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spk02: Good day and thank you for standing by. Welcome to the first quarter 2022 Solaris Pharmaceuticals Earnings Conference Call and Webcast. 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 one on your telephone. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press star zero. I would now like to hand the conference over to your speaker today, Daniel Canto-Boateng.
spk01: Good afternoon, and thank you for joining Solaris Pharmaceuticals' 2022 First Quarter Financial and Corporate Results Call. This afternoon, Solaris Pharmaceuticals issued a press release detailing its financial results for the three months ended March 31, 2022, which we encourage listeners to read. The press release can be found in the news section of solarisfarma.com. Before beginning today's call, I would like to make the following statement. Today, we will 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, Secodemstat, and SP3164, as well as our targeted protein degradation program and expectations regarding our capital allocation and cash resources, as well as asking shareholders to vote before or during the 2022 Annual Stockholders Meeting taking place on June 15, 2022. These statements are based on our current expectations, and you should not place undue reliance on these statements. Actual results may differ materially due to our risk and uncertainties, including those detailed in the Risk Factors section of Solaris Pharmaceuticals Annual Report on Form 10-K for the year ended 2021. and subsequent quarterly reports on Form 10Q, which have been filed with the SEC, as well as other filings we make with the SEC from time to time. Solaris Pharmaceuticals disclaims any obligation to update information contained in these four 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 will provide an update on Solaris' corporate and clinical achievements during the first quarter and its vision for the future, and Mark Rosenblum, CFO, who will review Solaris' first quarter financial results. David, please go ahead.
spk06: Thank you, Daniel, and thank you to everyone dialing into our conference call today, particularly all of you joining us for the first time. The first quarter of 2022 and recent weeks have once again been another exciting time for Solaris. The highlight of the quarter was our acquisition of an intellectual property portfolio from Duterex LLC, led by the drug candidate SP3164. 3164 now forms the basis of our Targeted Protein Degradation, or TPD, drug development program. And although we spoke recently on March 10th during our 2021 year-end earnings call, We already have news on advancing our 3164 drug development program, which I'll discuss in a moment. Our entry into protein degradation represents a significant expansion of our internal drug development pipeline, and we believe positions Solaris for significant future growth. TPD is a fast-growing field of cancer drug research with a commercial market potential in the billions of dollars as evidenced by drugs like Revlimid and Pomelis. that in 2021 generated global sales of over $16 billion, as reported by Bristol-Myers Squibb in their fourth quarter and full-year financial results for 2021. In addition, the potential market for TPD is attracting interest from some of the world's largest drug makers, including Bristol-Myers Squibb, Amgen, Pfizer, Novartis, and others who have recently announced deals with biotechnology companies that are focused on targeted protein degradation. We believe that the investment by pharma in protein degradation suggests the potential for protein degradation to be transformative within the healthcare space. Coupled with our existing clinical development program for seclidemstat, an oral reversible LSD1 inhibitor, and our most advanced investigational cancer drug candidate, Solaris is now pursuing multiple drug development programs built around two exciting approaches to targeted cancer drug development, protein inhibition and protein degradation. We are optimistic of the future given the multiple milestones we expect to soon achieve and the potential to deliver value inflection points for our shareholders. As CEO and a shareholder in the company, I'm as excited about our future as I have been since arriving at Solaris. Let me tell you about what we see ahead for the future of Solaris, and I'd like to start with seclodemstat. As you know, seclodemstat is an oral reversible protein inhibitor designed to target LSD1, an enzyme that is overexpressed in many types of cancer, and an enzyme that is a promising target for anti-cancer drug therapies. And as you also know, Ceclodemstat is currently the subject of two separate Phase I-II clinical trials. The first trial is exploring its potential in sarcomas, including one treatment arm exploring Ceclodemstat in combination with chemotherapy for patients with Ewing sarcoma. The second trial is an investigator-initiated trial sponsored by MD Anderson Cancer Center in Houston, exploring Ceclodemstat's potential in patients with two aggressive forms of hematologic or blood cancers. Ceclodemstack continues to advance in clinical development with patients enrolling across both clinical trials, and as we have discussed previously, we are looking forward to providing updates on these studies, including interim clinical data later this year. Now, let's discuss SP3164 and targeted protein degradations. 