Biora Therapeutics, Inc.

Greetings, and welcome to Biura Therapeutics' first quarter 2024 financial results call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the call over to Chuck Pedalla, Managing Director with LifeSci Advisors, Bayora's Investor Relations Fund. Please go ahead.

Thank you, Operator. Good afternoon and welcome to the Bayora Therapeutics First Quarter 2024 Corporate Update and Financial Results Conference Call. Joining me on the call are Adi Mohanty, Chief Executive Officer, and Eric Desbarbis, 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 within the meaning of the federal securities law, including but not limited to the types of statements identified as forward-looking in our quarterly report on Form 10Q that we filed or will file later today and our subsequent reports filed with the SEC, which are available on our website in the investor section. These forward-looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control. Please note that the actual results could differ materially from those expressed in the forward-looking statement. 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'll now turn the call over to Adi Mahadi, CEO of Bayora Therapeutics. Adi?

Thanks, Chuck, and thank you, everyone, for joining us.

In the short few weeks since our last corporate update, we had excellent progress in the execution of our clinical development plans for the NaviCAP platform, successfully completing dosing of our clinical study of BT600. For the Biojet platform, we have continued to advance our goals for both platform development and business development with pharma. First, an update on our NAVICAP targeted therapeutics platform with our lead program BT600 in ulcerative colitis. The basis of our clinical approach to ulcerative colitis, or UC, is the importance of achieving higher drug exposure and activity in colon tissue. The battle in UC is fought in the tissue in the colonic mucosa. Research shows that higher drug exposure and activity in the colonic tissue is associated with a higher likelihood of better clinical outcomes across drug classes, including JAK inhibitors and anti-TNFs. Achieving increased drug levels in colon tissue is not as simple as increasing the dose, since many of the advanced therapeutics for UC are dose-limited due to systemic toxicity risks. That's why our NaviCAP platform has been designed to provide anatomically targeted delivery of therapeutics directly to the site of disease in the colon. Studies with MaviCap have shown that payload is delivered along the entire length of the colon, achieving complete colonic coverage. In fact, we will be sharing more of that data at the Digestive Disease Week conference in Washington, D.C. later this month. We will present clinical data on the function of the MaviCap device across four different studies in humans, including healthy participants and active UC patients. These data show successful performance of the device as well as the full colonic coverage achieved by the NaviCAP platform. During our last update, we shared positive interim results from the single-dose portion of our BT600 clinical trial. To recap, we found that all NaviCAP devices performed as intended and were well-tolerated, no safety signals were observed, Measurable topacitinib in blood was first observed at approximately six hours with maximal concentration at approximately eight hours post-injection, which is consistent with drug delivery and absorption in the colon. That is what is intended in NaviCAP. and it is in contrast to what is seen with conventional oral tofacitinib, where maximum blood concentrations occur at 30 minutes to an hour after injection, consistent with absorption in the upper GI tract. Colonic delivery of BT600 was associated with three to four times lower systemic levels of tofacitinib. These data suggest drug delivery and absorption in the colon, as opposed to the upper GI tract. and they indicate the potential to achieve greater concentration of drug in the colon tissue compared with conventional methods. Everything we've seen so far indicates that our approach could lead to improved efficacy and reduced toxicity for UC patients. We're keen to see and share the data from the remainder of the trial and to that end. We recently announced completion of the remaining portion of the trial. in which a cohort of 24 healthy participants received Bt600 at 5 milligrams or 10 milligram doses of psilocybin or placebo with once daily dosing for seven days. In addition to blood samples, we also obtained colon tissue biopsies in this part of the study. We're now awaiting the analysis of those results and we anticipate sharing full study data in late June. These data will also be discussed with GI experts and key opinion leaders, including those on our clinical advisory board. In addition to the conclusion of our clinical trial of healthy volunteers, we continue to plan for a study in UC patients to begin later