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spk05: Greetings and welcome to the CellQED third quarter 2023 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Maria Jankowski with ICR. Thank you, ma'am. You may begin.
spk01: Thank you, Operator, and good morning to everyone on the call. Thank you for joining us to review Salcuity's third quarter 2023 financial results and business updates. Earlier this morning, Salcuity released financial results for the third quarter ending September 30th, 2023. The press release can be found on the Investors section of the website. Joining me on the call today are Brian Sullivan, Solcuity'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 NIR 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 would now like to turn the call over to Brian Sullivan, CEO of Cellcuity. Please go ahead.
spk07: Thank you, Maria, and good morning to everyone joining us on today's call. Our current focus at Cellcuity is to develop treatments for patients who have cancers involving the PI3K mTOR, or PAM, signaling pathway. The PAM pathway is one of the most important oncogenic pathways. It regulates key metabolic functions, cross-regulates other oncogenic pathways, and affects the tumor microenvironment. which can directly affect how a patient's immune system responds to a tumor. It is also the most highly mutated by a significant margin of all signaling pathways. 38% of solid tumors have a PAM-related mutation or alteration. Mutations obviously serve as potential targets, but the overall proportion of pathway alterations in a tumor highly correlates to its overall role as a cancer driver. Despite its importance as a cancer driver, The number of patients treated today with a PAM inhibitor is trivial compared to the number who could potentially benefit from them. And this is why we think the PAM pathway represents the largest drug development opportunity in solid tumors. The primary reason why PAM inhibitors have not become standard of care drugs, despite the importance of the PAM pathway, is because it is very difficult to safely and efficaciously inhibit this pathway. Unlike most pathways, where inhibition of a single kinase may induce the desired activity. The PAM pathway involves multiple nodes. Each of them must be targeted because of the complex interaction that takes place between them. Otherwise, uninhibited nodes may be activated and compensatory resistance may be induced, which in turn compromises efficacy. The available therapies that target this pathway only target a single node, such as mTORC1 or PI3K-alpha. and have only reported limited improvements in patient outcomes. That is why we believe development of an optimized PAM inhibitor, like getatilicin, that targets all class 1 PI3K isoforms and mTORC1 and mTORC2 represents one of the most important opportunities to improve the standard of care in these cancers. With our phase 3 program in HR-positive HER2-negative advanced breast cancer and our newly initiated phase 1B2 program in metastatic castration-resistant prostate cancer, We hope to eventually impact over 500,000 patients globally who have one of these tumor types. Our Phase III Victoria I clinical trial is evaluating getatilizumab in combination with fulvastrin with and without palvocyclib in adults with HR-positive, HER2-negative, advanced breast cancer who have progressed on prior treatment with a CDK4-6 inhibitor. We are now recruiting patients at nearly 220 sites in 23 countries in North and South America, Europe, and Asia. The trial remains on track to provide initial data and analysis of the PIK3CA wild-type patient subgroup in the second half of 2024 and the data for the PIK3CA mutated patient subgroup in the first half of 2025. In August, we announced our plans to initiate the clinical development of getotelicid in patients with metastatic castration-resistant prostate cancer whose disease progressed while receiving treatment with an androgen receptor inhibitor. Treatment options for these patients are limited, and there's an urgent need for new drugs to treat this patient population. Numerous preclinical studies have demonstrated interaction between the antigen receptor and PAM pathways suggests that combining a PAM inhibitor with an antigen receptor inhibitor may induce a synergistic antitumor effect in patients with prostate cancer. There's also compelling clinical evidence with an earlier generation PAM inhibitor providing a proof of concept of our hypothesis that combining getatilicid with an androgen receptor inhibitor may be efficacious. The FDA cleared our IND and gave us allowance to proceed with our Phase 1b2 trial to evaluate getatilicid in combination with darolutamide, which is a potent androgen receptor inhibitor, in patients with metastatic castration-resistant prostate cancer. We expect to activate this trial in the first quarter of 2024 and report initial data in the first half of 2025. In the phase 1B portion of the study, the acuity expects that up to 42 participants will be randomly assigned to receive 600 milligrams of darolutamide combined with either 120 milligrams of getothalicin in arm 1 or 180 milligrams of getothalicin in arm 2. An additional 12 participants will then be enrolled in the