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 helped to transform the treatment of cancer with products such as Revlimid and Pommelast, as I mentioned earlier. Both drugs are protein degraders indicated for the treatment of blood malignancies such as multiple myeloma and non-Hodgkin lymphoma. We believe that the therapeutic success of these early generations of protein degraders represents significant potential for protein degradation to enable the development of medicines that can achieve a therapeutic effect with small quantities of drugs. But perhaps the most exciting part about targeted protein degradation is the potential to develop medicines that target cancer-promoting proteins that have historically been considered undruggable. We have observed the broader biopharmaceutical industry's interest in targeted protein degradation through a number of transactions over the past two years. We believe in 3164, and we believe in its potential to be best in class. 3164 is an oral small molecule cereblon binding protein degrader referred to as a molecular glue because it is designed to bring disease-causing proteins into proximity with an enzyme that induces the disease-causing proteins elimination or degradation. What we think makes 3164 unique is that it is the preferred half or preferred enantiomer of the widely studied drug avatamide with the potential for increased efficacy and improved safety. Based on published reports, avatamide, or cell gene CC122, has been studied in more than 400 patients across 10 clinical trials, demonstrating a promising safety profile, good pharmacokinetics, and importantly, anti-tumor activity across several cancer types with what we believe is strong data in lymphomas. This is important because 3164, though derived from avatamide, is actually a new molecular entity with unique and improved characteristics and its own composition of matter pattern. In fact, in a preclinical animal study, where results were published in the proceedings of the National Academy of Sciences, 3164 showed improved efficacy and increased anti-tumor activity in multiple myeloma compared to Avatamide. Solaris is focused on advancing 3164 into the clinic as quickly as possible as a potential treatment for hematologic cancers and solid tumors. And we are pleased to announce, in fact, we announced yesterday afternoon that we have completed the pre-investigational new drug or pre-IND meeting process with the FDA. The pre-IND meeting process allows companies to submit drug development questions to the FDA and receive guidance to inform studies and development activities to prepare an IND application. Solaris has completed this important drug development step and obtained valuable FDA input that provided clarity on preclinical clinical, and other regulatory matters for preparing and submitting an IND. Solaris is actively implementing IND-enabling studies and other development activities to support a planned IND submission in the first half of 2023. Importantly, we plan to provide preclinical data updates later this year. The progress we have seen so far in our 3164 development program gives us confidence that we will be able to initiate our first 3164 clinical trial in 2023, next year. As I mentioned earlier, and hopefully as you can now appreciate, it's been another exciting quarter in recent weeks here at Solaris. And our annual stockholder meeting is next month. But before I discuss our upcoming stockholder meeting, I would like to ask Mark Rosenblum, Chief Financial Officer, to provide details on our first quarter financial results. Mark?
spk07: Thank you, David. For the three-month period ended March 31, 2022, Solaris reported a net loss of $6.1 million or 13 cents per basic and diluted share compared to a net loss of 1.9 million or 6 cents per basic and diluted share for the year-ago quarter. The loss for the three-month period ended March 31, 2022, increased $4.2 million compared to the same time span last year, primarily due to the company having higher overall costs and the absence of grant revenue in the current period. The company closed the quarter with a cash position of $24.2 million. The statement of cash flows indicates cash used for operating activities during the three-month period ended March 2022, totaled $3.5 million compared to 2.7 in the prior year, reflecting increased personnel and expansion of clinical trial sites. Investing activities on the statement of cash flow reflects the cash portion of the targeted protein degradation technology that David just spoke about at $1.5 million cash expended. Statement of operations research and development costs increased by approximately $2.7 million year over year, resulting again from higher overall personnel costs and clinical trial expenditures, more than offsetting lower drug manufacturing and drug development costs. Year over year general administrative costs increased by approximately $300,000 resulting from higher, again, higher overall personnel costs, including non-cash charges resulting from stock-based compensation. On March 31, 2022, our balance sheet states that the company, again, had $24.2 million in cash and cash equivalents compared to $36.6 million for the same date in 2021. Recall The March 2021 amount reflects $27 million in proceeds from a capital raise during that month in 2021. We believe Solaris has the financial resources to advance our clinical and operational programs into 2023. With that, I would like to return the call to David.
