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spk06: Greetings and welcome to the BioAura Therapeutics third quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chuck Padala, Managing Director with Lifestyle Advisors. Thank you, Chuck. You may begin.
spk08: Thank you, Operator. Good afternoon and welcome to the Biola Therapeutics Third Quarter 2023 Corporate Update and Financial Results Conference Call. Joining me on the call are Adi Mahanty, Chief Executive Officer, Eric Vesparvis, Chief Financial Officer. Before I turn the call over to Mr. Mahanty, I would like to remind you that today's call will include forward-looking statements in the meaning of the federal securities laws, including but not limited to the types of statements identified as forward-looking in our portal reports, Form 10-Q, that we will file later today, and our subsequent reports filed with the SEC, which are available on our website, the Investor section. These forward-looking statements represent our views only as of the date of this call about substantial risks and uncertainties, including many that are beyond our control. Please note the actual results could differ materially from those expressed in the forward-looking statements. For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, as well as risks related to our business, please see the company's periodic reports filed with the SEC. With that, I will now turn the call over to Adi Mahanty, CEO of Iora Therapeutics. Adi?
spk07: Thanks, Chuck, and thank you, everyone, for joining us. During the third quarter, we continued to make excellent progress with both of our platform technologies. The NaviCAP platform is rapidly advancing towards initiation of a phase one clinical trial by year end, and development of the Biojet platform has accelerated with an increased pace of data generation from several molecules, including those of our pharma collaborators. First, an update on our NaviCAP targeted therapeutics platform with our lead program, BT600, in ulcerative colitis. Research suggests there is a minimum level of drug needed in the tissue at the site of disease to achieve better therapeutic outcomes in ulcerative colitis, or UC. Our technology can potentially increase tissue concentration without systemic toxicity, which could provide improved outcomes for UC patients. We hope to demonstrate this with a phase one clinical trial, which we are on track to initiate by end of this year. Earlier, we filed our IND application with the FDA as planned. The IND for BT600 includes extensive manufacturing for clinical and toxicology data, as well as clinical device function data from our four separate studies in both healthy volunteers and UC patients. So it's a sizable filing that includes over 300 documents, larger than a typical submission, because we have both drug and device information. The FDA often generates questions and requests information as they review these types of filings. Towards the end of the FDA review period, we received some questions that required us to provide additional information, which we had. We discussed the questions of the agency, and as a result of our conversation, it became clear that it was appropriate for us to refile, which we did. This allows the FDA to have additional time to review our application and the additional information. We continue to have a constructive dialogue with the FDA, and it's understandable that the extensiveness of the information supporting our IND would require additional time for review. We hope the review will be satisfactorily completed by the end of this month. If so, we anticipate maintaining our timeline to initiate a phase one trial before the end of this year. We are, to our knowledge, the first company to file an IND for a drug and ingestible device combination. While other companies have pursued clinical studies that's outside the U.S., we believe it's important to engage U.S. regulators as early as possible and to take the most rigorous path to approval. We've successfully completed four human studies in which the NaviCab device performed as designed across a range of expected differences in GI motility in both healthy volunteers and UC patients. The next step is to use the NaviCab device to deliver tofacitinib. We aim to prove our treatment hypotheses by confirming that we can achieve sufficient drug levels in the colon tissue along with low systemic exposure. We anticipate exiting Phase 1 with not only safety data, but also with critical data on potential exposure in both plasma and tissue, which would be much more informative than a typical Phase 1 trial. In addition to progressing towards Phase 1, we continue to expand our intellectual property coverage for the NaviCAP platform. Recently, we received notice of allowance of a new patent that encompasses the novel treatment paradigm of our BT600 program, with its targeted delivery of JAK inhibitors to the GI tract. We will share more details in the coming weeks on the patent issues. Earlier this year, we were awarded another group of US and European patents that expanded our coverage for additional therapeutic targets for UC. We hold one of, if not, the world's most comprehensive IP portfolio for drug delivery using ingestible devices with 30 patent families for the NaviCap platform alone. As we progress our UC program, we gain more data on the overall platform, and the combination of IP and platform development will allow us to expand our pipeline organically with additional programs. Moving on to our BioJet systemic therapeutics platform. Our goal with the BioJet platform is to provide needle-free oral delivery of therapeutic molecules. The BioJet platform is based on a small capsule that, once swallowed, is designed to deliver drug into the wall of the small intestine using liquid jet injection. We believe the BioJet platform can provide an alternative to needle-based delivery of complex molecules and could also enable those molecules to more efficiently reach the liver through delivery into the small intestine. As planned during Q3, we continued development and testing to confirm the performance of our next-gen BioJet 2 device, which allowed us to progress further and begin testing our pharma collaborators' molecules with the device. In October, we presented new data at the European Association for the Study of Diabetes, where we confirmed that our Biogel2 device exceeded its performance targets. Across three studies in a porcine model, 96% of animals showed semaglutide in systemic circulation at clinically relevant levels for up to 10 days following administration. Among the 22 animals dosed with semaglutide, oral bioavailability averaged 20.5%, which exceeds