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spk02: Good morning, ladies and gentlemen, and welcome to the DELCAS First Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, David Hoffman, DELCAS General Counsel. Sir, the floor is yours.
spk05: Thank you. And once again, welcome to DELCAS Systems First Quarter 2022 Earnings Call. With me on the call are Gerard Michel, Chief Executive Officer, Dr. Johnny John, Senior Vice President of Medical Affairs and Clinical Development, Kevin Muir, Vice President of Commercial Operations, John Papora, Chief Operating Officer, and Anthony Diaz, Vice President of Finance. I'd like to begin the call by reading the Safe Harbor Statement. This statement is made pursuant to the Safe Harbor for Forward Looking Statement described in the Private Securities Litigation Reform Act of 1995. All statements made on this call, with the exception of historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurance that such expectations will prove to have been correct. Actual results may differ materially from those expressed or implied in forward-looking statements due to various risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statement, please see risk factors detailed in the company's annual report on Form 10-K, those contained in subsequently filed quarterly reports on Form 10-Q, as well as in other reports that the company files from time to time with the Securities and Exchange Commission. Any forward-looking statements included in this earnings call are made only as of the date of this call. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent knowledge, events, or circumstances. Now, I would like to turn the call over to Gerard Michel. Gerard, please proceed.
spk03: Thank you, everyone, for joining today. Del Cap has had a very productive first quarter of 2022 and year-to-date for both HEMSATO the company's product development candidate in the United States, and Chemosat, the company's marketed product in Europe. In the U.S.
spk02: Your conference will be recorded after the tone.
spk03: In the U.S., we are moving forward towards a resubmission of a new drug application for Hepsado. We have completed a pre-NDA meeting with FDA, and based on that interaction, we see no barriers to a resubmission of Hepsado's NDA, which we now plan to file in the third quarter. In addition, An update on the Phase III focused trial results were accepted for a poster presentation at the American Society of Clinical Oncology, or ASCOs, annual meeting in June. Regarding chemosat, single-center safety and efficacy data from the University Hospital Southampton in England was published in the Journal of Melanoma Research, and data from patients treated at the Hanover Medical School were presented at the European Conference on Interventional Oncology, or ECIO. In addition, we achieved medical device regulation certification under our CE mark, and most notably, we resumed direct responsibility for sales, marketing, and distribution activities of ChemoSaf in all of Europe. Starting with Hepsado in the U.S., after the first quarter ended, we completed a pre-NDA meeting regarding Hepsado's NDA resubmission without any meaningful new issues arising and gaining additional clarity of FDA's expectations regarding certain analyses. while we wait for the final official meeting minutes from FDA. We do not believe any additional preclinical or clinical studies will be required in order to file the NDA. Whether the FDA will convene an advisory committee is an open question. As a company, we are planning for one and would look forward to the opportunity to highlight HPSADA's efficacy and safety. We expect to file HPSADA's class two resubmission of the NDA to FDA in the third quarter. Our previous mid-year guidance regarding the timing of the NDA resubmission has shifted slightly due to a single vendor facing unforeseen delays in completing work. Notably, all clinical data is in hand, modern and complete, and only a few queries are currently outstanding. While we commercially manufacture products for the European market, we have undergone a third-party FDA mock audit and a review of the company's manufacturing processes. Based on the results of the review and our continued work, we believe our manufacturing system will be ready for FDA's pre-approval inspections. Over the course of the year at various conferences, we will look to share additional data analyses from the FOCUS trial that we believe further supports clinical efficacy and safety. Consistent with that, yesterday we announced the acceptance of a poster presentation at the upcoming ASCO 2022 annual meeting. The poster, to be presented on June 6th by Dr. Jonathan Zager, globally investigated FOCUS study, will provide an updated results from the FOCUS III trial. Updated efficacy parameters will include the time-based endpoints of overall survival and duration of response, which continue to mature. Turning to commercialization of Hepsado, octogen melanoma is a niche, high-value market for us with attractive attributes, including a focused set of treating physicians and a significant unmet need. A key goal is to have 10 expanded access sites open by the time of the expected launch and to ensure that the mix of sites are appropriately located to enable reasonable access regardless of a patient's location. By doing so, we will have an established base of treating physicians with an existing patient population. At the moment, two sites will be in a position to start accepting patients by the end of this month, with another three having agreed to participate. Multiple other sites have expressed some level of interest in participating, and we are hopeful we can