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spk03: Good day and welcome to the Presagen third quarter 2022 financial results conference call. Today, all participants will be in a listen only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. If you would like to withdraw your question, please press star then two. Please note that today's event is being recorded. I would now like to turn the conference over to Steve Harrison, Vice President of Investor Relations. Please go ahead.
spk01: Thank you, Operator, and thank you for joining us today. With me are Dr. Helen Sabzavari, President and CEO, and Harry Tomasian, CFO of Precision. Helen will provide an update on the significant progress we have made across our pipeline programs and highlight our anticipated upcoming milestones, after which Harry will review our third quarter 2022 financial results. Following our prepared remarks, we will open the call to Q&A. Before we begin, please note that during today's call, we will make various forward-looking statements. Investors are cautioned that such forward-looking statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ from those indicated by our forward-looking statements. Please read the Safe Harbor Statement in the press release, as well as risk factors contained in Presagen's most recent SEC filings, for a more complete discussion of these risks and uncertainties. I will now turn the call to Dr. Salisbury. Helen?
spk02: Thanks, Steve, and thank you for joining us today. I'm pleased to report to you today that Precision made significant progress during the third quarter of 2022 by focusing on the assets in our portfolio, offering the greatest potential for increasing shareholder value in the most efficient way possible. Focus is our mantra here at Precision, and our strategy is straightforward. First, we focus on markets with ultra-high unmet needs. The indications we are pursuing offer the potential for an accelerated regulatory and developmental pathway. Second, we continue focusing our research, development, and manufacturing operations by making early decisions to pursue therapies with higher probabilities of success. The ability to create consistent manufacturing at multiple sites also figures into our decision-making as we seek to decrease product costs and provide therapeutic access to a broader patient population. We need to move away from traditional concepts of centralized manufacturing, especially when we are dealing with patient populations suffering from diseases where earlier treatment makes a big difference. Finally, we are focused on advancing therapies that are not only differentiated in their utility, but also potentially in their pricing as we change the paradigm in manufacturing and development. I will talk about how our ultra-parader technology is proving to be a game changer when it comes to enabling overnight local manufacturing and distribution. We believe that we are entering a new era of value-based care and want to be ready with products that meet the future requirements of our healthcare system. Another area of focus is fiscal discipline. Thanks to our efforts, we have reduced the cost of SG&A and are now allocating further resources toward our clinical and commercialization efforts. I will now update you on our clinical programs. First, our adenoverse immunotherapy platform. For PRGN 2012 in recurrent respiratory papillomas or RRP, a devastating orphan disease with a severe unmet medical need as reoccurring surgeries remain the only option for these patients. The burden on these patients is immense. with many requiring hundreds of lifetime surgeries at a very high cost. Furthermore, recurring surgeries only temporarily treat the symptoms of RRP and do not lead to remission. These surgeries can actually worsen the condition of RRP over time, as it can increase the spread of the virus, leading to comorbidities, including significant breathing problems and loss of vocal function. There is an urgent need for a therapeutic treatment option such as a PRGN 2012. PRGN 2012 has been orphaned drug designation for the patients with RRP. We are extremely pleased with the rapid progress of this clinical program. To recap, We dosed the first patient on the phase one study in March 2021 during the highest heights of the COVID-19 pandemic. Enrollment and dosing are complete in the phase one dose escalation and dose expansion cohorts with 15 patients treated and 12-month follow-up is near completion. PRGN 2012 has demonstrated an excellent safety profile with all subjects receiving full treatment course with four PRGN 2012 administrations. There have been no dose-limiting toxicities and no treatment-related adverse events greater than Grade 2. We are looking forward to presenting what we believe will be highly compelling safety and efficacy data from the dose escalation and expansion cohorts of PRG in 2012 at the virtual R&D event in early January 2023, which is time to coincide with the 41st annual J.P. Morgan Healthcare Conference. We believe there is a significant market opportunity for this drug in RRP. Our estimate of the US, EU adult and juvenile patient population is approaching 30,000 cases. We feel there are substantial case numbers outside of the US and EU that could bring the global population to over 75,000. We also believe that due to limited disease awareness, reported numbers could understate the true prevalence of this disease. This could present a market opportunity for the US and EU alone of over $1 billion. These are our preliminary estimates, and