Caladrius Biosciences, Inc.

Welcome to the Calidaris Biosciences Second Quarter 2022 Financial Results and Business Update Conference Call. Currently, all participants are in listen-only mode. Following management's prepared remarks, we will hold a Q&A session. To ask a question at that time, please press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. As a reminder, this call is being recorded today, Thursday, August 4th, 2022. I will now turn the call over to John Mendito, Vice President of Investor Relations and Corporate Communications at Collegius. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Welcome to Collegius' second quarter 2022 conference call to discuss our financial results and provide a business update. Joining me today from our management team are Dr. David Mazzo, President and Chief Executive Officer, Dr. Kristen Buck, Executive Vice President of Research and Development and Chief Medical Officer, and James Nisko, Vice President of Finance and Treasury. Shortly before this call, we issued a press release announcing our second quarter 2022 financial results, which is available under the Investors and News section of the company website, along with a webcast replay of this call. If you have not received this news release or you'd like to be added to the company's email distribution list, please email me at jmendito at colladurus.com. Before we begin, I will remind you that comments made by management during this conference call will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Colladurus. I encourage you to review the company's filings with the Securities and Exchange Commission, including, without limitation, which form 10Q, 8K, and 10K, which identify specific risk factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as to the date of this live broadcast, Thursday, August 4th, 2022. Gladys Biosciences undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that, I will now turn the call over to Dr. Mazza. Dave?

Thank you, John, and good afternoon, everyone. Thank you for once again joining us today as we provide an overview of recent business highlights and discuss our second quarter 2022 financial results. I can say to you with much enthusiasm and certainty that 2022 is proving to be an outstanding year of progress for Colladrius as the proposed merger with SEND Therapeutics remains on track to close in the third quarter of this year, subject to approval by our stockholders. This transaction will be transformational for Colladrius, creating, upon closing, a financially sound NASDAQ-listed company with a diverse product development pipeline, strong existing partnership, and the potential for future attractive partnerships. The merged company will operate under the name Lasada Therapeutics, Lasada for short, and will focus on maximally exploiting the full potential of SEND's SEND-R platform technology in a range of solid tumor indications while progressing Caladrius' current CD34 positive technology-based product candidates to their next development milestone. SEND-1, the lead product candidate from the SEND-R platform, has the potential to be combined with myriad chemo and immunotherapeutic agents and could become an integral part of a revised standard of care therapy for many difficult to treat cancers. Coincident with the announcement of the signing of the definitive merger agreement back in April, we also announced that we had made a $10 million investment in SEND in order to maintain the momentum of development of SEND 1 and to allow for immediate collaboration between the companies. Since then, a number of achievements have been announced regarding SEND 1. For example, in June, It was announced that the first patient had been treated in the Phase 2b ASCEND study of SEND1 in combination with gemcitabine and nabpaclitaxel for the treatment of first-line metastatic pancreatic ductal adenocarcinoma, MPDAC for short. This 125-patient study is a double-blind, randomized, placebo-controlled clinical trial being conducted at up to 40 sites in Australia and New Zealand, led by the Australasian Gastrointestinal Cancer Trials Group in collaboration with the National Health and Medical Research Council's Clinical Trial Center at the University of Sydney. Additionally, groundbreaking data was recently published in the Lancet Gastroenterology and Hepatology Journal from the Phase 1B study of SEND1 in combination with gemcitabine and nabpaclitaxel for the treatment of first-line MPDAC. The results reinforce our belief that SEND1 could become a transformative new medicine for the treatment of pancreatic cancer and other difficult-to-treat solid tumors. Imminently, we expect to announce a collaboration with a major pharmaceutical company regarding SEND1, as well as advancement of our plans to initiate a registration-worthy study of SEND1 in MPDAC next year, along with a basket trial exploring the advantages of combining SEND1 with current standard of care in a variety of other solid tumor types. With that, I will now turn the call over to James Nisko, our VP of Finance and Treasury, to review and provide commentary on our second quarter 2022 financial results. James?

