Celcuity Q3 2023 Earnings Call Transcript

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November 13, 2023

There are 8 speakers on the call.

Operator

Greetings, and welcome to the Celcuity Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Maria Jankowski with ICR.

Operator

Thank you, ma'am. You may begin.

Speaker 1

Thank you, operator, and good morning to everyone on the call. Thank you for joining us to review Celcuity's Q3 2023 Financial Results and Business Update. Earlier this morning, Cellcuity released financial results for the Q3 ending September 30, 2023. The press release can be found on the Investors section we will conduct a reconciliation of the website. Joining me on the call today are Brian Sullivan, Cellcuity's Chief Executive Officer and Co Founder Vicki Hahn, Chief Financial Officer.

Speaker 1

Before we begin, I would like to remind listeners that our comments today will include some forward looking statements. These statements involve a number of risks and uncertainties, which are outlined in today's press release and in our reports and filings with the SEC. Actual events or results may differ materially from those projected in the forward looking statements. Such forward looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. On this call, we will also refer to non GAAP financial measures.

Speaker 1

These non GAAP measures are used by management to make we will conduct future results and evaluate the company's current performance. Management believes the presentation of these non GAAP financial measures is useful for investors' understanding and assessment of the company's ongoing core operations and prospects for the future. You can find the table reconciling the non GAAP financial measures to GAAP measures in today's press release. And with that, I would now like to turn the call over to Brian Sullivan, CEO of Celcuity. Please go ahead.

Speaker 2

Thank you, Maria, and good morning to everyone joining us on today's call. Our current focus at Telcuity is to develop treatments for patients who have cancers involving the PI 3 ks mTOR or PAM signaling pathway. The PAM pathway is one of the most important oncogenic pathways. It regulates key metabolic functions, cross regulates other oncogenic pathways and affects the tumor microenvironment, which it can directly affect how a patient's immune system responds to a tumor. It is also the most highly mutated by significant margin of all signaling pathways.

Speaker 2

38% of solid tumors have a PAM related mutation or alteration. Mutations obviously serve as potential targets, the overall proportion of pathway alterations in a tumor highly correlates to its overall role as a cancer driver. Despite its importance as a cancer driver, the number of patients treated today with a PAM inhibitor is trivial compared to the number who could potentially benefit from them. And this is why we think the PAM pathway represents the largest drug development opportunity in solid tumors. The primary reason why PAM inhibitors have not become standard of care drugs, despite the importance of the PAM pathway, it's because it is very difficult to safely and efficaciously inhibit this pathway.

Speaker 2

Unlike most pathways, where inhibition of a single kinase may induce the desired activity, the PAM pathway involves multiple nodes. Each of them must be targeted because of the complex interaction that takes place between them. Otherwise uninhibited nodes may be activated and compensatory resistance may be induced, which in turn compromises efficacy. The available therapies that target this pathway only target a single node, such as mTORC1 or PI3K alpha I have only reported limited improvements in patient outcomes. That is why we believe development of an optimized PAM inhibitor, migedetasilisib, that targets all Class 1 PIK isoforms and mTORC1 and mTORC2 represents one of the most important opportunities to improve the standard of care in these cancers.

Speaker 2

With our Phase 3 program in HR positive HER2 negative advanced breast cancer and our newly initiated Phase 1btwo program in metastatic castration resistant we hope to eventually impact over 500,000 patients globally who have one of these tumor types. Our Phase 3 VICTORIA 1 clinical trial is evaluating getatilisib in combination with fulvestrant with and without palvaciclib we are now recruiting patients at nearly 220 sites in 23 countries in North and South America, Europe and Asia. The trial remains on track to provide initial data and analysis of the PIK3CA wild type patient subgroup in the second half of twenty twenty four and the data for the PIK3CA mutated patient subgroup in the first half of twenty twenty five. In August, we announced our plans to initiate the clinical development of getatilisib in patients with metastatic castration resistant prostate cancer, whose disease progressed while receiving treatment with an androgen receptor inhibitor. Treatment options for these patients are limited and there's an urgent need for new drugs to treat this patient population.

Speaker 2

Numerous preclinical studies have demonstrated interaction between the androgen receptor and PAM pathways suggests that combining a PAM inhibitor with an androgen receptor inhibitor may induce a synergistic antitumor effect in patients with prostate cancer. There is also compelling clinical evidence with an earlier generation PAM inhibitor providing a proof of concept of our hypothesis that combining gatatelicin with an androgen receptor inhibitor may be efficacious. The FDA cleared our IND and gave us we will now proceed with our Phase IbII trial to evaluate gatasolipib in combination with darolutamide, we are executing on the regulatory pathway, which is a potent androgen receptor inhibitor in patients with metastatic castration resistant prostate cancer. We expect to activate this trial in the Q1 of 2024 we report initial data in the first half of twenty twenty five. In the Phase 1b portion of the study, the Acuity expects that up to 42 participants will be randomly we are now ready to receive 600 milligrams of darolutamide combined with either 120 milligrams of getifilcipin arm 1 or 180 milligrams of gatapolacin in ARM 2.