we plan to provide further details on the patient population burden of the disease on patients, and market opportunities during the data presentation. Dr. Clint Allen, senior investigator at NIH and a lead associate investigator for PRGN 2012 clinical trial, will lead the presentation. At the same time, I'm pleased to report that enrollment in the Phase II study is progressing rapidly with 16 patients enrolled to date. Given the high unmet medical need for this patient population, we have been in ongoing discussions to evaluate the various regulatory paths with FDA. Now for an update on PRGN 2009, our adenovirus immunotherapy in HPV-associated cancers. We completed enrollment in the phase one monotherapy and combination arm with six and 11 patients enrolled respectively. All patients were stage four recurrent or metastatic HPV-associated cancers and failed multiple prior therapies, including checkpoint inhibitors. Interim data. from the phase one combination arm demonstrated encouraging safety and efficacy with a 40% objective response rate, both complete and partial responses, in a patient population that had failed previous checkpoint inhibitor treatments. Patient follow-up is ongoing and we are looking forward to hosting an investigator-led Phase I data presentation in the first half of 2023. Enrollment is nearing completion in the Phase II monotherapy on in newly diagnosed oropharyngeal squamous cell carcinoma patients with 19 of 20 anticipated patient dose and patient follow-up ongoing. Based on our encouraging data thus far, PRGN 2009 immunotherapy has a broad potential to address the estimated 5% of all cancers which are attributed to HPV-associated malignancies, including cervical, head and neck, and anal cancers. Let's now turn to our Ultracar T trial. We completed enrollment for PRGN 3006 in the phase one dose escalation cohort of the phase one 1B study in relapsed refractory AML patients. Dr. David Solomon of Moffitt Cancer Center and the lead investigator for the PRGN 3006 study will present Phase I safety and efficacy data at ASH on December 12, 2022. We are encouraged by the results to date and are looking forward to the presentation in patients with relapsed refractory AMLs, which represents a potentially significant benefit to this patient population. The Phase Ib study of PRGN3006 Ultracar-T has been expanded to Mayo Clinic in Rochester, Minnesota, as the first of several new sites expected as part of the multicenter expansion of this study. And the first patient was successfully dosed at this expansion site. Additionally, as previously announced, we received FDA clearance to incorporate repeat dosing in the expansion phase of this study. This is an important milestone for Presagen, as well as for the field of immunotherapies, as it demonstrates the proof of concept for a scale-out of overnight decentralized ultracar T manufacturing using Ultraoperator. Site activation is in progress at several additional major cancer centers across the U.S. Ultraoperator is a game changer for the field and we are pleased that the renowned institutions such as the Mayo Clinic are partnering with us to advance its development. PRGN 3006 has been granted orphan drug designation as well as fast-track designation for patients with relapsed refractory AML. Now for PRGN 3005. are ultracarty treatment for advanced ovarian cancer. Enrollment is complete in the phase one dose escalation cohorts of the intraperitoneal and intravenous arms without lymphodepletion, as well as in the lymphodepletion cohort in the IV arm. Patient follow-up is ongoing, and we expect phase one data to be presented in the first half of 2023. You may recall that during our second quarter of 2022 call, we announced FDA's clearance to incorporate repeat dosing in this study. And we are pleased to report that the first patient has received a repeat dose via IV infusion. Enrollment is ongoing in the Phase 1B expansion study at dose level 3 with lymphodepletion prior to IV infusion. Site activation is in progress at multiple major cancer centers in the U.S., yet another point of validation for the scale-out of our overnight decentralized ultracar T manufacturing using UltraPerator. This is an extremely important study. There have been minimal therapeutic advances in this patient population with 10% or less response rate in ovarian cancer with current treatments. I participated in a panel at CITSE earlier this week with some of the prominent figures in the cell and gene therapy, including the CAR-T space. And it is clear that there remains significant unmet need and opportunity for innovation in solid tumors. We believe with our Ultra-CAR-T platform, we have a unique solution to address these limitations. Finally, our Ultracar T trial in PRGN 3007, which is being evaluated in the treatment of advanced ROR1-positive hematological and solid tumors. PRGN 3007 uses our next-generation Ultracar T technology and incorporate intrinsic PD-1 downregulation in addition to the three effector genes, a CAR, membrane-bound IL-15, and a KEL switch. Intrinsic blockade of PD-1 expression is aimed at addressing the inhibitory tumor microenvironment and eliminating the need for the checkpoint inhibitor combinations. The phase 1, 1B umbrella study in hematological and solid tumor is on track to initiate dosing this quarter. We look forward to an investigator-led trial in progress presentation of PRGN-3007 at ASH on December 11 of 2022. I will now turn the call over to Harry, who will review our third quarter's 2022 financial highlight. Harry?
