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spk02: Good day and welcome to the Acosti Pharma second quarter 2023 earnings event call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I'd now like to turn the conference over to Robert Bloom with Lithum Partners. Please go ahead.
spk03: All right. Thank you very much. Welcome to Acosti Pharma's second quarter. fiscal 2023 conference call. On the call with us this afternoon is Jan Del Vies, President and CEO, Brian Ford, Chief Financial Officer, Monique Champagne, VP of Clinical Affairs, and Prashant Kohli, Chief Commercial Officer. Following management's prepared remarks, there will be a Q&A session. Should any questions remain after the call, please contact me at 602- 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 Canadian securities laws and forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the Securities and 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 such as 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. We speak only 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 planned Phase III study for GTX-104 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 actual costs associated with ICASI's clinical trials as compared to management's current expectations. The forward-looking statements made during the conference call are expressly qualified in their entirety by the cautionary statement, the cautionary note regarding forward-looking information section, and the risk factors contained in documents that have been filed and are filed by Acosti 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 the Acosti website at www.acosti.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. Acosti undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date in which they were made, except as required by applicable securities law. I'd now like to turn the call over to Jan Delvis, President and CEO of Acosti. Jan, please proceed.
spk01: Thank you, Robert, and thank you, everyone, for joining the call today. We're really excited to update you on the significant progress made during the second fiscal quarter to advance our three clinical programs. We remain on track to initiate and enroll the first patient in our Phase III safety study for GTX 104 in the first half of calendar 2023. This is a key milestone for the company and what is expected to be the final clinical step required to seek regulatory approval. As a reminder, GTX 104 is our most advanced clinical program focused on developing and commercializing a novel aqueous formulation of nemotipine for continuous IV infusion to treat patients suffering from subarachnoid hemorrhage, or SAH. I'll go into more details in a moment on upcoming timelines and the overall business opportunity for this program. Also, during the second fiscal quarter, we initiated two PK bridging studies, one for GTX-102, our novel concentrated oral mucosal spray, abetamethasone, intended to improve the neurodegenerative symptoms of ataxia telangiectasia, or AT, in pediatric patients. And one for GTX 101, our non-narcotic topical bioadhesive film-forming bupivacaine spray designed to treat postherpetic neuralgia, or PHN, the severe and often debilitating nerve pain that can persist following a shingles infection caused by the varicella zoster virus, the same virus that causes chickenpox. The GTX 102 PK study is expected to be completed with top line results reported before year end. With positive results from this study, we expect to initiate our phase three program in children with AT in the second half of calendar 2023. The GTX 101 single dose PK study is also expected to be completed by the end of calendar 2022 and is expected to provide important information on the dosing strength and frequency ahead of the initiation of additional clinical studies of GTX 101 in humans planned next year. I'll dive deeper into planned activities and the overall opportunities for both GTX 102 and GTX 101 in a moment. Perhaps most important in today's environment is that we finish the second fiscal quarter ending September 30, 2022, with about $35 million in cash, cash equivalents, and short-term investments. Based on current projections, we believe this is sufficient capital to continue to fund operations through at least March of 2024 and will fund the advancement of GTX 104 well into Phase 3 and allow us to advance GTX 102 and 101 to additional key inflection points. Taking a step back, and as a reminder, our strategy is to leverage the company's drug delivery technologies and capabilities to reformulate and repurpose marketed drugs for new orphan indications where a significant unmet medical need exists. The well-understood efficacy and safety profiles of these marketed compounds provide the opportunity for us to utilize the FDA's Section 505 regulatory pathway for the development of our reformulated drug candidates and therefore may potentially provide a shorter, less risky, and less costly path to regulatory approval. For those not familiar under Section 505 , if sufficient support of a product's safety and efficacy can be established 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 under the 505 pathway. And as I've mentioned before, All three of our drug candidates have already received orphan drug designation from the FDA and have 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 in Europe. These rare diseases also typically involve clinical trials with fewer patients, and provide market opportunities that often require a much smaller, more targeted commercial infrastructure. It's important to point out that the orphan diseases that ACOSTI has targeted for