Lisata Therapeutics Q4 2023 Earnings Call Transcript

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February 29, 2024

There are 8 speakers on the call.

Operator

Welcome to the LASATA Therapeutics Full Year 2023 Financial Results and Business Update Conference Call. Currently, all participants are in a listen only mode. Following management's prepared remarks, we will hold a Q and A session. As a reminder, this call is being recorded today, February 29, 2024. I will now turn the call over to John Menditto, Vice President of Investor Relations and Corporate Communications at LASATA.

Operator

Please go ahead,

Speaker 1

sir. Thank you, operator, and

Speaker 2

good afternoon, everyone. Welcome to LASATA's full year 2023 conference call to discuss our financial results and provide a business update. Joining me today from our management team are Doctor. David Mazzo, President and Chief Executive Officer Doctor. Kristin Buck, Executive Vice President of Research and Development and Chief Medical Officer and James Nisko, Vice President of Finance and Treasury.

Speaker 2

Shortly before this call, we issued a press release announcing our full year 2023 financial results, which is available under the Investors and News section of the company website, along with the webcast replay of this call. If you have not received this news release or if you'd like to be added to the company's e mail distribution list, please e mail me at jmandidolessada.com. Before we begin, I remind you that comments made by management during this conference call will contain forward looking statements that involve risks and uncertainties regarding the operations and future results of LASATA. I encourage you to review the company's filings with the Securities and Exchange Commission, including without limitation its Forms 10Q, 8 ks and 10 ks, which identify specific risk factors that may cause actual results or events to differ materially from those described in the forward looking statements. Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, Thursday, February 29, 2024.

Speaker 2

LASATA Therapeutics undertakes no obligation to revise or update any statements to reflect events or circumstances as of the date of this conference call. With that, I will now turn the call over to Doctor. Mazzo. Dave?

Speaker 1

Thank you, John, and good afternoon, everyone. Thank you for joining us today as we provide an overview of recent business highlights, discuss our full year 2023 financial results and give an update on the progress of our various development programs. During 2023, our 1st full year as LASATA, we made notable progress advancing our clinical development programs targeting several advanced solid tumors using LISTEN-one, our lead product candidate in combination with multiple anticancer agents of differing modalities. As we have previously reported, we have both preclinical and early clinical data in humans that we believe demonstrates the potential of LISTEN-one to become an integral part of a revised standard of care treatment regimen for many difficult to treat cancers. Following the review of the financial results, LIFADA's Chief Medical Officer, Doctor.

Speaker 1

Kristin Buck will provide an update on our ongoing and planned clinical programs. With that, I now will turn the call over to James Nisco, our Vice President of Finance and Treasury. James?

Speaker 3

Thanks, Steve. Good afternoon, all. I'm pleased to join you today to present a summary of our full year 2023 financial results. Starting with operating expenses. For the year ended December 31, 2023, operating expenses totaled $25,700,000 compared to $57,600,000 for the year ended December 31, 2022, representing a decrease of $31,900,000 or 55.4 percent.

Speaker 3

Excluding the in process research and development expense of $30,400,000 associated with the merger of CEN Therapeutics and our predecessor company Caladrius Biosciences, forming LASATA Therapeutics, operating expenses decreased by $1,500,000 or 5.5 percent compared to the year ended December 31, 2022. Research and development expenses were approximately $12,700,000 to the year ended December 31, 2023, compared to $13,100,000 for the year ended December 31, 2022, representing a decrease of approximately $300,000 or 2.5 percent. This decrease was primarily due to lower costs associated with our List of 1 programs in the current year versus our legacy CD34 cell therapy technology programs in the prior year. Current year expenses were associated with study activities for LISTA-one Phase 2 wave of concept bolster trial in various solid tumors in combination with the corresponding standards of care. Enrollment activities for the LILISTA-one Phase 2b ASCEND study, chemistry manufacturing and control or CMC activities for LISTEN-one and study startup activities for the LISTEN-one Phase 2a study for the treatment of glioblastoma multiforme.

