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Operator
Good afternoon, ladies and gentlemen, and welcome to Saltuity First Quarter 2024 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would now like to turn the conference over to Maria Jankowski with ICR Westwick. You can go ahead.
Maria Jankowski
Thank you, Operator, and good afternoon to everyone on the call. Thank you for joining us to review Salcuity's first quarter 2024 financial results and business updates. Earlier today, Salcuity released financial results for the first quarter ending March 31, 2024. The press release can be found on the investor section of the 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 I 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 would now like to turn the call over to Brian Sullivan CEO of Salcuity. Please go ahead.
Brian Sullivan
Thank you, Maria, and good afternoon, everyone. We appreciate your interest in Salcuity. Our Phase 3 trial, Victoria 1, remains on track to report top-line data for the PIC3CA wild-type subgroup in the second half of 2024. Enrollment continues to proceed well. During the first quarter, in conjunction with an update related to our debt facility, we reported that the wild-type subgroup was more than 50% enrolled. Achieving this enrollment threshold during the first quarter gave us the right to draw down an additional $10 million tranche from our current debt facility. The patients we're evaluating in this study have HR-positive HER2-negative advanced breast cancer, whose disease progressed while receiving treatment with a CDK4-6 inhibitor and an aromatase inhibitor. And patients are eligible for enrollment if they've received up to two prior lines of endocrine treatment. But we anticipate that most of those enrolled will be receiving second-line treatment. And these patients typically remain on their first-line CDK4-6 inhibitor plus letrozole regimen for a median of 18 to 22 months, depending on the CDK4-6 inhibitor. And this compares to the 13 months medium duration of prior treatment reported for patients enrolled in the comparable arm of our Phase I B breast cancer study that evaluated gadotilisa combined with palbociclib and fulvestrin. Patients who received prior chemo in the advanced setting are not eligible for our Phase III study, unlike the comparable arm of our Phase Ib study. And this is relevant since the prognosis tends to be worse for individuals who have previously undergone chemotherapy for advanced breast cancer compared to those who are chemo-naive. Another difference in the Phase III eligibility criteria relative to our Phase Ib study is the allowance of patients with bone-only disease. Based on data from other Phase III trials, We expect that roughly 20% of the patients enrolled in our Phase 3 study will have bone-only disease. Our Phase 1b study did not allow bone-only patients. Only those with visceral disease were enrolled. And this is relevant since patients with non-bone-only disease generally have worse prognosis than those with bone-only disease. By not allowing patients who have received prior chemotherapy in the advanced setting, and by including those with bone-only disease, we're eliminating two factors in our phase three study that correlate with worst outcomes. As we begin preparing to get up to Elissa's potential position in a future treatment landscape, we'll take into account the criteria oncologists use to select a cancer therapy. We think these criteria, in order of importance, are efficacy, then safety, then mode of administration. And this is consistent with guideline recommendations, which are based on efficacy and safety considerations not mode of administration preference, especially in advanced breast cancer. The current second-line treatment paradigm for ER-positive HER2-negative patients with advanced breast cancer are selective estrogen receptor degraders, or SIRDs, like fulvestrin or elacitrin, as single agents, or one of three approved PAM inhibitors combined with fulvestrin. However, each of the PAM inhibitors only targets a single PAM node, such as PI3K-alpha, AKT, or mTORC1, which is suboptimal because the uninhibited PAM nodes can induce compensatory resistance. In patients who have received prior treatment with a CDK and 4,6 inhibitor, none of these drugs have demonstrated efficacy in patients who have PIK3CA wild-type tumors, while only the PI3K-alpha and AKT inhibitor have reported benefit in patients with PIK3CA mutations. And these results are consistent with the non-clinical data that shows these single-node inhibitors are three to four times less potent in breast cancer cells without PIK3CA mutations than in those with them. This is in sharp contrast to the non-clinical and preliminary efficacy data we've reported for gadotilicib. In studies evaluating breast cancer and prostate cancer cell lines, gadotilicib was found to be equally potent and efficacious in cell lines with and without PIK3CA mutations, and at least 300 times more potent, on average, in breast cancer cells than the improved single-node PAM inhibitors. Consistent with these non-clinical results, the preliminary efficacy we reported in our Phase 1b breast cancer study that evaluated getup to elastib combined with palacyclib and either letrozole or fulvestrin was comparable in both treatment-naive and second- and third-line patients with and without PIK3CA mutations. And we think these results demonstrate that along with the