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spk02: Good afternoon and welcome to the Cellquity first quarter 2022 financial results and corporate update conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Robert Aul with ICR Westwick. Please go ahead.
spk03: Thank you, operator. Good afternoon, everyone, and welcome to Selcuity's first quarter 2022 financial results and business update webcast and conference call. Thank you for joining us. Earlier today, Selcuity Incorporated released financial results for the first quarter ended March 31, 2022. The press release can be found on the investor section of our website. Joining me on the call today are Brian Sullivan, Salcuity's chief executive officer and co-founder, Vicki Hahn, chief financial officer, as well as Igor Gorbachevsky, chief medical officer, who will be available during Q&A. 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 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.
spk08: Thank you, Robert, and 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 first quarter financial results and key activities over the next few months. In particular, we'll review the financing transaction we announced this morning and the status of the clinical development program and pivotal phase three trial design for Get It to Listen. Today, we announced that we entered into a definitive securities purchase agreement with a premier group of biopharmaceutical investors and a private placement that is expected to result in the aggregate proceeds of $100 million. Venrock Healthcare Capital Partners is the lead investor. Commodore Capital, New Enterprise Associates, RA Capital Management, Soleus Capital, and I are also participating. Investors will purchase shares of common stock and preferred stock at a price per share of $5.75, which is on an as-converted-to-common-stock basis. For each share of common stock and each one-tenth of a share of preferred stock purchased, investors will receive a warrant initially exercisable for preferred stock equivalent to 0.4 shares of common stock on an as-converted basis. The exercise price of the warrants will be at a 40% premium to the price paid by investors for the initial shares of common stock purchased in the private placement. The preferred stock will be convertible into common stock at the holder's election, subject to certain limitations such as beneficial ownership and the approval by the company stockholders to increase the number of authorized shares of common stock sufficient to cover the shares of common stock issuable. The warrants are initially exercisable for preferred stock and will convert into warrants to purchase common stock if the proposed increase in the company's authorized common stock is approved by stockholders. The closing of the private placement is expected to occur shortly after the first patient enrolled in our forthcoming Phase 3 study, Victoria 1, receives their first dose of treatment at a clinical site located in the United States, provided that this occurs before December 31, 2022. you'll be able to find additional details regarding the private placement in a form 8K that we will soon file with the SEC. We're very pleased to have attracted such a well-regarded group of investors in this very difficult equity capital market. The erosion in the value of clinical stage biopharmaceutical companies over the past six months and the corresponding drop in financing activity create significant uncertainty for companies like Cellcuity. This uncertainty in turn can significantly undermine a company's ability to implement its clinical development programs. In light of the uncertainty this challenging capital market creates, we concluded that strengthening our balance sheet was paramount. With the capital we expect to raise from this transaction, we believe we significantly enhance our ability to develop Geta-Telicib as a new therapeutic option for cancer patients and to create value for our shareholders. Geta-Telicib targets PI3K mTOR, which is considered one of the most important and complex pathways involved in cancer. Blockading PI3K mTOR efficaciously and safely, though, has been challenging because of its structural complexity and its linkage to C-key cellular metabolic processes. Gatotilicib inhibits all four Class I PI3K isoforms and mTORC1 and mTORC2. And this is the optimal approach biologically because it avoids the cross-activation of uninhibited subunits and resulting drug resistance that can occur with PI3K isoform or mTOR-specific inhibitors. Completely blockading the pathway also enhances the potential to induce synergistic inhibition with other