Acasti Pharma, Inc.

Good day and welcome to the Acosti Pharma reports third quarter of fiscal year 2023 financial results and business update call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialist by pressing 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 would now like to turn the conference over to Robert Bloom with Litham Partners. Please go ahead.

All right, thank you very much, Jason. Welcome to Acosti Pharma's third quarter fiscal 2023 conference call. On the call with us this afternoon is Jan Del Vies, President and CEO, Brian Ford, Chief Financial Officer, Pierre Lemieux, Chief Operating and Scientific Officer and Acosti co-founder, 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 602-889-9700. 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 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, 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 ACOSTI's planned preclinical and clinical trials, regulatory requirements or developments and 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 ACOSTI's preclinical and clinical trials as compared to management's current expectations. The forward-looking statements made during this conference call are expressly qualified in their entirety by this 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 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 DelVees, President and CEO of ACOSTI. Jan, please proceed.

Hey, thank you, Robert, and thank you to everyone joining the call today. We're very excited to update you on the significant progress made to advance our three clinical programs over the last few months. Let me start with a high level overview and then I'll provide more details. First, in late December 2022, we announced successful results following the completion of two pharmacokinetic or PK trials in human volunteers for both GTX 101 and 102. In both cases, the top line results met all primary outcome measures allowing us to advance both programs to the next stage of clinical development in 2023. I'll expand more on each of these programs in a moment. Further, with GTX 104, we submitted a letter to the FDA to request a Type C meeting to review and discuss the results of the PK Bridging Study that was reported out last May, as well as our proposed design for the Phase III Safety Study. We anticipate receiving the FDA's clarifying guidance before the end of calendar Q1. We expect that favorable guidance will confirm our 505 regulatory strategy and will allow us to finalize the study protocol paving the way for the initiation of our phase three safety study in patients with subarachnoid hemorrhage caused by a ruptured aneurysm or ASAH. And very importantly, we finished the third fiscal quarter with $31.3 million in cash, cash equivalents, and short-term investments. We continue to believe that based on current projections, we have sufficient capital to fund operations into calendar Q2 of 2024, allowing for the advancement of GTX 104 well into Phase 3 and advancing GTX 102 and 101 to key value inflection points. So at a high level, we ended the quarter in a very strong fashion, and we expect calendar 2023 to be even more exciting with two of our drug candidates ready to enter phase three. With that brief summary of the quarter, let me expand on the positive results that we received on our two PK studies as announced in December, and I'll also provide a brief reminder of the market opportunity that each of these drug candidates represent. I'll start with GTX 101, our topical spray form of bupivacaine, that we're developing to treat patients with post-herpetic neuralgia, or PHN. On December 22nd, we announced that the top-line results for our single-dose PK study for GTX 101 met all its primary outcome measures for the study. The study was designed to evaluate the relative bioavailability of GTX 101 compared to a subcutaneous injection of bupivacaine, which is the reference-listed drug in the United States for regulatory purposes. This PK study was the next step in the proposed 505 regulatory pathway for GTX 101, and the results provide us with important information on the dose and dosing frequency in humans for future planned clinical studies. As a reminder, GTX 101 is a unique and patented formulation of bupivacaine hydrochloride that incorporates a novel bioadhesive film-forming polymer and is administered via a topical spray. As I mentioned, GTX 101 is being developed to relieve the severe pain associated with PHN, the persistent and often debilitating neuropathic pain caused by nerve damage from the varicella zoster virus, the virus that causes shingles and chicken pox. PHN pain may persist for months or even years. And based on our primary market research, there are still significant unmet medical needs for this indication. The single dose PK study enrolled 48 healthy adult subjects with 24 males and 24 females having a mean age of 36 years, and they were randomized into four separate cohorts with 12 subjects in each cohort. Subjects in cohorts one, two, and three received 50, 100, or 200 milligrams of GTX 101 respectively in adjacent and overlapping sprays on the lower back. Subjects in cohort four received a single 10 milligram subcutaneous injection of the active bupivacaine comparator. The primary objective of this PK study was to assess the pharmacokinetics of three different dose levels of GTX 101 at 50, 100, and 200 milligrams. Each dose of GTX 101 was administered to a separate cohort of 12 subjects as a single dose topical application in a metered spray. For clarity, 50 milligrams was delivered as five sprays, 100 