spk00: Thanks, Helen, and good afternoon to all of you on the call. I'd like to start by highlighting the great progress we've made over the past quarter in strengthening our balance sheet. As previously announced, during the third quarter, we completed the sale of our wholly-owned subsidiary, Transova Genetics, for $170 million. The proceeds from this sale have provided us the ability to retire our convertible notes. In regards to those convertible notes, during the third quarter and through today, we have executed opportunistic open market repurchases, retiring $144 million of our outstanding convertible notes that are due July 2023, bringing our outstanding debt balance as of today to $56 million. The volume-weighted average price of the repurchase activity was approximately 98.4% of PAR. Taking into consideration the discount to PAR and the savings on future interest through the stated maturity date, we will realize a cash savings of over $5.4 million. I'd also like to spend some time highlighting certain aspects of our operating results for the third quarter and year to date. As a reminder, Transova's historical results are reported as discontinued operations, as was the case beginning with the second quarter. As I've stated on previous quarterly update calls, we have pursued a variety of cost reduction initiatives over the past couple of years, specifically as it relates to our SG&A costs. These initiatives have borne fruit. As you can see in our financial statements, By comparing SG&A expenses quarter to quarter and year to date to the prior year to date, those costs have decreased 8% and 9%, respectively. Based on these reductions in our overhead costs, we are now able to focus on the continued advancement of our programs and the potential future commercialization of such programs. As for non-operating expenses, with the retirement of our convertible notes, Cash interest expense was lower for the three and nine months ended September 30, 2022 versus the prior year periods. Looking at the remainder of this year and into next year, cash interest expense will be significantly lower in the fourth quarter of this year and the first half of next year through the maturity of our remaining notes. With the sale of Transova and the retirement of debt, our balance sheet is much stronger than it was earlier this year. We ended the third quarter with cash, cash equivalents, short-term investments, and restricted cash of $153.8 million. This provides us with a cash runway into the early part of the fourth quarter of 2023. Overall, we have been successful in implementing our strategies to date, and we look forward to continued success and moving our product candidates through the clinic. That concludes our prepared remarks for today, and we are now happy to take your questions. Operator?
spk03: We will now begin the question and answer session. As a reminder, to ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to withdraw your question, please press star then two. As a reminder, please limit your questions to a total of two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Jason Butler with JMP Securities.
spk04: Hi, thanks for taking the questions and congrats on the progress. Two for me. First of all, on 2012, can you just give us any color on the patients enrolled into the Phase 2 trial in terms of their baseline characteristics and specifically baseline surgeries? And then secondly, for 2005, any more color you can give us on the patient that was retreated? Was the procedure successful? And anything you can say about safety so far? Thanks.
