Acasti Pharma, Inc.

Good day and welcome to the Ecosti Pharma first quarter fiscal year 2023 financial results conference call. All participants will be in listen-only mode. So if you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Robert Bloom with Lithum Partners. Please go ahead.

Thank you very much, Rocco. Welcome to Akasi Pharma's first quarter fiscal 2023 conference call. On the call with us this afternoon is Jan Delvis, President and CEO. Brian Ford, Chief Financial Officer. Pierre Lemieux, Chief Operating and Scientific Officer. and Prashant Kohli, VP of Commercial Operations. Following management's prepared remarks, there will be a Q&A session. Should any questions remain after the call, please feel free to contact me at 602-889-9700. I'd also like to remind everyone that statements on this conference call that are not statements of historical or current facts constitute forward-looking information 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 and the Securities in Exchange Act of 1934. Such forward-looking statements involve known and unknown risks and uncertainties that could cause the actual results to be materially different from those expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, listeners are urged to consider statements labeled with terms, beliefs, 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 planned Phase III study for GTX104 and ACASI's other preclinical and clinical trials, regulatory requirements or developments in the outcome of meetings with the FDA, changes to clinical trial designs and regulatory pathways, legislative, regulatory, political, and economic developments, and costs associated with ACASTI's clinical trials. The forward-looking statements made during this conference call are expressly qualified in their entirety by this cautionary statement, the cautionary note regarding the forward-looking information section, and the risk factors contained in ACASTI's documents that have been filed and are filed by ACASTI from time to time with the Securities and Exchange Commission and Canadian securities regulators which are available on EDGAR at www.sec.gov, on CDAR at www.cdar.com, and on the Investors section of Acosti's website at www.acostifarma.com. 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. Kosti undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by applicable securities law. With that said, I'd like to turn the call over to Jen DelVise, President and CEO of Kosti Pharma. Jen, please proceed.

Thank you, Robert, and I want to thank everyone for joining the call today. We're really excited to update you today on the strong progress we're making on our three clinical programs, each of which have key clinical trials either underway or planned to be initiated in this new fiscal year. As a reminder, our strategy is to leverage the company's novel drug delivery and formulation technologies to improve marketed drugs for orphan indications where a significant unmet need exists. The well-understood efficacy and safety profiles of these marketed compounds provides the opportunity for us to utilize the FDA's Section 505B2 regulatory pathway for the development of our drug candidates, and therefore may potentially provide a shorter, less risky, and less costly path to regulatory approval. For those not familiar, under Section 505B2, if sufficient evidence of a product's safety and efficacy exists, Either through previous FDA experience or sufficiently within the scientific literature, it may eliminate the need to conduct some of the preclinical and clinical studies that new drug candidates might otherwise require. All three of our drug candidates have already received orphan drug designation from the FDA, and each one has the potential to be considered for fast-track review and approval. Orphan drug designation provides for seven years of marketing exclusivity in the United States post-launch, provided certain conditions are met, and 10 years of exclusivity in Europe. These rare diseases also typically involve clinical trials with fewer patients, and they often require a much smaller, more targeted commercial infrastructure to realize the market potential. It's important to point out that the specific diseases targeted for drug development by ACOSTI are well understood, although these patient populations may remain poorly served by current available therapies Or, for example, in the case of our GTX-102 for children with ataxia telangiectasia, approved drug therapies do not yet exist. Our aim is to effectively treat the debilitating symptoms that result from these underlying diseases with the ultimate goal of improving quality of life and patient outcomes. We believe by leveraging the Section 505b2 regulatory pathway for the development of our novel and reformulated versions of these drugs, provides us with highly attractive opportunities in orphan disease indications with little or no competition. So with that as a background, let me give you a quick overview of our lead drug candidate, GTX-104, and then I'll provide an update on the status of our ongoing clinical efforts. As a reminder, GTX-104 is a novel formulation of nemotipine to be administered via a continuous intravenous infusion designed specifically for patients with subarachnoid hemorrhage, or SAH, which is a condition caused by bleeding on the brain due to a ruptured aneurysm. SAH presents a life-threatening emergency for the patient, and our new proprietary IV drug formulation addresses a vital need in the critical care market that's seen little innovation in over the last 30 years. The condition of SAH patients is so critical that 10% to 15% of them die before ever reaching the hospital, and about one-third ultimately do not survive. Another third of these patients require dependent care for the rest of their lives. SAH is estimated to affect about 50,000 patients per year in the United States alone, and based on our market research, we believe that GTX 104 represents a total addressable market in the U.S., of more than $300 million. The current standard of care is an orally administered drug called nemotipine, which was approved by the FDA way back in 1988. Nemotipine is a potent calcium channel blocker that relaxes the blood vessels in the brain and lowers blood pressure to allow more oxygenated blood flow into the brain to enhance healing. Nemotipine is typically given throughout the entire time that the patient remains in the hospital which can be up to three to four weeks. Nimodipine is available in the