Speaker 3

General and administrative expenses were approximately $13,000,000 for the year ended December 31, 2023 compared to $14,100,000 for the year ended December 31, 2022, representing a decrease of approximately $1,200,000 or 8.3 percent. This was primarily due to non recurring costs associated with the aforementioned merger in the prior year, a decrease in equity expense due to prior year performance stock unit vesting, merger option assumption expense and departing board member restricted stock unit vesting, lower annual stockholder meeting expenses and a decrease in directors and officers insurance premiums, partially offset by severance costs associated with the elimination of the Chief Business Officer position on May 1, 2023. Overall, net losses were 20,800,000 dollars 54,200,000 for the years ended December 31, 2023 and 2022 respectively. Turning now to our balance sheet and cash flow. As of December 31, 2023, LASATA had cash, cash equivalents and marketable securities of approximately $50,500,000 Based on its current expected capital needs, the company believes that its projected capital will fund its current proposed operations into early 2026, encompassing data milestones from all its ongoing and planned clinical trials.

Speaker 3

This completes my financial overview, and I will now turn the call over to our Chief Medical Officer, Doctor. Kristin Buck for the review of our clinical development pipeline. Preston?

Speaker 4

Thank you, James, and good afternoon, everyone. As we have previously emphasized, we have designed LASATA's rigorous clinical programs based on sound scientific rationale from a large body of published preclinical and early clinical data. Our platform technology is designed to address major impediments to the successful treatment of advanced solid tumors in an environment of increasing pharmacoeconomic pressures. Generating meaningful clinical data as efficiently as possible is critically important in this field and I can assure you that our entire organization has this goal top of mind in everything we do. With that, I will now provide an overview of Lista-one for the treatment of advanced solid tumors in combination with other anti cancer agents.

Speaker 4

Despite advances in cancer therapy today, many solid tumors remain difficult to treat effectively. Cancers such as pancreatic cancer, gastric cancers and other solid tumors are surrounded by a dense fibrotic tissue known as the stroma, which limits access of most pharmacotherapies to the tumor. Many solid tumors also present a hostile tumor microenvironment or TME, which suppresses a patient's immune system and makes it less effective in fighting cancer. The combination of a dense stroma and a hostile TME prevent many chemotherapies and immunotherapies from being optimally effective in treating these cancers. This coupled with the fact that most anti cancer therapies are not efficient in targeting only cancer tissue defines the major challenge in maximizing effectiveness and safety in the treatment of solid tumors.

Speaker 4

To combat this, LASATA's approach is to exploit the C end rule to activate the CEND R active transport system, a naturally occurring active transport system to selectively deliver anticancer drugs through the stroma and into the tumor. LISADA's lead product candidate LISTADA 1 is the recipient of multiple orphan drug designations, including for pancreatic cancer in both the United States and Europe as well as for malignant glioma in the United States. Lista-one selectively actuates the SendR active transport mechanism on tumor stroma while also having the potential to modify the TME and make it less immunosuppressive. Lista-one targets tumor vascular endothelial cells and tumor cells based on its affinity for alpha D, beta-three and beta-five integrins that are selectively upregulated on these cells in comparison to healthy tissue. LIST-one is a 9 amino acid cyclic internalizing RGD peptide that once bound to these integrins is cleaved by proteases expressed in the TME to release a linear peptide fragment called a CendR fragment.

Speaker 4

The CEND R fragment has high affinity for and then binds to an adjacent receptor called neuropilin 1, also up regulated on tumor endothelium and tumor cells. This binding activates the C end rule active transport pathway, which ferries anticancer drugs more efficiently into solid tumors. Additionally, LISTEN-one has been shown in a range of preclinical models to modify the tumor microenvironment, making it less hostile to immune cells, reducing tumor resistance to anticancer medications and impeding and or preventing the metastatic cascade. These results come from LISADA sponsored studies and from collaborators and research groups around the world and have been the subject of more than 3.50 publications relevant to ListaOne's mechanism of action. Along with our collaborators, we've also amassed significant non clinical data demonstrating enhanced delivery of a range of anticancer therapy modalities, including immunotherapies and RNA based therapeutics.