Speaker 2

An additional 12 participants will then be enrolled in the Phase 2 portion of the study at the recommended Phase 2 dose level to enable evaluation of a total of 30 participants treated with a Phase 2 dose of getatulisib. The primary objectives of the Phase 1b portion of the trial include assessment of the safety and tolerability of gatatelicin in combination with darolutamide and determination of the recommended Phase 2 dose of Gadatulisib. Primary objective of the Phase 2 portion of the trial it's to assess the 6 month radiographic progression free survival rate of patients who received the Phase 2 dose. We're excited that Bayer agreed to enter into a clinical trial collaboration and supply agreement to provide darolutamide, their approved androgen receptor inhibitor, for this trial at no cost. Darolutamide is structurally unique to other androgen receptor inhibitors with an excellent efficacy and differentiated tolerability profile coupled with minimal drug drug interactions, making it an ideal combination partner for agenotelisib.

Speaker 2

And finally, in September, we hosted a Virtual Science Day, where we provided an in-depth overview of the scientific and strategic rationale supporting our clinical development strategies. We review how getatolisib's differentiated mechanism of action, safety profile and potency solves the riddle of comprehensively inhibiting the PAM pathway without inducing unacceptable levels of toxicity. We then characterize the significant unmet needs in breast and prostate cancer and why gatasilisib is uniquely positioned to potentially improve the outcomes for the hundreds of thousands of patients with these tumors. For nearly 20 years, the PAM pathway has confounded drug developers. This has led many drug developers and investors to question the relevance of the pathway as a cancer target.

Speaker 2

We think that settlement is misguided. We blame the drugs, not the pathway. We're excited about the opportunity to potentially offer breast and prostate cancer patients effective treatment for the PAM pathway in bulk tumors. And we look forward to updating you on our progress over the coming quarters. With that, I'll turn now the call over to Vicki Hahn, our CFO, to review our financial results.

Speaker 3

Thank you, Brian, and good morning, everyone. I'll provide a brief overview of our Q3 2023 financial results. Net loss for the Q3 of 2023 was $18,400,000 or $0.83 loss per share compared to a net loss of dollars 10,900,000 or $0.75 loss per share for the Q3 of 2022. We also included in our press release non GAAP adjusted net loss for the quarter ending September 30, 2023. Our non GAAP adjusted net loss for the Q3 of 2023 we generated $17,300,000 or $0.78 loss per share compared to non GAAP adjusted net loss for the Q3 of 2022 we are expecting $15,500,000 for the Q3 of 2023 compared to $9,600,000 for the Q3 of 2022.

Speaker 3

Of the approximately $7,900,000 increase in research and development expenses, dollars 7,500,000 was due to an increase in expenses related to the VICTORIA 1 Phase 3 clinical trial and $400,000 was related to increased employee related expenses. General and administrative expenses were $1,400,000 for the Q3 of 2023 compared to $1,000,000 for the Q3 of 2022. Employee related expenses accounted for $300,000 of the increase. The remaining $100,000 increase resulted from professional fees and other expenses associated with being a public company. Net cash used in operating activities for the Q3 of 2023 was $12,700,000 compared to $9,300,000 for the Q3 of 2022.

Speaker 3

This was a result of non GAAP adjusted net loss of approximately $17,300,000 offset by working capital changes of approximately $4,600,000 in accounts payable and accrued expenses and partially offset by other assets. We ended the quarter with cash, cash equivalents and short term investments of $133,000,000 $133,900,000 On October 20, we closed on a $50,000,000 private placement, which is not reflected in the September 30 cash and investment amount. We believe this will extend our cash runway into mid-twenty 26 and fund us through multiple critical milestones. With that, I will now hand the call back to Brian.

Speaker 2

Thank you, Vicki. Operator, could you please open the call for questions?

Operator

Sure. Thank you. We will now be conducting a question and answer Our first question comes from Maury Raycroft with Jefferies, please go ahead.