Thanks, Steve. I'm pleased to join today to present a summary of our second quarter 2022 financial results, starting with operating expenses. Research and development expenses for the three months ended June 30th, 2022, were $3.2 million compared to $4.3 million for the three months ended June 30, 2021, representing a decrease of $1.1 million, or 25%. This decrease was primarily due to a decrease in expenses associated with Senedra in Japan, revenue received from the collaboration agreement, and one-off recruiting expenses in the prior year. Research and development activities in the current year period focused on the advancement of our ischemic repair platform and related to execution of the FREEDOM trial, including preparation for an interim analysis, and execution of the Phase 1b proof-of-concept trial of CLBS 201 as a treatment for diabetic kidney disease, which commenced in the first quarter of 2022 with the first patient in the study treated in April 2022, and study closeout activities, and preparation for the pre-consultation meetings with the Japanese Pharmaceuticals and Medical Devices Agency, or PMDA, for Honedra in critical limb ischemia and Berger's disease in Japan. General and administrative expenses, which focus on general corporate-related activities, were $3.5 million for the three months ended June 30, 2022, compared to $2.8 million for the three months ended June 30th, 2021, representing an increase of 24%. This increase was primarily due to one-time professional fees associated with the proposed merger with SEND Therapeutics. Overall, net losses were $6.6 million and $5.7 million for the three months ended June 30th, 2022 and June 30th, 2021, respectively. As previously communicated, Colladrius made an investment of $10 million in CEND in addition to entering into a collaboration agreement with CEND to maintain the development momentum of the CEND pipeline. Turning now to our balance sheet and cash flow. As of June 30, 2022, the company had cash, cash equivalents and marketable securities of approximately $73 million, which is net of our $10 million investment in SEND, and which we believe positions us well relative to the projected capital obligations for our existing development programs, as well as our cash and investments balance target at the time of closing of the merger with SEND. That completes the financial overview. With that, I will now turn the call over to our Chief Medical Officer, Dr. Kristen Buff, for the review of our clinical development pipeline. Kristen?

Thank you, James, and good afternoon, everyone. Before I provide an update on our current CD34 programs, I will reinforce what Dave had mentioned regarding our progress with SEND. Work under our collaboration agreement has been nothing short of seamless. and the collaborative effort has already yielded great progress. We are excited about this opportunity and look forward to reporting more accomplishments in the coming weeks and months, including the final coalescence into a singular, cohesive development team post-merger closing. Turning to our current pipeline, as you know, Caladrius' current development portfolio features autologous cellular therapies designed to treat or reverse disease. Our belief is that curative cell therapy products, when applied to the right indication, can restore human health and potentially improve quality of life with a single administration as compared to a treatment that requires frequent re-administration. I will now provide a summary of progress and status for each of Caladrius' clinical programs, kicking off with CLBS12 Hanedra in Japan, our product candidate for the treatment of critical limb ischemia and Berger's disease. Hanedra was awarded a Sakagaki designation from the Japanese regulatory authorities for the treatment of critical limb ischemia and Berger's disease, which is an orphan size subset of critical limb ischemia. The Sakagaki designation is akin to a regenerative medicine advanced therapy designation or an RMAT designation in the United States. Sakagaki designation affords the recipient prioritized regulatory consultation, a dedicated review system to support the development and review process, including the option of a rolling registration submission, as well as a reduced review time of six months for the registration application once filed. Additionally, under Japan's regenerative medicine legislation, products such as Henedra are eligible for early conditional approval and possibly full approval in Japan based on the assessment of the data from the trial or trials designed in direct collaboration with the Japanese Pharmaceuticals and Medical Devices Agency, PMDA. Note that conditional approval of a regenerative medicine product only requires the demonstration of a trend toward a therapeutic effect together with acceptable safety. Further, The Sakagaki designation is a highly sought regulatory classification in Japan, and we hope that this, coupled with positively trending data from our trial, will make Hanedra an