Salarius Pharmaceuticals, Inc.

Q1 2021 Earnings Conference Call

5/12/2021

spk04: Ladies and gentlemen, today's conference is scheduled to begin shortly. Please continue to stand by and thank you for your patience. Again, ladies and gentlemen, today's conference is scheduled to begin shortly. Please continue to stand by and thank you for your patience. Music
spk01: Thank you. Thank you.
spk04: Ladies and gentlemen, thank you for standing by, and welcome to the Quarter 1 2021 Salarius Pharmaceuticals Earnings Webcast and Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If you should need assistance during the conference, please press star zero. I would now like to turn the conference over to your host today, Mr. Jason Randa of TBRN Strategy Advisor. Sir, please go ahead.
spk05: Good afternoon, everyone, and thank you for joining Solaris Pharmaceuticals 2021 first quarter and financial and corporate results call. Earlier this afternoon, Solaris Pharmaceuticals issued a press release detailing its financial results for three months and did March 31st, 2021, which we encourage listeners to read. The press release can be found in the news section of solarisfarma.com. Solaris also filed a 10-K this afternoon, which is available on solarisfarma.com and sec.gov. Before beginning today's call, I would like to make the following statement. Today we'll be making certain forward-looking statements about operating metrics, future expectations, plans, events, and circumstances, including statements about our strategy, future operations, and the development and potential effectiveness of our lead investigational drug candidate, Sekla Demstat, and our expectations regarding our capital allocation and cash resources. These statements are based on current expectations then you should not place undue reliance on these statements. Actual results may differ materially due to our risks and uncertainties, including those detailed in the risk factors section of Solaris Pharmaceuticals 10-K filed with the SEC and other filings we make with the SEC from time to time. Solaris Pharmaceuticals disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise. With us on today's call is David Arthur, CEO of Solaris Pharmaceuticals, who will provide an update on Solaris' corporate and clinical achievements during the first quarter and its vision for the future, as well as Mark Rosenblum, CFO, who will review Solaris' first quarter financial results. David, please go ahead.
spk08: Thank you, Jason, and thank you to everyone joining our conference call, including those of you joining us for the first time. This is an exciting time for Solaris. first quarter of 2021 and recent weeks have been a period of substantial activity as Solaris accomplished several key milestones, including expanding our clinical programs for our lead drug candidate, Seclademstat, and strengthening our balance sheet. Before we review our financial results and business highlights, I would like to take a moment to describe Solaris to individuals joining us for the first time. Solaris is a clinical stage biopharmaceutical company developing potential new medicines for patients with pediatric cancers, solid tumors, and other cancers. Solaris was founded with technology from the University of Utah Huntsman Cancer Institute, and our lead drug candidate, seclidemstat, is a reversible inhibitor of the LSD1 enzyme, which is believed to play a key role in numerous cancers caused by dysregulated gene expression. Now, for those of us who are not scientists, dysregulated gene expression can be described as misreading the recipe. The right ingredients are all there, except the quantity of the ingredients is totally incorrect, or the ingredients are combined in the wrong order. When that occurs in the context of cells, misreading the recipe or misreading the genetic code can lead to cancer development and progression. we believe seclidemstat can address the dysregulation or, said another way, correct the misreading of the recipe. With that as background, let's discuss our recent accomplishments. We completed the dose escalation phase of the phase 1-2 clinical trial in Ewing's sarcoma, determined seclidemstat's safety profile, confirmed that we can reach seclidemstat plasma concentration levels above where efficacy was observed in animal and cell models, and we established the recommended phase two dose. We believe it was a good first quarter. Dose escalation across the Ewing and advanced solid tumor trials, we believe we saw that seclidemstat demonstrated early signs of drug activity in patients with Ewing sarcoma and in additional sarcomas that share a similar biology to Ewing. These additional sarcomas are also referred to as Ewing-related sarcomas or FET-rearranged sarcomas. As a result, and as yet another milestone, we initiated the dose expansion stage of the clinical trial, which we expanded to include three distinct patient populations, Ewing sarcoma, nixoid liposarcoma, and other FET-rearranged sarcomas. With each of these three patient groups, we have separate potential regulatory paths to approval, the potential for accelerated regulatory approval, and a distinct commercial opportunity, depending, of course, on