This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk03: Good afternoon, and welcome to CellQAT's second quarter 2022 financial results conference call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Robert Ewell. Please go ahead, sir.
spk07: Thank you, operator. Good afternoon, everyone, and welcome to Selcuity's second 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 second quarter ended June 30th, 2022. The press release can be found on the investors section of the company website. Joining me on the call today are Brian Sullivan, Selkuity'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 the Q&A. Before we begin, I would like to remind investors 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 results, 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, CEO of Cellcuity.
spk09: Thanks, Robert. Good afternoon, everyone, and thank you for joining us today. As always, we really appreciate your continued support of Cellcuity. I'm happy to report that over the past few months, our team has made significant progress on a variety of fronts to advance the development of Geta tolicib. On this call, we'll review the regulatory status of Geta tolicib's clinical development program, our pivotal phase three trial in breast cancer, and our recent financing activity. In July, the U.S. Food and Drug Administration, or FDA, granted breakthrough therapy designation to Salcuity's lead drug product candidate, Getatilisib, an investigational pan-PI3K mTOR inhibitor, for the treatment of HR-positive, HER2-negative, locally advanced, inoperable, or metastatic breast cancer that has progressed after treatment with a CDK4-6 inhibitor in combination with a non-steroidal aromatase inhibitor. Breakthrough therapy designation is intended to expedite the review of drugs that the agency believes have significant potential in treating serious diseases with unmet medical need and offers the potential to receive an accelerated review if relevant criteria are met. We look forward to collaborating closely with the agency as we seek to advance the therapy to the clinic as quickly as possible. Get a Thalissa previously received fast-track designation from the FDA in January 2022. In our submission-seeking breakthrough status, we provided detailed clinical, safety, and pharmacological data with a focus on our early phase study evaluating getatolizib in combination with tolicic lipinfluvestrin in patients with advanced breast cancer whose disease progressed on a CDK4-6 inhibitor. This study reported very promising efficacy with a high objective response rate and extended progression-free survival periods. and safety data that compared favorably to the currently available therapies for advanced breast cancer patients in the second-line setting. The initial potential target patient population for getotelicib is patients with HR-positive HER2-negative advanced breast cancer disease progressed during treatment with the CDK4-6 therapy. We estimate this represents over 100,000 breast cancer patients globally on an annual basis. Current standard of care for these patients includes endocrine therapies such as fulvestrin, and regimens that combine fulvestrin with either an mTOR-specific or a PI3K-alpha-specific targeted therapy. These therapies offer only modest progression-free survival periods, and in the case of the approved PI3K-alpha inhibitor, a very challenging safety profile. The PI3K-mTOR pathway is considered one of the most important pathways involved in cancer. Blockading PI3K-mTOR efficaciously and safely, though, has been challenging because of its structural complexity and its linkage to key cellular metabolic processes. Gatotilisib inhibits all four class I PSUK isoforms and the mTORC1 and mTORC2 subunits. This is the biologically optimal approach because it limits the potential for cross-activation of uninhibited isoforms or subunits and the resulting drug resistance that can occur with PSUK isoform or mTORC-specific inhibitors. Completely blockading the pathway also enhances the potential to induce synergistic inhibition with other targeted therapies, such as CDK4-6 inhibitors. Gadotilisib's differentiated chemical structure and intravenous formulation results in a very favorable pharmacokinetic profile. The drug is potent against the various PI3K isoforms in mTOR subunits at low or sub-nanomolar concentrations and is able to 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 Geta-Telicib'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. To advance the development of Geta-Telicib, we are conducting a pivotal Phase III clinical trial, known as Victoria I, to evaluate the safety and efficacy of Gettysiliceb in combination with Silvestrin, with or without Pylosiclib 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 PI3K status. The clinical trial protocol we described in May included five arms. with three arms evaluating patients lacking PIK3CA mutations and two arms evaluating patients with PIK3CA mutations. At that time, we had received feedback from the FDA on our study design, but we were still waiting to receive feedback from the European Medicines Agency, or EMA. In late May, we received EMA's feedback to our protocol, which included a recommendation that the study arms for PIK3CA mutated patients mirror the same study arms for PIK3CA non-mutated patients. In response to this feedback, we modified the protocol to include an additional study arm to evaluate geta-telicib plus fulvestrin in 50 patients who