this year. Getting data and patients would add to our learnings from phase one and help us prepare for future trials with an eye toward maintaining our accelerated clinical development cadence for the NaviCAP platform. We're gratified to see the excellent results so far, and we're excited to share the remaining data from our clinical trial later this quarter. Despite all the advanced therapies for UC, patients continue to experience tremendous difficulties in achieving and sustaining remission, and we remain focused on the serious unmet need in patients with UC. We believe we can optimize toposystem therapy in UC by achieving higher, potentially more efficacious drug exposure in tissue without the need for high systemic exposure. Beyond BT600, we believe the NaviCAP platform has the potential to create a portfolio of optimized UC therapies. Moving on to our Bioges systemic therapeutics platform. The Biojet platform continues to exceed its performance targets and shows outstanding promise to solve the challenges of oral delivery of large molecules, which has been called the holy grail of drug delivery. Liquid jet delivery is the foundation of the Biojet platform. It uses a small capsule that, once swallowed, delivers drug through liquid jet into the lumen of the small intestine, where it is absorbed into systemic circulation. we believe the BioJet platform can provide an alternative to needle-based delivery of complex molecules. It also enables those molecules to more efficiently reach the liver, which is difficult with other oral delivery methods. We've completed further animal studies over the past few months that demonstrate advances in consistency and bioavailability for our peptide candidate, somaglutide, and for adlimumab, our antibody candidate, in addition to collaborator molecules. As a reminder, the performance target that is considered commercially viable by us and our pharma collaborators is 15% compared to IV. We now have preclinical data demonstrating the BioJet platform's ability to achieve category-leading bioavailability of complex molecules, to deliver existing formulations without complex reformulation, to deliver large payloads in the multi-milligram range, and its potential to enable liver-targeted delivery of large molecules. With all of these competitive advantages, we believe we're in an excellent position with the BioJet platform. Our work with collaborators is progressing well, and we look forward to sharing an update on our preclinical data at an upcoming conference in June. Our initial focus with Biojet was on creating an in-vivo proof of concept that liquid jet injection technology could successfully inject and deliver large molecules into the small intestine. We used our first generation device to assess performance with semaglutide and an adenilumab variant, as well as with molecules from our collaborators. Through those experiments, we were able to achieve an average bioavailability of over 20% for animals with a detectable drug in blood. We have continued to make improvements to the biojet assembly and manufacturing process, which are required for later stages of development for this platform. We successfully evolved our NaviCap device from proof of concept to clinical stage under an IND. We're able to leverage that expertise with our biojet platform. This will serve us well as we prepare for further development, including future clinical studies with Biojet. We are currently running a partnering process for interested parties and are flexible on the ways we may work together. We're encouraged by the engagement shown with this process by some of our current collaborators, and we're also seeing strong interest from new companies. The goal is to have a critical mass of data and interested parties to have partner stated interest confirmed by mid-year. We're evaluating like-minded partners who see the potential for the Biojet platform and are eager to bring this technology to the clinic. Now to summarize our anticipated milestones. For our Navigat platform, We have completed execution of the MAD portion of our clinical trial for BT600. We plan to share data from the completed SAD and MAD study toward the end of the second quarter. We will present clinical data on the function of the MADECAP device across four different studies in healthy human participants and active UC patients at the Digestive Disease Week Conference in Washington, D.C. later this month. We anticipate initiating a clinical study with BT600 in patients with UC during the second half of 2024. For our Biojet platform, an update on data from recent animal studies will be shared at the NextGen Peptide Formulation and Delivery Summit in June. We continue to progress toward our goal of an enhanced partnership for the Biojet platform in 2024. With that, I'll now turn the call over to Eric for a review of our financial results and capital market activities.

Thanks, Eddie, and good afternoon, everyone.

