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spk00: Ladies and gentlemen, thank you for your patience. You are holding for today's ViantBio second quarter 2021 conference call and webcast. At this time, we are gathering additional participants and will begin momentarily. We appreciate your patience and ask that you please continue to hold. Thank you. Good afternoon and welcome to the ViantBio second quarter 2021 conference call and webcast. Today, August 16, 2021, the company filed its quarterly report for the quarter ended June 30, 2021 on Form 10-Q, issued a press release summarizing its results, and provided an overview of the activities in the second quarter. Today's discussion is being recorded and will be available for replay. A replay of today's webcast will be available on the ViantBio website following today's call. Alternatively, the link can be sent to you by contacting IR at ViantBio.com. All participants on this line will be in a listen-only mode during the presentation. The presentation will be followed by a question-and-answer session. At this time, I would now like to turn the conference over to Jay Roberts, Chief Executive Officer of ViantBio. Please go ahead, sir.
spk03: Thank you, Operator, and thank you all for joining the ViantBio Investor Conference call and webcast for the second quarter of 2021. We're pleased to be having completed our first full quarter as ViantBio. Now that the merger activities between the former Cancer Genetics and Stamonix are completed, we have directed our full focus on executing on our business plan. It's also a great pleasure to speak with you today and share our enthusiasm and to give you some insight into how we envision the near-term future of Buy and Bio. Additionally, we're going to present the financial results of the second quarter, end of June 30th, 2021. On the call with me today is Buy and Bio's Chief Financial Officer, Andy LaFrance. Following the Safe Harbor Statement, I will provide a strategic overview and update on recent corporate developments and the vision ahead. Then Andy will take us through a brief financial update and discuss key accounting matters for the second quarter. I will make some closing remarks and then we will open up the lines for questions. I'll now turn the call over to our CFO, Andy LaFrance.
spk05: Andy LaFrance Thank you, Jay, and welcome to all. We'd like to remind everyone that various comments about future expectations, plans, and prospects constitute forward-looking statements for purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. My bio cautions that these forward-looking statements are subject to risks and uncertainties that may cause or ask results to differ materially from those indicated, including risks described in the company's filings with the SEC. Any forward-looking statements made on this conference call speak only of today's date, Monday, August 16, 2021, and ViantBio does not intend to update any of these forward-looking statements to reflect the events or circumstances that would occur after today's date. This conference call is also being recorded for audio rebroadcast on ViantBio's website at www.viantbio.com. With that, I would like to turn the call back over to Jay Roberts. Jay?
spk03: Thanks, Andy. As I begin the presentation, I think it's important to remind everyone that the second quarter was the first full quarter our company has operated as ViantBio. The ViantBio integration has gone smoothly and operations are fully running. ViantBio is an emerging biotechnology company focused on discovering novel therapeutics and offering future partners de-risk clinical programs. efficacy, efficiency, cost savings, and greater speed to market within the drug discovery industry. We had a very productive quarter and made huge strides in several areas in the short period since we last reported. Early in the second quarter, we received an issued U.S. patent for the use of spheroids and organoids using the screening assay for drug discovery, an important addition to our developing IP portfolio. We announced a strategic collaboration with Ardeus Bio and Solaria to emerge in privately held companies that fit nicely into our strategic plan to supplement our data science and technology teams and unique avatar clinical trials with primary patient-derived cell lines. We also completed a large screening of AI-generated novel compounds for Rett syndrome, which is in the iteration stages now. Also in the second quarter, We elevated a new in vivo tox screening disease model, progressed compound screening programs for neurodegenerative disorders, and began a development of an AI-based molecule and biologic creation for in vitro testing. So, needless to say, I'm incredibly proud of our team, has done so much in so little time. I'd like to focus your attention on a couple of these accomplishments. First, obtaining a key patent, and second, signing the collaboration agreement. On July 13th, our wholly-owned subsidiary, Stemonyx, was issued a U.S. patent which covers a unique approach to applying human-induced pluripotent stem cells, or IPSCs, as a powerful tool to illuminate the biology of complex human cell types, such as those of the central nervous system, one of our two primary focus areas, with the other focus area being oncology. We believe that drug discovery needs to progressively evolve given that the traditional methods and models for predicting safe and effective drugs have underperformed. This is about evidenced by the billions of dollars and years of time it takes to bring novel drugs to market. The issuance of this patent continues to provide us with increasing focus for our business on converging an impactful approach to drug discovery. With data science and biology-driven technologies at the core, with engineering disciplines and regulatory expertise. On the strategic side, on April 22nd, ViadBio entered into a collaborative partnership with Ordeus Bio and Filaria to introduce a process