the outcome of clinical trials. These patient groups represent speed to market, the first prong in our development strategy, which I will discuss more later in the call. Moreover, building upon the preliminary safety and efficacy data observed during the dose escalation stage of the Ewing trial, we have amended the trial to explore the use of seclidemstat in combination with chemotherapy agents, topotecan, and cyclophosphamide, a common second or third line treatment for Ewing sarcoma. I want to pause here. And I want to highlight this trial amendment or change because we believe this is an important development and I would like to discuss this in more detail. This change makes it easier for physicians to utilize seclidemstat earlier in the treatment continuum and potentially improves outcomes for Ewing sarcoma patients. Because topotecan and cyclophosphamide are routinely administered as second or third line therapy, we believe the addition of seclidemstat to that combination will integrate seclidemstat into the existing treatment regimen for Ewing patients earlier and increase the number of Ewing patients who can receive seclidemstat. Treating Ewing sarcoma patients with seclidemstat in combination with a common chemotherapy is a second or third line treatment is in stark contrast to the Ewing trials dose escalation stage, where patients were treated with single-agent secludemstat, meaning without any other anti-cancer therapy. Additionally, and also in stark contrast, patients treated during dose escalation were treated later in the continuum of care, as in patients received two to 12 prior lines of therapy before receiving seclavemstat versus the new amended protocol where patients only receive one or two prior lines of therapy before receiving seclavemstat. In summary, we are expanding the addressable Ewing population and now treating Ewing patients earlier in the continuum of care with combination chemotherapy, which we believe will result in improved patient outcomes. In addition to increasing the addressable Ewing patient population, the trial expansion includes new patient populations of FET-rearranged sarcoma patients, including, as I mentioned earlier, myxoid liposarcoma and other FET-rearranged sarcoma patients, which also significantly increases ceclodemstat's overall potential addressable market. As you can see, compared to a year ago, our clinical activities have expanded dramatically. What's more, Solaris substantially strengthened its capital position by completing a series of financial transactions during the first quarter that raised more than $30 million. We currently have the capital resources to fund our current clinical trials through completion and beyond, while at the same time, developing secludemstat in larger commercial markets, including hematological cancers and other potential therapy combinations. At this moment, I would like to hand the call to our CFO, Mark Rosenblum, who will speak to our first quarter financial results and the recently completed transactions that have provided Solaris with over $36 million in cash and cash equivalents. Mark, please go ahead.
spk03: Thank you, David. For the three-month period ended March 31, 2021, Solaris reported a net loss of $1.9 million, or six cents per basic and diluted share, compared to a net loss of $2.1 million, or 22 cents per share, in the first quarter of 2020. The loss from operations before other income for the three months ended March 31, 2021, decreased by $.6 million compared to the loss from operations of $2.4 million for the same period last year, which was primarily due to lower general and administrative costs that more than offset an increase in research and development costs. Higher research and development costs resulted from increases in personnel, laboratory expenses, and drug manufacturing costs. The decrease in general and administrative costs resulted from lower professional fees and lower travel expenses. Professional fees in 2020 largely dealt with our one-time transformation into a public company during late 2019 and continuing into early 2020. Lower travel expenses are a result of the COVID-19 During the first quarter of this year, Solaris completed a $23 million public offering and an at-the-market offering for the maximum amount of $6.3 million. Additionally, the company took in approximately $1.5 million from warrant exercises during the period and received $900,000 from the Cancer Prevention and Research Institute of Texas also known as CPRIP. Collectively, this amounts to over $31 million in gross cash receipts in the first quarter. As of March 31, 2021, total cash, cash equivalents, and restricted cash totals $36.6 million, compared to 11.1 million at December 31, 2020, and $9.6 million on March 31, 2020. Our original $18.7 million secret grant, dating back to 2016, contains remaining funds totaling $4.8 million, of which $4.2 million is listed as a current receivable on our current balance sheet. We believe that our current cash position our strongest cash position to date, will be sufficient to fund our operations through the completion of our current clinical trials in 2022 and beyond. With that, I'll return the call to David.