U.S. only as an orally administered capsule or liquid solution, which is problematic, as many of these SAH patients are not conscious, or if they're awake, they have a hard time swallowing oral drugs. Consequently, Nimodipine must often be delivered via a nasogastric tube, which leads to a lot of variability in dosing, as the drug can stick to the inside of the tube making it difficult to control the resulting blood pressure of the patient. Furthermore, oral nemotipine is subject to a large variation in blood levels due to a food effect, as well as diurnal variations caused by changes in blood flow, renal function, and hepatic metabolism over the course of a 24-hour day, all which can affect absorption of an oral drug. So we believe that GTX-104 delivered intravenously could be a game changer for patients with SAH as a more convenient, efficient, and precise way to deliver nemotipine directly into the patient's bloodstream. With that brief overview, let me share the latest updates on the rapidly advancing clinical program for GTX104. As we discussed on our last conference call, we announced on May 18th that our GTX104 pharmacokinetic bridging study had successfully met all of its endpoints. The primary objective of the study was to evaluate the relative bioavailability of GTX104 administered intravenously compared to oral nemotipine in healthy adult male and female subjects, while the secondary objective was to assess its safety and tolerability. The results showed statistically no difference in the maximum and total exposure between GTX104 and the oral formulation of nemotipine. and no serious adverse events were observed. This meant that GTX104, delivered intravenously, can be considered essentially bioequivalent to oral numedipine. Importantly, the inter- and intra-subject PK variability was also much lower for GTX104 as compared with oral numedipine. We believe that because of its better absorption profile and more consistent blood levels, GTX-104 may provide physicians with a more reliable and more effective treatment for patients with SAH. This could be a key advantage, as GTX-104 could help to reduce the incidence of hypotensive events and vasospasm, which require immediate and costly intervention and can lead to worse outcomes for the patient. We plan to submit our recent PK bridging study results to the FDA in calendar Q3. And we plan to request a Type C meeting to get the FDA's guidance on the final dosing regimen that we're now recommending for our Phase III safety study based on our excellent PK results. We also want to review our proposed design for the Phase III safety study with the FDA and to obtain their feedback and guidance before initiating this study. There's a 75-day response time following our meeting request for the FDA for them to provide their comments. So we would expect to have the FDA's feedback by the end of this calendar year or at the very latest early in 2023. As a result, we expect to start our phase three study in the first half of calendar 2023. I'll remind everyone that while the major objective of our phase three safety study is to show that the safety profile of our GTX104 and SAH patients is similar to or no worse than oral nimetipine, We also want to collect additional pharmacoeconomic data compared to the oral for future publication and marketing purposes. So based on the discussions we're having with our key opinion leaders, we plan to collect important data such as the amount and intensity of nursing time associated with drug administration and patient follow-up for GTX104 compared to oral nematopine. Also the number of hypotensive events, and the length of stay in the ICU for each drug, and so on. Therefore, we believe that getting the FDA's guidance in the form of a Type C meeting before starting the study will be really important. And the net effect of obtaining their input in advance will ultimately reduce regulatory risk and increase the program's likelihood for success. As a reminder to everyone, the Phase III Safety Study is expected to be the final clinical step required. to seek regulatory approval under the 505 regulatory pathway before submitting a new drug application to the FDA for GTX104 to treat SAH patients. We're extremely excited about the opportunity to bring this new treatment option to patients with SAH. So now let me transition to GTX102, and I'll start with a brief program overview. Again, as a reminder, GTX-102 is a novel concentrated oral mucosal spray of beta-methazone intended to improve the neurological symptoms of ataxia telangiectasia, or AT, for which there are currently no FDA-approved therapies. AT is a progressive genetic neurodegenerative disorder that primarily affects young children, causing severe disability, impairment of the immune system, and an increasing susceptibility to infections and cancer. Patients typically die in their mid-20s from complications of lung disease or cancer. A market research study commissioned by ACOSTI found that AT affects approximately 4,300 patients per year in the United States and has a potential total addressable market of about $150 million based on the estimated number of treatable patients. GTX-102 is comprised of a novel concentrated formulation of the glucocorticosteroid beta-methazone that can be sprayed conveniently over the tongue of the AT patient, who often have difficulty swallowing. So I'm pleased to report that we remain on schedule to initiate the PK bridging study of GTX-102 in the third quarter of 2022. This study will be a randomized, open-label, crossover study in healthy male and female subjects to evaluate the comparative bioavailability, pharmacokinetics, and safety of GTX102 administered as an oral spray. We plan to compare GTX102 in this study to an intramuscular injection of beta-methazone, which is the reference product for U.S. filing purposes. and we'll also compare it to an oral solution of beta-methazone, which would be the reference product for filing purposes in Europe. This study will be conducted in Canada, and a total of 48 healthy adult male and female subjects will be enrolled in this single center study, comparing five different treatments, including the oral and IM forms of beta-methazone, and three different treatment doses of GTX-102. in a crossover study design. Blood levels and safety measures will be compared to beta-methazone IM injectable and to the beta-methazone oral solution. As I mentioned earlier, we plan to initiate this PK bridging study in the third calendar quarter of 2022, and we