attractive product for partnering to a Japanese pharmaceutical company. The company study of Hanedra in Japan for the treatment of critical limb ischemia and Berger's disease has shown positive results to date. The responses observed in the subjects who have reached an endpoint in this study are consistent with our expectations of therapeutic effect and safety based on previously published clinical trial data generated in Japan and the United States. However, as discussed in prior quarters, enrollment in the study was suspended due to the impact of the global COVID-19 pandemic on recruitment, especially in Japan, to minimize the operational and financial burden that we have incurred due to enrollment delays and lack of visibility on time to completion. Data from the follow-up of all patients completed in this registration eligible clinical trial in Japan have been compiled and will be reviewed by the PMDA later this quarter. We are conducting an ongoing dialogue with the PMDA as to what needs to be considered in preparation for the formal consultation meetings which precede the Japanese new drug application. Simultaneously, the company is focusing its efforts on securing a Japanese partner to complete the remaining steps to produce registration in Japan. Turning now to Exona or CLBS16 for the treatment of coronary microvascular dysfunction or CMD. Coronary microvascular dysfunction is a disease that continues to be underdiagnosed and potentially afflicts millions annually. a vast majority of whom are female, with no current treatment options. In May of 2020, Caladrius announced the full data results from a Phase IIa ESCAPE-CMD trial, showing a highly statistically significant improvement in coronary flow reserve, correlating with symptom relief for patients with CMD after a single intracoronary injection of Exona. Subsequently, the company initiated a rigorous Phase IIb clinical trial known as the FREEDOM trial, which to our knowledge is the first controlled regenerative medicine trial in CMD in the United States. The FREEDOM trial is a double-blind, randomized, placebo-controlled trial designed to corroborate the results of the ESCAPE CMD trial while assessing the efficacy and safety of delivering autologous CD34 cells, our exona product, to subjects with CMD and without obstructive coronary artery disease. As previously communicated, enrollment in the Freedom Trial initially proceeded as planned with the first patient treated in January of 2021. However, the impact of the COVID-19 pandemic in the U.S. on patient and site availability, coupled with issues affecting all stages of the supply chain associated with patient qualification, product preparation and product administration, made enrollment much slower than originally predicted and challenging to accelerate. Despite multiple protocol amendments to address these obstacles, along with an increased number of sites in the study, the FREEDOM trial only had enrolled approximately one-third of the targeted 105 patients by May of this year. And at this rate, more than four years would likely have been required to reach the primary endpoint follow-up at six months post-treatment for all subjects. As a result, the company suspended further enrollment activities at that time and is in the process of conducting an interim analysis of the data to determine the next steps for the program, which may require a discussion with and guidance from the FDA. The company expects to have a decision on next steps for the program by the end of 2022. Lastly, our most recently proposed development program, CLBS-201 for the treatment of diabetic kidney disease, or DKD. The company initiated a Phase 1B open-label proof-of-concept trial evaluating CLBS-201, a CD34-positive regenerative cell therapy investigational product for intrarenal artery administration in patients with diabetic kidney disease. This development program focuses on patients that exhibit rapidly-progressing stage 3b4 disease. The scientific rationale for the program is based on the association of progressive kidney disease with attrition of the microcirculation of the kidney. Preclinical studies in kidney disease and injury models have demonstrated that protection or replenishment of the microcirculation results in improved kidney function. Our proof of concept protocol provided for a staggered sequentially-dosed cohort of six patients overseen by an independent data safety monitoring board with the objective of determining the tolerance of intrarenal cell therapy injection in diabetic kidney disease patients, as well as the ability of CLBS-201 to regenerate kidney function. A key readout of data will occur at the six-month follow-up visit for all patients. The first patient treated in this study of CLBS201 was in April of 2022, followed by completion of enrollment of all six subjects in July of 2022, as recently announced. We continue to anticipate top-line data from all subjects by the first quarter of 2023. With that, I will now turn the call back to Dr. Mazzo. Dave?