drug development are well understood, although these patient populations may remain poorly served by available therapies. Or, for example, in the case of our GTX102 for children with AT, 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 outcomes for these patients and their families. We believe that leveraging the Section 505 regulatory pathway for the development of our reformulated versions of these drugs provides us with highly attractive opportunities in orphan disease indications with little or no current competition. Okay, so let me now circle back to GTX 104, and I'll update you on the upcoming timelines, milestones, and what we see as the overall commercial opportunity. As I mentioned, GTX 104 is a novel formulation of nemotipine for IV 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 has seen little innovation in over 30 years. The condition of SAH patients is so critical that 10 to 15% of them die before they ever reach the hospital. And only about one-third ultimately survive. Another third of these patients require dependent care for the rest of their lives. So to help address this very severe condition, we completed a phase one PK bridging study in May of 2022, which successfully met all of its endpoints. The primary objective of the study was to evaluate the relative bioavailability of our IV GTX 104 compared to oral nematopene capsules in healthy adult male and female subjects, while the secondary objective was to assess its safety and tolerability. Importantly, the inter- and intra-subject variability was much lower for GTX104 as compared with oral nemotipine. We believe that because of its better absorption profile and more consistent blood levels, GTX104 may provide physicians with a more reliable and effective treatment for patients with SAAH. This could be a key advantage, as GTX104 could help to reduce the incidence of hypotensive events and vasospasm, which require immediate and costly intervention, such as balloon angioplasty or the use of intra-arterial vasopressors, which can lead to a worse outcome for the patient. We've submitted a letter to the FDA to request a Type C meeting to review and discuss the results of the PK Bridging Study and our proposed design for the Phase III Safety Study, as we believe it's important to obtain the FDA's feedback and guidance before initiating the Phase III Safety Study next year. We expect to meet with the FDA by early January 2023, which should allow us to initiate the Phase III Safety Study and enroll the first patient according to plan in the first half of 2023. As mentioned, the Phase III Safety Study is expected to be the final step required to seek regulatory approval before submitting a new drug application to the FDA for GTX104 for the treatment of SAH patients. We're extremely excited about the opportunity to bring a new treatment option to patients that suffer from SAH, with an estimated 50,000 patients per year in the United States alone. Based on our market research, we believe that GTX 104 represents a total available 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 into the brain to enhance healing. It's typically given throughout the entire period that the patient remains in the hospital, which can be up to three to four weeks or sometimes even longer depending on the severity of the patient's condition. Nimodipine is available in the U.S. as an orally administered capsule or liquid, 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 often must be delivered via a nasogastric tube and the drug can stick to the inside of the tube, which can result in significant variability in dosing. Oral nemotipine is also poorly absorbed, adding to the difficulty in controlling the blood pressure of the patient. For these reasons, physicians sometimes must reduce the dose or discontinue nemotipine altogether, meaning the patient will not get the full benefit of the drug. We believe that GTX104 delivered intravenously could be a game changer. as a more convenient, efficient, and precise way to deliver nemotipine directly into the patient's bloodstream. Okay, let's transition now to GTX-102, and I'll start with a brief program overview. 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 cancers. Patients typically die in their mid-20s from complications of lung effects and affects approximately 4,300 patients per year in the United States, and based on the number of treatable patients, has a potential addressable market of about 150 million. GTX-102 is comprised of a proprietary concentrated formulation of the glucocorticosteroid beta-methazone that can be sprayed conveniently over the tongue of the AT patient who often have difficulty swallowing. As I mentioned a moment ago, we initiated a Phase I PK bridging study in the third calendar quarter of 2022 to evaluate the comparative bioavailability, pharmacokinetics, and safety of our oral beta-methazone spray, GTX-102, compared to an intramuscular injection of beta-methazone, the reference drug, and to an oral solution of beta-methazone in 48 healthy subjects. The first subject, first dose, was administered on September 13, 2022. This PK study is the next step in the clinical development pathway for GTX102 and is expected to be completed with top line results reported before calendar year end. I look forward to sharing more with everyone in the coming weeks on this important study. And finally, let's discuss the progress that our team has 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 these patients with PHN. Approximately 40% of patients who are prescribed the standard of care which includes oral gabapentin and lidocaine patches, experience