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spk02: Thank you for holding, ladies and gentlemen, and please remain on the line. The Acosti Pharma Conference will begin shortly. Thank you for your patience. Thank you. Good day, ladies and gentlemen, and welcome to the Acosti Pharma second quarter 2022 earnings call. At this time, all participants have been placed on the listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, David Waldman of Investor Relations. Sir, the floor is yours.
spk05: Thank you, and good afternoon, everyone. I'd like to welcome you to Acosti Pharma's Fiscal 2022 Second Quarter Conference Call. On the call with us this afternoon are Jan D'Alvis, President and CEO, Dr. Pierre Lemieux, Chief Operating Officer, Canada, Chief Scientific Officer and Co-Founder, Dr. George Cotillo, Chief Operating Officer, U.S., Brian Ford, Chief Financial Officer, and Prashant Kohli, VP of Commercial Operations. We are planning for a Q&A session at the end of our prepared remarks, but if you have any remaining questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020. I'd also like to remind everyone that statements on this conference call that are not statements of historical or current fact constitute forward-looking information and within the meaning of the Canadian securities laws, and forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, the Securities Act of 1933, and the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks and uncertainties and other unknown factors that could cause the actual results of a cost CD to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms belief, expects, intends, anticipates, potential, should, may, will, plans, continue, targeted, or other similar expressions to be uncertain and forward-looking. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Forward-looking statements during this conference call may include but are not limited to the success and timing of regulatory submissions of the PK Bridging Study for GTX 104 and ACOSTI's other preclinical and clinical trials, regulatory requirements or developments, changes to clinical trial designs and regulatory pathways, legislative, regulatory, political, and economic developments, ACOSTI's projected cash position and operating runway, and the effects of COVID-19 on clinical programs and business operations. The forward-looking statements contained in this conference call are expressly qualified in their entirety by this cautionary statement. The cautionary note regarding forward-looking information section contained in Acosti's last quarterly report on Form 10-Q and most recent management discussion analysis, which are available on CEDAR at www.cedar.com, on EDGAR at www.sec.gov, and on the investor section of Acosti's website at www.acostiforma.com. All forward-looking statements in this conference call are made as the date of the conference call. ACASI do not undertake to update any such forward-looking statements, whether it is a result of new information, future events, or otherwise, except as required by law. The forward-looking statements contained herein are also subject generally to assumptions and risks and uncertainties that are described from time to time in ACASI's public securities filings with the Securities and Exchange Commission and the Canadian Securities Commissions, including its latest quarterly form on Form 10Q and most recent MD&A. In addition, any forward-looking statements represent ACOSTI's views as of today and should not be relied upon as representing our views of any subsequent date. While ACOSTI might update forward-looking statements at some point in the future, unless legally required under applicable securities law, ACOSTI specifically disclaims any obligation to do so. I'd now like to turn the call over to Jan de Alice. Please go ahead, Jan.