estrogen receptor and CDK4-6 pathways, the PAM pathway plays an intrinsic role as a disease driver in HR-positive HER2-negative advanced breast cancer. That's independent of the presence of an activating mutation like PIK3CA. And that's why we believe development of an optimized PAM inhibitor like Getatilicib that targets all class 1 PI3K isoforms and mTORC1 and 2 represents one of the most important opportunities to improve the standard of care in HR-positive HER2-negative advanced breast cancer. Now, obviously, the foundation of getafilicib's potential future positioning will require that getafilicib report a clinically meaningful MPFS benefit. The current median PFS benchmarks for patients pretreated with a CDK4-6 inhibitor are modest. Published reports of median PFS for the surge range from 2 to 3.8 months, and in patients with PIK3CA mutations, 5.5 to 7.3 months for the AKT and PI3K alpha inhibitors, respectively. The two most recently approved therapies for this patient population reported 2 to 3.5 months of incremental PFS benefit, the threshold KOLs generally consider to be clinically meaningful. In addition, we've consistently heard from oncologists that they lately prefer to delay use of chemotherapy or ADCs until the benefit from endocrine backbone regimens is exhausted. And this perspective was actually recently echoed by senior management from an ADC sponsor that characterized ADCs as creating a third pillar in the treatment landscape for HR-positive HER2-negative breast cancer that sits between endocrine therapy-based regimens and classical chemotherapy. And these comments are consistent with the sponsor's drug development strategy in breast cancer, which includes development of an oral SIRD and AKT inhibitor. We also think get a telicid safety profile may favor its potential positioning in a future treatment landscape. Gadantilisib's treatment-related discontinuation rate was only 4% in the Phase 1b arm with the Phase 3 intermittent dose schedule, which is comparable to the 6% to 8% discontinuation rates for CDK4-6 plus fulvestrant regimens. And these results compare favorably to the treatment-related discontinuation rates reported in the Phase 3 studies for apalipsib plus fulvestrant, where 26% of patients discontinued, and everolimus plus eczemistine, where 24% of patients discontinued. The results for getathelizib are especially encouraging, given that patients in the Phase 1b study did not receive prophylactic treatment for stomatitis. Since we're prescribing stomatitis prophylaxis in our Phase 3 trial, we would expect fewer stomatitis-related adverse events, which would further enhance getathelizib's already promising safety profile. And finally, in-office administered therapies, such as an infused therapy like getathelizib, have several key advantages relative to orally or self-administered drugs. In a real-world setting, convenience is only a meaningful consideration when the efficacy and safety profile of the alternative drugs are comparable or when a patient lives a significant distance from the treatment site. Otherwise, a well-tolerated therapy that offers a clinically meaningful PFS benefit will be overwhelmingly preferred by oncologists relative to one that offers less efficacy but is more convenient. And office-administered therapies, such as Get It to Listen, fall into the medical benefit category, which has a far more streamlined reimbursement process than orally-administered drugs, which fall into the pharmacy benefit category. And this has several implications. First, oncologists can recover additional costs associated with treating their patients. Second, oncologists have more autonomy to select therapies, and the care management process is much less burdensome. And third, Pair contracting is less frequent, which results in fewer price discounts for this pharmaceutical company. And fourth, patients typically incur lower out-of-pocket costs with an infused therapy, which is an important consideration for most patients. Beyond our breast cancer program, we're excited about the opportunity to develop get a solicit for patients with metastatic castration-resistant prostate cancer, or CRPC. This past February, We dosed our first patient in a phase 1b2 trial evaluating getotelicid in combination with darolutamide, an androgen receptor inhibitor, in CRPC patients previously treated with an AR inhibitor. Like HR-positive breast cancer, prostate cancer involves both a hormonal pathway and the PAM pathway. The role the PAM pathway plays in prostate cancer has been well characterized non-clinically and in two since-continued PAM inhibitors. which showed compelling proof-of-concept clinical trial data and two randomized studies. In each of the clinical trials for these other PAM inhibitors, the clinically meaningful treatment benefit was reported relative to the androgen receptor inhibitor control arm in patients with CRPC. This is especially encouraging since gadotilicib is significantly more potent and efficacious than these PAM inhibitors in vitro. Primary objectives of the Phase Ib portion of the trial include assessment of the safety and tolerability of gettalicib in combination with darolutamide, and determination of the recommended phase two dose of gettalicib. We anticipate reporting initial preliminary data in the first half of 2025. And with that, I'll turn the call over now to Vicki Hahn, our chief financial officer, to review our financial results.