targeted therapies, such as CDK4-6 inhibitors. Getis-Helicib's differentiated chemical structure and intravenous formulation result in a very favorable pharmacokinetic profile. The drug is potent at low or sub-nanomolar concentrations and can maintain pathway inhibition with a tiny fraction of drug compared to approved oral PI3K inhibitors. This results in a safety profile that compares very favorably against approved isoform-specific PI3K inhibitors. Thus, we believe gadotilicib's unique properties position it to realize the significant potential first envisioned for PI3K therapies when the pathway's critical role in cancer was discovered. The initial potential target population for gadotilicib is patients with HR-positive, HER2-negative advanced breast cancer whose disease progressed during treatment with the CDK4-6 therapy. We estimate this represents over 100,000 breast cancer patients globally on an annual basis. To advance the development of gettalizib in March, we announced the trial design for Victoria 1, a pivotal phase 3 clinical trial, to evaluate the safety and efficacy of gettalizib in combination with fulvestrin, with or without palbociclib, in adults with HR-positive, HER2-negative, advanced breast cancer, whose disease progressed while receiving prior CDK4-6 therapy. This open-label randomized clinical trial will enroll subjects regardless of PIK3CA status while enabling separate evaluation of subjects according to their PIK3CA status. Subjects who meet eligibility criteria and do not have confirmed PIK3CA mutations will be randomly assigned on a one-to-one-to-one basis to receive a regimen of either getotelicib, pabliciclib, and fulvestrin in arm A, getotelicib and fulvestrin in arm B, or fulvestrin in arm C. Subjects who meet eligibility criteria and have confirmed PIK3CA mutations will be randomly assigned on a one-to-one basis to receive a regimen of either getotelicib, palbociclib, and fulvestrin in arm D or opalipsib and fulvestrin in arm E. We are receiving the supply of palbociclib for this trial from Pfizer at no cost to cell acuity. The primary endpoints of the study are progression-free survival per RESIST 1.1 criteria as assessed by blinded independent central review. The primary PFS endpoints will be evaluated separately in subjects who lack PIK3CA mutations and in those who have PIK3CA mutations. This multicenter international trial is expected to enroll patients at clinical sites across the U.S., Europe, and Asia. We expect to activate the VICTORIO1 study in mid-2022 and that the first patient receiving their first dose is expected to occur 6 to 10 months later. There are roughly twice as many patients who lack PIK3CA mutations as those that have them. Therefore, PFS for the subject lacking PIK3CA mutations will be available earlier than the data from those who have PIK3CA mutations. As a result, we expect that the primary analysis for PIK3CA non-mutated patients in arms A, B, and C will be available in the second half of 2024, and we expect data for the PIK3CA mutated patients from arms D and E to be available in the first half of 2025. There are limited options with limited efficacy for patients whose disease progresses on a CDK4-6 inhibitor. Current standard of care treatment includes either a selective estrogen receptor degrader, or SIRD, such as fulvestrin, or a regimen that combines an mTOR or PIK3-alpha targeted therapy with an endocrine therapy. Finding more effective treatment for these patients is a significant unmet need. To support our development efforts, we received fast-track designation for get a solicit for the treatment of patients with HR-positive HER2-negative advanced breast cancer in January. Fast-track designations granted by the FDA for products which demonstrate the potential to address a serious unmet medical need. This designation will enhance our ability to interact frequently with the FDA to discuss our development plan. And now I'd just like to take a few moments to discuss the diagnostic sides of our business. You know, Celsignia, our 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. Our strategy is to develop companion diagnostics that enable a pharmaceutical company to expand the number of patients eligible to receive their targeted therapy. Our ongoing fact trials were negatively impacted by COVID-19-related delays during early 2022. Now, with the lower COVID caseload, enrollment activities are resuming for these trials, and we expect to receive interim results from the FACT I and FACT II trials in the first half of 2023. I'd like now to turn the call over to Vicki Hahn, our CFO, to review our financial results.