spk04: Thank you, David. And I'd like to welcome everyone on the call today. The second quarter was truly transformational for ACOSTI. As you know, we successfully completed the merger with Grace Therapeutics in August, creating a premier clinical stage specialty pharma company focused on rare and orphan diseases. We now have a diverse technology and product portfolio comprised of unique drug delivery capabilities and several clinical and preclinical stage drug assets. Our lead clinical drug candidates have been specifically designed and formulated to enhance efficacy and safety by providing faster onset of action and reduced side effects, all while being more conveniently delivered, which can ultimately increase patient compliance and potentially lead to improved clinical outcomes. This acquisition brings us new and exciting opportunities in sizable orphan disease markets with substantial unmet medical needs. I'm really pleased to report that in the short time since completing the merger, we've achieved meaningful progress, both in terms of clinical development and business operations. We've swiftly and smoothly integrated the Grace employees with Acosti, and we're now laser focused on advancing our clinical pipeline. Towards this end, immediately following the closing of the acquisition, we commenced enrollment for our pivotal pharmacokinetic bridging study for GTX104, our novel aqueous formulation of nemotipine that's being developed as an IV infusion for patients experiencing subarachnoid hemorrhage or SAH that is triggered by an aneurysm. This important study is the next required step in the proposed 505 regulatory pathway and is being conducted in 50 healthy subjects as a single center randomized two-period crossover study. The primary objective of the study is to evaluate and compare the relative bioavailability of GTX104 with the currently marketed oral nematopene capsules, which are the standard of care. The second objective is to assess the safety and tolerability of GTX-104 as compared to oral nematopene capsules. Per the study protocol, subjects will be randomized, assigned in a one-to-one ratio to one of two treatment sequences with a crossover design. So Group A will switch to Group B, where GTX-104 is administered first, or Group B will switch to Group A, where oral nemotipine capsules are administered first. In both groups, GTX104 nemotipine will be administered intravenously over a 72-hour period, and nemotipine will be administered orally via two 30-milligram capsules with water every four hours for 72 hours. Throughout the study, we will be conducting safety evaluations, which will include capturing any treatment emergent adverse events, serious adverse events, electrocardiogram data, clinical laboratory evaluations, physical examinations and resting vital signs which will include very importantly blood pressure. Subjects will be admitted to the clinical research unit or the CRU on the day prior to dosing and they will remain domiciled in the CRU for the duration of each study period. Again, the goal of this pivotal study is to achieve blood levels with our GTX 104 IV nemotipine formulation that are comparable to the oral form of the drug that is in routine use today. As previously announced, we expect to report results during the first half of calendar 2022. Based on the previous encouraging results from a PK study conducted by Grace, we remain optimistic that this pivotal PK study will achieve its primary and secondary endpoints. Following the data readout and its subsequent review with the FDA, we intend to determine the final design of our planned phase three safety study for GTX104. Assuming the PK study and the FDA meetings proceed as planned, we intend to commence the phase three study in the second half of next year, calendar 2022. Both the PK study and the initiation of the phase three safety study are very important near-term and very meaningful catalysts for the company. As a reminder, SAH is a rare and life-threatening medical emergency where bleeding occurs over the surface of the brain in the subarachnoid space between the brain and the skull. It's estimated to affect about 50,000 patients per year, representing an estimated addressable market of more than $300 million in the United States alone. SAH typically occurs quickly, and the key to patient survival is prompt medical intervention. Normally it requires immediate surgery, and on average about two weeks in a neurointensive care unit to try to prevent death and reduce the risk of long-term disability. Patients typically remain on nemotipine throughout their stay in the neuro ICU. Nemotipine is currently only available in an oral dosage form in the United States, and many of these patients come into the hospital unconscious or have a hard time swallowing during their hospital stay. Therefore, we believe GTX104 delivered intravenously could be a much more convenient and efficient way to deliver nemotipine. And importantly, because of its better absorption profile and more consistent blood levels, GTX104 could potentially provide physicians with a more effective tool for hypotension management. This advantage is really important as GTX 104 could help to reduce the incidence of vasospasm, which requires immediate, aggressive, and costly intervention and can lead to worse outcomes for the patient. Also, please note that GTX 104 has been granted orphan drug designation status by the FDA. This provides us with the potential for seven years of market exclusivity in the United States. Provided that we see a similar safety profile to oral nemotipine upon completion