both the device performance and bioavailability targets set by us and our collaborators. Data analysis from animal studies were also completed with one of our collaborators' molecules to demonstrate the potential of the Biojet platform to achieve uptake of large molecules into the liver. Many disease targets reside in the liver, and it's a key area of focus for RNA-based therapeutics, such as antisense oligonucleotides or siRNA-based drugs. Large molecules must typically be delivered via IV or sub-Q injection because they cannot survive the stomach acid and are too large for absorption through the small intestine. The challenge with IV or sub-Q delivery is most of the drug is metabolized before it reaches the liver. Our technology uses liquid injection into the small intestine, which is an optimal delivery pathway to the liver. to the BioJet platform to provide a unique advantage for liver-targeted oral delivery of large molecules. While we aren't clear to share data yet, I can say that the results of the study with our collaborator's molecule were extremely encouraging. We also recently completed another set of animal studies for a second collaborator and are in the process of having the hundreds of samples analyzed. These data, they provide further support for the BioJet platform's ability to deliver large molecules. In addition, we're initiating preclinical studies with a third pharma collaborator. As we continue the progress of the BioJet platform and produce further data, we have seen increasing interest from potential partners, and we're actively negotiating an agreement with a fourth potential pharma collaborator. It is common for research collaborations to have strict confidentiality requirements early on, particularly those involving very large companies and highly competitive drugs. We appreciate the need to share as much information as possible with our stakeholders, but we rely on our collaborators' permission and timing to share information. We'll continue to be as transparent as possible while being good partners and respecting the disclosure rules established with our collaborators. We believe we're well positioned with the Bioget platform's several advantages, its ability to achieve category-leading bioavailability of complex molecules, its ability to deliver existing liquid formulations and large payloads in the multi-milligram range, and its potential to enable liver-targeted delivery of large molecules. We're excited to see the accelerating development of the Biojet platform, and we look forward to sharing more about the progress with our existing and new collaborators and potential partners. To summarize our anticipated milestones, for our Navigap platform, we await the FDA's response for IND application, and we anticipate initiating our Phase I trial before the end of the year. Initial Phase I data is anticipated early next year, and if we begin the trial before the end of this year as planned, we expect to complete the execution of the trial in Q1 with final data coming after that. For our BioJet platform, we expect to continue generating data from animal studies with the molecules of our pharma collaborators during the fourth quarter. With three existing and potentially a fourth new collaboration, all generating data that add to the overall development data set of the platform, we anticipate accelerating interest from others. With that, I will now turn the call over to Eric for review of our financial results and capital market activities.
spk03: Thanks, Eddie, and good afternoon, everyone. We had a number of financial activities during the third quarter. We made significant progress on optimizing our capital structure by materially reducing our convertible notes balance by $50 million through a notes exchange agreement. We remain actively engaged with convertible note holders to further enhance our capital structure to be more aligned with our company profile. I'm happy to share that we're making progress to further reduce our convertible note balance through a new potential notes exchange with the possibility to generate additional funding for the company. We expect to have further announcement on this in the near term. As a result of those activities, we have some non-recurring and non-cash entries in our Q3 financial results, which I will explain in more detail. Operating expenses were $23.3 million for the first three months ended September 30th, 2023, compared to $14.9 million for the three months ended June 30th, 2023. The increase was mainly attributable to a one-time stock-based compensation non-cash charge of approximately $9 million related to vesting of employees' restricted stock units. As a result, operating expenses excluding stock-based compensation expenses effectively remained stable at $12.8 million, with continued investment in device development, preclinical studies, and IND enabling activities. Breaking this down, G&A expenses in the third quarter were $6.9 million, excluding stock-based compensation expenses, while R&D expenses in the third quarter were $5.9 million, also excluding stock-based compensation expenses. We continue to streamline our G&A expenses and are making good progress in focusing our investments on R&D programs. While legacy spend has substantially been reduced over the last few quarters, it still represented more than 30% of our G&A cash spend in Q3, and we continue working actively to reduce it going forward with further substantial changes by early next year. Our core OPEC spend remains focused on our R&D programs as we rapidly move towards the clinic. We maintain our guidance of an average monthly operating cash burn of approximately $4 million. Net loss for the quarter was $73.5 million. This includes non-cash charges to stock-based compensation expenses of $9 million noted earlier, and a non-cash charge of $53.2 million attributable to the convertible notes exchange implemented by the company in September. As a result, our effective operating cash burn for the quarter was $12.7 million. On the fundraising front, we successfully raised almost $6 million in gross proceeds through different sources since our last call. We successfully monetized some remaining legacy assets, including our Ann Arbor Lab building. We continue to target non-dilutive sources of funding and actively engage with the investor community to ensure access to the necessary capital needed to fund the development of our programs. We've also seen keen interest from investors in supporting our programs through direct capital investments in Biara, and we've already raised meaningful capital through that channel so far this quarter. With that, I will now turn the call back over to Adi.
