to Jonathan for his closing remarks. Jonathan?
spk06: Thank you, Marina. We are obviously very excited about the opportunities that lie ahead for us in our leading product candidates, cystic fibrosis and atopic dermatitis. At the same time, we also recognize that the prevailing market conditions within the biotechnology sector have been difficult for companies and investors alike. Despite these ongoing challenges, we are exceptionally well positioned with a strong balance sheet and two proof of concept readouts for our lead clinical programs expected in the next 12 months. If either or both of these programs prove successful, we believe there will be a significant opportunity this year to grow shareholder value. We'd now like to open the call for questions. Operator?
spk05: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question today, please press star 1 from your telephone keypad, and 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 who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, that is star 1. Thank you. Thank you. Our first question comes from the line of Joe Pankinis with HC Wainwright. Pleased to see you with your question.
spk02: Hey, everyone. Good morning. Thank you for taking the question. Two questions, Jonathan. First, on the CF program, I guess I wanted to get a little bit of a framework of I guess the type of data in the fourth quarter, you know, from Part 2, I guess I'll ask it this way. What kind of microbiological data do we expect? And then with regard to efficacy, what would you consider a success, you know, for 24 patients?
spk06: So good morning, Joe. It's an excellent question. I think we have two parts in the study, right? So you kind of focused on Part 2, which is, I think, the more – significant inflection point. Part one, which has a readout in the third quarter, is actually eight patients, and those two are on placebo, six are on treatment. It's a bit of a sad, mad study. So we'll kind of give them low dose, high dose, and then a few doses of the high dose. So it's mostly safety. I think we know that phage is relatively safe, so we're not expecting any surprises there. I think there is a chance that we might see some you know, some signs of microbiology efficacy, right, in terms of just reduction of bacterial count. And again, I think in CF, what makes the indication exciting is that we know that these patients are actually succumbing to, you know, to the bacterial infections, right? So basically, if you reduce the bacteria significantly, you're going to have a clinical effect, right? And to your point, the readout in the part two, that's 24 patients, randomized two to one, kind of following the design that Yale did in some of their compassionate use studies, right? So we're going to treat these patients for 10 days. We're going to measure bacterial count before and after treatment. Here we want to see a significant effect, hopefully greater than an order of magnitude, and that should also translate to some signals on clinical parameters such as FFV1. I hope that kind of helps clarify it.
spk02: It certainly does. And I guess I wanted to... ask my next question regarding the atopic dermatitis program and also look a little historically. When you look at the, I don't know, we'll call it an issue, you know, the reasons why we feel there might have been issues with the acne program and skin penetration, you know, into the hair follicles and different aspects of the sebaceous gland or what have you, you know, what gives you confidence based on the different skin morphology and underlying pathology of atopic dermatitis that you would not necessarily have that issue?
spk06: It's a great question, right? We've debated at length with multiple experts and I think all through the industry with colleagues. You know, I think the main difference is that in acne, the bacteria, as you said, resides inside the hair follicles. So when we're measuring superficially with a skin swab, we're not really seeing what's going on inside the hair follicles. So if you recall, in our phase one, we've actually seen a reduction of the bacterial count But that's exactly the point. We measured with a swab. And obviously, you know, in a cosmetic study, we're not going to do skin biopsies, punch biopsies to the faces of, you know, the volunteers. So definitely, I think that was the case that we saw the effect happening superficially. It probably did not translate to deeper layers and the phase of the relatively large structure. And we just did not have a clinical effect. Right. Penetration is most likely the issue. Now, we're looking into and sort of implementing more and more takeaways from this study on atopic dermatitis. But what gives us comfort is that in the end, the bacteria, Staph aureus is a superficial bacteria, right? It's on the skin. When you look at the lesion before... Before there's lesions, there's low levels of staph. When you look at the lesions themselves, there's high levels of staph. You can see them, you know, skin swabs with very, very high levels. When the lesion kind of goes away, the levels of bacteria kind of go down. Interestingly, when we looked at different lesions in the same person, you see that it's the same strain over the different lesions, right? So it looks more like an infection. And it's not a bacteria that can go deep. into the skin, right? Sea acne is one of the most unique bacteria, you know, only appears in humans, only above the shoulder line. There's no other animal that has sea acne. There's no good models. So I think in that aspect, it's unique. And staph, again, is a probably more accessible target. And that's why we give a higher likelihood of success in this study.
spk02: That's very, very helpful. Thank you. And if you could just indulge me, if I can just ask a housekeeping question of Marina. Sure. Since the 10K is not out, would you be able to just give the shares outstanding as of today and the fully diluted count?