have PIK3CA mutations. PIK3CA-mutated patients will now be randomized on a one-to-one basis to receive either geta-telicib plus pabliciclib and fulvestrin, geta-telicib plus fulvestrin, or the control alpalisib and fulvestrin. Once 50 PIK3CA-mutated patients are enrolled to the geta-telicib plus fulvestrin arm, Subsequent patients will be then randomized on a one-to-one basis to receive either getatilicib plus palbociclib and fulvestrin or alpalipsib plus fulvestrin. Subjects without confirmed PIK3CA mutations will continue to be randomly assigned on a one-to-one-to-one basis to receive a regimen of either getatilicib, palbociclib, and fulvestrin for arm A, getatilicib, and fulvestrin, arm B, or fulvestrin, arm C. No changes were made to the primary endpoints, and we continue to expect data for the PIK3CA non-mutated patients to be available in the second half of 2024 and data for the PIK3CA mutated patients to be available in the first half of 2025. We're also excited to report that the updated clinical trial protocol that includes the additional arm was submitted to the FDA and received no comments, and central institutional review board, or IRB, approval was received. We thus remain on track to dose the first patient in the next few months. Dosing the first patient in any study is a significant milestone. For us, it will be doubly significant since it will trigger the closing of the $100 million private placement we announced earlier this year, provided that it occurs on or before December 31, 2022. Investors in the private placement included Venrock Healthcare Capital Partners, New Enterprise Associates, RA Capital Management, Commodore Capital, Soleus Capital, and myself. We also made additional progress strengthening our balance sheet this past week. Our debt financing agreement with Innovata's capital partners was amended to provide Salcuity with up to $75 million in term loans, a $50 million increase from the original debt financing agreement. Salcuity received $15 million at the closing of the original agreement in April 2021. Salcuity will now be able to draw an additional $20 million following the closing of the $100 million private placement. Salcuity will also then be able to draw on two additional tranches of $10 million each and one additional tranche of $20 million upon achievement of certain clinical trial and financing milestones. Salcuity is entitled to make interest-only payments through April 25 or, if certain conditions are met, through April 2026. The loans will mature in April 2027, the sixth anniversary of the initial funding date. Now I'd like to move on to the diagnostic sides of our business. CellQA'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. 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 late 2021 and early 2022. Now with a lower COVID case load, Enrollment activities have resumed for these trials, and we expect interim results from the FACT I and II trials mid-2023. With that, I'd like to turn the call over to Vicki Hahn to review our financial results.
spk02: Thank you, Brian, and good afternoon, everybody. I'll provide a brief overview of our financial results for the second quarter of 2022, and I invite you to review our 10-Q, which will be filed tomorrow for a more detailed discussion. Our second quarter net loss was $10 million or $0.67 per share compared to $14 million net loss or $1.11 per share for the second quarter of 2021. Because these quarterly net losses include significant non-cash items, including stock-based compensation, issuance of common stock in 2021 and interest, We also include in our press release non-GAAP adjusted net loss for the quarter ending June 30th, 2022. Our non-GAAP adjusted net loss was 8.3 million or 55 cents per share for the second quarter of 22 compared to non-GAAP adjusted net loss of 8.3 million or 66 cents per share for the second quarter of 2021. R&D expenses were 8.4 million for the second quarter of 2022 compared to 13.1 million for the second quarter of 2021. The approximately 4.7 million decrease during the second quarter of 2022 compared to the second quarter of 2021 reflects a $10 million reduction in Get It to LISB licensing related expenses, partially offset by increases of 5.3 million in other R&D expenses. Of the $5.3 million increase in R&D, $1.5 million was related to increased employee and consulting expenses, of which $0.5 million was in the form of non-cash stock-based compensation. The remaining $3.8 million increase in R&D expenses is primarily related to costs for existing clinical trials and for activities supporting the initiation of the Victoria I pivotal trial. G&A expenses were $1.2 million for the second quarter of 2022 compared to $0.6 million for the same period in 2021. The approximately $0.6 million increase in G&A during the second quarter of 2022 compared to the second quarter of 2021 arose primarily from approximately $0.5 million of non-cash stock-based compensation. Net cash used in operating activities for the second quarter of 2022 was $11.3 million compared to $7.6 million for the second quarter of 2021. This was the result of non-GAAP adjusted net loss of $8.3 million and working capital changes of approximately $3.1 million offset by depreciation expense of $0.1 million. We ended the quarter with approximately 66.9 million of cash and cash equivalents compared to cash and cash equivalents of 84.3 million on December 31st, 2021. I will now hand the call back to the operator for questions.