Speaker 4

Hi, good morning. Thank you for taking our questions. This is Yao on the call for Maury. Our first question is on the Phase 3 trial regarding the primary analysis between ARM B and ARM C, which compares Geta plus for veteran versus for veteran alone, what kind of delta was we're into the powering assumptions. We assume fulvestrant alone has maybe 4 to 5 months of PFS.

Speaker 4

What does GETA and the fulvestrant combo need to show to be static? And similarly between RMD and RME In mutant patients, what kind of delta went into the powering assumptions there that would be versus Opelisib plus Vovastrin combo in that comparison.

Speaker 2

And I have another follow-up. Thanks for the question. We powered the study with traditional powering assumptions, which are typically 90%, and so we have sufficient sample size to detect an effect size difference that's And so we haven't disclosed the specific effect size difference that we're assuming, but given the low the median PFS rate that's been reported for vivestrant, one could deduce that the level of improvement or the effect size difference it doesn't have to be significant to be statistically significant. For just as an example, a 2 month improvement in PFS, which would translate to 100% improvement relative to what's been reported in fulvestrant recently, 2 months meeting PFS for them, it would represent an HR of 0.5 and that would, A, be statistically significant and B, would be on the edge of being clinically meaningful. And a similar analysis was done with our assumptions for RMD versus RME.

Speaker 2

We power the study 90% and derive our sample size accordingly.

Speaker 4

Got it. That makes sense. And I guess maybe move on to the prostate cancer study. There we know darolutimab seems to have pretty low Drug drug interactions, but still there are some reports that seems to suggest darolutimab can reduce Cmax or AOC for some other drugs that had been administered together in the past. I guess, can you maybe clarify if you're going to do very detailed PK monitoring or do you think your trial design is sufficient for you to find the optimum dose and do you have any plans to maybe look at other different dose combos?

Speaker 2

Okay. Well, thanks for the question. Look, two things. We have evaluated the DDI profile of darolutamide and assess that relative to the interactions with GETA. But GETA is very stable, doesn't metabolize we're metabolizing at a very, very low rate.

Speaker 2

And so we don't anticipate any drug drug interaction between the two drugs just based on their respective PK profiles. We will be doing PTA analysis, so that we'll confirm that as part of our study. Our focus right now is demonstrating a proof of concept that combining PAMPH3K inhibitor like atelisib with an androgen receptor inhibitor like ferozumine, which is Very potent. We'll induce a treatment effect in these patients that could be significant and advance the standard of care. The steps that follow that, there's a lot of potential different steps and we will start discussing those as we begin reporting data.

Operator

Our next question comes from Boris Becker with Cowen. Please go ahead.

Speaker 5

Yes, hi. Couple of questions here. So just for GETIT in general, what's responsible for the drug's tolerability when we compare it prior attempts at targeting mTOR MPI 3 ks and specifically kind of an extension of that in the VICTORIA trial. What's the algorithm for dose reduction and do we have a fraction of patients that have had a dose reduction?

Speaker 2

Great. Well, thanks. So, Takeda's tolerability profile is a function of 2 features of the drug. 1 is that it's administered IV, intravenously, which means it avoids the GI tract and the liver. Because PI3K alpha, which is one of the targets of GATA and which is one of the targets of available therapy, regulates glycolic activity, which takes place in liver.

Speaker 2

Avoiding the liver allows you to avoid essentially inducing high levels of hypoglycemia, which is one of the primary adverse the second feature of the drug relates to its PK profile and that's a function of its chemical Which is that it has a very balanced volume of distribution of around 40 liters. And what that essentially means is that it doesn't distribution and were retained in the liver 50 fold higher concentrations than in plasma. So it's a combination of the Raututh administration, which is a necessary, but not sufficient condition to minimize the toxicity. It's also a feature of PK profile and its balanced volume of distribution. As far as dose reductions, on our Phase 1b study, we had dose intensity levels of roughly 90%.

Speaker 2

So there'll be a very structured approach to dose reductions. But overall, patients Stay on the drug for the most part at the 180 milligram dose level. The dosing density was comparable to palvaciclib. So we think that essentially the drugs are somewhat equally tolerable as a result. There's nothing that would expect us to see anything different in this Phase 3 study.

Speaker 5

Great. Maybe if I could squeeze in one more just on prostate cancer. Obviously, there's a lot of discussion on PSMA targeting therapies, particularly in the pre chemo setting. We just saw some data in asthma. We're expecting all the data readout from the company's Sigmund.

Speaker 5

How do you see that impacting kind of your development pathway for get a plus enzalutamide any questions?