spk08: Thank you, Mark. As I mention often, our ultimate goal is to maximize the potential of CECLA-DemStat, and by doing so, make a difference in the lives of patients and their families fighting cancers with limited treatment options. Expanding seclidemstat into new and larger markets is the second prong of our two-prong development strategy of speed to market and expand the market. To that end, we hope by mid-2021 to have up to three total separate and active clinical trials underway evaluating seclidemstat in up to five distinct patient populations And we are planning for these trials to explore seclidemstat not only as single agent therapy, but also as a component in up to three different combination therapies. As discussed earlier, completing the dose escalation stage of our Ewing trial was a major accomplishment, and we believe that the trial achieved all key endpoints established at its initiation, including demonstrating early evidence of seclidemstat anti-tumor activity. Full findings will be disclosed next month during a poster session and poster discussion at the 2021 Annual Meeting of the American Society of Clinical Oncology, also known as ASCO. Among the clinical evidence gathered so far is a refractory Ewing sarcoma patient we demonstrated a 75% reduction, 75% reduction in the prospectively defined sum of target lesions after treatment with single-agent seclidemstat over a six-cycle or 168-day span. Unfortunately, despite this tumor shrinkage, a new non-target lesion appeared at the end of cycle two, or after 56 days, resulting in a classification of progressive disease as defined by the response evaluation criteria in solid tumors version 1.1. Nevertheless, we believe this data demonstrates preliminary single agent drug activity. What makes this observation especially encouraging is that relapsed or refractory Ewing sarcoma is exceedingly difficult to treat and the fact that this patient received no other anti-cancer treatment while taking single-agent seclidemstat. When this clinical evidence is considered in the context of Solaris now treating new patients, second and third line, with seclidemstat in combination with topotekin and cyclophysamide, we believe there is potential for positive patient outcomes. We believe this potential is also supported by our internal preclinical research demonstrating that in Ewing sarcoma cell lines, cyclodamstat has a synergistic effect when combined with topatitin and cyclothosomide. In addition to the Ewing clinical evidence, we also observed encouraging clinical data from a small subset of patients with relapsed or refractory FET rearranged sarcomas. who were enrolled in the Solaris Advanced Solid Tumor Trial. All patients in this small subset demonstrated indications of single agent drug activity despite being treated at dose levels below the recommended phase two dose. This data, along with patient data from other cancer types, will also be presented next month during an ASCO poster session. When summarized, Solaris is now actively enrolling up to 30 Ewing sarcoma patients to be treated with seclodemstat in combination with tocatecin and cyclophosphamide, and up to 30 patients with myxoid liposarcoma and other Ewing-related or FET-rearranged sarcomas to be treated with seclodemstat single-agent therapy. We expect safety and efficacy data readouts in 2022. Solaris has also completed much of the necessary work to begin clinical trials in additional cancer indications, such as gynecological cancers and hematologic cancers, and we look forward to announcing additional trials in the near future. We believe there is substantial unexplored potential ahead for seclidemstat in other underserved cancers, including areas that we have previously discussed, such as the use of seclidemstat in combination with checkpoint inhibitors. As I said earlier today, these are exciting times for Solaris and we are looking forward to what the future holds. I would now like to take questions. Joining me for the Q&A portion of this call is Mark Rosenblum, CFO, Dr. Nadeem Mirza, Senior Vice President of Clinical Development, and Dr. Daniela Santi-Esteban, Director of Corporate Development. With that, I will now open the call to your questions.
spk04: Thank you. Ladies and gentlemen, if you have questions at this time, please press the start and the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the hash key. Please stand by. We'll be compiled the Q&A roster. Your first question comes from the line of Aideen Yusinov from Benchmark. Your line is now open. You may ask your question.
spk02: Hi. Good afternoon. Thank you for taking my questions. I have a first question regarding ASCO. So we're going to see abstracts in about one week from now, and just wanted to ask what to expect from the ASCO presentations. I think the press release says initial efficacy signals in relapsed living sarcoma and preliminary efficacy from solid tumor trials. Are we going to see the actual overall response numbers, or this is going to be more like a case study?
spk08: Wangzi, this is David. It's good to hear from you. Hope you're doing well. Thanks for the question. So the abstract, when it's released, as you know, is a short summary of the findings. What I will share with you is we have submitted three posters along with two recorded presentations to ASCO. And the posters for the Ewing sarcoma dose escalation trial and the advanced solid tumor dose escalation trial contain all the information that I think you're looking for. It will have an update on safety and the most common adverse events. It will have swimmer plots of both trials identifying length of treatment and any adjustments to dosage. It will also have the response data that you would expect to see based on resist criteria and also other assessments of drug activity that we think were relevant. So I believe that the data that you are looking for is going to be in the poster sessions and you'll be you'll be able to access that as it becomes available. And I apologize, Aiden, I got my names confused. So anyway, Aiden, it's good to hear from you. Thanks for the question. And I think the information you're looking for is coming up shortly here at ASCO. Okay, sure, yeah, thank you.
spk02: Another question. I have is about the potential of Cichlid Amstat in hematologic malignancies. So as you probably know, Horizons Yadat Amstat, their LSD1 inhibitor, showed 86% ORR and 58% complete responses with long-duration responses in AML. But given this result of another LSD1 inhibitor, what does it tell us about the potential success of Ciclidumstat in MDS and CML based on the clinical trials? These are the indications that you appear to be pursuing. What would be the competitive advantage of Ciclidumstat in this hematologic malignancy, and would it make sense for Ciclidumstat to study to pursue AML as well, given that both Orizon and Imago are going after AML?