spk07: Thanks, Eric. BioRaw continues to make strides with both our NaviCat platform, where we are focused on entering the clinic with our BT600 program, and our BioJet platform, where we're focused on progressing our pharma collaboration. We look forward to providing further updates as we achieve our milestone. Operator, we're now ready for questions.
spk06: Thank you. We'll now be conducting a question and answer session. If you'd like to ask your question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
spk05: One moment please while we poll for questions. Thank you. Our first question is from Joe Pangenis with HC Wainwright.
spk06: Please proceed with your question.
spk01: Hey guys, good afternoon. Thanks for taking the question. So first, a question on the BT600 IND. Was this more of just providing more understanding and clarification in your answers, or is there anything rate-limiting in the answers and responses expected with regard to getting the study started?
spk07: Yeah, hi Joe. So I think we mentioned in the script that The FDA asked some clarifying questions, and several of them were related to our device and, you know, about the early development of the device. We had the information, and so, which is why we were able to provide that and turn it around within a few days. And so at this point, all the information is back, and we hope that the FDA is quickly finishing the rest of their review.
spk01: That's great. Thank you. And then I guess for both programs, but also for BT600 and beyond for NaviCap, sort of the continuum of manufacturing, you know, sort of where do you stand right now with regard to being able to supply, you know, all the patients for the Phase I program and sort of any potential nearer term needs for that as well as the BioJet program?
spk05: Yeah, good question.
spk07: So for BT600, you know, along with this review, we're doing everything on our end that we can control to get ready for a phase one trial, which means getting our sites ready, getting our partners, the CROs ready, doing everything we can, including doing supply. So we have already produced what we expect to use for the phase one trial. So We'll be ready with, you know, the site, the protocols, the supply, everything ready to go for the BT600. Slightly different for Biojet. We don't really need to make a lot of these at this point, even though we use 10, 20 different animals and a few doses. It is still only a handful of devices, and we're able to make those on an ongoing basis. We're making some great progress with multiple studies coming back to back to back, but it's still a very manageable number of devices, and we're able to easily make those and continue progressing our programs.
spk01: Great. Thanks for the caller.
spk05: Thank you. Our next question is from Julian Harrison with BTIG.
spk06: Please proceed with your questions.
spk02: Hi, thank you for taking my questions. I guess some more on the IND resubmission. Can you talk more about the expected timeline to turn this around? Is this, you know, standard 30 days, something longer, something shorter? And then also, do you plan to press release first human dose?
spk07: Hi, Julian. So, in terms of the review, you know, We very much appreciate that the FTA's workload, you can imagine, has been pretty busy. They've had a lot to do, and that's also apparent from some other places where they've needed more time. They don't have a great mechanism for adding time to the 30-day cycle, which is what we were kind of talking about, that look toward the end of the cycle when they have these questions, even though we only needed a couple of days to gather the information, turn it around, we would have ended with the 30-day clock running out. And so, the best thing to do was to resubmit. So, the resubmission was more of a just a tactical, let's just go ahead, provide the information, resubmit, and it goes back now into a standard 30-day clock. So, what we hope is that they finish the review very quickly and that in November, you get a clearance from the FDA. And that's how we're preparing. Given the interactions we've had, they've been great. Really, we appreciate the way they've worked with us. We've had several conversations. And so we hope that they'll finish the review. We expect that we get a clearance in November, which is why we're doing everything to prepare for a start of trial in December.
spk05: Thanks very much. Thank you. Our next question is from John Vandermosten with ZAC.
spk06: Please proceed with your question.
spk04: All right. Thank you. And hello, Adi and Eric. Can you give us a sense of any other checklist items that need to be completed besides the FDA clearance on the BT600 trial before you can start your first, you know, your first administration?