Vicki Hahn
Thank you, Brian, and good afternoon, everyone. I'll provide a brief overview of our financial results for the first quarter of 2024. Our first quarter net loss was $21.6 million, or $0.64 net loss per share, compared to $11.9 million net loss, or $0.55 per share, for the first quarter of 2023. Because these quarterly net loss includes significant non-cash items, including stock-based compensation and interest, we also included in our press release non-GAAP-adjusted net loss for the quarter ending March 31st, 2024. Our non-GAAP adjusted net loss was 19.9 million or 59 cents per share for the first quarter of 24 compared to non-GAAP adjusted net loss of 11.9 million or 55 cents per share for the first quarter of 2023. Research and development expenses were 20.7 million for the first quarter of 24 compared to $11.3 million for the first quarter of 23. Of the approximately $9.4 million increase in R&D expenses, $7.9 million primarily related to activities supporting the Victoria 1 Phase 3 trial and the initiation of the prostate Phase 1B2 clinical trial, and $1.5 million was related to increased employee and consulting expenses. General and administrative expenses were $1.8 million for the first quarter of 2024, that compared to $1.3 million for the first quarter of 2023. Employee-related expenses accounted for $0.3 million of the increase. The remaining increase of approximately $0.2 million resulted from professional fees and other administrative expenses. Net cash used in operating activities for the first quarter of 2024 was 17.1 million compared to 12.9 million for the first quarter of 23. We ended the quarter with approximately 177.7 million of cash, cash equivalents and short-term investments compared to cash and cash equivalents of 180.6 million at December 31st, 2023. The decrease in cash quarter over quarter of 2.9 million is primarily the result of non-GAAP adjusted net loss of approximately 19.9 million, offset by a warrant exercise yielding 14 million in proceeds and working capital adjustments of approximately 3 million. I will now hand the call back to Brian.
Brian Sullivan
Thank you, Vicki. Operator, could you please open the call for questions?
Operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press the star followed by the 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. Once again, that is star 1 should you wish to ask a question. Your first question is from Mary Raycroft from Jefferies. Please ask your question.
Mary Raycroft
Hi, good afternoon. This is Yao Ang for Maury. Thanks for taking our questions. So for the Phase III study, can you remind us how the primary analysis is going to be triggered in terms of events and maturity? And what were the PFS assumptions for treatment and control that went into the guidance of second half 24 top line data?
Yao Ang for Maury
Sure.
Brian Sullivan
Well, the study primary analysis will be triggered by hitting an event threshold number of events, and that's independent of follow-up, although there are assumptions made about the follow-up period to derive an estimate of the timing when we would expect those events to occur, and which informs the sample size assumptions. We haven't published the assumptions we used to do that analysis, but we have presented data and there's publicly available data particularly for fulvestrin that suggests that two to three and a half months would be the most likely in that range, probably centering around 2.7 for fulvestrin.
spk03
Maybe a quick follow-up. You recently said
Mary Raycroft
Some KOLs think the bar for wild-type patients is 8-month PFS or 5-month Delta versus for veterans. And there is one everotimus study in post-CDK4-6 patients that showed PFS in that ballpark. So how does the current trial compare to the everotimus trial, and what in the current trial gave you confidence that you should show better PFS? Thanks.
Brian Sullivan
I'll have that in the queue. So all the numbers for PFS should be on a relative basis because obviously it's relative to the control. And I think, you know, generally KOLs think or would consider a clinically meaningful benefit to be about three months. Certainly more is better. But that's the threshold. If, you know, if you're referring to, I'm not sure whichever line of study you're referring to, could you tell me which study you're referring to?