insufficient pain relief, and gabapentin has unpleasant side effects. Consequently, many of these patients end up being prescribed more potent drugs, such as opioids, which can be addictive. The potential benefits of GTX-101 could include faster onset of action, which is inherent in our active ingredient, bupivacaine versus lidocaine, as well as a longer duration of pain relief. GTX 101 can be conveniently sprayed on the skin wherever the pain is located, and based on the PK 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-opiate analgesic for PHN patients who suffer from this debilitating pain. On July 26, 2022, we initiated the PK Bridging Study to evaluate the relative bioavailability of GTX 101 compared to the reference-listed drug vipivacaine in 48 healthy subjects. The PK study is the next step in our clinical development pathway for GTX 101. The PK study is expected to be completed by the end of calendar 2022 as planned and is expected to provide important information on the dose and dosing frequency for additional clinical studies of GTX 101 in humans in 2023. I look forward to sharing more with everyone in the coming weeks on this study. So let me recap quickly before I turn it over to Brian for a quick review of our Q2 numbers. First, we expect to receive guidance from the FDA on our proposed phase three safety study design for GTX 104 in the form of a type C meeting no later than early in the first calendar quarter of 2023. This should allow us to initiate the phase three safety study and begin enrolling the first patient as planned in the first half of 2023. The study is expected to take about 18 months to complete and is expected to be the final clinical step required to seek approval under the 505 regulatory pathway. The PK Bridging Study of GTX 102 was initiated on September 13, 2022, and we expect to report out topline results on schedule next month before the end of calendar 2022. Assuming the PK Bridging Study meets its primary endpoint, we expect that the final development step is to conduct a Phase III safety and efficacy trial in AT patients. We plan to request a Type B meeting with the FDA following the completion of the PK study to confirm the Phase III study design and the Phase III studies expected to be initiated in the second half of 2023. If both studies meet their primary endpoints and NDA filing for GTX102 under Section 505 would follow. The single dose study of GTX101 was initiated on July 26, 2022 in Healthy Human Volunteers. This PK study is the next step in our proposed 505 regulatory pathway for GTX101. And the PK study is expected to be completed by the end of calendar 2022 as planned. and should provide important information on the dose and dosing frequency for additional clinical studies of GTX 101 in humans in 2023. And finally, it's important to note that we finished the second fiscal quarter ending September 30, 2022, with about $35 million in cash, cash equivalents, and short-term investments. We continue to believe that this is sufficient capital to fund operations through at least March of 2024, allowing for the advancement of 104 well into Phase 3, and advancing GTX 102 and 101 to key value inflection points. We're very excited about the prospects ahead for the company, and we look forward to keeping you apprised of our progress towards our many milestones this new fiscal year. I'd like to now turn the call over to Brian Ford, our CFO, to review our financial results. And at the conclusion of Brian's remarks, we'll open the call for your questions. Brian?
spk07: Thanks, Beth. Please note that unless otherwise indicated, all financial numbers that we discuss are denominated in U.S. dollars and the financials are reported conforming to U.S. GAAP guidelines. We should also note that we are a clinical stage company, thus we do not yet generate revenues or have any cost of goods expenses. Research and development expenses, net of government assistance for the three months ended September 30th, 2022, totaled 3.3 million compared to 0.6 million for the three-month end of September 30, 2021. Our research and development during the quarter end of September 30, 2022, focused primarily on advancing our clinical development programs for our GTX 104, 102, and 101 drug candidates. General and administrative expenses for the quarter ended September 30th, 2022 were 1.6 million compared to 2.9 million for the quarter ended September 30th, 2021. This decrease was the result of decreased legal, tax, accounting, and other professional fees that we incurred in connection with the grace merger. The decrease in professional fees was partially offset by an increase in salaries and benefits due to the renewed accrual for our employee incentive bonus program. Loss from operating activities for the quarter ended September 30th, 2022 was 5.1 million compared to a 3.6 million loss of the quarter ended September 30th, 2021. Net loss and total comprehensive loss for the quarter September 30th, 2022 was $4.9 million, or $0.11 loss per share, compared to net income of $1 million, or $0.03 per share, income of $0.03 per share for the quarter ended in 2021. Cash equivalents and short-term investments totaled $34.9 million as of September 30th, compared to $43.7 million in cash equivalents and short-term investments as of March 31, 2022. As Jan mentioned, we will continue to believe that we have sufficient capital to fund operations through at least March of 2024, which would include the ability to fund our lead asset, GTX 104, well into Phase 3, and GTX 102 and 105, to additional milestones. With that, I'll now turn the call back over to Jan.