milligrams as 10 sprays, and 200 milligrams as 20 sprays. These sprays were not administered one on top of the other, but rather adjacently to cover the entire targeted area. An additional 12 subjects in cohort four received a single 10 milligram subcutaneous injection of the active comparator. A secondary objective of this study was to compare the bioavailability of these two very different modes of administration. The data from this study provides us now with key information that helps us to further characterize the PK parameters and the safety and tolerability of GTX 101 and will support additional future clinical development. We expect that the full clinical study report will be received from the CRO in the first half of calendar 2023 and we intend to publish this data. We plan to follow this successful PK study with a multiple ascending dose study. Results from both of these Phase I clinical studies, once completed, will be required before we can initiate our Phase II program in PHN patients. As background, the current treatment of PHN most often starts with oral gabapentin prescribed as a first-line therapy And when that fails, as it often does due to poor efficacy and unpleasant side effects, lidocaine patches are typically prescribed as a second line therapy. According to our recent market research with more than 250 physicians who regularly treat these patients, up to 40% of patients do not experience satisfactory pain relief from the patch. And these refractory patients may end up being prescribed opioids to address their persistent pain. Gabapentin and opioid abuse have continued to proliferate, and lidocaine patches are suboptimal for many reasons. The lidocaine patch can only be worn for 12 hours at a time. They're difficult to use as they fall off and can cause skin sensitivity and irritation, especially in older individuals. And depending on their placement, they can be inconvenient, uncomfortable, and unattractive. Prescription lidocaine patches are currently only approved for PHN, and the market is made up of both branded and generic offerings. You can certainly see the many issues with the current treatment options that we hope GTX 101 will address. It's important to note that the potential benefits of GTX 101 could include faster onset of action and a longer duration of pain relief as compared to the lidocaine patch. 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 to the affected area once a day or possibly even less frequently to get 24-7 pain relief, although this dosing schedule will be confirmed in additional clinical studies. Based on this product profile and assuming a successful development program, we believe GTX 101 has the potential to be a game changer as a non-opioid alternative to the lidocaine patch for PHN patients who suffer from this debilitating pain. In terms of market size, it's estimated that PHN affects approximately 130,000 patients per year in the United States. And according to the third-party market research report commissioned by ACOSTI, the total addressable market for GTX 101 could be as large as $2.5 billion, consisting of approximately $200 million for PHN pain and 2.3 billion for non-PHN pain. So this certainly represents a large addressable market opportunity for ACOSTI. Now I'd like to transition to GTX102. And on December 28th, and only a week after we reported our positive clinical study results for GTX101, we announced that the top line results of our GTX102-001 PK Bridging Study met all primary outcome measures. and represented an important milestone in the advancement of this program. The PK Bridging Study was a phase one randomized open label crossover study in healthy adult subjects designed to evaluate the comparative bioavailability, pharmacokinetics, and safety of GTX102 administered as an oral spray compared to intramuscular beta-methazone, which is expected to be the reference product for regulatory bridging purposes. as well as to an oral solution of beta-methazone, which is available in Europe, but not in the United States. A total of 48 healthy adult subjects comprised of 27 males and 21 females were enrolled in a single center, five treatment, eight sequence, two period crossover study. Our new and patented formulation of beta-methazone is intended to improve the neurological symptoms of ataxia telangiectasia, or AT. in a pediatric population for which there are currently no FDA-approved therapies. GTX102 can be sprayed conveniently over the tongue of AT patients who often have difficulty swallowing. As a reminder, the beta-methazone oral solution that we're comparing to GTX102 was shown to reduce neurological symptoms in children with AT in a multicenter, double-blind, randomized, placebo-controlled crossover trial conducted in Italy by Dr. Zanolli, and this study was published in 2012. As I mentioned, our PK bridging study met all primary outcome measures, providing us with confidence that the expected final development step for GTX102 will now be to conduct a phase three safety and efficacy trial in AT patients using a treatment regimen in a dosing range comparable to the one already shown to be effective in Dr. Zanolli's study. As background, I'll remind you that 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. The hallmark symptoms of AT are cilibellar ataxia and other motor dysfunction, as well as dilated blood vessels or telangiectasia that occur in the sclera of the eyes and on the skin. Children begin to experience balance and coordination problems when they begin to walk at a toddler age. And ultimately, they become wheelchair-bound