Speaker 4

To date, Lista-one has demonstrated favorable safety, tolerability and activity to enhance delivery of standard of care chemotherapy for patients with metastatic pancreatic cancer. Our development programs are designed to exploit the potential of LISTEN-one to enhance a variety of anticancer treatments in a range of solid tumors. Currently, LISTEN-one is the subject of nearly a dozen planned or active clinical trials globally for the treatment of various solid tumors. Let me touch on a few of these individually. The ASCEND trial is a 158 patient, double blind, randomized, placebo controlled clinical trial evaluating LIST-one in combination with gemcitabine and nab paclitaxel in patients with metastatic pancreatic ductal adenocarcinoma, also known as mPDAC.

Speaker 4

This trial is being conducted at 25 sites in Australia and New Zealand, led by the Australasian Gastrointestinal Cancer Trials Group or AGITG in collaboration with the NH Clinical Trial Centre at the University of Sydney. This study consists of 2 cohorts. Cohort A of the study received a single dose of 3.2 milligram per kilogram LISTA-one essentially simultaneously with standard of care therapy, while Cohort B is identical to Cohort A, but with a second dose of 3.2 mg per kilogram of Lista-one given 4 hours after the first. As previously reported, a positive outcome from the planned interim futility analysis was announced by the study's Independent Data Safety Monitoring Committee, which recommended continuation of the study without modification. In addition, we are excited to report that full enrollment of ASCEND has been achieved and we expect top line data from the 98 patients assigned to cohort A to be reported in the Q4 of 2024, followed by the complete data set of all 158 patients to be available by mid-twenty 25.

Speaker 4

We plan to use the results of the ASCEND trial to explore possible conditional approvals in several jurisdictions and to design an optimized Phase 3 program in metastatic pancreatic ductal adenocarcinoma. The BOLSTER trial is our Phase 2a double blind placebo controlled multicenterrandomized basket trial with active and planned investigational sites in the United States, Europe, Canada and Australia, evaluating LISTA-one in combination with standards of care in advanced solid tumors, including second line head and neck squamous cell carcinoma and first line cholangiocarcinoma. This trial will include both cytotoxic and immunotherapy standards of care. Bolster continues to make steady progress and enrollment completion is expected by the end of 2024. Then to FOX, the Phase 1b2a open label trial in United States of Lista-one in combination with neoadjuvantfulvironox based therapies in pancreatic, colon and appendiceal cancers continues to make steady progress with enrollment completion expected by the end of the Q2 of 2024.

Speaker 4

This trial will provide us with pre and post treatment biopsy immuno profiling data as well as long term outcome data. LIST-one is also currently being evaluated in combination with gemcitabine and nab paclitaxel in a Phase 1b2a open label trial in China, led by our licensee in that territory, Qilu Pharmaceutical. During the 2023 ASCO Annual Meeting, Chilu Pharmaceutical presented an abstract sharing preliminary data from the study, which corroborated previously reported findings from the Phase 1b2a trial of LISTEN-one plus gemcitabine and nab paclitaxel conducted in Australia in patients with MPDAC. According to Qilu, final data are expected by the end of the Q2 of 2024 with the initiation of a Phase 2 trial in China shortly thereafter. A collaboration with our funding partner WARP9 the ILLISTA trial is a Phase 1b2a randomized single blind, single center safety and pharmacodynamic study in Australia evaluating LIST-one in combination with the checkpoint inhibitor durvalumab plus standard of care chemotherapy nab paclitaxel and gemcitabine versus standard of care alone in patients with locally advanced nonresectable pancreatic ductal adenocarcinoma.

Speaker 4

Enrollment completion for ILYSTA is expected during the second half of twenty twenty four. IGOLYSTA, a Phase 1b2a proof of concept safety and early efficacy study evaluating LISTA-one in combination with nivolumab and Fulphiranox as a first line treatment in locally advanced nonresectable gastroesophageal adenocarcinoma is pending initiation as a function of availability of funding by our partner WARP9. The inspiration for this study comes from the findings recently published in Oncology and Cancer Case Reports Journal, which details a patient with metastatic gastroesophageal adenocarcinoma who achieved a complete response when given Lista-one in combination with standard of care for furofenox and pembrolizumab. The subject initially underwent months of standard of care treatments and only achieved a partial response. Upon subsequent addition of Lista-one to such standard of care therapeutic regimen, the subject achieved a complete response confirmed both radiographically and surgically.

