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spk04: Greetings and welcome to the CellQ&E third quarter 2021 financial results conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentations. 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. I would now like to turn the call over to Robert Uhl with ICR Westwick. Thank you. You may begin.
spk03: Thank you, operator. Good afternoon, everyone, and welcome to Selcuity's third quarter 2021 financial results and business update webcast and conference call. Thank you for joining us. Earlier today, Selcuity Incorporated released financial results for the third quarter ended September 30th, 2021. The press release can be found on the investor section of our website. Joining me on the call today are Brian Sullivan, Selcuity's chief executive officer, and co-founder, and Vicki Hahn, Chief Financial Officer. Before we begin, I would like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, which are outlined in today's press release and in our reports and filings with the SEC. Actual events or results may differ materially from those projected in the forward-looking statements. Such forward-looking statements and their implications involve known and unknown risks uncertainties and other factors that may cause actual results or performance to differ materially from those projected. On this call, we will also refer to non-GAAP financial measures. These non-GAAP measures are used by management to make strategic decisions, forecast future results, and elevate the company's current and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the company's ongoing core operations and prospects for the future. You can find the table reconciling the non-GAAP financial measures to GAAP measures in today's press release. And with that, I'd like to turn the call over to Brian Sullivan, Cellcuity's CEO.
spk05: Thank you, Robert. Good afternoon, everyone, and thank you for joining us today. As always, we appreciate your continued support of Cellcuity. On this call, we'll update you on our third quarter financial results, the status of our Gadalilisib clinical development program, and an update on our Celsignia companion diagnostic activities. Vicki will follow my comments with a discussion of our financial results, and then we'll open up the line for questions. As most of you may know, Salcuity took a transformational step in April this year when we licensed the Pan PI3K mTOR inhibitor, Gadalilisib, from Pfizer. We took this step because of the significant potential that a well-tolerated hand PI3K mTOR inhibitor offers to improve outcomes for patients with many different tumor types. This potential reflects the central role hyperactive PI3K mTOR signaling plays in the development and proliferation of many tumor types. Blockading PI3K mTOR efficaciously and safely, though, is challenging because of its structural complexity and its linkage to key cell metabolic processes. While the optimal approach to inhibiting PI3K mTOR requires targeting five different subunits, doing so has, until Gital Elisib's development, resulted in drugs that patients could not tolerate. We believe Gital Elisib is the first PI3K mTOR inhibitor that combines high potency against all five subunits with a safety profile that compares very favorably against approved isoform-specific PI3K inhibitors. Thus, we believe Gital Elisib is uniquely positioned to realize the significant potential first envisioned for PI3K therapies when the pathway's critical role in cancer was discovered. We are currently developing Gadalilisib to treat patients with ER-positive HER2-negative advanced or metastatic breast cancer. We estimate that over 100,000 breast cancer patients globally would potentially be eligible to receive Gadalilisib if approved. Given the broad role PI3K mTOR signaling has been demonstrated to play in a broad range of tumor types, We also believe we have a substantial opportunity to develop additional indications outside of breast cancer. During the quarter, we completed the transfer of regulatory clinical trial and safety reporting responsibilities for Gitalalisib from Pfizer to CellQID ahead of schedule. For our ongoing Phase 1B breast cancer clinical trial, we're now working with the participating sites to transition the 14 patients who are continuing to receive Gitalalisib treatment to an updated clinical trial protocol. This ongoing clinical trial is evaluating Katalalizab in a combination with the CDK4-6 inhibitor Ibrance and two different endocrine therapies. We're very pleased that updated data from our ongoing Phase 1B clinical trial for patients will be presented at the San Antonio Breast Cancer Symposium during a spotlight poster discussion session on December 10th. Dr. Rachel Lehman, an oncologist at the University of Texas MD Anderson Cancer Center, who was a principal investigator for the clinical trial, will be the presenter. Our preparations to initiate a Phase III clinical trial, evaluating Gatotilisib in combination with Palbociclib and Filvestrin, which is an endocrine therapy in patients with advanced breast cancer, are well underway. We have engaged the CRO and other critical vendors, started the process of site identification and qualification, and