spk07: Yeah. Hi, John. Like I said, what we're doing is going through that checklist of everything that we control. And so making enough material, getting all the supply ready, getting the site ready, getting our partners, the CROs ready, getting the protocols ready, getting the IRB ready. We're doing all of those and they're well on track and we would be ready with all of those any day that we get the clearance from the FDA. What we're not controlling is the review with the FDA. So we're working closely with them. And we're hoping that we get that done in November. And so tentatively, we're planning that all the stuff we have to get ready on that checklist really is done. And that in December, as soon as we get the clearance, we go activate the sites, do what we need to do. And I think like somebody else mentioned, we can then share when we have started the trial in December.
spk04: Okay, very good. Yeah, it sounds like it could start very shortly after you get the clearance. And then moving on to BioJet, when do you think you'll have serious discussions with the BioJet partners on going to the next step, which would be in the clinic, which might include potential milestones and things like that? When do you achieve or reach that stage?
spk07: That's an interesting question. So the way I would hope we were being clear people to understand, what we have now are research collaborations. These are great. These are ways where large companies work with innovative technologies like ours because they find that there is a potential that they could use that. They're interested in it. but they'd like to learn how our technology and their molecules kind of work. And this is a way where we can get some cost sharing. But the main idea here is to learn how the two work together. Progressing through those is what leads to the next stage of conversations, which then is about what I would call a partnership. So I'm qualifying These relationships which we have, which are very much like partners, but they really are research collaborations, and progressing those into partnerships, which then look like what, you know, many people might be used to seeing, whether it's a licensing or some other sort of partnership that comes with an upfront payment, a plan, milestones. But that's when you get into discussions about what kind of molecule, what kind of indications, what maybe a clinical plan might look like. There might be some situations where the company, like ours, helps them with those. There might be some where we allow them to run with it and they come up with their own plans. So I think what needs to be more near-term focus is that we are seeing tremendous progress with these collaborations. Over the last several months, we have gotten way better at execution, right? We have We've made the BioJet 2, which is our next-gen device. We've done the animal studies to make sure that the device works. We've then showed it to our collaborators who agree that the device works to a point where they want to include their molecules. We've run their molecules in our device, and we've gotten that initial first one's data. We're expecting the second one's data. In a month or two, we'll get the third one's data. Those data are what enable us to then have the conversation of, okay, given that this combination works, how do you see this relationship? So those could be near-term, pretty interesting inflections, and they lay out certainly what the development path is, but for a small company, they could mean significant things in terms of how investors might view our relationships with, at that point, partners The data obviously is getting good enough, which is why I mentioned that we're seeing the accelerated interest. We're getting more incoming people asking us about working with us, and that's why we were able to say we've already got a discussion with a fourth collaborator that could lead to a research collaboration in the near term, another big company. We see that this data generation translating into what could be meaningful partnerships being the short-term thing to focus on with BioJet. And then later next year, worry about what a clinical plan might look like.
spk04: Okay. And now this fourth collaborator, since you've done a lot of the preclinical work already and so have some of your partners, are they coming in at kind of a later stage, you know, where they kind of already know what to expect and you might be a lot closer to moving on to an advanced relationship with the fourth partner? Where does that stand, you know, just given all the preliminary work that's already been done for Biojet?
spk07: I think the way I see it is that several, whatever, a year or two ago when we had these other collaborations, those discussions were around early stage, our first gen, our biogent one device. And so we work with these collaborators to do things like establish success criteria, which is why we talk about meeting targets, establishing development of our device milestones. All of those, now that we've completed, we're now looking at the next stage of, okay, go ahead and try our molecules. So this fourth collaborator would come in at that stage of go ahead and try our molecule because they've seen this other data. And that's what encourages me, right, that people are seeing that we've done the development work, we've done the core work. We now have several molecules that we've run with this device. And it's all meeting those general commercial performance targets that people want to see. And so now it's about working with their molecule And depending on how that goes, quickly progressing that relationship. So certainly that should move much faster than our earlier collaborators, collaborations have moved. But we're excited about all of them. So we are at that point, right, with the other collaborators where we're getting, starting to get data with their molecules that allows us to have those next conversations.
spk05: Great. All right. Thank you, Adi. Appreciate it. Thank you. There are no further questions at this time. I'd like to hand the floor back over to Adi Mohanty for any closing comments.
spk07: Well, thank you again for joining us today for our financial results call. We're excited about the progress we're making, and we look forward to keeping you updated. Thank you.
spk05: Have a good evening. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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