spk01: Thank you, Brian, and good afternoon, everyone. I'll provide a brief overview of our financial results for the first quarter of 2022, and I invite you to review the 10Q, which will be filed today, for a more detailed discussion. Our first quarter net loss was $7.9 million, or $0.53 per share, compared to $2.8 million net loss, or $0.25 per share, for the first quarter of 2021. Because these quarterly net losses include significant non-cash items, including stock-based compensation and interest, we also include in our press release non-GAAP adjusted net loss for the quarter ending March 31st, 2022. Our non-GAAP adjusted net loss was 7 million or 47 cents per share for the first quarter of 2022, compared to non-GAAP adjusted net loss of 2.3 million or 21 cents per share for the first quarter of 2021. R&D expenses were 6.7 million for the first quarter of 2022 compared to 2.2 million for the first quarter of 2021. The approximately 4.5 million increase during the first quarter of 2022 compared to the first quarter of 2021 resulted primarily from the development of GDAD ELICIT. Employee-related expenses, including consulting fees, accounted for $1.6 million, including $0.2 million in non-cash stock-based compensation. The remaining increase of $2.9 million is related to costs for existing clinical trials and for activities supporting the initiation of the Victoria I pivotal trial. General and administrative expenses were $0.8 million for the first quarter of 2022 compared to $0.6 million for the same period in 2021. The approximately $0.2 million increase in G&A during the first quarter of 2022 compared to the first quarter of 2021 arose primarily from employee-related expenses, including $0.1 million in non-cash stock-based compensation. Net cash used in operating activities for the first quarter of 2022 was $5.9 million compared to $2.5 million for the first quarter of 2021. This was the result of non-GAAP adjusted net loss of $7 million offset by working capital changes of approximately $1 million and depreciation expense of $0.1 million. We ended the quarter with approximately $78.3 million of cash and cash equivalents compared to cash and cash equivalents of $84.3 million on December 31st, 2021. Today, as Brian mentioned earlier, we entered into a securities purchase agreement with investors via a pipe for gross proceeds of $100 million. The funding will occur in conjunction with the date that a patient enrolled in Victoria 1 receives their first dose of treatment, including the additional proceeds from the pipe We expect our cash will support our activities through the back half of 2025. I will now hand the call back to Brian.
spk08: Thank you, Vicki. We believe Get Up to Listen has great potential to provide more effective treatment for women with breast cancer as well as other cancers in the future. And we've built an incredibly talented team of drug developers with deep experience in guiding drug candidates through pivotal phase three clinical trials. We're hopeful this will represent the first of many opportunities for us to impact the lives of cancer patients. Operator, I'd like now to open the call for questions.
spk02: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question comes from Mari Raycroft of Jefferies. Please go ahead.
spk04: Hi, congrats on the update and thanks for taking my questions. To start off, just wondering if you could talk more about progress you've made with preparation to get the phase three started in the middle of 22. And you've mentioned potential for 175 sites in 15 countries. Can you talk more about the plan for site rollout on a country-by-country basis?
spk08: Sure. Thanks for the question, Maury. So our preparation is on track. laying the groundwork to be able to initiate the study in the next few months and then begin enrollment activities once the sites are activated. We'll focus initially on countries in U.S. and Asia, which can have shorter regulatory timelines and then move out to the rest of Europe. As is the case with any of these studies, the sites roll out over you know, fairly extended period of time. We've incorporated, you know, that site rollout timeline in our enrollment projections and, you know, our determination of when we expect to get, you know, primary analysis in the second half of 2024. Got it.
spk04: And maybe just a quick follow-up on that one. Getting that first patient dose, is that going to be in the U.S. or do you think it could be at an Asia site? Most likely the U.S. Okay. Okay. And then with the new financing, just wondering if you can clarify if you'll invest in developing GDAT Elusive outside of the phase three. And I think on the last call, you mentioned a potential lifecycle development update in the first half of 22. I'm just wondering if you could talk more about that.
spk08: Sure. So the financing was, we think, a great event for us because it certainly beefs up our balance sheet, provides flexibility. It It allows us to have some margin for error, which I think in this environment everybody's looking for. But it also allows us to think about the next steps in other indications. And it's possible to initiate phase 1B studies in a relatively small scale that can be hypothesis confirming or not, but essentially allow you to generate data in different indications. And so this funding will allow us to begin that type of work as well.
spk04: Got it. Okay. And that could start this year potentially, or is that something we wait to learn more about next year?
spk08: We haven't provided details on that. And as far as the lifecycle development plan, just with this financing and with the focus on the Phase 3, we'll probably provide lifecycle update closer to sometime in the third quarter.
spk04: Got it. Okay. Okay, congrats again, and thanks for taking my questions. Oh, you're welcome. Thanks.
spk02: The next question comes from Gil Bloom of Needama Company. Please go ahead.
spk06: Hi, everyone, and I'd like to add my congratulations on the successful financing. First of all, just to make sure I heard this correctly, so timeline for the pivotal data is now second half, 24, and full data in the first half of 25. Did I get that right?
