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spk00: Good day and thank you for standing by. Welcome to Q4 2021 Solaris Pharmaceuticals earnings webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to Jason Randall of Cibaran Strategic Advisors. Please go ahead.
spk03: Good afternoon, and thank you for joining Solaris Pharmaceuticals' 2021 Fourth Quarter and Full Year Financial and Corporate Results Call. This afternoon, Solaris Pharmaceuticals issued a press release detailing its financial results for the three months and full year ended December 31, 2021, which we encourage listeners to read. The press release can be found in the news section of SolarisPharma.com. 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, the development and effectiveness of our investigational drug candidates, SecloDemsat, and SP3164. as well as our targeted protein degradation program, and expectations regarding our capital allocation and cash resources. These statements are based on our current expectations, and you should not place undue reliance on these statements. Action results may differ materially due to our risks and uncertainties, including those detailed in the risk factors section of Solaris Pharmaceutical's annual report on Form 10-K for the year ended 2021, and subsequent quarterly reports on Form 10-Q which have been filed with the SEC, as well as in other filings we make with the SEC from time to time. Solaris Pharmaceuticals disclaims any obligation to update information containing these forward-looking statements, whether as a result of new information, future events, or otherwise. With us on today's call is David Arthur, Director and CEO of Solaris Pharmaceuticals, who provided an update on Solaris' corporate and clinical achievements during the fourth quarter and its vision for the future. And Mark Rosenblum, CFO, will review Solaris' fourth quarter financial results. With that, David, please go ahead.
spk07: Thank you, Jason, and thank you to everyone dialing in to our conference call, particularly all of you joining us for the first time. Last year and recent weeks were an exciting time for Solaris, highlighted by the continuing progress developing CECLA DemStat and the expansion of our development pipeline. In January, we acquired a portfolio of assets from Duterex LLC, which included the drug candidate 3164, SP 3164, a related intellectual property portfolio, and the opportunity to develop additional cancer-fighting assets. This acquisition formed the basis of our new cancer drug development program focused on targeted protein degradation, a fast-growing field of cancer drug research. With this one transaction, Solaris has grown from a company with a single clinical program into a company with an internal pipeline consisting of multiple drug development programs built around two exciting approaches to cancer drug development, protein inhibition and protein degradation. This acquisition marks a significant step forward for Solaris and provides a bookend for what was a busy 2021 where in addition to advancing secludemstat, we completed financial transactions that strengthened our financial position, completed the dose escalation portion of our sarcoma trial, added two additional patient treatment groups to our sarcoma trial, added numerous clinical trial sites to enroll patients in our sarcoma trial, activated an investigator-initiated clinical trial in hematologic cancers at MD Anderson Cancer Center, our advanced solid tumor trial, which supported our sarcoma trial expansion and initiated a number of research collaborations. We believe 2021 was a successful year, but now I'd like to spend some time talking about the future. Our priorities for 2022 are clear. We believe that we are well-positioned, and I'd like to tell you what we plan to achieve both with seclidemstat and with SP3164. I think you'll understand why we at Solaris are excited about the future. For a long time, I've talked to you almost exclusively about seclidemstat. Seclidemstat, as you know, is a reversible protein inhibitor that targets LSD1, an enzyme that is overexpressed in many types of cancer, and is a promising target for anti-cancer drug therapies. As I've discussed in previous calls, secludemstat is currently the subject of two separate Phase I-II clinical trials. The first trial is exploring its potential as a monotherapy treatment in two groups of sarcoma patients, myxoid liposarcoma and FEP-rearranged sarcomas, and also exploring its potential in chemotherapy combination treatment in a third type of sarcoma, Ewing sarcoma. The second trial is exploring its potential in patients with two aggressive forms of hematologic or blood cancers. Ceclodemstac continues to advance in the clinic with patients enrolling across both clinical trials. And as we've discussed previously, we are looking forward to providing updates later this year. With that said, I'd like to take the opportunity to discuss our recent acquisition involving SP-3164 and how this acquisition adds additional potential above and beyond our protein inhibition