spk02: Sure. Hi, Jason. Well, in regard to the PRGN 2012, the patient population that actually we have been treating is the patients with the most severe cases. They have at least three surgeries and more, but majority of them are much more than that. And some of them have been continuously almost on a monthly, every four to six weeks, requiring surgeries. So we did not go after a very, very early on disease, but actually the patient population that we have in our trial is the most difficult, if someone wants to say it that way, to treat. And from a perspective of what we will be reporting in the upcoming is on the, obviously, the safety both on dose escalation, but also on an expansion cohort, which, as I mentioned, contains the patients that I discussed. And we are very excited about the data that was shown. As was mentioned, there is really no treatment for this patient except consecutive surgeries and Some of them, they have hundreds and hundreds of surgery throughout their life. And as you can imagine, this is a very, very difficult disease to treat. And up to this point, there has been absolutely no treatment. And surgery is just a matter of removing followed by recurrence continuously. And this is what these patients have to look forward to. In regard to our PRGN 3005, as mentioned, we have redosed the patient IV infusion, and the patient is doing very well, and we are really excited. And this patient actually had received the first dose a while back, and had been doing well, very well, and it continues. and after the second dose. So we are very excited for the reports coming in the first half of next year. And as I mentioned, actually, in prepared remarks, I just came back from a meeting at the CIPSE. Actually, it was a special panel for cell and gene therapy with some of the renowned people in this field. And it was very clearly mentioned that really the field has nothing for the solid tumors at this point and how the current, including the CAR-Ts, are not able to address anything in the solid tumors and the discussion around are overnight basically manufacturing and the ability of the sustainability of these cells that are not exhausted and going into the solid tumors such as ovarian. So it is a very exciting time for us with the, especially the solid tumor indication. And we look forward to the presentation next year.
spk04: Thanks, Helen. Appreciate all of the details.
spk03: The next question comes from Ben Burnett with Stiefel.
spk05: Hey, thank you very much. I wanted to ask a question about the AML Ultracar T program. Can you just talk about what went into your decision to focus on dose level 3? And I think there was maybe some discussion in the ASH abstract around expansion and expansion kinetics. But what went into that decision to focus on dose level 3, and was it efficacy? And I guess also, maybe just a clarification, can you remind me, for the AML program, what for patients to get multiple doses, will the product be made all at once and then split into two doses, or will it be two separate manufacturing runs?
spk02: Great. Thanks, Glenn. First of all, for PRGen 3006 and the decision on dose level three was really based on, first of all, the efficacy that we reported. If you recall, in the ASH last year, we already, at the dose level one and two, we already had shown objective responses, 50% objective responses. And we are talking about those levels that were between basically 100,000 to a million, 100 to 300,000, or 30,000 to 100,000 per kilogram, so very low doses. The maximum dose that we have infused was around 28 million. So because of the ability of this platform, both that these cells are not exhausted and they don't require activation outside, we believe that we do not need to infuse hundreds of millions and billions of these cells, which also leads to the very severe CRS and some of the toxicity and neurotoxicity that has been seen with other types of cell therapy, especially the CAR-T. So for that reason, and based on both safety, the efficacy, we decided the third dose and the ability to re-dose would be sufficient for us to stop at our third dose level and then expand and go after the efficacy. Because as you know, still with the very encouraging data from dose escalation, We are still in phase one, and the efficacy data has to include a larger number of patients in that. And we believe that we have a very good position, especially with the fast track designation that we have, as well as the orphan drug, but positioning this therapy rapidly in a larger patient population and looking at the clinical data, especially the efficacy, both safety and efficacy. And that was the main reasoning for going after that. We also had shown that, of course, incorporation of lymphodepletion had led to the much faster expansion of these cells. And we showed that kinetic of expansion of these cells in the ASH last year. That also was another reason that we believe, therefore, the third dose level was sufficient to go through our expansion. So we are really looking forward. And now with the Mayo Clinic having come on board and a number of other major clinical centers that will be joining us in the next few months, we are looking at recruiting patients rapidly. And what it really, for the first time, and I cannot stress this enough, this is the first time in the field that you have been able to do a decentralized manufacturing and various sites being able to manufacture these ultra cars overnight. This is not one site anymore. This is now a number of sites. And obviously, it is really exciting because we have shifted the paradigm here for the first time in this. And allowing us the redosing, what you asked about PRGEN 3006, and that is a split dose. So currently, obviously, there are a number of ways that you can do this. You can freeze back T-cells. and split it and dose at the time that you want. And we have been working also on the process that you can generate your ultracars at once and then move toward that. So those process development work is ongoing. But at the current, we are able to basically provide number of doses, which is, again, unique and paradigm shifting. Why? Because the other companies, the concept of redosing at the $400,000, $500,000 per shot is almost impossibility as far as the cost is concerned. And for us, the cost of this is lots different. And I think this is what makes this platform unique and allows the ability for the patient not only to receive that treatment, but to receive it multiple times at different points if they need it.