spk08: Well, we have two primary analyses. So we'll have the primary analysis for the PIK3CA wild-type patients, patients who lack mutations in the second half of 24, and then separate primary endpoint data for patients with PIK3CA mutations in the first part of 2025. Okay. Okay.
spk06: Thanks for the clarification. I know this is going to be a little... So just from the cash library perspective, it seems you have... I've run all the way through this readout. Does that leave you with sufficient cash for strategic optionality after the first readout?
spk08: Well, we plan to have cash in excess of what's needed to achieve our first primary readout. But obviously, one of the purposes of the cash is just to make sure we are you know, have sufficient cash to handle bumps in the road. Not that we're anticipating them, but just, you know, again, we want to have a robust balance sheet. And once we have the primary analysis, you know, if it's favorable, as we hope, you know, we would likely have a variety of options that we could consider.
spk06: Okay, that does make sense. And maybe our last one, I know this is relatively unlikely. Does this financing limit in any way strategic options for monetization of future revenues and get that listed?
spk08: No, this is the financing that will end up with the issuance of what will ultimately be common shares and there's no restrictions or other strings associated with it. It doesn't create any restrictions on our ability to make decisions in the future.
spk06: Okay, just wanted to make sure. I knew that was unlikely. Thank you for taking our question. You're welcome.
spk02: As a reminder, if you have a question, please press star 1. The next question comes from Alex Nowak of Craig Hallam Capital Group. Please go ahead.
spk05: Great. Good afternoon, everyone. This is Connor. I'm for Alex. I guess first, a couple weeks back, the FDA had a discussion or a meeting on PI3K trials kind of happening around the country. And it seemed pretty obvious that the meeting was kind of only applicable to hematological drugs, and the outcome of the meeting was really requiring a trial design like yours. But I guess, is there any sort of read-through to GATA from that meeting?
spk08: No, thanks for the question. So that meeting was very explicitly focused on a particular class of PIK3K drugs, delta inhibitors that are designed and intended for hematological indications. And the focus of the meeting was around the regulatory pathway, accelerated approval, that those drugs had used to initially get approved for marketing. One of the obligations associated with an accelerated approval is doing a follow-on randomized study to confirm the findings. I don't think any of those drugs had done confirmatory studies. And so I think the agency was highlighting a concern that drug companies haven't followed through with their commitments that are embedded in the accelerated approval process. Those drugs also have a different safety profile than our drug, and those, you know, a variety of other factors. But really, our drug, nor Alpalypsib, which is a PSUK alpha inhibitor that's approved for breast cancer, you know, our drugs weren't part of that conversation. And the reason is that we're We're pursuing a normal regulatory path for approval for this indication, and we're doing a randomized study. And none of those drugs met those conditions. They did accelerated approvals with single-arm studies.
spk05: Sure. Okay. All right. That makes sense. And then I guess on the self-signia side, can we expect any updates here this year on upcoming collaborations and things like that, or does the focus really remain on KEDA for now?
spk08: Well, I mean, we have the trials ongoing, and we're continuing to pursue those. We also have studies that we'll be pursuing, you know, that combine celsignia and GETA. So that'll, you know, be, we think, something that could be very interesting. And then, obviously, you know, the budget that we're spending and the opportunity at hand with GETA solicit we think is, in the near term, you know, the most significant opportunity we have.
spk05: Yeah, that makes perfect sense. And then I guess one for Vicki, just a real quick one. Following the placement announced this morning, I just want to make sure my math is correct.
spk07: What is the new fully diluted share count? We'll have those details in the 8K that will follow that we'll be filing later today or tomorrow. Okay. Thank you for the update. You're welcome.
spk02: Seeing that there are no further questions, I would like to turn the conference back over to Brian Sullivan for closing remarks.
spk08: Great. Well, thank you again for participating in our call today. We'll be at the Craig Hallam and Jeffries Investor Conferences in June and hope to have a chance to run into some of you there. If you have any additional questions, please feel free to contact us. Hope everyone has a good evening. Goodbye.
spk02: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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