program led by Sekla Demstat. As mentioned earlier, the assets acquired through our transaction with Duterex form the basis of our new cancer drug development program. This program is focused on targeted protein degradation fast-growing field of cancer drug research. Targeted protein degradation involves harnessing the body's natural degradation system to selectively target and eliminate disease-causing proteins, and by doing so, stop the development and progression of cancer. This field of research has already transformed the treatment of cancer with products like BMS cell genes Revloid and Pomelast, both protein degraders, which combined for over $15 billion in global sales in 2020 and are indicated for treatment of cancers such as non-Hodgkin's lymphoma and multiple myeloma. We believe these early generation protein degraders are only the tip of the iceberg in the potential for protein degradation to deliver efficacious medicines that are able to overcome drug resistance and achieve a therapeutic effect with small quantities of drugs. Perhaps the most exciting is the potential to use targeted protein degradation to pursue medicines targeting cancer-promoting proteins that have historically been considered undruggable. Other pharmaceutical companies seem to share our vision, as demonstrated by recent deal-making around targeted protein degradation that reads like a who's who list of the biopharmaceutical industry. For example, last year Pfizer inked a drug development deal with Arvinas worth about $1 billion, Bayer acquired Vividium Therapeutics for $1.5 billion, and Novartis entered into a transaction with UK-based Dunab Therapeutics worth $1.3 billion. And just last month, Amgen completed a $500 million multi-year drug development deal with Plexium. From our viewpoint, it is apparent that these drug makers see value in targeted protein degradation given the commercial success of the first-generation molecular glues or protein degraders and the tremendous upside to developing new drugs targeting previously or historically undruggable targets. But beyond the financial allure and multibillion-dollar commercial market potential, we believe that targeted protein degradation represents an excellent strategic fit for salarius. We believe we can harness our existing scientific expertise in gene dysregulation and protein expression and our growing clinical infrastructure to efficiently advance 3164 into the clinic. Building on our optimism around 3164 is our belief that the asset will have a strong clinical safety profile and the potential to be superior from an efficacy perspective versus other comparable drugs. 3164 is an oral, small-molecule, cereblon-binding protein degrader, referred to as a molecular glue because it is designed to attract or bring disease-causing proteins into proximity with an enzyme that induces targeted protein degradation. Or in simpler terms, it eliminates the disease-causing proteins. 3164 was engineered by Duterex from a first-generation molecular glue, avatamide, using a unique process called deuterium-enabled switching, or DEX, V-E-C-S, to create a new novel molecular entity with the potential for increased efficacy and improved safety compared to avatamide. Why is this important? This is important because Avatamide, also known as CC122 or Celgene 122, was widely studied in over 400 patients across 10 clinical trials. It showed a promising safety profile, good pharmacokinetics, and importantly, anti-tumor activity across several cancer types with what we believe is strong data in lymphomas. So we believe that the considerable amount of validated, published data produced in the development of Avatamide will significantly help us guide 3164's development. But let's remember that 3164 is an entirely new molecular entity with its own unique and improved characteristic and its own composition of matter patent. In fact, in preclinical animal studies, 3164 showed improved efficacy and increased anti-tumor activity compared to abatamide in multiple myeloma. Clearly, we can learn from the vast body of research surrounding abatamide. To help us achieve this potential, Duterex worked with Solaris to structure a transaction that focuses today's resources on developing 3164 by backloading development milestones. In fact, the first 3164 milestone is not due until the initiation of a registration clinical trial. With this in mind, we are focused on advancing 3164 into the clinic as a potential treatment for hematological cancers and solid tumors in 2023. During 2022, we will prepare for an IND submission, and we look forward to providing additional preclinical data updates later this year. While all this is happening, Solaris is continuing to advance the clinical development of seclidemstat, and continuing to explore opportunities to further expand the Sekla Demostat development pipeline. But before I discuss further details about Solaris' future, I would like to ask Mark Rosenbloom, Chief Financial Officer, to discuss our strong financial foundation, which is enabling all of this growth. Mark?