Mary Raycroft
Oh, it's just I think you recently said one of the Everolimus study in the post-CDK4-6 patients that showed PFS in the, I think, maybe six to eight months.
Brian Sullivan
No, okay, that's why I asked. That's not correct. So there's been some retrospective analyses of Everolimus that doesn't break out what their activity is between PIC3CA wild-type and mutant patients. But those are retrospective analyses. There are three of them. If you aggregate the data and weight it for the number of patients in each study, the median PFS was 4.2 months. But again, given the non-clinical data which suggests everolimus is more likely to be more effective in patients with mutations than not with mutations, I think there's an open question about how effective everolimus is in the wild type, PIK3C wild type patients. And as I mentioned, there's been no randomized data that provides any informed information or credible data about the activity of the drug in patients who've received prior CDK4-6s.
Mary Raycroft
Oh, I see. Thanks for the clarification. That was really helpful.
spk03
And thanks so much for taking our questions again.
Cohort A
You're welcome.
Operator
Thank you. Your next question is from Tara Bancroft from TD Carolina. Please ask your question.
Tara Bancroft
Hi. Good afternoon. I have one clarifying question. Can you explain the reasoning that you have behind stratifying patients by six months on prior therapy versus 12, you know, as these are chemo-naive patients, and that essentially implies that many will have a longer time on prior therapy and Do you expect that the prior therapy will be almost entirely all prior CDK4-6, or will it be including others like afrolimus or SIRD2 if it's appropriate? You know, as you know, the time on prior CDK4-6 specifically is important for outcomes. So, it'll be helpful to know. Thank you.
Brian Sullivan
Sure. So, the stratification factor for prior treatment duration was based on ESMO guidelines, which define endocrine resistance in the advanced setting as patients receiving less than six months of PFS in endocrine therapy. So we felt that was a validated way of defining a patient population. There's a clear demarcation in responsiveness to subsequent rounds of chemotherapy. which is why the benchmark or that guideline identified six months as the threshold. To the extent that people want to look at more than 12 months, I would say the bulk of the differentiation in outcomes probably occurs in six months. And so what you'll see is a bit of an upward-sloping curve that correlates highly with prior treatment that is much more gradual than the curve for patients who have progressed on less than six months. And what you'll see when you're looking at some data for therapies under development, particularly the SIRDs, it appears the strategy or the patient population they're going after, at least that's who they're enrolling in some of their studies, are patients who have, they're only enrolling patients who've had more than six months of benefit, PFS, on their prior endocrine therapy. So essentially they're selecting out the patients who are endocrine resistant. In our study, since we That's a meaningful and important group of patients to treat. We are including those patients. Stratification variable factor, though, allows us to do an analysis and make sure the arms of the study are well balanced.
spk12
Okay. Thank you so much. Perfect. Thank you. Your next question is from Brad Canino from Staple.
Operator
Please ask a question.
spk01
Thank you, and good to see the reiteration of the second half 24 top line guidance. Brian, maybe another timing question to layer on top of that. I'm just wondering how important is it for your strategy to be able to report the full data for the wild type cohort at the San Antonio breast cancer meeting in December?
Brian Sullivan
You know, again, what's going to be most important is what the data says. And it'd certainly be nice if the data was available, we could present it. I don't think it's essential, to be frank. I think it's a very secondary consideration. And we don't control the timing of that. And there's other complicating factors that you have to weigh. So we'll see, basically. But I don't think it's a nice to have, not a need to have. And certainly, what's more important is the data itself.
spk01
OK. And then you also mentioned in your comments about the prior chemo and bone-only patient factors between your phase two and phase three. Could you point us to any data that might help quantify the degree of impact these factors can have on durability and PFS or any other comments and how you think about the potential directional impact? Thank you.