received commitments from a number of globally recognized breast cancer KOLs to serve as members of our trials steering committee. Our meeting with the FDA is scheduled, and subject to their feedback, we continue to expect to activate this clinical trial in the first half of 2022. We also began evaluating and prioritizing new potential indications for Guttal Alyssa. This evaluation includes assessment of previous trials for other PI3K and mTOR inhibitors, review of tumor microenvironment factors related to PI3K mTOR activity, and identification of non-clinical and clinical evidence of pathways that may cooperate with PI3K mTOR. Our goal is to develop a lifecycle development plan in the first half of 2022 that will guide our long-term plans for Gatalla-Elizib. As we've previously discussed, our assessment of different PI3K and mTOR inhibitors using our CellSignia platform led us initially to approach Pfizer about our interest in pursuing a collaboration to evaluate Gatalla-Elizib. Subsequent to that initial internal study, and as part of our due diligence on Gatalla-Elizib's mechanism of action, We conducted additional studies to evaluate Gitalalisib and a PI3K inhibitor in breast and ovarian patient tumors using our CellSignia platform. We presented the results of these studies at the AACR Annual Meeting this past April. These studies demonstrated the value of leveraging our CellSignia platform to gain valuable insights about drug development opportunities. Thus, as part of our lifecycle development planning efforts, we are conducting additional investigations using our CellSignia platform to support our assessment of different indications for Gdolalicin. Now I'd like to move on to the diagnostics side of our business. Celsignia, Cellcuity's third-generation diagnostic platform, identifies the underlying cellular activity, dysregulated pathway signaling, that may be driving a patient's tumor so that a matching targeted therapy can be identified. Since dysregulated signaling is too complex for molecular tests to characterize in most cases, our platform can identify new treatment options for patients who lack actionable molecular biomarkers. Our strategy is to develop companion diagnostics that enable a pharmaceutical company to expand the number of patients eligible to receive their targeted therapy. To achieve this, we're collaborating with pharmaceutical companies to evaluate the efficacy of their targeted therapies in patient populations selected by a cell-signia pathway activity test. If the clinical trial results are favorable, These collaborations may lead to advancement of a new indication that expands the market for targeted therapy. In October, Cellcuity entered into a clinical trial collaboration with the University of Rochester Wilmot Cancer Center and Puma Biotechnology. This open-label Phase II trial will evaluate the efficacy and safety of Puma's pan-her inhibitor, NeurLynx, or Neratinib, and the chemotherapy, Capacetabine, in previously treated patients selected with Cellcuity's CellSigMia HER2 activity test who have metastatic HER2-negative breast cancer with brain metastases. This will be our first collaboration to study metastatic breast cancer patients with brain metastases, a patient population with an unmet and challenging medical need. While we're hopeful, salicylamine may allow us to identify much needed new treatment options for them. Based on estimates of patient enrollment rates, Salcuity expects to obtain interim results 12 to 15 months after initiation of the trial, followed by the final results 12 to 15 months later. Enrollment is planned to begin by mid-2022. We now have six clinical trial collaborations in place. The ongoing FACT1 and FACT2 trials that Salcuity is conducting are evaluating anti-HER2 therapies in early-stage HER2-negative breast cancer patients. The goal of each of these trials is to demonstrate that breast cancer patients identified by our Celsignia HER2 pathway activity test obtain a higher rate of pathological complete response to neoadjuvant anti-HER2 drug treatment than from current standard-of-care chemotherapies. Patients who receive a pathological complete response to neoadjuvant drug treatment are less likely to have their cancer recur, so we believe our Celsignia test can play a significant role in extending the lives of many breast cancer patients. Enrollment in both the FACT-1 and FACT-2 trials, though, were negatively impacted by COVID-19-related delays during the third quarter. Hospitalizations of patients with COVID-19 increased dramatically during this period, which led hospitals to reduce clinical trial-related activities, especially those that require a screening step, such as Celsignia. We now expect interim results from our FACT I and FACT II trials in the second half of 2022. This is later than our previous expectation of interim results in the first quarter of 2022. Nevertheless, we're excited about these collaborations and the opportunity to work with some of the world's most prominent cancer research centers. We have additional collaboration discussions in progress, and our goal is to announce new agreements in the coming months. Now, I'd like to turn our call over to Vicki Hahn to review our financial results.