spk04: Mark Rosenbloom Thank you, David. For the three-month period ending December 31, 2021, Solaris reported a net loss of $4.1 million or $0.09 per basic and diluted share compared to a net loss of $1.8 million or $0.10 per basic and diluted share for the same period in 2020. The loss for the three-month period increased by $2.3 million compared to the loss for the same time span last year, primarily due to high higher overall costs and the absence of grant revenue in the current period. For the 12 month period ended December 31, Solaris reported a net loss of 12.8 million or 31 cents per basic and diluted share compared to a net loss of 7.4 million or 50 cents per basic and diluted share for the same period in 2020. The loss for the 12 month period increased by $5.4 million compared to the loss for the same period last year, resulting from increased charges related to R&D personnel and higher clinical trial costs, more than offsetting lower drug development costs. Net cash used for operating activities during the 12-month period ended December 31, 2021. totaled $10.2 million, essentially the same as approximately $10.3 million in the prior year. During 2021, the company collected approximately $4.1 million on its outstanding grant receivable, compared to $0.8 million in the prior year. Research and development costs increased approximately $1.6 million resulting from higher overall personnel costs and clinical trial expenditures, again, more than offsetting lower drug development costs. General administrative costs year to year were essentially flat. On December 31, 2021, our balance sheet states that the company had $29.2 million in cash and cash equivalents compared to $11.1 million at year-end 2020. The balance sheet this year was strengthened as the company raised more than $28.3 million in 2021, primarily driven by the sale of equity securities during the first quarter of 2021. We believe Solaris has the financial resources to advance our ongoing clinical programs through completion and beyond. With that, I'd like to return the call to David.
spk07: Thank you, Mark. As I mentioned earlier, the clinical programs investigating seclidemstat, our most advanced product candidate, are continuing to enroll, and we look forward to sharing updates from both ongoing clinical trials later this year. As I've stated before, and stated often, our aim is to maximize the potential of seclidemstat by expanding its use into new and larger indications. During our past discussions, I have described Solaris' two-prong development strategy, speed to market, represented by our company-sponsored sarcoma program, and expand the market, represented by the MD Anderson Cancer Center Hematologic Cancer Investigator-Initiated Trial, and as well as the continued exploration into additional larger market indications. With this in mind, we are actively researching other promising drug combinations where seclidemstat can address large unmet medical needs. We are also investigating the impact of seclidemstat scaffolding inhibition properties to identify cancer indications where the drug can improve treatment options. And as we announced last year, helping in these efforts is the research partnership established with the Cancer Epigenetics Institute at Fox Chase Cancer Center, one of several prestigious cancer hospitals and research centers that have joined the growing list of those involved in our ongoing clinical trials or helping us search for new opportunities to expand the utility of Secludemstat. As I said earlier today, these are exciting times for Solaris. And as Mark just informed you, we reported slightly over $25 million in cash and cash equivalents at the end of last year. And we are looking forward to building on our current momentum as we continue into 2022. I would now like to take questions. Joining me for the Q&A portion of this call is Mark Rosenblum, Dr. Nadeem Mirza, Senior Vice President of Clinical Development, and Dr. Daniela Santiesteban, Director of our new Targeted Protein Degradation Program. With that, I will now open the call to your questions.
spk00: As a reminder, to ask a question, you will need to press star 1 on your telephone. Again, that is star 1. To withdraw a question, press the pound key. Your first question comes from the line of . Your line is open.
spk01: Good afternoon. Thank you for taking my question. My first question will be on the 3164 program. We are looking forward for this program to advance to the clinic. In the meantime, I know we are looking for some preclinical data. I'm curious if you could elaborate more on what type of data we are going to see and when do you plan to disclose those data? Will it be around the conference? Just curious if you could give a bit of color on that.
spk07: Ahu, it's good to hear from you. This is David. Thanks for joining the call. Let me make a couple of comments and then turn it over to Daniela. when we're very excited about acquiring 3164, and we really feel it's a diamond in the rough. We purchased the asset from Duterex, and they had done a minimal amount of development work. And when we took it over, we realized that while we were convinced that the story was very sound, You know, the work, you know, Revlimid was there. Avatamide had great comparable data to Revlimid. And 3164 had great data compared to Avatamide. We were sold. But we also knew that the marketplace was going to want to see more preclinical data, more traditional preclinical data that looked at 3164 in combination with other drugs, in vivo models, in other indications other than just multiple myeloma. And so those are the types of studies that we're working on right now. Daniela is deep into planning those studies, and she might want to comment a little bit about where we're focusing. And I will share with you that as soon as the data is available, we're looking forward to getting it out. And it'll probably be, you know, probably third, late third, fourth quarter this year. But Daniela, any additional comments?
spk02: Yes. Thank you, David. And thanks also for the question. Like David said, we are really excited, planning a variety of different studies to show why 3164 has so much potential. So we'll be doing, you know, your traditional in vitro work, looking at the profile of proteins degraded. We'll look at in vivo models, as David said, both in hematological indications and solid tumors as a single agent in combination with standard of care agents. And then we're also gonna be exploring the immunomodulation that's been reported with these types of drugs. So yeah, like David said, looking forward to presenting the data, third quarter, fourth quarter of this year. You can anticipate and maybe guess that we'll be trying to present at ASH this year as we start to generate some of the preclinical data in the heme space.