spk05: Okay, excellent. That's super helpful. And if I could just ask one more just on the ROY-1-3007 Ultracar T program. I guess, what's getting to initiating patient dosing for that?
spk02: So I'm going to be very frank and open. It has been a lot of the changes that has happened in Moffitt and internal processes that they had for their various committees. Our drug product is there and basically our investigators are now ready. The manufacturing is set. And it's just passing through the last committees and some of the bureaucracy that is taking place.
spk05: Okay. Understood. Thanks so much. I appreciate it.
spk03: Of course. Again, if you do have a question, please press star, then one. Our next question is from Arthur He with HC Wainwright.
spk06: Hi, Helen and the team. Good afternoon. This is Arthur for RK. Hi. So my first question is regarding the 2012. Could you remind us what's the dose level for the 2012 for the expansion cohort? And on average, how many doses does the patient receive
spk02: Yeah, so dose level 2 is 5 times 10 to the 11, and our patients receive the course of 4 basically infusion, or not infusion, sorry, it's the sub-Q injection. I apologize. So it's the course of 4 and with 5 times 10 to the 11. Got it. Thanks for that. And
spk06: I noticed that for the phase two study, you plan to enroll up to like 48 patients, according to the clinicaltrial.gov. Have you speak with the FDA regarding the size of the study? Would that be efficient for as a registration trial data?
spk02: Excellent question, and that's exactly some of the discussions that we are having with the FDA in regard to the regulatory path for this molecule in view of the safety and efficacy that we are seeing in our expansion cohort.
spk06: Gotcha. Thanks for the color. And my last question is, for both 3005 and 3006, the repeat dosing regimen. Just curious how you guys determine the dosing interval for the repeating dose for the patient. It's more a fixed schedule or it's more personalized for the patient at the physician's discretion?
spk02: Excellent question. Unlike off-the-shelf, because, as you know, the conventional cars, they receive one dose, and that's all they can produce, and they receive that. The only ones that they are multiple dosing within the first two or three weeks is off the shelf, and the reason for that is because the cells there, as the clinical data has shown, they don't sustain themselves, and that goes hand in hand with upwards of almost 300 million each time every week for three weeks, and close to a billion cell infused with the very, very heavy lymphodepletion, which obviously has had a number of issues with the tox. And eventually, if you still look at the how the cells maintain themselves and over the time it's pretty much after a month they are gone. So with that in view, actually our redosing, as you mentioned, we don't need to do it on a weekly basis because our cells directly they expand and manufacture actually inside the patient. We don't do any expansion outside. These cells because they have the membrane-bound IL-15, they are capable of, upon seeing the tumor antigen expand, and we have shown the kinetics and continue the kinetics over the period of time as a follow-up with this patient, but also in the absence of antigen, for instance, while they are circulating to get to the sites of the tumor, then they can sustain themselves because, again, of a membrane-bound IL-15 that they have. So for those reasons, we are very differentiated from what you see from the off-the-shelf. And the need in those settings, they absolutely have to do that. In our settings, we do not need to do this because of the mechanism of action of this ultracar T. And as a result, The redosing is at the discretion of basically our oncologist and the need of the patient. That's how it takes happen. And again, still with a tremendous difference in the number of the cells that are being infused because obviously in the case of off-the-shelf, there are hundreds of millions to billions, and ours is Much is a log of the difference there.
spk06: Awesome. Thanks for the additional color. And thank you for taking my question. And congrats on the progress. Thank you.
spk03: The next question comes from Jennifer Kim with Cantor Fitzgerald. Hi, Jennifer.
spk07: Hey, everyone. Thanks for taking my questions and congrats on all the progress. I have a few questions here. Maybe to the 2012 assets, Given the exciting expansion data you're expected to present in early January, is the timing of that R&D event also coinciding with when you believe you'd be able to give a greater level of color around those potential regulatory pathways?