phase 2 portion of the study at the recommended phase 2 dose level to enable evaluation of a total of 30 participants treated with a phase 2 dose of getothalicin. The primary objectives of the Phase 1B portion of the trial include assessment of the safety and tolerability of getatolizumab in combination with darolutamide and determination of the recommended Phase 2 dose of getatolizumab. The primary objective of the Phase 2 portion of the trial is to assess the six-month radiographic progression-free survival rate of patients who received the Phase 2 dose. We're excited that Bayer agreed to enter into a clinical trial collaboration and supply agreement to provide darolutamide, their approved androgen receptor inhibitor, For this trial, at no cost, darolutamide is structurally unique to other androgen receptor inhibitors, with an excellent efficacy and differentiated tolerability profile, coupled with minimal drug-drug interactions, making it an ideal combination partner for gettalicin. And finally, in September, we hosted a virtual science day, where we provided an in-depth overview of the scientific and strategic rationale supporting our clinical development strategies. We reviewed how gettalizib's differentiated mechanism of action, safety profile, and potency solves the riddle of comprehensively inhibiting the PAM pathway without inducing unacceptable levels of toxicity. We then characterized the significant unmet needs in breast and prostate cancer and why gettalizib is uniquely positioned to potentially improve the outcomes for the hundreds of thousands of patients with these tumors. For nearly 20 years, the PAM pathway has confounded drug developers. This has led many drug developers and investors to question the relevance of the pathway as a cancer target. We think that sentiment is misguided. We blame the drugs, not the pathway. We're excited about the opportunity to potentially offer breast and prostate cancer patients effective treatment for their PAM pathway-involved tumors, and we look forward to updating you on our progress over the coming quarters. With that, I'll turn now the call over to Vicki Hahn, our CFO, to review our financial results.
spk02: Thank you, Brian, and good morning, everyone. I'll provide a brief overview of our third quarter 2023 financial results. Net loss for the third quarter of 2023 was $18.4 million, or $0.83 loss per share, compared to a net loss of $10.9 million, or $0.75 loss per share, for the third quarter of 2022. We also included in our press release non-GAAP adjusted Net loss for the quarter ending September 30, 2023. Our non-GAAP adjusted net loss for the third quarter of 2023 was $17.3 million or $0.78 loss per share compared to non-GAAP adjusted net loss for the third quarter of 2022 of $9.5 million or $0.63 loss per share. Research and development expenses were $17.5 million for the third quarter of 2023 compared to $9.6 million for the third quarter of 2022. Of the approximately $7.9 million increase in research and development expenses, $7.5 million was due to an increase in expenses related to the Victoria I Phase III clinical trial, and $.4 million was related to increased employee-related expenses. General and administrative expenses were $1.4 million for the third quarter of 2023 compared to $1 million for the third quarter of 2022. Employee-related expenses accounted for $0.3 million of the increase. The remaining $0.1 million increase resulted from professional fees and other expenses associated with being a public company. Net cash used in operating activities for the third quarter of 2023 was $12.7 million compared to $9.3 million for the third quarter of 2022. This was the result of non-GAAP adjusted net loss of approximately $17.3 million offset by working capital changes of approximately $4.6 million in accounts payable and accrued expenses and partially offset by other assets. We ended the quarter with cash, cash equivalents, and short-term investments of $133.9 million. On October 20th, we closed on a $50 million private placement, which is not reflected in the September 30th cash and investment amount. We believe this will extend our cash runway into mid-2026, and fund us through multiple critical milestones. With that, I will now hand the call back to Brian.
spk09: Thank you, Vickie. Operator, could you please open the call for questions?
spk05: Sure, 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 alignment 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. Our first question comes from Maury Raycroft with Jefferies. Please, go ahead.
spk03: Hi, good morning. Thank you for taking our questions. This is Yao on the call for Maury. Our first question is on the phase three trial regarding the primary analysis between RMB and RMC, which compares GATA plus fulvestrin versus fulvestrin alone. What kind of delta went into the powering assumption? We assume fulvestrin alone has maybe four to five months of PFS. So what does GATA and fulvestrin combo need to show to be static? And similarly, between ARM-D and ARM-E in mutant patients, what kind of delta went into the powering assumptions there? That would be versus a palisade plus fulvestrin combo in that comparison. And I have another follow-up. Yeah.