We remain very active with capital market activities during the first quarter. I'll first cover our financial results and then provide more background on the continued positive evolution of our balance sheet. Operating expenses during the first quarter exclude investment-based with continued investment in device development, preclinical, and clinical activities. To break this down further, G&A expenses in the first quarter, excluding stock-based compensation expenses, were $8.1 million, of which 60% was core activity spend, leaving almost 40% of G&A costs associated with legacy matters, which we are actively working to eliminate by the end of the year. R&D expenses, excluding stock-based concession expenses, were $6.4 million. The result, Biara's core OPEC spend was $11.5 million in Q1, with the majority of the spend allocated to our R&D programs, including execution of our clinical development with MediCap and preclinical work on Biojet with our pharma collaborators. Net loss was $4.2 million for the three months ended March 31, 2024, which included non-cash stock-based compensation expense and gain-for-change and warrants liabilities. I'd like to remind investors that our financial results include many non-cash items, which is why we also refer to operating expenses, excluding those elements, for better guidance around our actual operating cash burn which was $11.5 million for a quarter, as I just noted.

Moving on to our capital structure.

As a reminder, we reduced outstanding notes by more than $80 million in 2023, a 75% reduction in the company's net debt in 2023 alone. We made further progress during the first quarter by completing a third note exchange combined with new capital investments bringing total new institutional investment into Biara through these exchanges to $19.8 million in the last two quarters. As a result, we materially reduced our convertible note balance to approximately $52 million by the end of the first quarter. We truly appreciate this commitment from our institutional investors as their agreement to trade debt for equity demonstrates continued confidence in the potential value of our stock. During the quarter, we complemented this funding from note holders by securing $3 million from the monetization of legacy assets, equity proceeds of $2.9 million, and a $6 million raise through a registered direct placement, which closed in early April. This brings our total capital raise over the last four months to more than $31 million, demonstrating strong access to capital markets. We are making good progress with our efforts to further optimize our capital structure, and we expect to have additional updates soon. We believe this series of transactions set up the company for success ahead of our important clinical data readout later this quarter and the eventual development of partnerships with Pharma.

With that, I will now turn the call back over to Adi.

Thanks, Eric. We're excited to present data from our BT600 clinical trial for the NaviCAP platform in the coming weeks. For the Biojet platform, we're focused on progressing towards partnerships this year. We look forward to providing further updates as we continue to achieve our milestones.

Operator, we're now ready for questions.

Thank you, Sal. Ladies and gentlemen, at this time we will be conducting a question and answer session. If you would like to ask a question, please press star then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then 2 if you would 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 keys. Again, if you would like to ask a question, Please press star and then 1 now. The first question that we have comes from Joe Panskinis of HC Wainwright. Please go ahead.

Hey, guys. Good afternoon. Thanks for taking the questions. So first, I'm just curious if you could give a little perspective. With the NAVICAP program with tofacitinib, obviously it appears encouraging that your plasma levels that you're seeing are three to four times lower as you talk about it. So I'm just wondering if you could give a little perspective about, you know, physicians' views towards that and, you know, is that within the target range you were looking for? Would you like to see even lower levels or, you know, sort of where does it play on the, you know, physician expectation continuum? Thanks.

Yeah, Joe. So you're right. We are seeing three to four times lower. What I can say is we know from conversations with physicians that Low is better. Three to four times matters a lot. That is probably slightly higher than physicians' expectations. But you have to combine that with what we're also doing, which is a much lower dose because on the other side, which is the tissue side, so the plasma side were three to four times less. On the tissue side were multiples higher. So the goal being to get much more in the tissue, which we believe we can do, with a lower dose than the current label dose for telfacitinib, for Zaljan. And there's actually publications that talk about how a 10-big dose behaves with a single ascending dose like we have. And so we can look that we get more in the tissue, likely, because we see the six-hour delay. And yes. Initial conversations with a couple of our clinical advisory board members were, well, quite encouraging. They seemed quite interested in the data, and this is good. So far, so good. Really what we wanted.

That's helpful. Thanks. And then I guess looking forward a little bit to the second half, can you give some more maybe, you know, brushstrokes with regard to the design of the UC study?

So we'll get to the UC study in a few weeks. What we're really excited about is, well, in like hardly in a few weeks, right? We said in the later part of June. So in a few weeks, we're going to have the MAD data. And the data is starting to roll in. We're getting ready to share it with everybody. Having some information on what that MAD data looks like will help us As we've already started work on that UC patient study, we've got protocols, we've got things, but we'll make some final determinations after we look at the MAD data, after we get reactions from GI experts, from key opinion leaders, and we'll have some time. And so we'll be able to share a lot more. Let's get past the MAD in the coming weeks.