of the Phase III study, we could then expect to proceed with the filing of an NDA using the orphan drug designation and the 505b2 pathway. We're very excited about GTX104's potential, and we look forward to updating you as we progress towards achievement of these important near-term catalysts. Now, regarding our other two clinical candidates, GTX 101 and GTX 102, we've recently been awarded four composition and matter patents between the two drugs. The European Patent Office, the Chinese Patent Office, and the Mexican Patent Office all have issued composition and matter patents for GTX 101, which is our novel bioadhesive film-forming topical spray formulation of bupivacaine. for the treatment of postherpetic neuralgia or PHN. And as a reminder, PHN is a persistent and often debilitating neuropathic pain which is caused by nerve damage from the shingles virus. In fact, it's so often cited as the leading cause of suicide in chronic pain patients over the age of 70. It's also been reported that PHN affects approximately 150,000 patients per year in the United States alone, which represents an estimated addressable market of about $400 million. So based on encouraging results from a Phase I PK study conducted previously by Grace, we believe that GTX 101's biphasic delivery mechanism has the potential for rapid onset as well as continuous pain relief for up to eight hours. This could be a significant improvement over the standard of care and it could potentially provide physicians and patients with an opioid sparing alternative as bupivacaine is well understood, it's safe, and it's a non-habit forming non-narcotic analgesic. So we plan to conduct single and multiple ascending dose or SADMAD studies with GTX 101 next year. and we expect to report those results by the end of calendar 2022. Furthermore, we intend to initiate a Phase 2 study shortly after reporting the SADMAD data. Now, turning to GTX 102, the Japanese Patent Office recently granted Acostia Composition of Matter patent for this novel, concentrated, easy-to-use oral mucosal spray formulation of beta-methasone. We're developing this to improve the neurological symptoms of ataxia telangiectasia or AT. Now, AT is a progressive neurodegenerative genetic disease that's typically diagnosed in children at a very young age. It causes severe disability as it affects many parts of the body including areas of the brain which impact their motor function and their speech. AT is also associated with a weakening of the immune system. predisposing these patients to infection and cancers. Sadly, AT patients typically die in their mid-20s. This disease unfortunately affects about 4,300 patients per year in the United States, creating an estimated addressable market of about $150 million. Now, based on an independent study conducted in Italy with an oral liquid form of beta-methazone, We believe GTX102's novel concentrated oral mucosal spray formulation has the potential to simplify drug administration and improve the symptoms of AT, including posture and gait disturbance, as well as kinetic and speech functions. Therefore, we believe that GTX104 could address a very important unmet medical need as no FDA-approved pharmacotherapies currently exist. In the near term, we plan to conduct a pharmacokinetic bridging study comparing blood levels of GTX102 to a reference product containing beta-methazone. We anticipate reporting those results by the end of next year. Assuming this trial is successful, we would then move forward quickly to conduct a confirmatory phase three safety and efficacy trial in patients with AT. These newly granted composition of matter patents are very important additions to our already strong and established intellectual property portfolio as they provide protection beyond 2036 and create potential opportunities for partnering in these major international markets. I hope you're as pleased as we are by the meaningful progress that has already been made in the two short months since we completed the merger. We look forward to reporting on progress next quarter as we continue to advance our lead drug candidates through clinical development and ultimately to commercialization. So with those operating updates, I'll now turn the call over to Brian Ford, our CFO, to discuss our financial results for fiscal Q2. Brian?
spk06: Thank you, Jan, and good afternoon, everyone. Turning to our results for the quarter, R&D expenses before depreciation, amortization, and stock-based compensation expenses for the three months ended September 30, 2021 totaled $0.55 million compared to $0.81 million for the same three months ended September 30, 2020. And that decrease was mainly attributable to the reduction in professional fees within the research and development departments associated with the completed TRILITY trials as well as the reversal of prior period provision after assessments and correspondence from tax authorities. There were no significant R&D costs in Q2 related to the acquired assets from Grace, as these programs only began to ramp up as of September of 2021. General and admin expenses before stock-based compensation expenses for the three months ended September 30th, 2021, were 2.9 million compared to 1.1 million for the three months ended September 30th and 2020. This increase was a result of increased legal, tax, and accounting and other professional fees related to the Grace Therapeutics transaction. Loss from operating activities for the three months ended September 30th, 2021 was 3.6 million compared to a loss of $8 million for the three months ended September 30, 2020. The reduction