spk07: Oh, go ahead. No, thanks for the question. We powered this study with traditional powering assumptions, which are typically 90%. And so we have sufficient sample size to detect an effect size difference that's statistically significant with that. And so we haven't disclosed the specific effect size difference that we're assuming. But given the low... median PFS rate that's been reported for fulvestrant, one could deduce that the level of improvement or the effect size difference doesn't have to be significant to be statistically significant. For just as an example, a two-month improvement in PFS, which would translate to 100% improvement relative to what's been reported in fulvestrant recently, two months median PFS for them, would represent an HR of 0.5. And that would, A, be statistically significant, and B, would be on the edge of being clinically meaningful. And a similar analysis was done with our assumptions for RMD versus RME. We power the study 90% and derive our sample size accordingly.
spk09: Got it. That makes sense.
spk03: And I guess Maybe move on to the prostate cancer study. We know dilutamate seems to have pretty low drug-drug interactions, but still there are some reports that seems to suggest dilutamate can reduce CMAX or AOC for some other drugs that had been administered together in the past. I guess Can you maybe clarify if you are going to do very detailed PK monitoring, or do you think your trial design is sufficient for you to find the optimum dose? And do you have any plans to maybe look at other different dose combos?
spk07: Okay, well, thanks for the question. Two things. We have evaluated the DDI profile of darolutamide and assessed that relative to the interactions with GETA. But GETA is very stable, doesn't metabolize, or metabolizes at a very, very low rate. And so we don't anticipate any drug-drug interaction between the two drugs just based on their respective PK profiles. We will be doing PK analysis so that we'll you know, confirm that as part of our study. You know, our focus right now is demonstrating the proof of concept that combining a PAM-PI3K inhibitor like erythrolytic with an androgen receptor inhibitor like ferrolutamide, which is very potent, will induce a treatment effect in these patients that could be significant in advancing standard of care. The steps that follow that, there's a lot of potential different steps, and, you know, we will start discussing those as we begin reporting data.
spk09: Got it. That makes sense. Thank you so much. I'll hop back in the queue. Our next question comes from Boris Becker with Cowen.
spk05: Please go ahead.
spk04: Yes, hi. A couple of questions here. So just for Getta in general, what's responsible for the drug's tolerability when we compare it to some prior attempts at targeting mTOR and PI3K, and specifically kind of an extension of that in the VICTORIA trial. What's the algorithm for dose reduction, and do we have a sense of fraction of patients that have had a dose reduction?
spk07: Great. Well, thanks. So, to get a tolerability profile is a function of two features of the drug. One is that it's administered IV intravenously, which means it avoids the GI tract and the liver. Because PI3K alpha, which is one of the targets of GETA and which is one of the targets of available therapy, regulates glycolic activity, which takes place in the liver, avoiding the liver allows you to avoid essentially inducing high levels of hypoglycemia, which is one of the primary adverse reactions associated with PI3K drugs. And the second feature of the drug relates to its BK profile, and that's a function of its chemical structure, which is that it has a very balanced volume of distribution of around 40 liters. And what that essentially means is that it doesn't get retained excessively in the liver, which is in comparison to some other drugs that have been ID administered, which had very high volumes of distribution and were retained in the liver 50-fold higher concentrations than in plasma. So it's a combination of the route of administration, which is a necessary but not sufficient condition to minimize the toxicity. It's also a feature of the PK profile and its balanced volume of distribution. As far as dose reductions, in our Phase 1B study, we had dose intensity levels of roughly 90%, so there'll be a very structured approach to dose reductions. But overall, you know, patients stay on the drug for the most part at the 180 milligram dose level. The dosing density was comparable to palvocyclib. So we think that essentially the drugs are somewhat equally tolerable as a result. There's nothing that would expect us to... see anything different in this phase three study.
spk04: Great. Maybe if I could squeeze in one more just on prostate cancer. Obviously, there's a lot of discussion on PSMA targeting therapies, particularly in the pre-chemo setting. We just saw some data in asthma. We're expecting all the data right now from another company soon. How do you see that impacting kind of your development pathway to get a plus enzalutamide in these patients?