spk03: Thank you, ma'am. 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 one. A confirmation tone will indicate your line is in the question queue. You may press star then two 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. The first question we have is from Maury Raycroft from Jefferies.
spk05: Hi, congrats on the progress and thanks for taking my questions. I was going to ask one. I was going to ask one on the Arm F addition, just if you can talk more about how that suggestion came about from EMA, and do you have specific expectations for that arm relative to Arm B, where EMA seems to be focused, and potentially compared to Arm E, which is the epilisib plus a fulvesceric combo?
spk09: Sure. Sure. So we received the written feedback in response to a request for scientific advice, and that's a process that's laid out that companies use to get input about various clinical topics, including clinical trial design. And so we submitted that and received that feedback in late May. And the feedback is written form and essentially recommended that we mirror the the study design that we're using in the non-mutated patients. And so it's fairly straightforward. In totality, then, we'll have 50 patients in mutated group, 117 in the non-mutated group, and that'll provide the sufficient data that the regulatory feedback was looking for. As far as the comparisons, so RMF will actually... and analysis in the mutated group will be arm D versus arm F, similar to an analysis or a comparison of arm A versus arm B. There won't be a comparison with a formal test for comparing epilepsy fulvestrin versus get a fulvestrin. There will be exploratory analysis, but that's not a formal endpoint.
spk05: Got it. Okay. That's helpful. And the other question I had was just – With breakthrough therapy designation in hand, do you plan on meeting with FDA soon? And what is your plan for interactions over the course of the phase three?
spk09: We expect to have ongoing discussions with the FDA. There's a variety of topics. Sponsors want to get feedback from the agency on you know, range of a variety of topics from, you know, CNC topics or pharmacology topics. And you do all that anticipation of, you know, to help ensure that your preparation for what you hope to be a new drug application is in order. And so with Breakthrough, you know, the timelines to get those meetings or the frequency of those meetings is increased. And so we already have plans in place to get feedback, but it's really less about seeking specific direction and is more about ensuring that what we've done to date aligns with, you know, what their expectations are.
spk05: Got it. Okay. And maybe last quick question. Just wondering if you can remind me where you're at with good adolescent drug supply and are there any other gating factors that you can comment on prior to starting dosing for the phase three?
spk09: No, so the manufacturing is in place, and so the drug supply and logistics around that have been developed. And so the gating items really are just related to the work sites have to do once essentially the protocol has been finalized, central IRB has reviewed the protocol and provided approval of it. It's quite a complex undertaking at these sites. Smaller sites tend to be able to move more quickly. They may have fewer steps. but a significant amount of training, logistical coordination has to be put in place. So those activities are ongoing now at a number of the sites that we've selected. And so you go from a phase that runs in parallel to your protocol finalization and your regulatory interaction of identifying sites and then begin qualifying them, and that's a formal process, to ensure they can comply with good clinical practice guidelines, etc., And then you begin the specific process of engaging with them, not least of which is negotiating contracts and budgets. And again, depending on the institution, those can be quick or take a long time. That's just part of the process. And we take all of those into account. Each site essentially has its own timeline, its budget, and we plan accordingly. And so those are the activities that we're focused on right now. And so we're on track with what we have been discussing that we've in effect initiated the trial and study activities with the sites and finalizing all of the operational aspects and mostly it's the site on site shoulders to finalize contracts and be available for training.
spk05: Got it. Okay, that's helpful. Thanks for taking my questions. You're welcome. Thank you.
spk03: The next question we have is from Boris Pika from Cohen.
spk06: Great. Thanks for taking my questions. First, I would like to focus maybe on the Celsignia assay. Could you just remind us what you need to show in the FACT-1 and FACT-2 studies to gain approval? And maybe kind of more broadly, can you describe where in the course of therapy would the Celsignia test be administered to the patient?
spk09: Sure. So these studies are evaluating early-stage patients who are receiving neoadjuvant treatments. and with the goal of achieving a pathological complete response. That's the primary endpoint. And in this setting, a pathological complete response is associated with longer disease-free recurrence periods. And so the study is designed to identify or to obtain a significant increase in that pathological complete response rate in the populations that we're studying, and if successful, if we meet the endpoint. At that point, we would engage with our collaborator, let's say Genentech or PUMA, to develop a more formal regulatory plan. which would involve both of us going to the agency. Since we would pursue a PMA process, they would pursue essentially a label expansion process, SNDA supplement, to expand the label. And that work is kind of subject to specific direction that you get from the agency. And so with the data we would have in... we hope to have, expect to have, you know, middle of next year, you know, that would give us the basis for having those discussions.
