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spk00: Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. THE END Oh, my God. Oh, my God. THE END Good morning, ladies and gentlemen, and welcome to the Diametica Therapeutics first quarter 2021 conference call. An audio recording of the webcast will be available shortly after the call today on Diametica's website at www.diametica.com in the investor relations section. Before the company proceeds with its remarks, please note that the company will be making forward-looking statements on today's call. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. More information, including factors that could cause actual results to differ from projected results, appears in the section entitled Cautionary note regarding forward-looking statements in the company's press release issued yesterday and under the heading Risk Factors in Diametica's most recent annual report on Form 10-K. Diametica's SEC filings are available at www.sec.gov and on its website at Please also note that any comments made on today's call speak only as of today, May 6, 2021, and may no longer be accurate at the time of any replay or transcript rereading. Diametica disclaims any duty to update its forward-looking statements. Following the prepared remarks, we will open the phone lines for questions. To ask a question, you need to press star 1 on your telephone. I would now like to introduce your host for today's call, Rick Pauls, Diomedica's President and Chief Executive Officer. Mr. Pauls, you may begin.
spk07: Thank you, Erica. Good morning, everyone, and thank you for joining us today. Welcome to our first quarter earnings and business update call. Yesterday, after the markets closed, we issued a press release summarizing our Q1 2021 financial results and providing a general update. At that time, we also filed our quarterly reports on Form 10-Q. Both documents can be found in the Investor Relations section of our website at diametica.com. I am joined this morning by our Chief Financial Officer, Scott Kellan, and our Chief Medical Officer, Dr. Harry Alcorn. Since our last call was just a month and a half ago, we'll provide a brief update today before taking your questions. Let's begin with our Acute Ischemic Stroke Program. We're pleased to be moving forward with a phase two slash three study of DM-109 in acute ischemic stroke patients. We submitted the IMD for the study on April 16th, a bit behind our end of March goal, but we used the additional time to ensure that we have the right study plan and the proper statistical analysis to support our proposed adaptive design. The IMD submission is not the pacing item for initiating this study, and we have confidence in our current timelines. The FDA 30-day review period concludes the end of next week. As of yesterday, we have not received any communication from the FDA other than that they're acknowledging receipts of the IND. Based upon the feedback we received from the FDA last December, we don't anticipate any significant additional questions on the study protocol. As proposed, this Phase 2-3 trial will be a double-blinded, placebo-controlled, randomized study of approximately 350 participants. based upon a 90% powering for statistical significance on the primary endpoints of the modified Rankin scale at day 90. Secondary endpoints will include stroke recurrence, MRS shift, NIHSS, and the Barthol index, along with deaths, safety, and tolerability measures and biomarkers related to KLK1. In addition to preparing for the Phase 2-3 study, We also expect to engage the FDA in the discussion regarding stroke reoccurrence as a clinically significant endpoint. Recall that in our Remedy Phase 2 study, we observed a statistically significant reduction in recurrent severe strokes. Specifically, we saw an 86% reduction in the overall study. One patient in the DM-109 group compared with seven in the control group, four of which were actually fatal. We believe this provides a strong signal of the potential for DM-19 to improve the physical recoveries for stroke victims and additionally reduce stroke recurrence and associated with the mechanism which we believe stabilizes the plaque. Recurrent strokes tend to be more costly, disabling, and also fatal. Anything that can be done to reduce the level of recurrence would greatly benefit patients and their healthcare system. We also intend to submit an application for fast track designation for DMA9 as part of initiating this discussion. Dr. Elkhorn led a comprehensive process to finalize the study protocol, bringing together a number of key opinion leaders, our scientific advisory board, as well as clinical and regulatory experts. We have engaged a contract research organization to provide us with the resources to identify, qualify, and engage up to 75 clinical sites. Concurrently, our team is focused on getting key operational procedures and services for the study. They are prioritizing time-sensitive needs to assure a timely, accurate, and efficient study in anticipation for initiating the trial this summer, subject to FDA authorization. Turning to our chronic kidney disease program and our REDUX trial, the key item that we've been waiting for is the preliminary top-line data from the diabetic kidney disease cohorts. The data is currently being compiled. We remain on track to provide this data readout during this quarter and look forward to sharing these results for you in the near term. Overall, enrollment in the REDUX study has reached 70 participants. This includes the full enrollment of the diabetic kidney disease cohorts, or 32 participants. The IgA nephropathy cohort has reached 70% completion, or 21 participants. and enrollment in the African American cohorts has reached approximately 60% or 17 participants. Enrollment in the IG nephropathy and the African American cohorts has continued at a slower pace, still being impacted with COVID. We also have two additional sites identified and qualified that will be activated very shortly. With the significant declines in new COVID cases and recent availability of vaccines, and these new study sites, we still anticipate completion of both of these cohorts in the second half of 2021. Now, I'll ask Scott Kellin to take us through the financial results for the first quarter.