Absolutely fair. And then my last question, if you don't mind, and I guess this is a little more even more forward-looking statement, if you will. When you talk about potential partnerships in 2024, you know, what would we essentially looking for? These sort of like early collaborations to do some, you know, maybe models or maybe clinical partnerships or, you know, what sort of continuum are we looking at?

Fair question, Joe. So I will tell you we are pretty excited with, The fact that, you know, when we talked about in our prepared remarks that we actually are running a process. We're running a process trying to get to a conclusive answer very soon, and we'll have a lot more specifics in a short few months that we can share with everybody. Clearly, we're past the feasibility collaboration kind of stage. we'll be happy to do more for others who might want to do it but that's really not our focus what we want to get to is somebody who's willing to say we're getting we want to take this into the clinic and then we can work on the specifics of their molecule their disease indication combine it with what we have and prepare to take this into the clinic so it would be that kind of collaboration doesn't mean we would say no to a commercial collaboration that that's not kind of anything that makes sense right now. Ideally, though, we are looking for somebody, and we've seen that interest, and so we're looking for somebody who wants to take something into the clinic that we can work together on and clearly beyond a collaboration but a serious partnership.

Great. Thank you, Adi.

Thank you. The next question we have comes from Julian Harrison of BTIG. Please go ahead.

Good afternoon. This is Rayon for Julian. Thank you for taking our questions and progress on all the progress. Just a follow up on a previous question. Are you framing, how are you framing expectations for the BT 600 top line data that is expected within the next few weeks? Are you guiding to a certain bar for success? And then we have a follow up.

Yeah. So to us, A confirmation of SAD data would be success because we clearly saw that six-hour delay in the uptake, and all the data kind of supported colonic uptake, supported more in the colon, supported, you know, even if you look at the data that we shared that showed how it washed out through the body over time. And so to have multiple dosing over several days and have No issues with all these multiple devices being in the body potentially at the same time. That would be something that we would want to confirm. And getting similar data to SAD would be awesome. We will have some tissue data to support it. But we kind of already know, right, with the plasma data that we're getting colonic uptake and that needs to be confirmed over multiple doses over multiple days. That to us would be success because that's what we're looking for.

Great. Thank you. Looking forward to the data. And then turning to your adalimumab biosimilar program, what are some factors that might influence a go-no-go decision there?

It's a little early to be making a go-no-go. I think we're extremely encouraged by what's happening with the TOFA. We have some early data with ADA. We want to take this TOFA a little further, maybe beyond that, get some patient data, and that would guide us in our ADA. We think potentially that it could be a shorter development program for the ADA. Because if you remember what we keep saying with TOFA-CIDMID, we're actually expecting to have eventually a much better program initial remission rate than what is currently approved and what is currently available with the various molecules. That significant gap of, you know, almost all, even the latest drugs that are approved are in that 15 to 30 percent remission rate in the beginning. We think we can do better than that. So taking our BT600 program to a point where we can show better outcomes is important. However, with the ADA, we could take the learnings from the BT600 a little bit, but also look for a slightly different outcome that could be a much shorter and faster development plan.

Great. Thank you. Very helpful. And I guess looking a little more forward, how are you thinking about the obesity opportunity with your pipeline? Are there certain payloads that you're more interested in than others? I understand it's early days.

Yeah, so we have done a fair amount of work, as you know, with some of Glutide, but that's not necessarily the molecule we're right now talking about taking to clinic. We decided that in the short run, we want to get this partnership that would allow us to take something into the clinic, potentially with a partner's molecule in the partner's preferred indication. That would allow us to, with the current resources, progress this platform really much faster and more efficiently even for the investors. And so we'll get back to a clinical program for Biojet that would be our own sometime past that, maybe next year.

Great. Thank you. Congrats again on all the progress. I'm looking forward to the BC600 data.