Brian Sullivan
Sure. So there's data across many tumor types that will show patients who've received chemo and then are subsequently treated on targeted therapy will have a worse outcome than patients who hadn't had prior chemo. In the breast cancer space, I guess the data that's probably most meaningful was reported out of the Bileave study. Cohort A enrolled kind of a first-line, second-line population, no chemo, chemo-naive patients. And then cohort C of that study enrolled or allowed patients who had prior chemo to enroll. And so it was more of a second, third line study. Cohort A, which is more similar to the patient population we're enrolling, reported 7.3 months. Cohort B, about 5.5 or 5.6 months. So essentially a 30% delta in favor of the patients who are chemo-naive. And that's probably relevant benchmark just because they're hitting a similar pathway. As far as bone-only impact, and essentially when you say bone-only, there's one qualification. Patients who are enrolling are bone-only, but they have to have a measurable lytic lesion so you can measure PFS. But in the Paloma 2 study for palocyclib, they did a follow-up analysis and found that patients with bone-only disease had 38 months or 50% greater PFS than patients that had visceral disease, not bone-only disease, which suggests, obviously, there's a much more favorable prognosis for bone-only patients who are more likely to get a favorable response to target a therapy, at least one that includes a CDK4-6 inhibitor.
Cohort A
Thank you.
spk12
Thank you. Your next question is from Chase Knickerbocker from Cragnola.
Operator
Please ask your question.
spk08
Hey, good afternoon, everyone. This is Connor on for Chase. Thanks for taking my question. I just have one here today. Last quarter, you brought on Eldon Mayer to prepare for a commercial launch of data. Since then, what initiatives has he implemented or plan on implementing to prepare for the launch on your own?
Brian Sullivan
Thanks for the question. So, no, very happy to have Eldon on board. As folks who've invested in the space know, the preparation time for a launch is quite long. And I think launch preparation takes place in two time buckets. I would say there's the T minus 12, launch minus 12 months bucket, which is the most intense and expensive time. And that time can be gated or really begun once you have your phase three data, essentially when you can really fully flesh out your product profile and be much more specific when you're doing research and characterize your positioning and your overall messaging and in the marketplace and able to put together dossiers, et cetera, for payers. So we're in the T minus 24 timeframe, right? We're in between month 12, T minus 12, and let's say T minus 20 or so. And so the work that we're focused on now is, A, building the initial team. You need to bring on people who can lead the marketing effort, business operations effort, the managed market effort, And we're on track with identifying and getting those people on board. And those are individuals. Those are not teams. And then you start to do research and lay out the overall plan. So I would say the main focus for us by the end of this quarter was to essentially develop a preliminary plan, which would identify organizational structure. That will be required by month over the next year let's say 20 months or so, the budget that's associated with that during that timeline as well as post-launch, the first year of commercialization. We've identified the cross-departmental dependencies that will require support of the launch, whether it's IT or administrative support or clinical operation support, medical affairs support, etc., And then making sure that all that work is aligned with the landscape as we see it today or as we see it evolving down the road.
Yao Ang for Maury
Awesome. Thanks for the question. You're welcome. Thank you.
Operator
Thank you. Once again, should you have a question, please press 4-1 on your telephone keypad. Your next question is from Gil Bloom from Radom & Company. Please ask your question.
Gil Bloom
Hi, everyone, and thanks for taking our question. So maybe a bit of a rewording on a couple of previous ones here. So given your enrolling patients with better expected outcomes, shouldn't this overall extend timelines for study and readout? I mean, increased benefits should be evenly spread across the treatment arms, but I'm assuming this went into your calculations. Thank you.
Brian Sullivan
It did, but I would say, though, there's a cap on the potential for fulvestrin. If you look at the data, I don't think there's any data that has been reported in this patient population that suggests, excuse me, that fulvestrin can do more than 3.7 months. You know, if you aggregate the data that's been reported, you'd see it's about 2.7. If you look at the error bars on the data that has been reported, you know, the upper bound of the 95% confidence interval is around 3.8. You know, you can nudge that up and round it to four. But just given the mechanism and those results, we think that there's much less upside, I guess, due to a more favorable patient population than there is by treating untreated disease mechanism, which is what, you know, we're doing with get a pellicid.
Cohort A
All right. Thank you. That's very helpful.
spk12
Thank you. There are no further questions at this time.
Operator
Please proceed.
Brian Sullivan
Well, great. Well, thank you again for participating in our call today and for your ongoing support and interest in our company. We're participating in a number of conferences in the coming months and look forward to interacting with many of you soon. I hope you have a great evening. Goodbye.
Operator
Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.
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