spk10: Scott Kellin Thank you, Rick. Good morning, everyone. And as Rick mentioned, we announced the first quarter financials and filed a quarterly report on Form 10-Q yesterday afternoon. If you haven't had a chance to review these documents, they're both available on either the Diametica or the SEC websites. Our net loss for the first quarter of 2021 was $3.6 million, or 19 cents per share. This compares to a net loss of $2.4 million, or 19 cents per share, for the same period in the prior year. Our research and development expenses were $2.4 million for the three months ended March 31, 2021, an increase of $1 million from $1.4 million for the three months ended March 31, 2020. The increase was due to a number of factors, including year-over-year increases in costs incurred for the Redux Phase 2 CKD study and costs associated with an increase in staff levels, consulting services, and non-clinical testing required to support our preparation for the Remedy 2 Phase 2-3 Stroke Study. Now, these increases were partially offset by year-over-year decrease in costs incurred for the remedy phase two stroke study, which completed during 2020. Our general and administrative expenses were $1.2 million for the three months ended March 31, 2021, up slightly from $1.1 million for the prior year period. The increase in G&A expenses resulted primarily from increased director and officer liability insurance premiums, increased personnel, and non-cash share-based compensation costs. On the balance sheet, we finished the first quarter of 21 with cash, cash equivalents and marketable securities of $23.4 million. Current liabilities were $1.2 million and working capital was $23 million. This compares to $27.5 million in cash, cash equivalents and marketable securities, $2 million in current liabilities and $25.9 million in working capital as of the end of 2020. The decreases in combined cash resources and in working capital are due primarily to clinical study costs related to the Redux Phase 2 CKD study and costs associated with preparing for our Remedy 2 Phase 2-3 stroke study. Our current capital position should allow us to complete all three cohorts of the Redux Phase 2 clinical study, initiate the Phase 2-3 study in acute ischemic stroke,
spk00: and fund our planned operations through mid 2022 excuse me now let me turn the call back over to rick thank you scott we'd like to open the call for questions operator if you could please introduce the first analyst as a reminder to ask a question you will need to press star 1 on your telephone to withdraw your question press the pound or hash key Your first question comes from the line of Alex Nowak with Craig Hallam Capital.
spk09: Hey, everyone. Just wanted to touch base on the breakthrough of the Fast Track designation. So just to be clear, that has not been submitted. Have you had any communication with the FDA or HHS on that front? And then just current timelines or remind us the pathway there to hear back on whether or not you get that designation.
spk07: Sure. Good morning, Alex. Yeah, so after getting the green light to proceed with this study, our plan is to submit to the FDA for fast-track designation.
spk09: Okay, and that's a 60-day review, correct? Yep, that's right. Okay, that's great. You know, anything that it doesn't sound like you're too worried about in the IMDs or anything to really note that might be in the IND submission that's going to give some pause at the FDA, or would you expect a pretty vanilla review here?
spk07: Yeah, I think the short answer, we're very confident. But as you know, there's always a chance the FDA will come back with new questions or concerns. It was very helpful for us, the fact that we did get written feedback from the FDA in December, and we're following their guidance and comments. And, yes, we're optimistic that this will be – you know, the C-Diably positive. Okay, understood.
spk09: And then maybe could you set some guideposts on how to think about the kidney readout and BKD? The data that we have out there to compare is we got, obviously, your phase 1B that you've done, the Chinese kidney studies, and then there's other CKD drug under development. So what would you like to see from EGFR and a UACR standpoint to call out as success?
spk07: Yeah, so, you know, again, this is a, you know, three-month study. We have two different doses. And we're measuring this versus baseline. And so ideally, if we could see a decrease in the UHCR proteinuria while seeing a stable to increase in EGFR, we'd be very pleased.
spk09: OK, understood. And then just last question. The enrollment for DKD was completed in December, and just 90 days puts us into March. So what else is needed on your end to review and clean up the data for ultimately publishing it, and then The second question, I guess, to that is, would you expect a similar timeline to the other two cohort players this year? Because the press release mentioned completing the enrollment in the second half of 2021. Does that include a readout in the second half of 2021 or just finishing the enrollment?
spk01: Alex, as it relates to the Redox DKD cohort three, DKD, you are correct. Currently, the laboratory batches some of their assays, so even though the patients are complete, we have to wait for the results to come through. We're following a process to ensure the accuracy of the data, and we anticipate the data to be reported out early June for DKD. As it relates to the other two cohorts, one and two respectively, they will be reported out by the end of the year. That's great.