spk00: Thank you, Brian. Good afternoon, everyone. I'll provide a brief overview of our financial results for the third quarter of 2021, and I invite you to review our 10-Q, which will be filed tomorrow, for a more detailed discussion. Our third quarter net loss was $6 million, or 41 cents per share, compared to $2.5 million net loss, or 24 cents per share, for the third quarter of 2020. Because these quarterly net losses include significant non-cash items, including stock-based compensation, the issuance of common stock, and interest, we also include in our press release non-GAAP adjusted net loss for the quarter ending September 30th, 2021. Our non-GAAP adjusted net loss was 5.1 million, or 35 cents per share, for the third quarter of 2021, compared to non-GAAP adjusted net loss of $2 million, or $0.20 per share, for the third quarter of 2020. R&D expenses increased approximately $3 million during the third quarter of 2021, compared to the third quarter of 2020. This was primarily the result of preparations for increasing clinical activity related to gadadalizumab. Employee-related expenses, including consulting fees, accounted for $1.1 million of the increase. The remaining increase of $1.9 million in expenses is related to clinical trials, patent legal fees related to patents, and costs associated with the transfer of the GDED ELISA-related activities. 1.1 million increase in G&A during the third quarter of 2021 compared to the third quarter of 2020 arose primarily from non-cash stock-based compensation. Net cash used in operating activities for the third quarter of 2021 was $4 million compared to 1.6 million for the third quarter of 2020. This was the result of non-GAAP adjusted net loss of 5.1 million offset by $1 million of working capital changes and $0.1 million of depreciation expense. We ended the quarter with approximately $90.4 million of cash and cash equivalents compared to $11.6 million of cash and cash equivalents on December 31, 2020. I will now hand the call back to Brian.
spk05: Thank you, Vicki. Overall, I'm very excited about the progress we made this quarter and throughout 2021. The opportunity to develop gadotilisib significantly expands the markets we are addressing, the potential value we can create for our shareholders, and the impact we can have to extend the lives of cancer patients. We're looking forward to getting the FDA's feedback on our phase three trial design soon, while also continuing to lay the groundwork for the trial. The new studies we expect to activate on the diagnostic side of the company further supports the advancement of our Cellcigna platform, And finally, our successful financing activities in 2021 provide us with significant capital to advance our development programs. Operator, I'm ready now to open the call for questions.
spk04: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 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. One moment, please, while we poll for your questions. Our first questions come from the line of Maury Raycroft with Jefferies. Please proceed with your questions.
spk01: Hey, Maury. Hi, this is Kenny Chan on for Murray Raycroft. I have a question about the San Antonio Breast Cancer Conference data. What should we expect in terms of efficacy and follow-up from that poster?
spk05: Sure. So this data will represent data that was cut as of May versus January, which was the previous data cut. We'll include additional analyses that were performed, better additional detail on patient characteristics. duration of treatment, some exploratory analyses, and again, data that has also been cleaned or reviewed for data integrity. So it'll essentially be consistent with what we've described, but just a deeper dive into certain aspects of the study and the patients.
spk01: Thanks. And I have one more follow-up question about Phase III trial design. Regarding patient baseline, will you be screening for patients who fail first-line CDK4-6 within three months or five months? Like, how are you screening for patients who perform better? Is it by CDK time to CDK failure?
spk05: So we'll be going into quite a bit of detail when we're ready to announce the design of our trial, and those type of screening characteristics and eligibility requirements will be details that we'll speak to, but I can speak generally because we've talked about this in the past. Our plan is to enroll patients who have progressed on prior CDK treatment and could also have progressed on subsequent treatments as well to ensure we can enroll quickly for this study. There are different factors that may be ones that you stratify across your arms so that you ensure there's equal representation or proportionate representation in your study arms. So variables similar to the one you described would be an example of a stratification variable that could be used to ensure consistency across your arms. But those are details that we'll provide when we schedule some time to talk about our trial design. Thanks.
spk04: Thank you. Our next questions come from the line of Boris Peeker with Cowan. Please proceed with your questions. Great. I just want to focus on the Celsignia test. I'm just curious, how would the logistics work for patients and physicians, and what tumor types are best suited for obtaining a sufficient tumor sample?