in their second decade of life. In pre-adolescence, around five to eight years of age, patients experience ocular motor apraxia. This is difficulty moving their eyes in a desired direction. And they also experience a weakness in the muscles of the face used for speech, causing slowed or slurred speech as well as dysphagia or difficulty swallowing. They often develop compromised immune systems and are at an increased risk of developing respiratory tract infections and cancers, typically lymphomas and leukemia. Patients typically die in their second decade of life from complications of lung disease or cancer. Unfortunately, there's no known treatment to slow the disease progression of AT. and treatments that are used are strictly aimed at symptoms or conditions secondary to the disease. A third-party market research study that we commissioned found AT effects approximately 4,300 patients per year in the United States and has a potential addressable market of about $150 million based on the number of treatable patients. Duchenne muscular dystrophy, or DMD, is another rare inherited and progressive muscular disorder that typically affects boys. And like AT, it is often diagnosed at a young age. Enflaza is the first and only FDA-approved corticosteroid for treating boys with DMD over the age of two. Like GTX102, the dosing of Enflaza is determined for this pediatric population based on their weight. Enflaza, which is sold by PPC Pharmaceuticals, was launched back in 2017. and it's reached more than $200 million in sales last year. Given the many similarities with GTX 102, we believe that Inflozit could serve as an excellent analog for successful commercialization of our drug. In terms of next steps, following the receipt of the full PK data study data set from our CRO, which is expected sometime in the first half of calendar 2023, We plan to request a Type B meeting with the FDA to confirm our proposed Phase III study design and the 505 bridging strategy with the listed intramuscular form of the drug. If all proceeds as planned, the study startup activities for Phase III safety and efficacy study are expected to be initiated by the end of calendar 2023. If the Phase III program meets the primary endpoints, and NDA filing for GTX102 under Section 505 is expected to follow. Transitioning now to GTX104, our lead development program. As previously discussed, we submitted a Type C meeting package to the FDA back in November. That package included the data from our PK Bridging Study, as well as our proposed design for our Phase 3 Safety Study. We anticipate receiving the FDA's clarifying guidance before the end of calendar Q1. This should allow us to benefit from the FDA's buy-in and should allow us to begin recruiting clinical sites and initiate the phase three safety study as planned. We've already selected our CRO and clinical trial site selection is currently underway. For those of you who may not already be familiar with our lead drug candidate, GTX104 is a novel patented formulation of nemotipine for IV infusion designed specifically for patients with aneurysmal subarachnoid hemorrhage, or ASAH, which is a condition caused by bleeding on the brain due to a ruptured aneurysm. ASAH 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 over the last 30 years. The condition of ASAH 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. As a reminder, we completed a Phase I 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 GTX-104 administered as a continuous IV infusion 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 GTX-104 as compared with oral nematopene. we believe that because of its better absorption profile and more consistent and predictable blood levels, GTX-104 may provide physicians with a more reliable and effective treatment for patients with ASAH. This could be a major advantage as GTX-104 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 worse outcomes for the patient. As I mentioned, while we wait for the guidance from the FDA on our proposed phase three study design, we continue to plan and prepare for the initiation of the study. We have engaged to manage the study for us, and we are qualifying and recruiting sites now to enroll patients. We expect the study to take about 18 months to complete once the first patient is enrolled, And if the trial is successful, it is expected to be the final clinical step required to seek market approval under the 505 regulatory pathway. We're eager to hear back from the FDA, and we look forward to providing a market update once we receive their guidance. Before I turn it over to Brian to review our Q3 financials, I think it's important to mention that the strategy that we're undertaking to leverage ACOSTI's unique drug delivery capabilities by reformulating and repurposing marketed drugs for new orphan indications where significant unmet medical need exists is advancing nicely according to our plans. The well understood efficacy and safety profiles of the currently marketed forms of these drugs provide the opportunity for us to utilize the FDA's Section 505 regulatory pathway for the expedited development of our reformulated drug candidates and therefore may provide potentially provide a shorter, less risky, and less costly path to regulatory approval. 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 ACASTI 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. With that, I'd like to turn the call over now to Brian Ford, our CFO, to review our financial results. I'll then quickly wrap things up and we can then open the call up for questions. Brian?