Speaker 4

We hope to have further update on timing related to the execution of the study in the coming quarters. A study of LISTEN-one in combination with temozolomide in glioblastoma multiforme or GBM has been initiated with patients already being treated. This study is designed as a Phase 2a, double blind, placebo controlled, randomized, proof of concept study evaluating LISTA-one when added to standard of care temozolomide versus temozolomide and matching LISTA-one placebo in patients with newly diagnosed glioblastoma multiform. It is being conducted across multiple sites in Estonia and Latvia and is targeted to enroll 30 patients with a randomization 2:one Lista-one plus standard of care versus placebo plus standard of care. Importantly, as recently announced, Lista-one has been granted orphan drug designation by the U.

Speaker 4

S. Food and Drug Administration for malignant glioma. This action by the FDA not only highlights the unmet medical need, but also recognizes the potential of Lista-one to benefit patients in this indication. As a reminder, several of these studies are investigator initiated trials. And although we have great confidence in our investigators running these studies, LISADA has limited control and thus timelines and expectations may be subject to change.

Speaker 4

That said, we are extremely grateful to our investigators and especially to those patients participating in List of 1 clinical trials around the world. For those who are interested, a more comprehensive description of each of our trials is available in the appendix section of the corporate presentation on our website. Additionally, in the body of the presentation, there are 2 milestone slides that depict the anticipated timing of key execution milestones and data readouts from our trials. As you will see, there are numerous execution and data milestones projected for our portfolio of clinical trials over the next year and beyond. With that, I will now turn the call back to Dave.

Speaker 1

Thank you, Kristin. To summarize, 2023 was a year marked by the honing of our ListaOne development efforts in keeping with our strategic imperatives of advancing Lista-one rapidly toward registration in mPDAC as well as demonstrating the broad application of Lista-one A1 in combination with a variety of anticancer agents for the treatment of numerous solid tumor types. For 2024, more than ever, we are focused on efficient and timely study execution with the goal of getting to meaningful clinical data readouts as soon as possible. And with that overview, operator, we're now ready to take questions.

Operator

Thank And our first question comes from the line of Joe Pantginis with H. C. Wainwright. Your line is now open.

Speaker 5

Hi, good afternoon. This is Sarah on for Joe. Thanks for taking the question. I just wanted to gain some insight if you had any further detail on how the bolster trial is enrolling and if you're seeing across Europe, U. S.

Speaker 5

And Canada, any regions seeing maybe increased enrollment compared to others? Thank you.

Speaker 1

Thanks, Sarah. Appreciate the question. And say hello to Joe for us as well. As it relates to bolster, bolster is actually on track to reach the enrollment goal of completion by the end of 2024 and we're quite pleased with that. And as most people know, enrollment in clinical trials is not linear.

Speaker 1

It actually has more of the shape of a hockey stick and we're finally on the upslope of that curve and moving things very, very nicely. As it relates to regional contributions, so far the U. S. Has been the greatest contributor to enrollment, but that's mostly because many of our European sites will only really be coming on line in the month of March. And so we expect to see a significant contribution from the European theater starting in the Q2 of this year.

Speaker 5

Okay. That's helpful. Thank you.

Operator

Thank you. One moment for our next question please. Our next question comes from the line of Pete Enderlin with MAZ Partners. Your line is now

Speaker 1

open. Hi, Pete. Go ahead. It's Dave.

Operator

Pete, you may be muted.

Speaker 6

Yes. Can you hear me now?

Speaker 1

Yes. Go ahead.

Speaker 6

Okay. Sorry. Thanks for taking the questions. First one maybe a little naive in a way. Did you get a milestone for enrolling the cohorts for the ASCEND trial?

Speaker 6

And if so, by whom? I don't know who it would be.