achieve 10 EAP sites prior to launch. We are actively developing key documentation to support reimbursement, such as a value dossier, as well as holding advisory boards and treating physicians to better understand the patient journey. We have initiated recruiting for key positions required for commercialization, such as training, and have engaged the hub service to assist sites with reimbursement for standard of care expenses associated with the EAP. Turning to chemosat in Europe, we continue to see a steady stream of single center publications and presentations reporting on the use of chemosat in Europe. In February, we were pleased to see results from University Hospital Southampton's retrospective study published in the Journal of Melanoma Research. As we previously reported, the study evaluated the safety and efficacy of 250 chemoSAT treatments in 81 patients with liver-dominant metastatic uveal melanoma between 2012 and 2020. The authors concluded that chemoSAT provided excellent response rates and progression-free survival compared with other available treatments, and noted that combination therapy of chemo set with systemic agents may be viable to further advance overall survival. The study's results are consistent with numerous other publications out of Europe and add to the growing body of published research documenting the efficacy and safety of our chemo set system in the European commercial setting. We expect that investigators from the Leiden University Medical Center in the Netherlands will present updated data from the Chopin Investigator Initiative trial at ASCO. Dr. Recall that at the 2021 party of us when eventual radiological Society of Europe for surgery conference. They presented an abstract included data from seven patients. Dr. Treated during the first phase of the trial, which invest is investigating the combination of chemo set with if you live at a needle to map the truth in patients with metastatic their melanoma. The trial had completed dose escalation phase, and the observed responses in the seven patients were complete response in one patient and partial response in four patients for an overall response rate of 71.4%. After a median follow-up of eight months, at that time, the median duration of response was eight months. No DEMPs and no dose-limited toxicities occurred. Given the 10 months since the last report, we eagerly await updated efficacy data both response rates and duration of response from this first trial investigating combination immunotherapy with ChemoSat. In February, we received medical device regulation, or MDR, certification for ChemoSat MIRA. Achieving MDR certification entails a detailed evaluation for a designated EU-notified body, including an audit of quality systems and a review of documentation supporting safety and performance claims for the device. NDR greatly expands upon existing NDD requirements, including the level of clinical evidence supporting claims, post-marketing surveillance, database traceability, unique device identification, and increased supply chain oversight. Under NDR, ChemoSET's designation has been changed from a Class 2B to a Class 3 medical device. We believe the NDR certification demonstrates our manufacturing team's ability to adapt the company's quality systems and processes as required by differing regulatory standards. DELCAP resumes direct responsibilities for sales, marketing, and distribution activities of Chemosat in all of Europe on March 1. We currently have four customer-facing employees in sales, marketing, and medical affairs, working with healthcare providers in the UK, Germany, and Netherlands, and anticipate hiring several more this year to further support healthcare providers and patients in those markets, as well as expand use throughout Europe. Importantly, we anticipate our first submission for national coverage will occur by the end of the year in the United Kingdom. Given the multi-year process to obtain national coverage approval and then to be incorporated in the NHS budget, we have also initiated efforts to obtain regional reimbursements in the UK in the interim. While it will likely take several years to obtain national coverage in most major markets, we are confident that Europe will become a meaningful revenue contributor to the business with the EU revenue is likely growing with our U.S. commercial launch next year. Finally, we continue to plan on expanding the PHP platform into other indications. We are in the midst of a series of planned advisory boards to review proposed protocols for both ICC and CRC, after which we will start formal discussions with sites to repair any required regulatory submissions. We will likely initiate ICC trials first, and then follow with one or more CRC trials. ICC is more than two times the market size of metastatic osteomelanoma and has some similarities in that many of these patients are treated at specialist centers, and there's a high unmet need, especially for patients who fail first-line therapy. Importantly, we have seen encouraging efficacy signals in ICC at a number of centers in the EU, and there is strong investigator interest. Given our first priority remains submitting the NDA and launching in the U.S., DELPCAS is primarily focused on those regulatory and commercial goals. However, these additional indications for development are still a core part of our strategy, and our efforts will continue in parallel. We continue to build our management team as we transition to a company with both a full development pipeline and commercial operations in Europe and the US. In January, we announced David Hoffman as General Counsel, Corporate Secretary, and Chief Compliance