spk01: Sounds great, thank you. I have one more follow-up question. That would be, I know we talked about, Evadomide showed some data in the liver cancers, multiple myeloma, and you also mentioned some particular interest in the solid tumor arena. Are we going to see any specific towards solid tumors for the preclinical data that will be disclosed this year? Yes, we're planning.
spk02: Dave, yeah, I can take this one.
spk07: Yeah, please.
spk02: So yeah, we're exploring the heme space because that's really where avatamide, which we're an improved version of avatamide, so great activity. But like you said, they also support solid tumors. And we'll also be doing that. We do believe 3164 is differentiated from other molecular glues. And we'll have promising activity in a variety of solid tumors. And so we do have a short list that we're actively looking into. And should be generating some data in that space this year as well.
spk01: Thank you. This is very helpful. I'll hop back on the queue. Thank you.
spk00: Thank you. Your next question comes from Hunter Diamond with Diamond Equity.
spk06: Hi, everyone. Hope everyone's doing well. So I had a couple of questions. The first one was, can you comment more on the recently filed Form 4s?
spk07: Hunter, this is David. Good to hear from you. Thank you for joining the call. Yes, both Mark Rosenblum and I filed Form 4s today. We were able to participate in a company-wide program that allowed us to purchase stock with a portion of our annual bonus. And as CEO, of Solaris, and I'm sure you're aware of this, I have very limited opportunities to purchase stock. You know, there's the blackout periods. I have to wait for an open window. I have to make sure that I'm not in possession of material nonpublic information. And this program, programs like our employee stock purchase program, which I participate in, and, you know, and other activities, if I have an opportunity to participate, I do. So, as I've said to a number of people and I talk about in all of our calls, I'm very bullish on Solaris as a company. I think the, you know, Sekla Demstat has potential. I'm looking forward to the readouts in the middle of the year. I couldn't be more excited about the acquisition of 3164. When the opportunity presented itself to take the maximum opportunity available to purchase some stock at today's prices, you know, I jumped all over it.
spk06: Great. No, I appreciate the clarification. It makes perfect sense. My other question was, and maybe it's more for Mark, talking about the cash burn in the runway with the new asset.
spk04: Well, our cash burn, as you can see, for most every quarter in the last year, even a little bit more, is about $3.5 to $3.8 million per quarter. The studies that are required, my understanding of the studies, and David can provide a little bit of color commentary here, my understanding of the study is that we are initially performing them on 3164, and the ongoing studies, of course, on seclidemstat, we've already budgeted for. It's already been in our cash runway. The 3164 activities are largely in the beginning all tolerable by our current cash flow. We can handle them. They're not all that expensive until we get into the future a little bit more. But right now, it seems as though we can fit them in. So, David, do you want to?
spk07: Mark, I think you hit the nail on the head. You can look at it mathematically and say we just reported $29 million in change in cash and cash equivalents at the end of last year, and we burned $1.2 million, $1.3 million, You can do the math and come up with one number, and then you can look at the fact that come second half of this year, we're going to get data releases on Ewing's sarcoma, and that data can take us in one direction or it can take us in another. So, you know, strategically, you know, the second half of this year and the first half of next year is going to be exciting times for Solaris, but what we feel good about is we're sitting on enough cash runway to cover us during that period and give us some operating spaces.
spk06: Great, exactly, and that's what you want to hear in this risk-off environment. So the next question was, you know, the targeted protein degradation is obviously a huge market, you know, multi-billionth, and you announced some of the, you know, deals on the call. Does that worry you in terms of, you know, how crowded it is, or are there a lot of competitors in the space?
spk07: You know, Hunter, let me take a crack at that first, and then I'll see if Daniela wants to follow on. No, it doesn't bother me at all. In fact, you know, it makes me feel good about our decision. Let's face it, if we were entering a space with no competition, it would tell me that, A, we made a bad choice, or B, it's, you know, because no one wants to be there, or B, it's such a difficult space, nobody wants to be in it. So the fact that we're pursuing, we're entering a space, and, you know, we're entering it with a drug where we hope to be, plan to be in the clinic next year, and you look at the fact that the other people in this space read like a who's who of the biopharmaceutical industry, I'm pretty excited. I mean, we're in the game with some really good players, and based on the data we've seen about 3164, I think we have a very competitive product, and we're looking forward to getting some additional data out into the marketplace to help support that. that knowledge that we have.