Speaker 2

Sure. Well, we'll see. I mean, it's a function of the data that we report. If the data that we report it is consistent with what's been reported in clinical studies that were done with earlier generation PAM inhibitor that is no longer under development, then we think GETA would be on track to we are actively offering a standard of care that was superior to PSMA targeted therapies. Even if it was just comparable and again I'm just Describing scenarios, not projecting anything, but even if it was just comparable to the radiographic progression for survival, it was just comparable to the PSMA.

Speaker 2

We think that we would have an advantage relative to the challenges involved in administering that class of drugs. But it's early days, but ultimately, as is the case in most of these settings, the efficacy will really determine the strategy going forward and the penetration you could hope to expect. We don't think that the bar is raised to a level with those drugs that will create an impediment for us to be successful.

Speaker 5

Great. Thanks for taking my questions.

Speaker 2

You're welcome.

Operator

Our next question comes from Gil Blum with Needham and Co. Please go ahead.

Speaker 6

Hey, good morning, everyone. Thanks for taking our question. Just a quick one on use of proceeds. You guys recently had the financing. I'm just trying to understand if you expect the majority of these proceeds to be used To maybe extend the cash runway or is it more to expand the footprint than invest in we will be

Speaker 2

conducting a question and answer session. Thank you. Thanks, Neil. We raised the incremental $50,000,000 which really came over the threshold, it was an unsolicited inquiry, and we concluded that it it would be favorable for us to extend the runway. The money we raised and had on our balance sheet prior factored in development costs associated with the Phase 1btwo study.

Speaker 2

And so for the most part, this incremental infusion of cash we'll primarily extend our cash runway, which again in this environment, having additional runway, we think is just very prudent. And so we concluded that it was an opportunity for us to bolster the balance sheet and really can't say eliminate, but certainly reduce the potential balance sheet risk associated with our programs.

Operator

Our next question comes from Alex Nowak with Craig Hallum. Please go ahead.

Speaker 7

Okay, great. Good morning, everyone. With the enrollment ramping here, 220 sites, multiple countries, you're now looking you're doing the indication expansion into prostate, what additional investment in the talent side, resources, whether it be in Minnesota or other geographies, do you need to plan for here?

Speaker 2

We're adding staff to our team throughout, we have added people to our team. We'll continue to add people to our team that typically will not be at the senior executive level. And those folks are there to support just the day to day activities of managing studies significant as Victoria One, but also to help us prepare ourselves for new drug application, our NDA. And so we have to simultaneously we'll execute our Phase 3 study, while also preparing for an eventual NDA submission. And so as we get closer to that NDA submission and that activity starts to ramp up, we'll add staff accordingly.

Speaker 2

But the investments from a G and A standpoint We'll still be relatively modest, but there'll be some increase in headcount as a result of our progress towards the NDA.

Speaker 7

Got it. That makes sense. And then the R and D expense pickup this quarter, I mean is that a is it fair to say that's a direct indication that the enrollment for the trial is going, let's say, better than initially expected?

Speaker 2

I would say it's just in line with what we expected. So as you enroll more patients, there are certainly expenses associated with that as more patients are on the drug. There's more expenses associated with that. And so I think what we've reported is pretty consistent with what the expectations have been for our expenses.

Speaker 7

Okay. Makes a little sense. And then just lastly, with enrollment creeping high here, has there been any major kind of recruitment protocol changes that have been made to the study?

Speaker 2

No, so far so good. It clearly requires a lot of very hands on work with the sites ensuring that the trial has visibility not only with the principal investigator, but the typically multiple investigators, sub PIs that can enroll patients. And so we have a very deliberate approach to stay in contact with the multiple individuals involved with the study. We're constantly assessing the patients they may have who could potentially be eligible for the study down the road if they progress on their we have multiple ways of gauging what the potential activity could be at the site and also just multiple ways of ensuring that we're as top of mind as we can and so far so good. But we have roughly 220 sites, so that means we have we'll stay in touch with a lot of individuals and but we think we have a very good approach to not only execute that, but also keep track of it.

Speaker 2

And then to the extent that we see any sites that maybe not living up to our expectations. We're following up with them and digging into any potential obstacles that they may think they have that could be preventing them from screening patients.

Speaker 7

All right. Well, great to hear. Appreciate the update. Thank you.

Speaker 2

You're welcome.

Operator

There are no further questions at this time. So that concludes our Q and A session. I would like to turn the floor back over to Brian Sullivam, CEO for closing comments.

Speaker 2

Well, thanks again for participating in our call today and for your ongoing we'll be participating in the upcoming Stifel Healthcare Conference and Jefferies London Healthcare Conference next week, and look forward to hopefully seeing many of you there. Goodbye.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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Earnings Conference Call
Celcuity Q3 2023
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