Officer. He brings over 20 years of industry experience and has considerable expertise in pharmaceutical law and regulation, business development, commercial business transactions, and compliance. In February, we announced Anthony Diaz as our new vice president of finance. Tony also brings over 20 years of industry experience and will oversee all financial aspects of the company, including financial planning, reporting, accounting, and control. Both hires strengthen our management team at an important time as we approach commercialization in the U.S. In summary, during and since the first quarter, we've taken significant steps towards commercial readiness in the U.S. and increased our activities in Europe. We have brought in key personnel and continue to be supported by a growing body of data. I look forward to taking questions, but first we'll turn the call over to Tony to review the financials. Tony? Thank you, Gerard.
spk06: Product revenues for the three months ended March 31st, 2022 was approximately $207,000 compared to $261,000 from the prior year quarter from sales of Chemostat in Europe as we resumed direct sales during March 2022. Other income for the quarter was $171,000 compared to $127,000 in the prior year quarter. Research and development expenses for the quarter increased to $4.2 million compared to $3.7 million in the prior year quarter, primarily due to high professional service costs relating to our pre-NDA meeting with the FDA and preparation for NDA submission in the third quarter of 2022. Selling, general, and administrative expenses for the quarter were approximately $3.6 million compared to $3.3 million in the prior year quarter. The increase was due to pre-launch costs relating to the commercialization at Posado. Other expenses increased from $660,000 to $20,000 due to the increase in interest expense amortization related to our debt financing. On March 31, 2022, The company had cash, cash equivalents, and restricted cash totaling $20.5 million as compared to cash, cash equivalents, and restricted cash totaling $27 million on December 31st, 2021. During the three months ended, March 31st, 2022 and March 31st, 2021, we used $6.4 million and $4.6 million respectively of cash in operating activities. That concludes my financial remarks. I'd like to ask the operator to open the phone lines for Q&A. Can you please check for questions?
spk02: Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold while we poll for questions. Thank you. Your first question is coming from Marie Diavo from BTIG. Marie, over to you.
spk04: Good morning. Thank you for taking the questions. I wanted to start here with what you learned from the pre-MDA meetings with the FDA, as well as any more detail you can give us on that one vendor who had those unforeseen delays. Maybe any detail you could give along what those delays are and how they led to the slight change in the timeline.
spk03: Sure, Marie. So as you well know, pre-NDA meetings, usually there's not a lot of upside and there's potential for some downside out of those. In this particular case, there was some modest upside in that in discussions with the FDA, they did tell us that they would prefer us to use actually our treated population as the primary efficacy analysis, not the IPT. And as you may recall, the efficacy parameters were a bit higher in the treated as would be expected. In terms of any downside, there really was none. We got some clarification from the FDA in terms of how they wanted to look at some of the data. As an example, you know, was there a question as to whether or not they'd want us to pool our safety data for purposes of a great summary of safety. And they agreed that the data and that the devices were distinct enough from the prior pivotal trial that there'd be no need to do that. So that was excellent. It told us that they kind of had the same mindset as we did in that this was, you know, a step change in terms of the safety of the product, and it made no sense to pull the two. So I think that was a very strong positive signal. But overall, I mean, it was a very positive meeting. There are always some clarifications on how they want to see some of the data, but, you know, nothing dramatic one way or another. So, we were very, very happy with how the meeting went. Now, we get to see the official meeting minutes. We don't expect there'll be anything in there that would surprise us, but we still have to get those in hand. Now, in terms of the delay in the vendor, we have kind of a unique product in that a lot of our components that we utilize are, you know, off-the-shelf components that we package together. not all of which do we have quality supply agreements with the vendors because, frankly, we're such a small player. For them to do that, it's not worth their time. And that means we have to redo a number of what I'll call quality tests, whether it's stability, leachable, distractible, the whole host of things such as that, kind of to revalidate these off-the-shelf components. We had most of these things done. We had one vendor that had slipped considerably by a matter of quarters, as a matter of fact. in terms of getting at this data. There was another slippage recently. I'll just say it, that really what has happened is that the, really what has happened is we've kind of come down hard in the vendor, to be honest, and we've gotten a firm commitment that we'll have the data in hand any day now, as a matter of fact. We've seen the draft data, but it's going through QC. But once we have that data, it does take several months to kind of do the analysis of the data, write it up, and get it into the NDA, and that really is the primary dating item.