spk01: Sure. Hi. Thank you for your question. So first of all, the 10K is going to be filed later today. So we have Approximately 30 million shares outstanding and approximately 47 million fully devolved.
spk02: Thank you very much, guys.
spk01: Thank you.
spk02: Thank you.
spk05: As a reminder, you may press star 1 to ask a question. We'll pause a moment to assemble a queue. Thank you. Thank you. Our next question comes from Kay Nakai with Chardin. Please just use your questions.
spk03: Yeah, thank you. So, Jonathan, for 004, for CF, what else is possibly holding up the start of Part 1?
spk06: Good question. Good morning, Kay. I think what we've seen, not unlike many of the other companies now, is that when you initiate these studies, first there's issues with the CROs because of COVID, right? So there has been delays just in terms of like manning, you know, positions at the CRO. So, you know, a lot of the site logistics have been slower. So I think we've seen that. We've seen that both in a topic as well as in CF. And that's where we decided to kind of, you know, be more conservative, give in our guidance a bit more time on both of the studies. Specifically with CF, these patients are a lot more vulnerable to COVID, right? They're much more worried and they haven't been in contact with their physicians for a while through the waves as they not show up in the clinic. So now as we've kind of opened up all the sites on time, we see that there's kind of greater time. They haven't talked to them. They don't know what's their status, you know, and that kind of fits into, we got to make sure we know all the parameters when we enroll these patients. So we're seeing involvement, slightly slower. So I'd say it's kind of these two issues, right? Issues which are in the CROs around sort of manpower that I think a lot of other companies have been experiencing. And specifically with CF, there's kind of an additional difficulty because they're so worried about showing up to the clinic given their vulnerability.
spk03: Okay. And in terms of finding patients with, you know, pseudomonas is testing or screening for that, is that difficult? We don't think that it is, but is it difficult and is there some sort of baseline level of infection that matters or the fact that they simply have a chronic infection, just the presence of it is sufficient for them to be part of the study?
spk06: So I do think, I mean, that's sort of our takeaways, and it's important in phage therapy in general, right, to make sure that they have the bacteria and they have sufficient amounts of the bacteria, right? I think we've learned through our both preclinical and clinical work that the more bacteria patients tend to have, the more likely the phage is going to work. So we definitely have a threshold of minimum bacteria. You've got to make sure that the patients are producing enough sputum in order to take the sample. So that's definitely some of the parameters there. that we're putting in and you want to have there. I think on the one hand, I think we're encouraged by, you know, we're getting incoming emails from patients that want to enroll into the study and been experiencing and struggling with these infections for years, right? So there's definitely a lot of patients out there. But I do think we got to acknowledge the difficulties of COVID and sort of, you know, the system needs to kind of be rebooted after they kind of disconnected for a few months. And, you know, let's hope Omicron and other ways kind of stay at bay.
spk03: Okay. And then, you know, I'll ask a similar question about atopic derm once you get started there. But, you know, in screening for those who have staph aureus, you know, again, is there a threshold that you need to see for them to be included?
spk06: Yeah, it's exactly your spot on, right? I think that's the reason we're going to moderate to severe. We want to have high levels of bacteria, we think, based on KOLs and some of the studies that have been out there. is that the more bacteria there are out there, the more likely you're going to have an effect. So that's exactly the same rationale, right? We're taking skin swabs. There is a minimum threshold. And only those that, A, have a minimum threshold, and, B, we can make sure their phage cocktail is relevant to their strains, right? We definitely don't want to be in a situation that we're treating patients that our strains are not relevant. Those are the patients that we enroll. And, you know, here what we're, you know, we're also proceeding in our original timeline of, in terms of executing the clinical study, and the patients are not worried about COVID, right? That's not the issue. I think we are seeing some of the logistical issues that we talked about at the CROs, though.
spk03: Okay. All right. Thanks for the call.
spk06: You bet. Thanks, Kay.
spk05: As a reminder, you may press star 1 to ask a question at this time.
spk04: Once again, let me ask, sorry, I wanted to ask a question.
spk05: Thank you. It appears we have no additional questions at this time. I'll turn the floor to management for further remarks.
spk06: So, all of you, thank you again for joining us this morning. We look forward to providing you with future updates on our Cystic Fibrosis and Histopic Dermatitis clinical programs throughout the next 12 months. Have a wonderful day, and please reach out to us if you have any questions.
spk05: This will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time.
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