Speaker 1

No, that's a trial that's funded by us. So no, there are no milestones associated with that. No milestone payments associated with that.

Speaker 6

And you mentioned WARP 9 as a source of funding for a couple of the programs. That's a 3 year old company or organization. Do you have any sense of what their financial resources would be? I know they get corporate funding I think, but I'm not sure how big a company it is or how robust their financial resources are?

Speaker 1

Well, WARP 9 is a philanthropic foundation in Australia dedicated to the improvement and the rapid accessibility of patients to novel treatments for gastrointestinal cancers of all types. So far, I mean, we don't really monitor their finances per se. So far, they've met all their commitments to us, though, as it related to financing of the trials associated with List A1.

Speaker 6

Okay. Does AGITG typically take a financial interest in anything that they help you with or in other way some universities do here or is that not the way they do it?

Speaker 1

I don't know what they typically do, but as that relates to our associations with AGITG for ASCEND and any other work we may do, there is no financial interest from them. They are purely clinicians executing at the site level. So we don't give up any commercial rights to them and they don't take any commercial or financial interest in the product.

Speaker 6

Okay, fair enough. And then on the ASCEND Cohort B, I'm just curious from a naive perspective, what's the significance of 4 hour delay in the second dose versus say a 24 hour delay, which sort of seems like it would be more normal to go through a normal metabolic cycle for the patient. So what's 4 hours versus a longer period of time?

Speaker 1

Well, I'll describe the sort of top line if we if you want to have a more detailed conversation, we could always take that offline with Doctor. Buck. But generally speaking, it's the choice of 4 hours is a combination of both knowledge of the pharmacodynamic excuse me, pharmacokinetic and pharmacodynamics of LIST-two-one in humans and also simply practicality for patients. So without getting too technical, LISTEN-one has a half life in humans of about 90 minutes. So and so after 1 or 2 half lives, you can expect that the concentration of Lista-one would be significantly decreased in the bloodstream.

Speaker 1

What we are doing is reinitiating administration at 4 hours to bring that concentration back up to the earlier peaks in order to see if the concentrations of the co administered chemotherapeutic agents gemcitabine and nab paclitaxel, both of which have active components that have very long half lives might actually see another increase of activity due to that second dose. The reason it's 4 hours and not 5, 6 or something else is that most patients do not want to spend an overnight in a hospital or do not want to have to return to the hospital or clinic for treatments, a second day after receiving chemotherapy. So 4 hours is a convenient time for patients who come in, in the morning, receive their chemo, wait 4 hours at the center, receive their second dose and then can go home. And so as I said, it's a combination of scientific design and practicality for patients.

Speaker 6

That's very interesting and it makes a lot of sense. And then one more if I might and this is sort of a premature question which a lot of them typically are from people like me. But what would be the Opto and business model once these drugs are approved and you have different co administrations of other modalities and so on. What will be the typical business model for that kind of a co administered program in terms of who pays and how it divides the funding and all that?

Speaker 1

Well, who pays are typically insurance companies and sometimes government entities, that's standard. How it's divided up is actually quite simple. Even though these products are co administered, they're not sold as a bundled product necessarily. So we will sell or somebody will sell List to 1 and they'll get paid for that. And somebody will sell gemcitabine and nab paclitaxel and they'll get paid from that.

Speaker 1

Now at some point, there could be arrangements that allow for bundling. So you buy a single package for convenience or even some sort of combination product that could be ultimately developed, which would involve a new product and new regulatory pathways, etcetera. And all of those things are possible. I would suggest that if someone is looking for a metaphor, an analog here on something like this, I would suggest that you go back and look at the case. It's not in oncology, but the business case would be similar.

Speaker 1

Look at the business case for ezitimibe, which was Charing Plow's cholesterol absorption inhibitor, which was approved as ZEDIA and how that product was used in combination with almost all of the then approved statins. And then ultimately, a new product was developed, which is now called Fytorin, which is actually the combination of simvastatin, Merck's 2nd generation statin plus ezitimibe in a single product sold as vytorin and ultimately became one of the reasons why Merck purchased Sherring Plow. But you can see the model there of how a product that could be used in combination with a variety of other products can be marketed in a variety of different ways and can achieve great commercial success.