spk04: Okay, very good. And then I guess I'll ask on the EAP, expecting to have two sites accepting patients by end of month, three more coming online pretty soon. What's needed to get those centers across the finish line here, and what will they be doing in the early days of that EAP? Thanks again.
spk03: Yeah, the thing we're facing with the EAP that I think a lot of other probably companies are facing is really, frankly, that the nursing shortage is impacting the ability to supply clinical coordinators in the hospitals for clinical trials. EAPs are not always the easiest thing to entice people to hospitals or investigators to join. They're considered not the sexiest thing, let me put it that way, in terms of terms of trials um i'm thrilled that we'll probably i'm pretty sure we have you know we have two that either have been trained or have one little piece of training to be done so they can start enrolling patients three others have committed um there are quite a few more than five others have talked to us and are kind of circling the basket we just need to see if we can get five more over the finish line but it really is having them be able to allocate the resources can they find the resources to do it and i think this is an issue-wide problem i'm pushing the team very hard to get to 10. I'm not moving that goal right now internally. I think we can get there, but it really has mostly to do with the sites having adequate resources to put on trials right now.
spk04: Okay, that's well understood. Thanks a lot, Gerard.
spk02: Thank you. Your next question is coming from Scott Henry of Roth Capital. Scott, please ask your question.
spk07: Thank you and good morning. Just a couple questions. I guess first, with regards to the survival data, has that data fully matured or is that still going to be coming in through this process?
spk03: That data will mature over the next year. So in terms of duration of response and overall survival, that will continue to recur over the next year. There'll be an updated ASCO and probably, you know, one or two more updates until the final maturity occurs. In our protocol, we said we would follow those patients for two years post the last treatment, and that last treatment was May of last year. But OS is not the primary exploratory endpoint of the trial. There's no need to wait for that data to mature to submit the NDA.
spk07: Okay, great. Thank you for that, caller. And then on the income statement, a couple questions. R&D, should we expect that to start to decline, or should it maybe stay up at this level for another quarter or two? And then I guess very small numbers, but the COGS going down, is that a function of the new sales model in Europe? Just trying to get my arms around that.
spk03: Yeah, in terms of R&D, I think we'll have another quarter probably of a high level as we continue to pay the typical army of consultants that gets involved when you're pulling an NDA together. And then that should drop for a period before we start wrapping up with the new indications. But there'll be a pause of a couple months in terms of that higher level. In terms of the COGS, I will turn to Tony to see if he can answer that question. They are indeed small numbers.
spk06: Yeah, it is a small number this quarter as we only started going direct in March. But the COGS is reflective of some of the direct sales, as a result of some of the direct sales we did in the month of March.
spk03: Yeah, and there was also a modest drop. in the units sold. I think our past partner probably sold in a little bit into some sites, which led to a modest drop in the units sold. So that probably had an impact as well.
spk07: Okay, great. And, Gerard, perhaps a bigger picture question. Do you kind of slow things down a little bit on future indications given the current market environment and biotechnology? How do you adjust kind of your compass given the backdrop we have currently? I'm just curious if you do at all and your thoughts on that. And also another balance sheet question, that restricted cash, is that usable or what are the restrictions there? Thank you.