spk08: So, Aidan, great question, and I'm going to give a short answer and then turn it over to Daniela. The short answer is yes, we've seen some of those results, and we believe seclidemstat has real potential in pursuing hematologic cancers, and we have plans to enter the clinic in the hematological cancer space. What I'd like to do is ask Dr. Daniela Stante-Esteban to comment on a little more detail and a little bit about the science and why we believe we're going to be successful.
spk00: Yeah. Thank you for the question, Aiden. So, yeah, we're very excited to enter the heme space. As you said, it's been well validated by others that have LSD1 inhibitors, for instance, Horizon. As you know, secludemstat is differentiated from the other LSD-1 inhibitors currently in clinical trial, being that it's a reversible inhibitor and it interacts within a different location of the LSD-1 protein. So we think that both of those factors will contribute to us having an advantage in terms of a safety profile, where other LSD-1 inhibitors often run into hematological toxicities. which when given in combination with azacitabine, you have overlapping heme toxicities. We have not seen that with secludemstat in our clinical trials to date yet. And we'll be revealing more safety data, of course, during the ASCO conference. But we think that will give us an advantage. And mechanistically, the reason why LSD1 inhibition is very attractive for these indications is because of the inhibitor's ability to disrupt LSD1 from associating with certain transcriptional repressors. And we've seen that we're able to have that disruption effect with secludemstat. So the rationale for efficacy is there, and the advantage secludemstat has in terms of not having significant hematological toxicity is also there. So those are the reasons we're excited to enter that space.
spk02: Okay. Thank you very much. Appreciate your answers. And the last question I have regarding cyclid and stuck potential opportunity in CNS. So as you know, probably that horizon published first in human data of their LSD one inhibitor and other inhibitor, but see them stop in the personality disorder, CNS indications. Do you think, has any potential in CNS, and if yes, would you plan to license a specific CNS indication for secletum stud?
spk08: Aidan, that's a great question. We have currently, to this point, not pursued extensive exploration in the central nervous system or CNS area. So I don't think I can give you any additional information from my perspective. Daniela or Nadim, do you have any perspective? Daniela, would you like to go first?
spk00: Sure, yes. So, yeah, it's a very interesting area, and there's been good validation of LSD1 inhibition for that space, Aidan. But as you know, every molecule is a little bit different, with some crossing the blood-brain barrier more effectively than others. We, SeqLat-MSEP, doesn't cross the blood-brain barrier, and even in cases of CNS tumors where it might be somewhat disrupted, we don't get as effective penetration. So that can be a good thing in some indications, but it means that we'll likely target other indications outside of the CNS space.
spk02: Understood. Thank you very much for your answers.
spk04: Thank you. Next question comes from the line of Langzi Li from Leidenberg. Your line is now open. You may ask a question.
spk09: Hi. Thanks for taking my question. Just follow up on the ASCO since the abstract will be out next week. Just want to see Do we expect to see a significant difference or new data to present at the actual presentation versus the abstract next week, or they will be quite similar?
spk08: Wangzi, this is David. Thanks for the question. Hope you're doing well. The poster that we have submitted, or the posters that we have submitted for ASCO that support the two abstracts that I think you're referring to, contain extensive information and detail about the two studies. The abstract, as you know, are short and really only provide summary comments on the findings. The posters, as I've mentioned maybe previously, include significant detailed information on safety findings, on response criteria, they include the swimmer's plots, and they include assessment of not only the resist criteria, but also other assessments that we feel demonstrate the drug activity that we see and we really believe is supporting the continued drug, the development of this drug in the clinic. So I think the information you're looking for is really gonna come out in the poster sessions.
spk09: Got it. That's helpful. And then maybe for the question is, we had a poster include some of the historic benchmark information or the context to interpret especially the efficacy signal. If not, could you provide some color? How should we view the results under that context or benchmark?
spk08: So Wangzi, and I'm going to do a little bit of this from memory and then ask Nadim and Daniella to comment. I believe in a few cases we have provided the reference for some historical or accepted benchmarks. And in some of the data that we present, we've put it in the format of what some other companies have chosen to use as a way of presenting their data. So I think you may have to read our poster and then go pull up a couple of references to get the comparative numbers, but I believe we've provided what you'll need in both posters. And I'm looking at Nadeem and letting him see if I got that correct.