expect to report out top-line results before the end of 2022. Assuming the PK bridging study meets its primary endpoint, we plan to conduct a Phase III safety and efficacy trial for GTX102 in AT patients, and like GTX104, we plan to request a Type B or end of Phase 1 meeting with the FDA following the completion of the PK study to confirm the Phase 3 study design. The Phase 3 study is expected to be initiated in the second half of calendar 2023. If both studies meet their primary endpoints, an NDA filing for GTX102 under Section 505B2 would follow. Okay, and finally, let me discuss the nice progress that's being made on GTX 101, our novel, non-narcotic, thin-film, bioadhesive, topical bupivacaine spray designed to treat PHN, the severe and often debilitating nerve pain that can persist following a shingles infection. It's important to point out that market studies suggest a significant unmet need exists for treating patients with PHN. Approximately 40% of the patients that are prescribed the standard of care, which includes oral gabapentin and lidocaine patches, experience insufficient pain relief. And gabapentin has unpleasant side effects and also has abuse potential. The benefits of GTX 101 could include faster onset of action, which is an inherent characteristic of our active ingredient bupivacaine versus lidocaine, as well as a longer, more sustained duration of pain relief. GTX 101 can be conveniently sprayed on the skin, wherever the pain is located, and based on the PK profile of bupivacaine, we believe that GTX 101 may only need to be applied once or twice a day for 24-7 pain relief, although this dosing schedule will need to be confirmed in our clinical trials. We believe GTX 101 has the potential to be a disruptive therapy as a non-opioid analgesic for PHN patients who suffer from this debilitating pain. We completed a mini pigskin sensitivity study in the second quarter of 2022, and on July 26th, we initiated our planned single-dose pharmacokinetic bridging study to evaluate the relative bioavailability of our topical spray form of bupivacaine, GTX-101, compared to the reference-listed intramuscular injectable form of the drug in 48 healthy subjects. The initiation of the study in Canada followed feedback from the FDA on the study protocol and a non-objection letter from Health Canada. The PK study is a Phase I randomized, single-dose, four-cohort parallel study designed to evaluate the pharmacokinetics dose proportionality safety and tolerability of GTX-101 compared to the subcutaneous injectable form of bupivacaine in healthy subjects. The primary objective is to assess the pharmacokinetics and pharmacodynamics of three dose levels of GTX-101 given as a single dose topical application via a metered spray. As mentioned, the study will enroll up to 48 subjects with 12 subjects per cohort. Subjects in cohorts one, two, and three will receive GTX 101 at three different dosage levels respectively, and subjects in cohort four will receive a single subcutaneous injection of the active control. In addition, a pharmacodynamic assessment measuring skin sensation and sensitivity will be performed to collect early information on efficacy and to guide important further decisions for advancing GTX 101 clinical development. The initiation of this single-dose PK study for GTX 101 is yet another accomplishment achieved so far in 2022 by the ACASTI team. This study is the next step in our proposed 505 regulatory pathway for GTX 101, and it's expected to be completed on schedule by the end of calendar 2022. The results will provide important information on the dose and dosing frequency for GTX 101, which will guide the design of our multiple ascending dose study to be conducted in Healthy Human Volunteers next year, followed quickly by our planned Phase II study in PHN patients. So let me recap quickly before I turn the call over to Brian for a quick review of our Q1 numbers. First, we're planning to initiate a Phase III study for GTX104 in the first half of 2023, and all of the planning is underway now. As mentioned, we'll be requesting a Type C meeting with the FDA before initiating the Phase III study to confirm the study design and final dosing regimen based on our excellent PK results, and also to obtain the agency's feedback on the additional pharmacoeconomic data that we would like to collect which could help to support our marketing and commercialization efforts once the product is approved. While this means that our Phase III trial will now start a month or two later than originally planned, we believe the net effect of obtaining this clarification and guidance from the FDA reduces regulatory risk and will ultimately benefit the program's opportunity for clinical and commercial success. We remain on schedule to initiate the PK Bridging Study of GTX102 in the third calendar quarter of 2022, and we continue to expect to report out our top line results as planned before the end of calendar 2022. Assuming the PK bridging study meets its primary endpoint and based on the FDA's guidance, we plan to conduct a phase three safety and efficacy trial in AT patients in the second half of calendar 2023. In July, we initiated on schedule our single dose PK bridging study to evaluate the relative bioavailability of GTX-101 compared to the reference-listed drug bupivacaine in 48 healthy subjects. This study is expected to be completed as planned by the end of calendar 2022, and it'll provide important information on the dose and dosing frequency in humans that will guide the design of our multiple ascending dose study in healthy human volunteers, as well as our phase two study in PHN patients. And while Brian will expand on this in a moment, I think it's important to also point out that given our continued focus on tightly managing cash, we've identified and implemented additional operating efficiencies across the organization. And we now believe that we have sufficient capital to fund at least 21 months of operations through March of 2024. This capital will continue to support the advancement of GTX 104 through Phase III and and GTX 102 and 101 to important additional key value inflection points. So bottom line, we're very excited about the prospects ahead for the company, and I look forward to keeping you apprised of our progress towards our many milestones in this new fiscal year. Now I'd like to turn the call over to Brian Ford, our CFO, to review our financial results. At the conclusion of Brian's remarks, we'll open the call for your questions. Brian?