spk03: Sure. In terms of how do we adjust the dials given the current market situation, there isn't a lot we can do in terms – there isn't a lot we're spending at the moment on those new indications. It's primarily advisory boards, and we have already slowed that down. We started doing that probably three months ago instead of really pushing hard. But what we're trying to do is the low-cost things, in the interim, which is advisory boards to get interest with investigators, make sure we have the protocol fine-tuned. You know, we have definitely slowed down the expansion of hiring that we otherwise would have done to support some of that. So that's, you know, a key component in terms of, you know, trying to manage the balance sheet. In terms of restricted cash, there is a target amount of money to raise that would release it. and that would be raising another $16 million in equity financing. We would release the restricted cash. We can always, of course, have conversations with Avenue if the need arose to do that sooner. They are a very constructive partner. So those are the two avenues we would have to release that cash.
spk07: Okay, great. Thank you for taking the questions.
spk03: Thank you.
spk02: Okay, your next question is coming from Soyampa Kula Ramakant of HC Wainwright. Over to you.
spk01: Thank you, Dara. Good morning, Dara. Quite a few of my questions have been asked. But just thinking of ChemoSat and Europe, now that you've taken over the responsibility of commercializing in Europe, how is that working out, you know, and...
spk03: anything we can get color on in terms of the progress so far and what needs to get done so that it goes smoothly from here onwards sure so for the last several years we've been you know haven't had a lot of visibility into um kind of the commercial dynamics in the markets in europe uh when we handed it over so right now we are um reintroducing ourselves to a lot of the um clinicians, some of which we kept tabs on because we were doing clinical development in Europe, but right now it really is, for example, in Germany, trying to better understand the lay of the land. But the near-term priorities in those markets, the markets we currently exist in, is the following. In the UK, we try to increase referral patterns to the existing sites. I think we have enough sites in the country, so we're trying to increased referral patterns uh whether or not it's from ireland which has an agreement with nhs or whether or not it's within the uk itself find those patients who are being surveilled and then refer them to the treating center um the second thing um in the uk is to get a submission together uh for national coverage um our goal is to get that in this year um but it's a good year and a half process between you and then getting budgeted in the in the in the uh in the NHS budget. So there's also regional funding. So we've hired a consultant to help trying to get regional funding in parallel. Again, we couldn't do this before we had the rights back. So we're looking for regional funding, which we think might give us some additional revenue beyond the patients who are paying out of pocket right now. In Germany, we'll likely want to open another site somewhere in Germany. But also importantly, it is again, once again, trying to get referrals to hospitals and working more closely with the hospitals from a budgeting perspective, because those hospitals do have the ability to get reimbursed via something called a ZEDI scheme, but they have to do it every year. They have to request the funds. Now that we have rights back, it'll be a lot easier to work directly with those hospitals and assist them in terms of making those requests, giving them the data they need. And again, as I mentioned before, another important factor there will be trying to increase the referrals to the treating centers, which is really key to generating revenue here. That's something that really wasn't occurring in the past. The Netherlands, we're going to work towards doing a submission in terms of a reimbursement there as well, national reimbursement. We're going to try to get started in Austria and Switzerland, primarily because it's a lot easier to get started. We have German speaking, we're hiring some German speaking personnel in Germany and it's easier to cover, you know, Austria and Switzerland with those personnel. And then longer term, we're going to look towards expanding to Italy and other markets in Europe. So that's kind of the near term, you know, 18-month plan I just outlined in terms of Germany, the UK, the Netherlands, expanding totally into the DAC region and trying to get those humming and then looking towards other regions in Europe.
spk02: Well, if there are any final questions or comments, please indicate so now by pressing star one on your phone. Okay, there appears to be no more questions. I will now hand back over to Gerard for any closing remarks.
spk03: Okay, well, I want to thank you all again for your interest and support. We look forward to giving future updates as the year progresses. Have a great day, everyone.
spk02: Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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