spk10: Yes. So, David, you're correct. So, absolutely. We have provided references so you can look up the reference for the comparator. And as David mentioned, we have shared some of the data or presenting some of the data which you can evaluate based on how others have been presenting. And certainly, you know, after this data is presented, we are happy to have a conversation with you and walk you through the comparator. Unfortunately, you cannot, you know, in a non-comparative trial, put the comparative data in the poster. But we are happy to have that discussion.
spk09: Got it. That's great. I think those are my questions. Thank you very much.
spk04: Thank you. Next question. Thank you. Next question comes from the line of Hunter Diamond from Diamond Equity Research. Your line is now open. You may ask your question.
spk06: Hi everyone. Congratulations on the continued progress. So I think we had a lot of questions on the scientific advancements of the company. I wanted to just go a different angle and this may be more for Mark. I just wanted to see the recent take on spending, expanding the headcount. I saw the burn was recently around 2.7 million and just how I guess you're thinking about at the same time advancing a lot of different trials. but also managing the budget. And I know you may not be giving formal guidance, but just any color around how you're looking to either, you know, expand a team, pay more salaries versus, you know, also watching the, you know, cash balance.
spk03: Yeah. Thanks. Thanks, Hunter. The number you see on cash used in operating activities of about 2.7 million, you know, remember we probably, not probably, we did spend additional cash related to the capital raise, which just to give you an additional degree in accounting, would be charged to additional paid-in capital and not hit the P&L. So it would go to the balance sheet. That's one thing. We did receive the $900,000 from CPREIT, which is an operating activity, also advanced accounting, as opposed to... financing activity. So if you would have added back the $900,000 and you would have put in a number and amount related to professional fees related to the capital raise, you would have seen our number probably be in line with the guidance we've mentioned in the past, which is we spend about $1 million to $1.2 million per month. And we've provided that information publicly. As to the headcount or personnel additions, very normal. It's in our R&D section of the business. And also, it will replace consulting fees. So as a younger company, we used outside consultants for a number of scientific and administrative activities. As we grow, we're bringing those activities in-house where we can get 100% dedication of people's time as opposed to a consultant's time. So we're really just going to be swapping out the numbers a little bit. Our overall forecast has really not changed dramatically from what we've had, and we probably would stick with those same numbers. So we will update this from time to time. We're a growing company. On the admin side, As I mentioned, we basically were down based on professional fees being lower in the first quarter than they were at the end of 2019 and the first quarter of 2020, really related to, again, the transformation to a public company. We haven't commented on general administrative headcount, if you will, or personnel, but we're We're comfortably staffed. We don't see a spike in anything in that direction. Our efforts are on the scientific side of the house. I hope that answered your question.
spk06: No, absolutely, Mark, and appreciate the additional color. So my last question, and I'm not sure if anyone's thought about this, the company appears to be trading almost near its cash balance, right? And I've seen other small cap companies trade have a buyback available. So the company now has, you know, a good amount of financing, you know, to have, and I've seen other microcaps say, okay, you know, we're going to allocate a few million. If the shares dip below a level where it's undervalued, it's a reasonable use of our cash to purchase our own equity and reduce, you know, the outstanding shares. Is that something the company has thought about or has even come on the radar?
spk03: It's a good comment. This is Mark again. It's a good comment. Certainly, it's a board decision. Frankly, we have not considered it. We think the best use of our everyday capital is to place our bet on the science. The marketplace for early-stage biotechs can always be choppy waters, if you will, and our best bet is to put our dollars into the R&D costs of the company.
spk06: Understood. Okay, perfect. It was just something I figured I would bring up because I've seen other companies do that just because, as you know, biotech can be very volatile, you know, in the day-to-day weekly movement. So, okay, perfect. Thank you for taking my questions. And, again, congratulations with the progress. Thank you, Hunter.
spk04: Thank you. I am showing no further question at this time. I would now like to turn the conference back to Mr. David Arthur. Sir?
spk08: Thank you. So as you have heard from today's discussion, celerius has never been in a stronger position. We entered this year firing on all cylinders and with positive momentum, and we are now actively enrolling multiple patient populations for treatment with seclodemstat in combination with a common chemotherapy treatment. and for treatment as a single agent. We are planning to announce additional clinical trials in the near future, and we closed the first quarter with $36.6 million in cash and cash equivalents, enough to fund our ongoing clinical trials through completion and beyond. We look forward to maintaining and building upon this momentum as we continue to advance and expand the clinical development of CECLID M-STAT. I would like to thank our employees for their dedication and loyalty and always thank our stakeholders for their continued support. I appreciate your time and attention today and would like to extend my sincerest wishes of good health to all. Thank you and thank you for your time today. Be safe.
spk04: Thank you. Ladies and gentlemen, that concludes today's conference call. Thank you all for participating.
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