spk07: Sure. Well, we'll see. I mean, it's a function of the data that we report. If the data that we report is is consistent with what's been reported in clinical studies that were done with an earlier generation PAM inhibitor that is no longer under development, then we think GETA would be on track to potentially offering a standard of care that was superior to PSMA targeted therapies. Even if it was just comparable, and again, I'm just describing scenarios, not projecting anything. But even if it was just comparable, the radiographic progression to survival was just comparable to the PSMA. We think that we would have an advantage relative to the challenges involved in administering that class of drugs. But it's early days. But ultimately, as is the case in most of these settings, the efficacy will really determine you know, the strategy going forward and the penetration you could hope to expect. But we don't think that the bar is raised to a level with those drugs that will create an impediment for us to be successful.
spk09: Great. Thanks for taking my question. You're welcome. Our next question comes from Gil Bloom with Needham & Co.
spk06: Please go ahead. Hey, good morning, everyone. Thanks for taking our question. Just a quick one on use of proceeds. You guys recently had the financing. Just try and understand if you expect the majority of these proceeds to be used to maybe extend the cash runway, or is it more to expand the footprint and invest in the prostate cancer program? Thank you.
spk07: Thanks, Gil. We raised the incremental $50 million, which really came Over the threshold, it was an unsolicited inquiry. And we concluded that it would be favorable for us to extend the runway. The money we'd raised and had on our balance sheet prior factored in development costs associated with the Phase 1B2 study. And so, for the most part, this incremental infusion of cash will primarily extend our cash run rate, which, again, in this environment, having additional runway we think is just very prudent. And so we concluded that it was an opportunity for us to bolster the balance sheet and really, can't say eliminate, but certainly reduce the potential balance sheet risk associated with our programs.
spk09: Hello? Our next question comes from Alex Novak with Craig Holland.
spk05: Please go ahead.
spk08: Okay, great. Good morning, everyone. You know, with the enrollment ramping here, 220 sites, multiple countries, you're now looking, you're doing the indication expansion into prostate. You know, what additional investment in the town side resources, whether it be in Minnesota or, you know, other geographies, do you need to plan for here?
spk07: We're adding, you know, staff, to our team throughout. We have added people to our team. We'll continue to add people to our team that typically will not be at the senior executive level. And those folks are there to support just the day-to-day activities of managing a study as significant as Victoria 1, but also to help us prepare ourselves for a new drug application, our NDA. And so we have to simultaneously execute our Phase 3 study while also preparing for an eventual NDA submission. And so as we get closer to that NDA submission and that activity starts to ramp up, we'll add staff accordingly. But the investments from a G&A standpoint will still be relatively modest, but there'll be some increase in headcount as a result of our progress towards the NDA.
spk08: Got it. No, it makes sense. And then the R&D expense pickup this quarter, I mean, is it fair to say that's a direct indication that the enrollment for the trial is going, let's say, better than initially expected?
spk07: I would say it's just in line with what we expected. So as you enroll more patients, there's certainly expenses associated with that. As more patients are on the drug, there's more expenses associated with that. And so I think what we've reported is pretty consistent with what the expectations have been for our expenses.
spk08: Okay, makes whole sense. And then just lastly, you know, with enrollment creeping higher here, has there been any major kind of recruitment protocol changes that have been made to the study?
spk07: No, so far so good. You know, it clearly requires a lot of very hands-on work with the sites, ensuring that, you know, the trial has visibility not only with the principal investigator, but the typically multiple investigator sub-TIs that can enroll patients. And so we have a very deliberate approach to stay in contact with the multiple individuals involved with the study. We're constantly assessing the patients they may have who could potentially be eligible for the study down the road if they progress on their current CDK4-6 therapy. And so we have multiple ways of gauging what the potential activity could be at the site and also just multiple ways of ensuring that we're as top of mind as we can. And so far, so good. But we have roughly 220 sites. So that means we have to stay in touch with a lot of individuals. But we think we have a very good approach to not only execute that, but also keep track of it. And then to the extent that we see any sites that maybe not living up to our expectations, we're following up with them and digging into any potential obstacles that they may think they have that could be preventing them from screening patients.
spk09: All right. Well, great to hear. Appreciate the update. Thank you. You're welcome.
spk05: There are no further questions at this time, so that concludes our Q&A session. I would like to turn the floor back over to Brian Sullivan, CEO, for closing comments.
spk07: Well, thanks again for participating in our call today and for your ongoing support. We'll be participating in the upcoming Stifel Healthcare Conference and Jefferies London Healthcare Conference next week. And look forward to hopefully seeing many of you there. Goodbye.
spk09: This concludes today's teleconference. You may disconnect your lines at this time.
spk05: Thank you for your participation.
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