Speaker 6

Thanks. That's very helpful. Thanks, Dave.

Speaker 1

Thanks, Jeff.

Operator

Thank you. One moment for our next question, please. Our next question comes from the line of Tim Dolliver with Brookline Capital Markets. Your line is now open.

Speaker 7

Hi, Chris. Hi, thanks and good afternoon. I have 2 or 3 questions. Just to close the loop with WARP-nine, how long do they have to raise the adequate amount of money to run the trials before you can just contractually walk away and find another entity?

Speaker 1

There's really there's nothing contractually in that about a timeline. So it's really something again we approach pragmatically. To the best of our knowledge, they are very close to having all the funding necessary to supply for Icolysta and they've already of course fully funded Icolysta alone. So we they're actually pretty efficient at getting to full funding and it's because they tap a network of philanthropic organizations and individuals within their region of the world, mostly Australia and New Zealand, who are very interested in supporting the cause.

Speaker 7

Okay. That's helpful. Thank you. And when do you expect you will get your rebates for your Australian activity for this year? It looks like you were paid about $2,000,000 last year in the second quarter.

Speaker 7

Is that a good ballpark, number 1? And then number 2, are these R and D credits included in the runway

Speaker 1

guidance? So the R and D credits are included in the runway guidance. James, if you're still available and your connection is working, could you just jump in, please?

Speaker 6

Yes.

Speaker 3

So in September, we received $600,000 from the Australian Taxation Office that was related to the 2022 tax year. And at the end of this year, we did have $1,000,000 recorded as an income tax receivable. So we typically file our returns in the June, July timeframe and then receive the refund around the September timeframe. And that'll be the expectation of about $1,000,000 in 2024 based on the 2023 tax year. And yes, that is included in our projected capital runway.

Speaker 7

That's great. Thank you. And then with regard to Chilu, it looks like you've had some recent communication with them because there was some verbiage added versus last quarter regarding the timing of them advancing the program once they have data. And so I think in the past, you've said the next milestone from them would be in 2025. Is that still the case?

Speaker 7

And I think the estimate could be that it would be as much as $10,000,000

Speaker 1

So the estimate is correct. Actually it's not an estimate, it's contractual at the beginning of phase. When they dose the 1st patient in Phase 3 or in a registration trial, which is typically a Phase 3 trial in the region, They are contractually obliged to pay us a milestone of US10 $1,000,000 To the best of our knowledge, they'll be starting Phase 2 at the end of this quarter or early next quarter. And while we don't know the projection of a Phase 2 timeline in China, but one could guesstimate that a typical Phase 2 program takes between 18 to 24 months. So we're starting now roughly 2 years from now, one might expect that the milestone might become due.

Speaker 1

But it's all dependent on enrollment rate and progression of the development program by Chi in China.

Speaker 7

Okay. Thank you. And I'll just press on this a little more in case

Speaker 1

you

Speaker 7

they've indicated anything. But the CFDA has done a pretty good job of replicating many of the accelerated pathways of the USDA. And so have you heard from Chilu whether or not the CFDA has indicated some eligibility for an accelerated pathway if the data hold up?

Speaker 1

To our knowledge, they have had that is, Chiluv has had discussions with the Chinese regulatory authorities. And I believe that their program is designed to take maximum advantage of the possibility of an accelerated approval pathway. But we have not been privy to any written well, we don't read Chinese anyway, but any translated of the written communications between them that might actually codify that. But that's what we've been told that they're developing with achieving accelerated approval in mind.

Speaker 7

Right. Okay. That's reasonable. Thank you so much.

Speaker 1

Thanks, Kim.

Operator

Thank you. This concludes the Q and A portion. I will now turn the call back to Doctor. Mazzo for closing remarks.

Speaker 1

Thank you, operator. And again, thank you all for participating in today's call. We look forward to speaking with you again during our next quarterly conference call and to continuing to provide updates on our achievements and progress. We remain grateful for your continued interest and support. Stay well and have a good evening.

Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.

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