to rapidly design, redesign, and optimize biological drug candidates using artificial intelligence and in vitro patient cell-based avatar clinical trials. The goal of the collaboration is not only to design candidates that are likely to be successful in clinical trials, but have also been assessed for efficacy in numerous patient-specific cell-based models before even making it to the clinic. The relationship will continue to progress, first with data that defines binding affinity and function, then a subsequent focus on efficacy results as the near-term milestone. We look to accomplish these goals in the next four to five months, and we expect the progress to eventual result in the identification of a lead therapeutic. The collaboration capitalizes on the unique capabilities of each company to design, manufacture, and test small protein therapeutics that target multiple biomarkers derived from whole genome sequencing of patient populations. Using proprietary artificial intelligence, Rodeas is generating in silico protein sequences designed to bind specific disease targets. These sequences, optimized around binding, function, and performance, serve as a blueprint for the collaborative team's experts in in vitro and in vivo clinical drug discovery to produce the protein and rapidly iterate the structure using a highly efficient expression system. Using Solaria's patient-specific cell model cohorts, the purified protein will be critically evaluated for target binding and further optimize to improve performance across an array of disease-specific genetic biomarker-expressing cells. BioBio's objective will be to deliver regulatory readiness and a maximally de-risked drug candidate. The combined solution will provide data and human-based insights not usually available until after a costly clinical trial. Disease indications of high importance to us initially will be focused in oncology. As the project evolves, the therapeutic de-risking strategy will further incorporate the human-based biology and analytical software from our wholly-owned subsidiary, Stamonix. Stamonix will be leading data science and scientific teams. We look forward to keeping our shareholders and others in the industry updated as we continue our progress. Now let me turn the call over to Andy for a financial update. Andy?
spk05: Thank you, Jerry. Hello, everyone, and thank you again for joining our call. Today, I will review our balance sheet as of June 30th, 2021, and our financial results for the second quarter of 2021. As Stelmanis was deemed to have acquired Cancer Genetics for accounting purposes, and the merger closed on March 30th, 2021, the company's second quarter 2021 post-merger financial results are compared with the second quarter based solely on the stimulus operations. Therefore, the U.S. GAAP reporting for the company does not include the public company costs and the vivo farm operations for substantially all of the first quarter of 2021, as well as the 2023 and six-month period ended June 30, 2020. Given the differences in pre- and post-merger operations and cost structure, I'm going to report three items in my report. First, Q2 2021 GAAP results. Second, expectations regarding our ongoing research and development spending, SG&A, and public company cost structure. And third, total revenues for the three and six months ended June 30, 2021, as compared with the same 2020 periods on an actual and pro forma basis. First, let me review the results for the second quarter of 2021. Cash and cash equivalents totaled $26.5 million as of June 30, 2021, which provides us cash runway into the first half of 2023. Operationally, for the three months ended June 30, 2021, total revenues were $1.9 million, Cost of goods sold service aggregated $1 million, resulting in a cost of goods sold of 56% of service revenues. Cost of goods sold product aggregated $345,000, resulting in a cost of goods sold margin deficit of $229,000. As we've mentioned previously, our product manufacturing capabilities currently have excess capacity to support future growth. Research and development expenses were $910,000 for the three months ended June 30th. Selling general and administrative expenses were $3.7 million. SP&A expenses include a public company cost of $2.3 million, of which $620,000 are non-cash expenses for stock-based compensation, amortization, and depreciation. Second, regarding our ongoing spending, we expect research and development expenses to increase in the second half of 2021 to at least $1.5 million and up to $2 million per quarter. SG&A costs are not expected to change materially in the second half of 2021. However, such costs include approximately $650,000 per quarter in non-cash expenses related to depreciation, amortization, and stock-based compensation, as well as approximately $200,000 per quarter in prepaid insurance amortization. Finally, while the company executes its drug development strategy for long-term growth, the company currently generates revenue from its VivoPharm and Stamonic subsidiaries. On an actual basis, revenues were $1.9 million and $2.2 million for the three and six months ended June 30, 2021, respectively, as compared with $99,000 and $267,000 for the respective prior year periods. To provide deeper insights to the revenue trends on a pro forma basis and assuming the merger occurred on January 1, 2020, Pro forma revenues for the three and six months ended June 30th, 2021 were $1.9 million and $3.8 million respectively as compared with $1.5 million and $3.1 million in the prior year respected periods. On a pro forma basis, revenues increased by 26 and 21 percent in the current year three and six month periods as compared with the same prior year periods. The pro forma information is presented solely for informational purposes and is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of future results of the company. I will close for now and hand the presentation back over to Jay Roberts for closing remarks. Jay?