was mainly due to a reduction in R&D and sales and marketing expenses offset by an increase in general and admin expenses as a result of increased legal, tax, accounting, and other professional fees related to the grace transaction for the three months ended September 30, 2021. The company also recognized 5.3 million of impairment charges, including 3.7 million related to the intangible assets and 1.6 million related to production and lab equipment for the Capri program. And that was back in 2020. Net income for the three months ended September 30th, 2021 was 1 million or roughly 0.3 cents or 3 cents a share. compared to a net loss of $6.1 million, or $0.52 per share, for the three months ended September 30, 2020. The increase resulted primarily from a gain of $4.5 million, due mostly to a decrease in the fair value of the derivative warrant liability, as well as a decrease in R&D expenses, and the Trilogy Phase III clinical program for CAPRI was completed Cash equivalents and short-term investments totaled $50.8 million as of September 30, 2021, compared to $11.6 million in cash and cash equivalents at September 30, 2020. Based on management's current projections, ACASI believes that our existing cash provides at least two years of operating runway. Also, during the quarter, as Jan mentioned earlier, we completed the acquisition of and merger with Grace Therapeutics through the issuance of 18.2 million shares that had a value of 60.8 million. Upon completion of the transaction, the company recognized acquired intangible assets of 65.2 million, primarily related to the development assets at Grace. Finally, in addition to our quarterly filing, I can report that we also filed a prospective supplement relating to our existing at-the-market or ATM facility to update our disclosures and restore available capacity to $75 million. Under the terms of the related sales agreements and prospective supplement, ACASI may, from time to time, issue and sell common shares, have an aggregate offering value of up to $75 million. I would remind our shareholders that we currently have an estimated two years of operating capital that will fund several major catalysts, including the completion of our GTX 104 program. This filing of the ATM prospective supplement was simply a good housekeeping activity to regain the active status of the facility following the merger. We have no obligation or plans to use the ATM in the future, and we would only use it provably and opportunistically with a goal to minimize shareholder dilution. With that, I'll now turn the call back over to Jan. Jan?
spk04: Yeah, super. Thanks, Brian. That concludes our prepared remarks. Now I'd like to open the call to any questions. Operator, do we have any in the queue?
spk02: Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Your first question for today is coming from Nicole Kaufman. Please announce your affiliation, then pose your question.
spk03: Hi, thank you. I'm with Black Ridge Capital. I want to congratulate you guys on the progress so far. I do have a few questions. First, Jen, do you mind elaborating on the importance of the PK study and then the expected timing of the phase three of GTX-104?
spk04: Sure. Thanks, Nicole. Appreciate the question. And thanks for attending today. So I assume you're referring to GTX-104, our IV formulation of nemotipine. Is that correct?
spk03: Correct.
spk04: Yeah, so that study is well underway. We refer to it as a pivotal trial. The key here is, again, being able to compare our blood levels of our IV infusion to the orally administered nemotipine. And if we can show a comparison between the two, then we'll be able to proceed directly to our Phase 3 safety study. And again, the PK study is underway. We expect results in the first half of next year. And we would expect then to be able to start the Phase 3 safety study in the second half of next year, so certainly before year end.
spk03: Great. And then a follow-on to that, what would be your commercial strategy following approval?
spk04: Yeah, so great question. So with GTX 104, we're targeting a fairly concentrated market. We'll be focused on the major neuro ICU centers around the country. So we believe that we can reach those centers ourselves with a small, very targeted commercial team. We feel that we can do that very cost-effectively, and it gives us control of the product. So, that would be our plan with GTX 104. I think it would be our plan as well with GTX 102. That's even a smaller, more concentrated market. There's probably about a dozen centers in the United States that treat these kids with AT. The most important center is Johns Hopkins. They probably treat about 50% of the patients in the United States. We're very pleased that they're working with us and will be part of our clinical trial program. So I think it'll be very easy for us to reach those markets directly ourselves. On the other hand, GTX 101 is a very large market and the physicians that are primarily prescribing are PCPs, primary care physicians. And so for GTX 101, We'll likely seek a commercial partnership in the United States and, as we will, outside of the U.S. really for all of our drug assets.
spk03: Well, thank you very much. I appreciate the detailed response, Jan. I look forward to hearing more developments from you guys. I'll jump back in the queue if I have further questions.
spk12: Yeah, thanks, Nicole. Appreciate it. Have a good day.
spk03: Thank you.
spk11: Once again, if there are any questions or comments, please press star one.
spk02: We do have a follow-up question coming from Nicole. Nicole, your line is live.