spk06: Thank you, Mark. As we discussed earlier in the call, this is a year of significant potential for Solaris with multiple value inflection points on the horizon. And we believe, I believe, the company is well positioned to build value for shareholders. On June 15th, Solaris will hold its 2022 annual meeting of stockholders via a live webcast. All shareholders who own stock in Solaris as of the end of business on Tuesday, April 26th of this year are eligible to vote on several issues on the meeting agenda. Information on how to participate in the meeting and how to vote your shares is available in the proxy statement filed recently with the SEC. And in proxy materials, all shareholders of record at the end of the day, Tuesday, April 26th, should receive by mail or email. In many cases, shareholders can vote online directly through their brokerage accounts by logging into their account, searching for proxy voting information, and following the instructions. The proxy statement and all other SEC filings from Solaris can be found in the investor section of our website and at sec.gov. No matter how many shares you hold, even if you own what you feel is a small number of shares, your vote is important, and we need you to vote. We're asking you to vote. For shareholders with brokerage accounts at TD Ameritrade, Charles Schwab, and Robinhood, please vote your shares through your brokerage website or through the proxy materials you should receive from Solaris. We have been informed that these brokerage firms will not vote the stock that you own on your behalf at annual shareholder meetings. This means your votes will only be counted if you take the few minutes needed to vote your shares. Remember, every vote counts. As I said earlier today, these are exciting times for Solaris, and we are looking forward to building upon our current momentum as we continue into the second half of 2022. I would now like to take questions. Joining me for the Q&A portion of this call is Mark Rosenblum, Chief Financial Officer, Dr. Nadine Mirza, Senior Vice President of Clinical Development, and Dr. Daniela Santi-Esteban, Director of the Targeted Protein Degradation Program. With that, I will now open the call to your questions.
spk02: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Ahu Deamer from Lattenburg.
spk00: Ahu, can you hear us?
spk03: Hello, can you hear me?
spk06: Yes, we can, Ahu. Good to hear from you.
spk03: Likewise. Thank you very much for taking my questions. My first question will be on the Seqlidam Estat sarcoma study. If you could update us on the enrollment status and when do you plan to disclose the next data readout on Seqlidam Estat sarcoma study?
spk06: As we mentioned in a number of releases and discussions. It's our intention to release data mid-year, so we are on track to release information shortly in the next few months, definitely in the second half of 2022. Enrollment is moving along. In fact, enrollment is moving along in both studies, both sarcoma and in the investigator-initiated trial with MD Anderson, which, as you know, is enrolling patients in two blood cancers, MDS and CMML, which are precursors to AML, a much larger indication. We're pleased with where enrollment is, and we feel we're on track to meet our earlier commitments to release interim data in the second half of this year.
spk03: That's great to know. And in terms of the data dissemination, are you looking for a scientific conference? If so, are there any targeted conferences that we should be paying attention to?
spk06: Well, I think it's going to depend on when the data is available. and when we are able to submit it to the conferences. As you know, many of these conferences have significant lead times. But if we are seeing positive results, you know, I would feel we have an obligation to at least make the headline information available as we're treating patients who in most cases have failed standard of care therapy and are actively advancing in their cancer. And if seclidemstat, either in the hematologic cancer study or the sarcoma study, is showing a benefit, patients need to know that so they can look at both the sarcoma study and their hematologic cancer study as options for their treatment. So I think there are two parts to answering your question. One is perhaps a high-level dissemination through a press release, and then the more detailed information through a subsequent congress.
spk03: That sounds good. Moving to 3164 program, what were the key highlights from the FDA pre-IND meeting discussion? And also the second part of the question is, what stage of pre-IND work are you currently at?
spk06: Well, let me take the first part of the question, and then I will ask – Dr. Santi Esteban to fill in any gaps that are appropriate at this time. So as you can imagine, we are in what we think is a very good position with 3164 given that it is the preferred half or the preferred enantiomer of avatamide that's been studied in over 400 patients across 10 clinical trials. And because of that and the tremendous number of published studies, both clinically and preclinically, and the patents that have been filed on avatamide, we have a wealth of information to inform our clinical development. And, you know, even though we are the preferred enantiomer. We are a unique chemical compound with our own characteristics and our own fresh or new and our composition of matter patent. So as you're aware, you go to the FDA and you seek advice on key questions relating to toxicology studies, specifications for chemistry control and manufacturing, clinical trial design, and any other topics that you think may be important. And while I'm not going to get into details on the actual responses, what I can share with you is that we felt all of the answers that we received from the FDA were either as expected or positive, and we are in line with the development plans that we had put forth, so the FDA response did not impact our timelines at all. Now, the second part of your question, where are we in the development timeline? As you know, we purchased the intellectual property portfolio in January with 3164 as the lead asset. And being very fortunate, as I mentioned, on having the preferred half or the preferred natural
spk00: We had the clinical candidate.
spk06: We immediately began work on all of the activities that make up standard drug development once you have a clinical candidate or a lead candidate. And that is working on your GMP manufacturing to produce drug substance and drug product, designing, contracting, and then working on implementing your toxicology studies, and the myriad of additional studies that all need to be executed in order to submit an IND application. So we are well into the IND enabling process.