spk06: Got it. And in terms of, I guess you partially answered in terms of when it would be administered in course of therapy, it would be just to newly diagnosed patients.
spk09: Yeah, so these are, right, for the FACT-1 and 2 trials, these women would receive the therapies that we're studying, and in the case of FACT1, it's Herceptin, Progetta, and chemotherapy, which is standard of care for HER2-positive patients in a neoadjuvant setting. And what we would be doing, or what our test is doing, is identifying patients who are HER2-negative. You know, they have normally expressed HER2 and non-amplified. And then we would be treating them with, you know, what is essentially the standard of care a regimen that HER2 positive patients receive. Currently, these patients, if they receive a chemotherapy neoadjuvant with the goal of shrinking the tumor to make possible a more successful surgery, or ideally, eliminate the tumor completely, which is a pathological complete response, these patients who are HER, you know, HR positive, the typical or expected rate of pathological complete response is only 10%. And so, you know, if we could double that rate, that would be very significant, given, you know, the importance or the benefits of patients who do get a pathological complete response from the chemotherapy.
spk06: Great. And my last question on the Victoria trial, the rationale, if I understand it correctly, for giving palbociclib to patients that already progressed on a CDK4-6 inhibitor? Yes. Okay.
spk08: Oh, the rationale for that. I'm sorry. So the mechanistic rationale... I'm sorry, Boris, you cut out there.
spk06: Yeah, no, that's what I was asking. What is the mechanistic rationale for giving Palbo to... Sure.
spk09: And so these patients... I'll step back to what we think is the disease mechanism involved in these women's cancer. Fifteen years ago, you know, the hypothesis was that this was solely estrogen-driven and that the development of better endocrine therapies was the prime focus of drug development. Work was done and discovered that estrogen pathways are cooperative with cell cycle pathways, and that led to development of CDK4-6 inhibitors, and those were eventually approved and proved to be fantastically beneficial to patients. But obviously, these patients aren't cured. Patients will eventually progress. The tumors will become resistant to these drugs. And so research has been done over the past 10, 15 years to understand what that resistance mechanism is. And I think there's a reasonable consensus out there, certainly recognition, that the PSK mTOR pathway is involved. And so with our early phase data, we studied first-line patients and second-line patients. In the first-line setting, we showed that when you added get-a-thalysib to palbociclib and letrozole, we induced a, we reported a higher rate, objective response rate, 85%, than had been reported in PLOMA-2, the registrational study for palbociclib-letrozole. We interpreted those results. Again, those are different trials, really non-comparative, but the numbers, the results are far enough apart that you can draw some inferences. The inference we drew was that PS3K mTOR is intrinsically involved. When you add data to this population, the PS3K mTOR pathway is involved. And then in the second line setting, what was compelling about the data, the inference we drew from that data, was that even though the patients had progressed most of them on tablocyclo, because that has a 75%, 80% share of the CDK4-6 markers, So even though these patients had received and progressed on their CDK4-6 endocrine therapy, when you added GETA, they had a significantly significant response to that, you know, 63% response rate. And the registrational data that was reported in the PLOMA-3 trial, which was polycyclic fulvestrin, reported only 25% response rate. So you saw between these two studies, again, can't directly compare them, but the differences are big enough to be interesting. you know, 63% response rate versus a 25% response rate, again, suggesting this activity. So what additional research has been done non-clinically has found that these patients that become resistant to CDK4-6 and endocrine, you know, essentially the cell tumors are adapting to primary reliance on PSKM to progress and allow this tumor to continue proliferating. When you blockade that, you could potentially then reactivate the CDK4-6 pathway. which means, in turn, that would become a resistance mechanism to a PSOK mTOR pathway. That's actually a result we think is consistent with the reduction in efficacy that's been found with everolimus and opalipsib in patients that have received prior CDK4-6 therapy. The data that's been reported for opalipsib, for instance, in patients who are post-CDK4-6 treatment is substantially lower than what was reported in patients who hadn't received CDK4-6 treatment. And so the non-clinical data suggests then that these patients, when their PSKM3 pathway is blockaded, their tumor cells will, the CDK4-6 pathway will be reactivated, which in turn means they'll be resensitized to treatment with CDK4-6 therapy. So essentially now, what we see kind of think of is that there's a triad of pathways that are involved. Estrogen receptor pathways, CDK4-6, PAF3K, mTOR. And that the most beneficial potential treatment, we believe, is synchronized inhibition of all of those pathways simultaneously. And that's consistent with the data we had in our second-line arms as well as the first-line arms. And we think this is a strategy that could be effective in other tumor areas where the PS3K mTOR is a resistance mechanism where it's involved in the disease intrinsically. and that may be that we can extend the benefit patients get from their prior therapy if that pathway or that inhibitor is blockading a pathway that's cooperative with PI3K, that we can extend potentially the treatment benefit of a drug that was used in the first-line setting, which is essentially what we're doing now, essentially saying maintain the pressure on the tumor on these pathways with palbo and fulvestrant in this case, and then blockade this escape route And you'll essentially put the equivalent of a clamp on the signaling that's driving proliferation. Great.