spk03: Hi, again. I do have another question, so thanks for taking me again. I see you do have, you know, sufficient cash. Can you explain how you're going to be deploying that and your plans for it?
spk04: Yeah, sure. Happy to do that. Yeah, it's difficult to precisely estimate, you know, the total cost of each of these programs at this point. We don't have final designs, for example, for the phase, you know, phase three programs for each of these products. But, you know, we will be getting that tremendous amount of input from the FDA over the next year as we complete our Phase 1 PK programs and getting input into the Phase 3s in the case of GTX 104 and 102. With GTX 101, we do expect we'll proceed to a Phase 2 next year. But the current cache that we have, we believe is adequate to take us through complete development through phase three of GTX 104. And it should significantly advance both GTX 102 and 101. So I don't know if that answered your question, Nicole. Can I expand on that?
spk03: No, I think that's great. That officially answers my question. I appreciate the time, Jan.
spk12: You bet. Yeah, thanks again.
spk02: I would now like to turn the floor back over to Jim Caldwell. Your line is live.
spk01: Thank you. Hello, Jan. Just wondering if you could outline what's happening with CAPRI. And the second question is, too, we had some investment firms that were following a CAST-E beforehand with Capri, and just wondering if they are still on the scene.
spk04: Yeah, thanks, Jim. Great to hear your voice. Thanks for the question. With Capri, what I can tell you is, as we've stated previously, we are continuing to evaluate several strategic options for Capri. And those are progressing. We'll continue to keep you apprised as this process progresses. So we'll keep you posted on that. And your second question, yeah, we're very, very hopeful that we'll be able to pick up coverage, analyst coverage, with some additional firms in the near future. But I really don't have... I can't really comment on the timing because I don't have any insight into the timing at this point.
spk10: Okay, thank you then.
spk11: Thanks, Jim.
spk02: Your next question is coming from Sean Kenavan. Your line is live.
spk09: Hey, Jen. Good afternoon. Good afternoon. Coming from a shareholder question I have for you is we were going back and forth with the investor relations teams, even yourself on several calls. There's a lot of shareholders impacted with that reverse stock split. But what is the plan moving forward to kind of recoup some of that? Right. And being that you guys said that it was the absolute last resort, what did you guys do prior to that before it became the last resort?
spk04: You're speaking the reverse split. Yeah, we worked with NASDAQ to try to delay the implementation, hoping that the market would react to the news of our merger with Grace. That did not happen, and we simply ran out of time. In order to maintain our listing, NASDAQ required that we get our share price back up above $1. So we really had to implement that at the time that we did. And now, honestly, all we can do, I think, is really focus on execution. And I hope you can see that we've made significant progress in the last two months, just since the merger. We have a number of studies either underway or about to start These are very important catalysts for the company, and I think we'll have the potential to create a lot of value as we go forward. And, you know, it's also up to us to get the word out. I mean, what I'm realizing is that so many of our investors really don't understand the new business of Acosti. You know, they're not familiar with the assets. I think we've got to get out, and we've got to – you know, educate, we've got to communicate. And we are doing that now. We're going to a number of conferences. We've been to several just since the acquisition was completed. We have participated in a number of interviews. We've had a couple of publications. So, you know, we just need to do more of that, Sean, you know. And I think if we can show in a very short period of time, for example, I mentioned that we'll have our PK results in the first half of next year, if we can start showing results with additional studies following that one, then I think the company should be able to significantly improve our value. I know it's frustrating, we're all frustrated over it, but we really did the best we could you know, postpone doing the reverse split to the very last moment.
spk09: I feel I heard the same thing prior to the reverse split, but again, I'm all in with you guys, so I've got my fingers crossed.
spk04: Yeah, well, you know, just, you know, let's see what we... We definitely plan to show you we can execute. We've got a great team, and we're well underway with the PK trial. And as I mentioned to Nicole, this is really a pivotal study. These results are very important. You know, the safety of nemotipine is well accepted. So the fact that all that we have to do after this pivotal PK trial is a safety study, you know, it bodes well for our ability to get approval of GTX104. So, you know, we've just got to keep putting one foot ahead of the other here. And I think we've got the team to do it. We've got some exciting assets. So you're going to see a number of catalysts over the next year that I think, you know, hopefully will make a difference. We appreciate your hanging in there.