spk05: Sure. So right now our focus is working with breast cancer patients. The two trials, FACT1 and FACT2, are early-stage patients. These are women who are presenting with a tumor in the breast, so the tumor is very accessible. They typically undergo biopsies for purpose of their initial diagnosis. But in the case of our study, they will get an initial, or rather an additional biopsy so that we have tissue available to evaluate using cell signia. In the future, if when we hope to be diagnostic available in the clinic, we would expect to get tissue biopsies at the time the patient is receiving their initial diagnostic biopsy. And there's a lot of moving pieces to that, but that's something that we've worked through and think we have a very good process so that we can provide our results at the time that the diagnostic results would be available. And there's ways of stratifying those patients so that you're not generating a lot of false negative results of doing studies with patients who actually don't have a malignancy. And then we would be providing those results to clinicians to inform the decision about the type of treatment the woman should receive. In the later stage settings, we follow a similar process. Biopsy is because of the prevalence of genomic testing have become much more standard of care for later stage patients. And so in those cases, you know, the biopsies are obtained, you know, typically from metastatic lesions. Most common lesions in breast cancer are liver, as an example, or lung. But liver we think would be the primary site just based on what we've seen so far. And again, we would receive tissue and report out a result in, on average, less than 10 days.
spk04: Gotcha. And so maybe lastly, for the FACT I and II studies, can you comment on exactly what you need to show and what's the regulatory pathway for approval here?
spk05: Sure. So the studies are designed to allow us to detect whether patients who we've selected get a significantly higher proportion of patients achieving a pathological complete response pathological pathological complete response of PCR basically means that you will have eliminated the tumor and that's essentially the goal of treatment that woman received before they who are early stage so their tumor is local it's just in the breast it hasn't spread or spread beyond the lymph nodes and you know the goal of that treatment is to increase or decrease the likelihood that the woman's cancer will recur. So if we were able to demonstrate that, then we would expect to kind of collaborate with whomever the drug sponsor is. Let's say it's Genentech, you know, with our FACT-1 trial as an example. And Genentech at that point would be, you know, driving the bus. They would be the ones who would be driving discussions with regulators about, you know, what the regulatory pathway would be for moving forward with, in their case, a label expansion. And then our activities from a regulatory standpoint would kind of be conducted in parallel. There's kind of a specific guidance that talks about concurrent evaluation of either label expansions or new drug approvals and companion diagnostic PMA approvals. And so we would operate within that framework. And then ultimately, depending on what the regulatory pathway is or maybe additional data that the FDA would require, we would take that next step with the goal of ultimately being a test that could be available to breast cancer oncologists to help inform their treatment decisions for these patients.
spk04: Great. Thank you very much for taking my questions.
spk05: You're welcome.
spk04: Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next questions come from the line of Alex Nowak with Craig Hallam. Please proceed with your questions.
spk02: Craig, good afternoon, everyone. I was just hoping, Brian, you can highlight some of the key questions that you sent over to the FDA for feedback and data. And do you think any of the feedback could potentially change your plans for launching a pivotal phase 3 in the first half of 2022?
spk05: Well, yeah, I'll fax you over those questions, Alex. That would be great, thank you. Yeah, no, I'm sure you'd appreciate that. No, the goal of the meeting, and you typically have kind of topics that are closely related because, you know, the FDA is divided into different subject matter areas. And so in our case, we wanted to bring subject matter experts who would provide input and guidance on the clinical trial design. And so our questions specifically relate to the approach we're proposing to take with our Phase III design. We spent a lot of time with breast cancer KOLs over the summer to, A, review the data that we've shown or we've presented. And also then to discuss the actual design of the phase three study that we were proposing. And we provided these KOLs different options. We wanted to spur discussion. And we found during this series of scientific advisory meetings that there was pretty good consensus on what made sense, which was consistent with what our thinking was. So it was encouraging to us that Our approach was consistent with what these oncologists were suggesting or thinking would be the right approach. Our goal is to develop a study that has robust approach that really will lead, assuming we meet our endpoints, lead people to accept the results, and that means you have to have a comparator arm that is appropriate, represents real-world activity, and is one that the investigators would consider the biggest challenge. They want to make it realistic. You take into account other factors. Stratification variables is an example so that you make sure you're eliminating any biases that could potentially confound your data. And then, you know, there's just a lot of details that go into these protocols, which we reviewed in detail with these investigators. And so those are the types of – that's the type of information we provided to the FDA. You know, the process involves, you know, providing a very detailed document with background information and then the information about the trial design and then specific questions. And so, you know, by the end of the meeting itself, we'll review those questions. We'll have a discussion. The process then involves kind of a memorialization of that conversation in the form of minutes, and those minutes come from the FDA, and there's a process to receive them and then to review and, if necessary, change them or suggest modifications. So it's a bit of an, not ordeal, but it's certainly a bit of a process at this stage of our development to get this input. Now, there are different programs that would allow you to get expedited meetings and feedback, and we're aware of those, and certainly the positioning ourselves to take advantage of those. But as a new sponsor, we're basically starting having to use kind of the standard meeting process to get feedback. And it's a very structured approach with timelines, some of which are kept, some of which aren't on their part. And so that's really the only way to really effectively interact with the agency at this point. But it'll give us the input we need. And again, based on the We think a very consistent input we received. We think we have a good approach and feel good about where we've ended up.