spk01: Thanks, Brian. Before I turn it over to the operator for questions, I wanted to let everyone know we'll be participating in the Investor Summit Conference tomorrow. If we don't already have a one-on-one meeting scheduled with you and you would like to arrange a meeting with us, please reach out to Robert Bloom and he can coordinate getting a meeting scheduled. With that, I'd like to now turn the call over to the operator. Jason, can you open it up for questions?
spk02: Yes, thank you. We will now begin the question and answer session. And to ask a question, you may press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Leland Gershell from Oppenheimer. Please go ahead.
spk04: Hey, good afternoon, and thanks for taking my questions. Just a question on 104. I know it's sometime late, away, but just as you think about approaching the commercial market for the opportunity in SAH to access those patients out there in hospitals and ICUs and so forth, what structure do you plan to deploy in terms of commercial organization and field reps, if you're able to speak to that? Thanks.
spk01: Yeah, thank you, Leland. Thanks for being on the call today. Yeah, you know, the The really nice thing about this market is that it's highly concentrated. These patients present typically to a major health care center with usually an ICU stroke unit. And there's about roughly 1,400 of those centers around the country. It's interesting because it's a typical 80-20 rule, or in this case about 70% actually of the patients are treated in about 400 of those centers. So we really believe that we can commercialize GTX 104 ourselves. And we think we can do this initially with just roughly 15 to 20 reps. and then grow organically as sales grow. So, we obviously would be targeting some of the larger centers around the country. And I should mention, by the way, that we already have relationships with many of these centers. We expect, you know, a number of them to participate in our Phase 3 safety study and will be recruiting patients for us. So, If we have a successful study and the drug gets approved, we would expect fairly rapid adoption. I should mention that we remain open to other potential partnering opportunities, not just in the U.S., but certainly outside of the U.S. We think there's really a very attractive market, for example, in China. So we have discussions just beginning, you know, for potential partnership opportunities in Asia as well as potentially in Europe as well.
spk04: Thank you. And great. And just to confirm, so we'll see the 102 sounds like sometime next month. So we look forward to seeing that readout. Thanks very much for taking the questions.
spk01: Yeah, sorry, I didn't catch the last part you cut out there. Were you asking about 102?
spk04: Yeah, just confirming that we'll see the top line by year end.
spk01: Yes, absolutely, yeah. We're planning to report out that study should, we should have the top line results before the end of December. So we will report that out as soon as we get the results.
spk04: Great, I look forward to it. Thanks so much.
spk01: Yeah, thanks, Leland.
spk02: Again, if you have a question, please press star, then one. Our next question comes from Sahil Cosme from B-Rally Securities. Please go ahead.
spk05: Yeah, thank you. Good afternoon, Jan and team, and congratulations on another productive quarter, and thanks for taking our questions. I just have a couple here. Maybe if we can start with something that you were going over in the recap there. Could you just remind us – when we can expect sort of potential filings for each of the programs and then sort of lay in your current balance sheet and capital requirements to that, you know, in the context of during the time of the 104 filing. I know the runway is sufficient through there, but for the other programs as well?