spk03: Jay Roberts Thanks, Andy. As we come to the final part of this presentation, I'd like to conclude with the following takeaways. First, I'd like to reiterate how pleased we are now that the merger with Stamonix has been completed. We're focused on rapidly identifying small and large molecule therapeutics to treat central nervous system and oncology-related disorders. We had a very productive quarter in which we strengthened our intellectual property, meaningfully progressed our pipeline, and signed an exciting collaborative partnership that built long-term shareholder value. we continue to be actively looking at new licensing and partnership opportunities. With world-class capabilities in data science, biological and chemical sciences, engineering, and regulatory affairs, we are well-positioned to advance internal and partnered programs and continue to forge an innovative pathway for drug discovery that could potentially result in higher quality and faster drug development. With that, I invite Angela Frentz to join me as we open up the line for Q&A.
spk00: Thank you. The floor is now open for questions. For those of you who have joined by webcast, you can submit your questions through the webcast tool by clicking on the ask question button on the left side of your screen. Then type your question into the text box and hit send. If you would like to ask a question over the phone, please press star 1 on your telephone keypad at this time. If you're using a speaker phone, we ask that while posing your question, you pick up your handset to provide the best sound quality. Again, ladies and gentlemen, if you would like to ask a question over the phone, please press star 1 on your telephone keypad at this time. We'll take our first question from Robert LaMoyer with Noble Capital. Please go ahead.
spk02: Hi, and congratulations on all the progress that you've made in the past quarter. One of the questions that I had was how you see the business developing between products and services and what the future looks of the company's business development might look like.
spk03: Thanks for joining. Great to hear from you. And Bob, thank you so much. So, you know, as we think about the business, you know, relative to products and services, we, as you know, we have a legacy service business that both companies, when we merged together, was able to combine through some key integration activities. And we're going forward to continue to provide access to those same services and products. to our existing customers and to new customers. And we do see that that part of our business will continue to grow. But, you know, with that, we use that really as an opportunity for us to continue to learn to perfect our capability set, you know, with the full intention to be able to recognize that those capabilities lead us to, you know, drive deeper partnerships with biotech and pharma partners and increase our capability set, ultimately, you know, driving the speed in which we can identify novel therapeutic compounds in the categories that we're focused on.
spk02: Okay, great. And do you see any, the idea of the service business versus the product business, any split in terms of the emphasis of the company?
spk03: So the focus is really on our drug discovery side of our business. and so products and services get combined as a solution set, and we've continued to be progressing those type of initiatives, and we think that that'll allow us to sort of expand the footprint that we have within existing customers. We think about the, you know, the real focus in terms of the future of the company. It certainly is focused on our R&D efforts to discover and identify novel therapeutics, and, you know, that's a big part of I will continue to make key investments in the company going forward.
spk02: Okay, great. Thank you very much.
spk00: We'll take our next question from Ben Hainer with Alliance Global Partners. Please go ahead.
spk04: Good afternoon, gentlemen. Thanks for taking the questions. First off, for me, and I apologize if I missed a little bit of the color commentary here. But it's not often that you see a newly issued patent as kind of the first highlight in a quarterly press release. You know, just kind of considering that, you know, apparently it would seem that you guys really think of that patent as kind of foundational or a very important piece of IP. It also sounds like it's fairly broad. You know, are there... Are there opportunities that you would think about licensing some of that technology? Are there others that might be infringing upon it? Do you keep it to yourself? What's kind of the strategy there? And maybe a little bit more color on the patent itself or the IP itself.
spk03: Yeah. Thanks, Ben. Thanks very much. So we think it's important. It was the reason that we put it at the top. You know, we do recognize that it's at the core of, you know, some unique patient-derived IPSC use, you know, patient cell-based assays. And, you know, that's a big part, we think, of being able to rapidly iterate as we move through the drug discovery process. And some of the methodologies that the company, you know, had created, you know, we think actually are, you know, incredibly unique in terms of how we approach it. So, you know, we do think that it's an important aspect of how we use this capability for drug discovery. And, you know, we also think, you know, obviously there's, you know, there is some amount of use of other types of steroid or organoid technologies for purposes of drug screening. And we think that this is going to give us a strong position when it comes to licensing access to our disease models, which is a big part of our strategy. So we think that from, you know, clearly from just a defensive perspective, we think that it's important. And as we evaluate the landscape, as we kind of look across the globe in terms of other potential infringers, we're keen on that front as well. And we have a, you know, we've engaged legal counsel to help us to support some of those efforts. And we're doing a pretty clear, sort of careful landscape review as we speak now that the patent has been issued.
spk04: Okay, so really it's an enabler of the kind of rapid feedback loop in designing these compounds. It's less of a patent control type of asset, although there may be some folks that you might be able to sell a license to.
spk03: Right. Yeah, we think it's, you know, obviously it was put together fairly broad, you know, by intention and we think the sort of the application, you know, clearly it's down the middle for us in terms of our strategic plan and will continue to be very important in terms of how we further develop our capabilities. And obviously we want to continue to protect the investments that we've made and that we fully intend to continue to invest in the, uh, the development of commercialization of other similar kinds of disease models using the same kind of platform. I mean, frankly, the, Now, the opportunities are endless if you think about the numbers of diseases, you know, even in just, you know, simply across CNS and oncology, you know, gives us many, many shots on goal. So we think that it is, you know, it is center and central to our strategic plan and to our future.