Thank you.

Thank you.

Thank you. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The next question we have comes from John Fandomosten from Zax. Please go ahead.

Great. Thank you, and good afternoon, Adi and Eric. Let me start out with a question on the VT600 Phase I trial. I know you're looking at safety and PK tests, What else might you share at the June conference from the trial?

So clearly, what we want to confirm is what we have been talking about from the beginning, that we can deliver more drug in the tissue, less in plasma, at a lower dose than what is currently being used. We got that first indication in animals. Then we got that next indication with our single dose, which said, yep, it goes to the colon and over time comes out. We want to make sure we can do that in a sustained way over multiple doses. Getting those data truly is the confirmation of our approach. Tocacidinib has already been proven, right? You know, everybody kind of knows that Tocacidinib works. The issue there has been in order to make it work, doctors keep having to prescribe even a higher dose than what's on the label. So that's really toxic. To be able to get the tissue concentration with low plasma concentration really is a home run. So that's kind of what we're looking to get.

Okay. And looking at Biojet, based on your commentary on the press release and on the call, it seems like there may have been some new inquiries since the last earnings release. And I'm wondering what the conversations are revolving around. Is it more the financial aspects of moving forward, or is it related to device design or something else?

Yeah, John. So, yes, we got more interest. You are correct in picking that up. Part of that has also been us gliding to this process and making people aware that, look, we are running a process. Of course, we'd love to continue collaborating, learning more along with you, but we need to make some choices on who we work with going forward, getting into the clinic. And so when we drove this process, that drove some of the timeline in some ways, which is great, I think, for us, for them, for investors that We're getting to going to have a decision fairly soon. We're still fairly open with the conversations at this point are around the various entities that we're talking to. Some have a clear idea of a molecule they want to take forward and want to talk through that. Some have a broader number of molecules they might want to take forward. Agreeing on yes, the idea here is to take it to clinic. Now, in going to the clinic, if we need to optimize certain things for that specific indication, that specific molecule, we have that ability with our platform and we'll do that. But that's all going to be based on agreeing to something that gets us to clinic. That's really the conversation. And then because there's multiple conversations, you know, we just got to get people approximately within a certain timeline to to a point where we can make decisions.

Okay. And another thought that came to mind is how you negotiate with multiple parties when you have probably the big pharma, they want to get as broad a license from you as they can to perhaps block others, but you'll want to keep it as narrow as possible. I guess, how do we look at that? Are you negotiating on specific biologics or is it... Or is there some other kind of way that you narrow down what they will be able to license?

So I appreciate we have to get the specifics. The good news is we're getting very close to being able to share specifics in a short few months. Okay. The breadth of your question, we could take a long time to get through. But we'll have answers very soon. We're absolutely – but we are focused on trying to – maximize the value, and maintain optionality. So we're trying not to give away a bunch of our optionality. That is clearly a priority for us.

Right. You've got to walk that narrow path, I guess, between the two. And then last question on what is next for capital structure. There's been a lot of movement over the last several months, and we've seen the capital structure improve dramatically. What do we see next in terms of that?

Yeah, so thanks, John. This is Eric here. So we've talked here about having a lot of milestones coming up, very important catalysts. I think those will be pretty much the key to establish how we take the capital structure next. I think we can expect to have further simplification of the node structures, and if we achieve our milestones and the expected results, we could potentially see an improvement in the market capitalization of the company. So the way I would answer is let's wait and see how we generate data. I think it will answer a lot of those questions.

Okay, great. Thank you, Eric. Thank you, Adi.

Thank you.

Thank you.

Ladies and gentlemen, just a final reminder, if you would like to ask a question, please press star and then 1 now. We'll pause a moment to see if we have any further questions. So at this stage, there are no further questions. Ladies and gentlemen, we have reached the end of our question and answer session, and I would like to turn the call back to Adi Mohanty for closing remarks. Please go ahead, sir.

I want to thank everyone for joining us today. I really appreciate your time. We are eager and looking forward to coming back and sharing updates very soon. Thank you.

Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.