spk12: All right. Thank you.
spk02: Your next question is coming from Sahil Kavmi. Your line is live.
spk07: Hi, Jan and team. Thanks so much for taking our questions and congratulations on all the progress. Just a couple of brief ones from us. I'm curious about how you're thinking about the commercial potential here across both, you know, 104 and 102 and how that might differ across the different geographies, whether it be in the U.S. or the E.U. Are there certain, you know, prescribers you're targeting? And just in general, how should we think about the ramp as we go forward? into the PK study, through the safety study, and then into 2023.
spk04: Yeah, great. Hey, Sahil, thank you for joining today. Appreciate it. You know, I'll turn this question over to Prashant. Prashant is our VP of Commercial Operations. Prashant, can you respond on the commercial question?
spk08: Sure, happy to. Hi, Sahil. So, you know, in terms of, I'll just take them one at a time, 104 and then 102. 104, as Jan alluded to, the market is fairly concentrated to the comprehensive and advanced stroke centers in the country. You know, we believe based on the segmentation and the market analysis that we have conducted, there are about 400 such centers in the country that handle about 70% of the patient volume. So, with a relatively short, you know, small footprint of Salesforce, highly experienced hospital-based Salesforce, we believe we can cover a major portion of the market. GTX 104, which is an IV formulation of nemotipine, we believe has potential outside the U.S. as well. There is an intravenous formulation of nemodipine available in certain geographies in Europe. However, there are significant benefits to our formulation, the biggest one being that it can be peripherally infused as opposed to a central line, which adds a lot of complexity bedside. So we believe that there is a strong value proposition outside the U.S., And opportunistically, we plan on partnering for those or such opportunities. For GTX 102, as again Jan mentioned, that's a very, that's a much smaller market from a clinical perspective. There are about a dozen such centers in the country. So with a relatively small sales force, we can capture a lot of the value and then cover those markets. Similar to 104, our plans are to partner with international biopharma to take our drug to those markets. Does that help answer the question?
spk07: Yeah, no, thanks so much. That's great. And then just a brief follow-up on 104. You know, from our perspective, it looks like a relatively de-risk path forward here. But if you can talk about, you know, pending the PK study, a little bit more color on what that sort of phase three pivotal safety study might look like from a design perspective, and maybe when you plan to read that out as well.
spk04: Yeah, so I'll give you a brief answer here, and then Pierre or George, you know, could jump in. Ultimately, we're going to have to sit down with the FDA, but preliminary discussions would indicate that we would need maybe about 100 patients, so it's not a big study. And again, the important focus of the study is going to be on safety. And again, what we've seen so far with the IV form of nemotipine is that it may, in fact, more safe or have a reduced number of adverse events as compared to the oral simply because it's easier to control the administration and you see less variability in terms of blood levels. So this could be important. I think the other thing to mention is while it's not required for the design of this study, we do want to collect some pharmacoeconomic endpoint data because we do believe that this will be a very important aspect or benefit of our IV formulation. For example, we believe that it's going to require less nursing time, less prone to medication errors, certainly want to capture whether there's a reduction in any sort of rescue therapy that's required, And ultimately, you know, does it lead to a shorter stay in the ICU? Do these patients, are the outcomes better? So these are the sorts of things that we want to collect. It won't be designed as an outcome trial, but we'll be able to collect, you know, data, you know, such as I described, and then our thoughts would be to try to publish that data.
spk07: Excellent. Thanks so much. And once again, congrats on the progress. We look forward to following this story.
spk12: Yeah, thanks, Sahil. Really appreciate it. Take care.
spk11: There are no more questions in queue.
spk04: Okay. Thank you, Operator. And again, I want to thank everyone for joining us today. Appreciate your being here with us. And we really look forward to continuing to provide you with further updates in the very near future. So with that, I'll wish you a good day. Thank you.
spk02: Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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