spk09: Appreciate the update. Thank you.
spk00: Your next question comes from the line of Edser Duro with Guggenheim Securities.
spk06: Great. Thanks for taking the questions. This is the first question for me. I guess, you know, have you done anything, you know, maybe anecdotal on patient disposition as they exit the cohorts for the DKD trial?
spk01: We don't like to look at the data individually. We want to make sure that we have a complete set to fully understand and analyze the data. And so at this point we're unable to answer that question until we see a final report.
spk06: Got it. And then I guess maybe, you know, maybe this may be a similar answer, but I guess in terms of sort of the, you know, the sense of sort of the number of patients in the trial that are on SGLT2 inhibitors. And I guess, you know, really asking not only for the data readout itself, but thinking about sort of, you know, the implications for phase three design as you would expect maybe more patients to sort of now be getting sort of SGLT2 inhibitors and sort of the DKB core, just your thoughts around that.
spk07: Yeah, so I think the first of the plan is we'll follow the data based upon the three cohorts. What we anticipate is the more likely pathway here is for IgA nephropathy. We think that is a very clear pathway in terms of a rare disease where the potential to have conditional approval after six months based on proteinuria, full approval two years in EGFR, And then longer term, we see the opportunity for the diabetic kidney disease. And the mechanism of action of DMY-9 is really improving vasculature versus the SGLT2s are about excreting glucose via the urine. So we think it's a different mechanism that ultimately could be complementary, but that's something that we'll have to look at more closely as we analyze our data.
spk06: Great, and thank you. Looking forward to all the updates in 2021.
spk07: Thank you, Etta.
spk00: Your next question comes from the line of Francis Brisey-Boyce with Oppenheimer.
spk02: Hey, thanks for taking the questions. Just a couple here. In terms of the stroke recurrence strategy, can you talk about a little bit the timing there of approaching the FDA And what could be the outcomes here? Would this be a secondary outcome, a co-primary outcome, a whole new study? Just any thoughts there. And then just to complete that answer, can you just explain a little bit more on the mechanism of action of stabilizing plaque and how that would make a lot of sense for a stroke occurrence?
spk07: Sure. So what our plan here is after we get the okay to proceed with the current study as proposed, we're currently looking at a number of different pathways. for stroke recurrence. This could be a sub-study within the Phase 2-3. We're also looking at the potential for co-primary endpoints, but not both required. and are also the possibility for a separate study. And so when we look at, you know, the phase two data, although, again, small study, we talked about earlier how for severe recurrent strokes we had, you know, seven on placebo, one on drug. When we look at ischemic recurrent strokes, we had six on placebo, zero on drug. And so if you look at the mechanism of action, and we went to a lot of detail on this in our recent KOL event, we do believe the potential for KOK1 and DMO9 to actually stabilize plaque, and we feel that this is something that could be applicable for both small vessel, medium vessel, and large vessel occlusions. And so this is something that's very important to us that we're looking at further. At a very minimum, though, the ability to reduce stroke recurrence should also be very important and part of the rationale and the data that we've seen with our protein and the data that's been reported with the urinary form in Asia today.
spk02: Okay, great. And then if I can sneak in a couple more here. Once the DKD data reads out, any read-through here? You talked about what you'd like to see on the EGFR side. Obviously, it's just three months here in protein area. But any read-through that we can think about for the IgA nephropathy data? And then on that data, what would be the importance of maybe seeing some important biomarkers on the IgG and IgA side?
spk07: Yeah, so the purpose of the study is looking at it as a basket approach. So we got, you know, three different cohorts and we wanted, you know, we feel overall that, you know, DMY-9 will improve, you know, kidney function across different causes of kidney disease, but we really would like to see are there differences amongst the cohorts. I think, as you mentioned, one of the aspects that I think I'm most excited about the IGA is the potential for it to be disease modifying. And part of that rationale is some of our preclinical work that we've conducted in a Type 1 animal model, and we did see a significant increase in Tregs and also halting the autoimmune attack. So if that's the case, we think that the potential for our drug to not just improve kidney function, but potentially to halt the autoimmune attack, I think could have a greater impact and a greater differentiator from other compounds that are in development today.
spk02: Okay, great. And then just last one here on the stroke study. in 2022, I guess. You've talked about an interim result here. Can you help us understand, is that still blinded? Is there, you know, what goes into that result that, you know, without necessarily seeing the efficacy that we can read through here on the interim one in 2022? Thank you.