spk01: Sure, yeah. So, you know, we have disclosed that we would expect that the GTX 104 study We'll start as planned in the first half of next year, actually in the second quarter we would expect to see the first patient in. That study is expected to enroll about 100 patients. We'll have two arms. It'll, you know, 50 of those patients will be on the oral nematopene and 50, roughly 50, on our IV GTX-104. We expect it'll take about a year to enroll those patients, and with a short follow-up period, the whole study is expected to take about 18 months. So, you know, we would expect to, you know, wrap up the study, if we were able to start mid next year, would expect to wrap up the study towards the end of 2024, you know, and then file in early 25. And again, we hope we'll get, you know, fast track review on this. But assuming, you know, a 10-month review cycle, which would be the, you know, conservative, we would expect to have approval before the end of 2025. And I'll turn it over to Brian with regards to your balance sheet question. Brian, do you want to take that one?
spk07: Sure. I'm not exactly certain what you meant by the balance sheet or capital requirements. You're just looking for how much is going to be required to complete these programs?
spk05: Yeah, so more just understanding how we can think about the burn going forward at this, you know, 5 million number that we're seeing this quarter as some of the studies get into these, you know, larger safety studies. Should we expect sort of along the same trajectory?
spk07: Yeah. Okay, so my expectation and our expectation is that our long-run burn rate is about $2 million a month. And that's kind of, you can take that from looking at our 35 million, it'll last us for the next, 18 months through March of 24. Beyond that, as we start to commercialize, I would expect our burn rate to increase a little bit just to cover the cost of commercialization and the build-out of our commercial infrastructure. But, you know, at the same time, we'll be looking at other ways to monetize and raise funds to support that commercialization effort.
spk05: Excellent. And then maybe one more for Jan or Prashant, if he's on the call as well. Could you remind us of some of the market research that's been generated from the 101 program?
spk01: Sure, yeah. Maybe I'll turn that over to Prashant. You want to cover that one?
spk06: Yeah, happy to. Hi, Sahil. So, you know, earlier this year, we refreshed our market assessment primary research for GTX 101 program. This is for post-herpetic neuralgia. And the results, the findings were astounding, to put it mildly, I guess. We interviewed over 250 primary care physicians and pain specialists, specifically socialized the target product profile for GTX 101, and it was an overwhelming response. even in light of the lidocaine patches, as you know, is mostly the standard of care with the gabapentin. And as Jan had mentioned, both of them have unmet needs out there, which came out very clearly in the survey findings of these physicians. The perception was GTX-101 would meet a need out there in terms of faster analgesia, as well as a potential drug that would be more convenient to use and apply. So it validated our hypothesis that there is an unmet need for PHN out there that GTX 101 would fulfill very nicely. The other aspect of our primary research was to look at reimbursement and what the impact of Shingrix vaccine is on the overall lidocaine patch market. And just to remind everyone that lidocaine patches have the only approved indication is for post-herpetic neuralgia. And what we found was only a tenth of scripts are being written for the patches. Majority of the others are for back pain, osteoarthritis, diabetic peripheral neuropathy. And in over half the instances, the major insurance companies are routinely approving those prescriptions for the non-PHN pain indication. So the market opportunity, we think, for GTX 101 is very attractive with PHN as well as beyond for extension opportunities. Shingrex was successful. During the Pure Chingrex was launched, we analyzed the uptick curve of the lidocaine patches, and they have grown at a healthy CAGR of 7%. So it's these non-PHN indications as well that we believe is a robust driver for GTX 101. So I'll just pause here if you have any further questions, or Jen, if you'd like to add anything.
spk01: No, I thought that was a good summary, Prashant. Thank you.
spk05: Yeah, no, that's fantastic for Sean. Thank you so much for that additional color and for taking a lot of our questions. We look forward to seeing some of the data by the end of the year.
spk01: Yeah, thanks, Sahil. Really appreciate you being on the call today.
spk05: Absolutely. Thanks.
spk02: There are no more questions in the question queue. This concludes our question and answer session. I'd like to turn the conference back over to management for any closing remarks.
spk01: Okay, thank you, Jason. Appreciate it. I want to thank everyone for taking the time to be with us today on the call. We're really excited about the progress we're making to deliver innovative new treatments to thousands of patients who currently lack effective therapies, and we really look forward to updating you on our progress towards several key milestones coming in the next few months. So thanks again, and I wish you all a great day. Take care.
spk02: Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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