Thanks, Kristen. While we continue to make progress on our current Colladrius programs, a tremendous amount of work already has been conducted under our collaboration agreement with SEND. Over the next month or so, we will be working diligently with SEND and with you, our shareholders, to finalize the merger transaction and look forward to announcing the closing by our target of the end of September of this year. As I hope you appreciate, we are tremendously excited about and motivated by the prospects that this merger will bring for patients, our employees, and our shareholders. We look forward to providing additional updates in the coming weeks and months. And with that, operator, we're ready to take questions.

As a reminder, to ask a question, please press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. Each listener will be permitted to ask one question at a time and will return to the queue for any additional questions. Please stand by while we compile the Q&A roster. The first question comes from Kumar Raja with Brookline Capital. Your line is now open.

Thanks for taking my questions. So first, with regard to the ASCEND trial, what are the expectations in terms of how soon these 40 sites can come on board? And also, when do you think potentially enrollment could be completed in that trial? And in terms of the merger process, what remains to be done so that it can be consummated? Thank you.

Thanks Kumar, appreciate your questions and hope you're enjoying your summer. I'll take them in reverse order. So first, as far as the merger goes, things are working very well down the checklist of activities that are required to consummate the legal transaction. What remains now is the final vote by shareholders of both companies and then the final legal transaction document signing that'll occur once the shareholders approve the transaction. We collectively have filed the new proxy, the S4, and a mailing of that document has gone out to all the Colladrius shareholders. And beginning next week, we expect that shareholders will have the opportunity to begin to vote either online, by telephone, or through the normal mail. And we hope that we will accumulate sufficient number of votes such that the Voting will be completed, and we will announce an approval of all the resolutions at the currently scheduled special shareholder meeting for September 13th. And then within 24 to 48 hours after that, assuming everything's approved, the legal documents will be completed, and we will be then officially Lesada Therapeutics trading under the ticker symbol LSTA on the NASDAQ. Now going back to the ASCEND trial, the Phase IIb trial, this is a trial that's being run by the AGIGT, I'm sorry, ITG in Australia. They just began enrolling patients just a month or so ago, and the expectation is that it will take probably a couple years to complete enrollment. I don't have the specifics yet of when all 40 sites will be online, but we will expect to do our next conference call as Lasada Therapeutics, and at that point in time, not only will we have additional information and all the specifics about the SEND-1 programs, but we'll likely invite the CEO of SEND, who will be the president and CBO of Lasada, to the call, and he'll be able to speak to some of these things as well.

Thank you for your question. Finally, as a follow-up question, You alluded about the pharmaceutical collaboration. Anything additional you can share about it? Thank you.

The only thing I can say is if everything goes well, watch the news wires for next week. That's all I can tell you.

All right, great. Thanks so much. Thank you.

Please stand by for the next question. Our next question comes from Pete Enderlin with MEC Partners. Your line is now open.

Thank you. Good afternoon. On Exona, your commentary was that you expect a decision on the next steps by the end of this year. And my simple question is, whose decision are we talking about? I know it's sort of a collaborative process, but are you saying the FDA makes a decision, you make a decision, and then go to them? whose are we really talking about as the initial decision maker in that situation?

Hey, Pete, thanks for your question. In these kinds of situations, the FDA, the only types of decisions that FDA takes would be decisions related to safety and putting a company on clinical hold. Otherwise, it's up to the sponsor to take decisions about treating patients, conducting their trials, and spending their money. The decision to which I refer is a decision That will be a collaterous decision, or if it occurs post-merger, it will be a LASADA decision, and it will be based upon an analysis of the data from the interim data analysis that's ongoing, as well as any discussions that may be considered appropriate with the FDA. And so that's why we say, you know, we've given ourselves time to have those discussions with the agency should we need them, And that's why we projected having the answer by the end of the year. But it could come much sooner than that.

Okay, thanks. And there was a comment about some revenues from the collaborative agreement with SEND. I mean, I know you gave them $10 million, but what are we getting back? It must be fairly small because it was a factor in the reduction of R&D. But can you be a little more specific about that?

I will, and this is really, you know, my apologies to James, our Vice President of Treasurer, and to the Grant Thornton team, our auditors, but this is a bit of an accounting game, if you will. As part of the collaboration agreement, we have allocated resources from Colladrius to help work on the SEND programs. And until we are a single company, we are accumulating a set of charges for the time spent by Colladrius employees working on the SEND program at some sort of flat rate. So for the time being, those are being booked as a payable by SEND and a receivable by Colladrius, but also as part of the collaboration agreement. As soon as the merger goes together and we combine the books from both companies, they cancel each other out. So it's really not something that anybody should spend any time on.

Okay, thanks. And then, you know, the trial in Australia and New Zealand, is that because SEND had a historical relationship or is there some other specific reason to pick those particular venues?

Well, there are a couple of reasons why that venue was chosen, but this is a program that was initiated by SEND Therapeutics. And it's based upon existing relationships that they had in Australia, but also with a particular lead investigator who was able to procure additional funding to help support the further development in that geographic area. So that's why it's being done in Australia and New Zealand.

Are there differences in how to work with the The regulatory agencies over there, are they easier to work with or similar or are there any other significant differences?

The Australian regulatory authorities have standards and practices that are similar to the FDA and the other Western European regulatory authorities. I think the main reason why people choose to work in that venue, besides it being an interesting market for a product once it's ultimately approved, is that they, the Australian government, offers an R&D credit for work done in Australia that makes things financially attractive to do research there. And for some indications, they have a higher prevalence of disease, which makes recruitment a little bit easier as well.

Okay, thanks. I'll get on the queue, maybe one more. Thanks.

Thanks, Pete.

As a reminder, to ask a question, please press star 11 on your telephone.

This concludes the question and answer session.

I will now turn the call back to Dr. Mazzo for closing remarks.

Again, thank you all for participating in today's call. We look forward to speaking with you again during our next quarterly conference call, which we expect will be conducted under the banner of La Sada Therapeutics, and to continuing to provide updates on our achievements and progress. We remain grateful for your continued interest and support. Stay well, have a good evening, and enjoy the rest of your summer.

This concludes today's conference call. Thank you for participating. You may now disconnect.