spk06: Thank you very much for the detailed answer to my question. Sorry. No, I appreciate that. That's great. Thank you very much.
spk08: Okay. You're welcome.
spk03: Thank you. The next question we have is from Gail Blum from Needham.
spk08: Hey, Gail.
spk01: Hi. Hi. Yeah, hi, this is Chan for Gale. Thank you for taking our questions. So, we just want to ask if the new ARM apps offer any benefit on the regulatory perspective for data tulsa, and if the readout for ARM app misses, does it affect any other pathways in other arms?
spk09: Thanks for your question. Well, since EMA recommended we add the arm, we think it's helpful to add the arm and address a recommendation they had. It makes logical sense. We're not surprised by the requests. We felt the data in the non-mutated population for Geta fulvestrant was sufficient. EMA thought supplementing that data with mutated patients would be useful. We agreed. And so that's really the rationale for moving forward with that arm. As far as the test, there really is no formal test or hurdle that that arm has to achieve. And so it's essentially part of a requirement that you demonstrate and allow the agency to see the individual contribution of different drugs to treatment benefit.
spk08: Thank you. You're welcome.
spk03: Thank you. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then 1 now. The next question we have is from Alex Nowak from Craig Hallam.
spk04: Great. Good afternoon, everyone. This is Connor. I'm for Alex. Thanks for taking the questions. I guess first, you know, how is the team thinking about modeling clinical trial, you know, enrollment uptake? Like how quickly do you think you can enroll these sites and start dosing? And then are there any internal goals the team has talked about for, you know, hitting those enrollment numbers?
spk09: Sure. You know, as we've indicated, we expect to dose the first patient in the next few months. So we think it's imminent, you know, as, you know, the activities are underway at a variety of sites. to get them going. As far as the enrollment path, again, we think the number that we're driving towards, or the date we're driving towards, is when there's sufficient events that have occurred that would trigger the primary analysis. And that takes into account enrollment, number of patients, rate of enrollment, rate of events, and that's ultimately how the statistical analysis plan is structured. It's less about the number of patients per se as much as the number of patients that allow you to do this comparison between the progression-free survival in the different arms that you're analyzing. And we're projecting to have that data available second half of 24 for the wild-type population, first half of 25 in the mutated population.
spk04: Perfect. That makes sense. Thank you. And then just another quick one. Are there any, you know, kind of like additional staffing needs as you kind of ramp up phase three?
spk09: So we've, over the past 15 months, you know, we've built out our senior team. I think I'm very happy we were able to find such great people in a short period of time. They're doing a fantastic job. And in turn, you know, they've built a group of folks who perform, you know, specific functions that support the study, support the operations in general. And I would say that team has been built. And so, there may be, you know, additional folks, you know, performing, you know, more, less senior functions. But we don't expect a dramatic increase in our headcount going forward. We think the the team, you know, required to execute the Victoria 1 studies in place and, you know, working full steam ahead.
spk04: Yeah, that's great. Thanks for the update. Congrats on the progress.
spk08: You're welcome. Thank you.
spk03: Thank you. Ladies and gentlemen, we have reached the end of our question and answer session, and I would like to turn the call back to Brian Sullivan for closing remarks. Sure.
spk09: Well, thank you for attending our call. We look forward to continuing to update you, and I will say goodbye.
spk03: Thank you, sir. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.
Disclaimer