spk04: Okay. That's definitely helpful. And then, you know, when you talk about these avatar clinical trials, you know, the right way to think about it is you're looking at groups with you know, say certain genetic mutations, you know, or is that something that you can kind of take down to the individual patient level? Or is there, you know, kind of an example you could say, like, you know, a patient with ABC or XYZ mutation, we build an avatar of that and then, you know, kind of use that for our screening and development and identification of these potential therapeutics.
spk03: Yeah, so the tumor cell collection process is at the individual patient level. So it allows, and why that's important, it gives us a broad look at multiple sources of data about a specific patient. And so as we bring those tumors into the in vitro sort of the lab environment, we're also bringing a meaningful amount of genomic and genetic related data that's centric to the patient that allows our our AI and machine learning systems to be able to continue to get better insights and giving us better data as we do the design. In this particular case, as we further iterate on the design of very specific proteins that are intended to create this binding capability to the specific growth of tumors within this sort of test environment.
spk04: then how do you ensure if it's at an individual patient level that, you know, you know, you're not going to take a drug through the FDA just on the basis of an individual patient, you know, do you have a sense of, you know, how many similar patients that you need to identify or, you know, kind of any.
spk03: Because we're not expecting that we're going to rely upon. That's okay. No, we're not going to rely upon that data, but there's, you know, there's a population is a, patient cohort population. So it's not just one individual patient. So we've got numerous patient cells that are coming into this particular iteration of the research. And so it does give us, you know, again, you know, better insight as you cut across the more number of cohorts that are in the, in the population base. Now, ultimately it's, you know, it's helpful to us to be able to use, the insight in the data to be able to continue to do the iteration of the design of the protein. And that's really its purpose. You know, obviously we'll be taking, you know, once we've identified that we candidate, we'll be taking it through a very typical kind of optimization processes and, you know, obviously manufacturing and other, and then ultimately at the preclinical studies that allow us to continue to check through the sort of check the boxes on both safety and efficacy. in animal clinical trials as we put IND packages together to get to the regulatory community.
spk04: Okay. That makes a lot of sense. That's all I have. Thanks for taking the question, gentlemen.
spk03: Ben, thank you.
spk00: And we'll pass the floor over to Andy LaFrance for questions that have come in over the web.
spk05: Thank you very much, Karen. We did have a question that came in over the web related that breaks out of our services revenue between the historical vehicle farm business and semantics business. And I think one of the purposeful things that we have done here is try to view that as an integrated reporting process between the two, especially as we go to market with integration of the organoids with the VivoPharm business and some of the joint projects we are doing internally to provide, I would say, expanded service offerings for that segment of the business. So, as we look forward, what I would say is that we were not planning on, you know, providing separate disclosure. Other than what I can tell you is that, obviously, the majority of the increase in the overall services revenue came from, year over year, came from the VivoPharm business. We also got a second question that came in here, providing some color on the progress and anticipated timeframe for any advice and team agreements associated with either our disease models or drugs. Jay, do you want to take that one?
spk03: Yeah, I think, you know, the way to think about it is, you know, we're heading multiple pilot programs at this point. And, you know, we think that we had gives us kind of the starting point, but we've been actively engaged in discussions with potential out licensing partners now for, you know, a short period of time post the merger. And I'd say that we're making really good progress. Obviously our intention would be to the extent that we get to a signed agreement. Of course, we'll be communicating that very clearly to investors and to our shareholders. So I think the answer really is stay tuned. We're making good progress. Part of it was making sure that we had our fundamentals right, that we had our feet underneath us post-merger. And we've accomplished all of that quite successfully, in fact, in the second quarter. And as we head into the middle of the third quarter, we're very much heads down on what we think is the next most logical step that's important to our strategies.
spk00: As a reminder, ladies and gentlemen, if you'd like to ask a question over the phone, you may press star 1 on your telephone keypad at this time. Again, that was star 1 if you'd like to queue up for a question over the phone. Andy, are there any more questions over the web?
spk03: It looks like that's it, so I think we can move forward.
spk00: We continue at this point in time. And we have no one else queued up over the phone.
spk05: We do not.
spk03: Okay. Well, so thank you, operator, and thank you all for joining the call today. We're very happy with our progress so far as an emerging global drug discovery company that is rapidly identifying small and large molecule therapeutics to treat CNS and oncology-related diseases. We look forward to keeping everyone informed of our progress along the way. Thanks very much for joining the call today, and have a great evening.
spk00: Ladies and gentlemen, this does conclude today's teleconference. We thank you again for your participation. You may disconnect your lines at this time and have a great day.
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