spk02: That's an excellent question. At this point, I will not make any comments in regard to that, but obviously, As soon as we can, we will make comments in regard to the regulatory aspects. But what I can say is we are definitely looking forward to this presentation because we are really excited for this patient population and what PRGN 2012 is currently showing both in regard to the safety and efficacy. And we are pleased that basically our investigators can present this data early in January.
spk07: Okay, that's fair. And then I have a few questions on the 3006 asset. First, in terms of the timing that it takes to get that tech transfer and site activation, like all those activities done for the decentralized manufacturing, has that all been in line with your expectations in terms of how long it takes to get that done? And then my second question for this asset is, The repeat dosing in the Phase 1b, is that still anticipated to start this year?
spk02: Well, the repeat, first of all, let me take a text transfer. Originally, when this platform has been designed and advanced, the whole concept was that this platform can be basically taken up on any of the cancer centers And the tech transfer and the ease of technology had to be in such a way that any clean room in the hospital can do this. And even though at the very beginning it was considered almost a dream to achieve something like that, we are so thrilled that almost two and a half years post starting these trials, phase one, not only we have shown the capability of this ultracar to actually to manufacture it, but also in patients to be kinetically expanding it and show the preliminary signs of efficacy there. Now, in regard to the tech transfers, yes, I have to say the answer is what we anticipated and SOPs that we had provided to the center is self-sufficient. Our teams are not at the sites to actually execute the manufacturing of these cells. So the staff of the clean room in the hospital, they do this. And through the SOPs that we have developed and the tech transfers that we do. And that is not a lengthy time. We are not talking about months or six months of training. We are talking about during the COVID, I can tell you, when every manufacturing sites were shut down, we continued with our tech transfers. And actually, we did that over Zoom. So this is the advantage of this platform. And also the incorporation of Ultra Operator, which makes the semi-closed systems which is a central part of this technology, has allowed these basically sites to move very rapidly, and we are really pleased. We have now a number of sites that are coming up, both for our hematological trials in 2006 and 2005, and you will see that in the next few months as they roll out and start actually enrolling patients.
spk07: Okay, and then if I could squeeze one more question in for the 2006. Specifically at the dose level 3, those patients, what kind of updated data and I guess how meaningful can we expect that updated data to be in the ASH presentation beyond what was revealed in the abstracts?
spk02: I think what you will see is... complete all of the doses both with and without lymphodepletion. I think some of the most, not only the safety of everyone and having no basically toxicity, but also the efficacy that is being set in this patient population. As you know, this is a patient population that has two to three months to live. They have failed multiple treatment before. These are all the stage fours, have failed minimum of three to four, if not up to five or six. And they have also all failed bone marrow transplant at some point. So they really have no option in front of them. And to see objective responses in this patient population, is extremely important, and I think we will be reporting on those and also the science of how some of the ultracars working directly in the patient. So it's quite an exciting part for us.
spk07: Okay, great. That's really helpful. Thanks, guys, and congrats on the quarter.
spk02: Thank you very much.
spk03: At this time, we are showing no further questioners in the queue, and this concludes our question and answer session. I would now like to turn the conference back over to Dr. Saab-Savari for any closing remarks.
spk02: Thank you, operator. As you can see, we have made substantial progress across our clinical pipeline and corporate goals this year. We continue to focus on fiscal discipline and maximizing our balance sheets. to drive our lead clinical programs through the clinic and toward commercialization. Retiring a substantial portion of our debt reduces overhang and adds additional operating capital to our balance sheet. On the clinical side, we are eagerly anticipating releasing the complete phase one dose escalation and expansion data from our PRGN 2012 trial in early January. We are also looking forward to the two upcoming presentations for our UltraCard T programs at ASH in December. As always, we are deeply appreciative of the support from our shareholders. We continue to strive toward creating a shareholder value and focus on bringing in treatments to the markets with differentiating prices to address the high unmet medical needs. Thank you.
spk03: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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