spk03: Thank you for that update. My last question, if I may, on the financial side, looking at the R&D expenses, we do notice a significant increase compared to the previous quarter. If you could elaborate more on that, Mark, what is the main driver? Is it the 3164 program or are there anything else?
spk07: Well, the answer is 3164 is the largest When you look at the 10Q, you'll see our R&D expenses detailed in a pretty significant way. The targeted protein degradation program was a little less than $2 million, like $1,988,000. And as you may know, it's called in-process research and development, and it's expensed. It is not on the balance sheet as an asset. it's an in-process R&D expense. So that's the first reason. Additionally, we've increased our personnel in R&D just to manage our increased clinical trial sites. And when you really get into the detail, Dr. Shanti Esteban, for instance, is now in the R&D side of the house where she once shared where she once wore two hats, half admin and half R&D. So it is largely the 3164 effort and clinical trial sites.
spk03: Very helpful. Much appreciated you taking my questions.
spk00: Thank you. Our next question comes from Hunter Diamond with Diamond.
spk04: Hi, everyone. I hope everyone's doing well. So my only question is around hiring and recruiting. So I just wanted to get more color on, you know, how you're finding hiring protein degradation professionals, epigenetic experience professionals, and how you're weighing that versus, you know, a capital light model, if you're finding it easy to hire people and how you're thinking about the team in the next couple of years.
spk06: Well, Hunter, it's good to hear from you. One of the ways to think about Solaris is we try and run an efficient operation by primarily acting as general contractors, if you will. We try and hire very capable, experienced, and talented individuals.
spk00: Some development work in-house. We have a laboratory at JLABS here at TMC. But to a large extent, our preclinical work, our manufacturing is outsourced.
spk06: And as you know, we don't, we don't spend, we are not a basic discovery operation. Our sweet spot is identifying clinical drugs that are ready to begin the IND enabling process, lead candidates, clinical candidates, and taking them through phase one and two. So along those lines, we don't envision significant headcount increases, however, we will be looking to ensure that we have the right resources to manage and implement our clinical trials across both Seclodemstat and 3164. So if I look at where the headcount growth might come from, I think it's primarily going to be in the area of supporting drug development and advancing these drug
spk00: into the clinic to generate data that I think is going to be critical not only for patients, but also to drive value inflection points. Did that answer your question?
spk04: No, absolutely. It was just a general sort of question because as you know, you know, wages have been increasing and in certain industries, uh, even I've seen it in large pharma or, you know, small biotech, there's been, you know, salary increases and a lot of competition for talent. So it was a general, you know, more high level on, you know, uh, how the company's hiring and it's affecting any hiring processes.
spk06: Well, and, and as you know, uh, The war for talent, finding the talent that you need to continue to move your company forward is a never-ending battle. And we want to make sure that we are paying competitive salaries and we've taken competitive compensation in total. And we've taken measures to ensure that we're getting advice from the professionals in the industry to ensure that we're doing that. I mean, one of the things that I have to be responsible for as CEO is ensuring that we're bringing the right talent on board, training that talent, motivating that talent, and retaining that talent to make sure that we can continue to advance our drugs through the development cycles. So I think it's gonna be an active area. As we all know, it's been a tough time for biotech right now, and there are always people out there, talented people out there, ready to work on promising projects. And one of the things we've learned from COVID is you don't always have to live in the same city as where the company is located. So I think it's always a tough area, but I think there's a way through it.
spk00: Absolutely, and I think that's a
spk04: great use of shareholder money is also not, you know, having expansive office spaces, you know, like a Merck or something with whole, you know, centers and massive facilities, right, because it's not necessarily driving shareholder value. So I think the model makes a lot of sense. And, again, congratulations on the results, and thanks for taking my question.
spk06: No problem. Anything else you'd like to ask?
spk04: I think that's it on my end, yes. It was a very clear presentation. All right.
spk06: Well, thank you. It's always good to talk, Hunter.
spk04: You as well.
spk02: I'm showing no further questions at this time. I'd now like to turn the conference back to David Arthur, Director and Chief Executive Officer.
spk06: Thank you. As you've heard from today's discussion, this is a year marked by big expectations and, I think, matching opportunities to build shareholder value. There's a lot of activity coming in the second half of this year. I look forward to working with my management team and our board of directors to execute a business and clinical strategy that has the potential to build Solaris Pharmaceuticals into the anti-cancer drug development powerhouse we all know we can become and we all envision. Supporting all this is the dedication of our employees and the support of our stakeholders. And on behalf of my colleagues at Solaris and the Board of Directors, I want to thank everyone for your time and attention today. Be safe and take care. Thank you.
spk02: This concludes today's conference call. Thank you for participating. You may now disconnect.
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