spk06: Great. No, I appreciate the color. In terms of, I guess, avatamide, you discussed that a lot with 3164. Can you just explain sort of the logic, why that's always mentioned?
spk07: You know, Daniela, would you like to take that and tell a little bit about the 3164 and avatamide story?
spk02: Yeah, yeah, happy to. And I'll just add to your previous question, Hunter, that in addition to what David said, the targeted protein degradation space is still relatively new. So if you look at where all the programs are, most of them are actually in phase one development with actually over 70% being in preclinical or discovery phase. So while there is competition, and like David said, it's good to enter a space that others think is attractive, we're in a great position in terms of timing with 3164. So then moving on to your next question, like David mentioned in his call, what we have with 3164 is an improved version of avatamide. Avatamide, not to get too sciencey, but it exists as a racemic mixture, so two enantiomers, but it's only one of those enantiomers that's actually the active species. And that means that it's only one of the enantiomers that's having that anti-cancer effect that you want in an anti-cancer drug. One half of the drug is not contributing any therapeutic activity. And so what we have with 3164 is we've purified the active species that has that anti-cancer activity. And that's why when we go into preclinical models, we see improved therapeutic activity when we compare to avatamide. And this is important because like David said, avatamide already in clinics showed a nice safety profile, showed good therapeutic activity in lymphomas and in solid tumors. And so if we can show an improvement over a drug that already showed promising activity in clinics, it would be great. And that's why we were really excited about 3164's potential. And to your question, that's why it's compared to avatamide, an improved version of it. Does that help?
spk06: Absolutely. No, thank you. That's a great color on that. So the last question, then I'll open the line for other investors. In terms of upcoming milestones, can you just kind of pinpoint what you view as the main ones and what you view investors should be monitoring the next 12 months?
spk07: Yeah, Hunter, I'd be happy to. We've been talking a lot about clinical trial enrollment in the sarcoma and in the hematologic study, and now we're talking about 3164, so it's a pretty full plate. So let's start with seclodemstat. Enrollment is continuing. We have three patient populations, Ewing, sarcoma. We have myxoid liposarcoma. We have FVT rearranged sarcomas. And we are looking to report out some interim data in mid-year third quarter-ish. You know, we have patients that we're actively treating. We just need to see, you know, we need to get some months under our belt. These are diseases where the real benefit to patients is to increase their progression-free survival. And to get that data, you've got to get patients on treatment and let them stay on treatment for a while. So that's coming mid-year. And now what we've added to that list of milestones is the 3164 program. portfolio of data. And as Daniela has said, we've brought the drug in-house. We've spent a lot of time building our early development plans. We have a list of studies that we think is exactly the type of information that not only we want to see, but that the marketplace wants to see and potentially strategic partners want to see. And we're hoping to complete that work in late Q3, early Q4, and start getting it out potentially conferences, potentially press releases, and so the second half of this year is going to be pretty exciting.
spk06: Great. I look forward to the continued progress. And again, thank you for taking my questions. Thank you for taking the time to join the call.
spk07: Take care.
spk00: Once again, if you would like to ask a question, please press star 1 on your telephone. There are no further questions.
spk07: Okay, thank you. Yes, thank you, Ashley. So let me make a few concluding remarks. As you've heard from today's discussion, we view this year as a year of optimism. Given our expansion into targeted protein degradation, our continuing clinical development of ceclodemstat, our continued strong financial footing. And as we discussed with Hunter's question, the value-building opportunities and data points in the future, we think it's going to be a great year for Salarius. I look forward to working with my management team and our board of directors to execute our business and clinical strategy. that has, as I mentioned, the potential to build Solaris Pharmaceuticals into an anti-cancer drug development powerhouse. We really believe that. Supporting all of this is the dedication of our employees and the support of our stakeholders. Without all of them, Solaris would not be where it is today. We look forward to embarking on what we believe will be a productive year, and we appreciate your continued support. Thank you, everyone, for your time and attention today, and I extend my sincerest wishes for good health to all. Thank you.
spk00: This concludes the conference call. You may now disconnect.
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