spk07: Sure. So the plan is after approximately 40% of the patients have completed and followed up, we'll have the DSMB, we'll have an interim analysis. DiMedica will remain blinded. And there's really three potential outcomes. So one is to continue the study as planned. So if the data is coming in as anticipated, we've powered the study for a 15% absolute improvement in excellent outcomes. If the data is coming less than anticipated, call it between five and 10%, we would have the opportunity to increase the study size. And if there's no effect with the drug, a little effect, so if the outcome are less than four or five excellent outcomes, then we would terminate the study. So I think it should give us a good indication in terms of is the drug efficacy coming in as anticipated.
spk06: Thank you very much.
spk07: Thank you, Frank.
spk00: Your next question comes from the line of Thomas Flatton with the Lake Street Capital.
spk08: Good morning. Hey, Rick, I just want to follow up on a comment you made a couple of questions ago about the recurrence study. You mentioned an idea of going after co-primary endpoints. I just want to confirm co-primary in the sense that you have to hit both for study success, or did you mean two primary endpoints that are discrete?
spk07: So we would not want to have dual endpoints. They would be independent. So if we had hit significance on either, then it would be a success. So it's still early, but this is something that we are talking to some of the experts with our consultants and advisors, and we want to understand is this something that we should proceed with or not. At a very minimum, this would be an important secondary endpoint that could also be as part of a separate study.
spk08: And then just with the assumption of the IND clearance, where are you at in terms of activating or identifying the overall number of study sites? I think you mentioned 75. Have you identified all of those, or can you just give us a sense of where you are quantitatively or qualitatively, however you like?
spk07: Yeah, so we are planning up to 75 sites. We've already identified a number, a fair number of the sites already, both with Harry's network and also with our CRL. And so this has been something we've been started a while back, and we're just going through the process here right now and working on getting those sites up and running so that we can start the study this summer.
spk08: And then finally, on the other two cohorts in the kidney disease study, IGA and African Americans, is there anything you're seeing in terms of where these patients are coming from? I know it's been a slog since the turn of the year. Is there anything specific in where you're seeing these patients, or how did you determine where those new sites were going to be that you were going to bring online? I'm just curious if you can give us some color on that.
spk01: Sure. In the CKD space, these sites are primarily specializing either in DKD or in IGA or if they have a strong African-American hypertensive group. And so we want to look at their database respectively and do analysis that they actually have the patients that they can recruit and screen for our study before we would engage even qualifying the site beyond that. So we've been very specific about the demographics, where they're located, not only from the database perspective for the patients that they can actually screen and recruit, but also in the fact of COVID, are their clinics physically open 100%? What's their feeling of the patient population? Are they willing to come to the clinic? And making sure that we've addressed those other, I would say, social needs to ensure the accuracy of bringing the patients in to be screened.
spk08: Okay. And then, sorry, I just want to follow up on that. And I believe you said earlier that you would read out the other two cohorts by the end of the year. So by implication, you would have to have those last patients in by what, like, you know, July, August. Is that about right to give yourself the three months plus some time for database lock and readout and compilation, et cetera? Correct. Okay. Got it. Thanks. Appreciate you taking the question. Yep.
spk07: Thanks, Thomas.
spk00: Your next question comes from the line of Elmer Piros with Roth Capital Partners.
spk04: Good morning, gentlemen. I just have one question related to DM-199. How many doses of the drug you have available on hand for the study? And what is the shelf life of the M199, please?
spk01: So the amount of drug that we have on hand is double what is currently required for the study today. So we have ample amount of drug on hand. Obviously, the expiration dating is on a rolling basis. And right now, our expiration date goes out an additional two years.
spk07: So no concern from our end in terms of having to complete another manufacturing run while we run these studies. Okay.
spk04: Thank you very much.
spk00: Your next question comes from the line of Jason McCarthy with Maxim Groups.
spk05: Hey, everyone. Thanks for taking my question. So I'm assuming everything goes to plan with respect to I&D approval for the Phase 2-3 stroke study. When can we expect an initial data readout? And then my second question is, do you expect to utilize clinical trial sites outside the U.S. and potentially work with XUS regulators?
spk07: Yeah, thank you, Jason. So we're planning 75 sites. We're currently working with our CRO and the sites in terms of estimating recruitment rates. Based upon recruitment rate of one patient every three months per site, we'd be looking at interim results in next year in 2022, and then to complete the study in 2023. The 75 sites are all going to be in the US. And as we get this up and running, we're also looking at expanding this into the EU.
spk05: Great. Thanks for the additional call. I appreciate it. Thank you, Jason.
spk00: And there are no further questions at this time. At this time, I'll turn the call back over to the speakers for any closing remarks.
spk07: All right. Again, we'd like to thank everyone for joining us this morning. We appreciate your interest and your continued support. Please stay safe in these challenging times, and this concludes our call today. Thank you.
spk00: Thank you for participating. You may disconnect at this time.
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