spk02: No, that's helpful. And I remember going back a couple of quarters ago, there were some questions whether or not you would need to run a bridge phase two. So you're pretty confident this could move directly into a pivotal study, just wanted to get
spk05: So questions like that, so the issues that surround whether you go to phase one to phase three or phase one to phase two really involve two factors. One is safety. So depending on how much data has been generated for the drug, the agency could say that you don't have enough data to go into a registrational study to characterize the safety. You need to do a phase two study to further flesh out what the safety signals are. Gitala Elizabeth, though, has been studied in over or nearly 500 patients with a variety of different drug combinations. You know, the phase 1B enrolled over, you know, 138 patients. So the safety profile has been pretty well, I would say, you know, pretty well established. And we would argue it's favorable. No adverse events would limit its use in the clinic, in our opinion, and in the opinion of the investigators. So that's one factor. And the second factor relates to what they would call sponsor risk. And so it's become much more prevalent. If you were to look at the design of studies today, you'll see in many cases phase one, phase three study design, where they have sufficient safety data to justify going to a bigger study with more patients. And then they have the option, depending on how favorable or not the phase one studies are, to go right to a phase three study. And so, this is a case where we believe the data creates a certain margin of safety to meet an endpoint that would be clinically relevant and statistically significant for approval. And so, essentially, we believe the risk, if you want to call it that, makes sense. Because, you know, the option of going to phase two, you know, just means you add a couple years to your program. And we think, you know, when you balance the time, the additional time and expense of going to phase two with the advantage of, you know, moving the program through more quickly, it warrants, you know, moving directly to phase three. And the agency, you know, essentially views that as our decision.
spk02: Yep, that makes sense. I mean, can you expand... Okay, got it. That makes sense, Brian. And maybe if you just expand on the delays with the FACT-1 and the FACT-2 studies, you know, originally tracking towards data next couple months here. No, I mean, the world changed.
spk05: Interesting. If you guys go back and look at the data for COVID, I'm sure many of you look at those charts. I mean, you know, I do. And you look at the hospitalization curves. You know, if you look at that third week of July, that first, second week of July, they bottomed out and then started climbing almost immediately. By early August, they were getting to levels that were bothersome, and then a few weeks later, they were troublesome. And so our trial requires patients to come in to get a biopsy. That extra procedure, what we found, is in an environment where, A, the hospitals are centers of people who have infectious disease, which is obviously for cancer patients, not where you want to be. And B, because the management of the patients with COVID is very labor intensive, the people who are typically assigned to staff clinical trials simply have been assigned elsewhere. And so the studies, for all intents and purposes, stop because you need individuals, monitors to enroll these patients or screen them and get them consented to a study. And they're simply, you know, when these hospitalizations start to ramp, or at least this is the experience we had in 2020, they're just not available. And that's what we experienced beginning in August. It was very sudden and, you know, caught everybody anywhere. I think everybody in July was thinking we were through the worst of it. And, you know, we were waving goodbye to COVID. But that, you know, isn't ultimately what happened.
spk02: Yep, that makes sense. Appreciate the update. Thank you. You're welcome.
spk04: Thank you. There are no further questions at this time. I would like to turn the call back over to Brian Sullivan for any closing comments.
spk05: Thank you for attending the call. We appreciate your interest in our company. I look forward to updating you in the future. Talk to you later. Goodbye.
spk04: This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Have a great day.
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