Network-1 Technologies Q4 2023 Earnings Call Transcript

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March 21, 2024

There are 7 speakers on the call.

Operator

Good morning, and welcome to the NICE Biosciences Inc. Corporate Update Call. As a reminder, this conference call is being recorded. Your hosts today are Doctor. Lynn Kirkpatrick, Chief Executive Officer Doctor.

Operator

Bill Smith, Chief Medical Officer and Dave Humphrey, Chief Financial Officer. Before we begin the formal presentation, I would like to remind everyone that the statements made on the call and webcast may include predictions, estimates or other information that might be considered forward looking. While these forward looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events.

Operator

Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our prediction. You should also review our most recent Forms 10 Q and 10 ks for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. At this time, I'd like to turn the call over to Chief Executive Officer, Doctor. Lynn Kirkpatrick. Lynn?

Speaker 1

Thank you, operator, and good morning, everyone. Thank you for joining us. I am pleased to welcome you to today's corporate update conference call. 2023 was a year of exceptional clinical progress for our next generation analgesics as we move our programs to more commercialization. Before I get into the full background of the company, I remind you that Ncyte's mission to provide safer therapeutics to treat severe pain, to reduce abuse and to provide protection from overdose remains the core of our operation.

Speaker 1

A medical dichotomy exists between the treatment of severe pain with appropriate medication and the abuse and overdose that occurs with this class of drugs. Statistics suggest that the United States loses over 200 Americans every day to prescription opioid overdose. Yet there are countless Americans with severe pain who cannot get access to the prescription medication. My NICE team believes this is unacceptable and we believe our novel TAP and MPAR opioid products provide a solution to address this dueling issue with opioids. For those of you new to our story, we are a clinical stage pharmaceutical company seeking to develop innovative solutions for severe pain relief, while reducing the potential for opioid misuse, abuse and overdose.

Speaker 1

We've used sophisticated chemistry in the development of our 2 technology platforms TAP and MPAR, providing opioid abuse deterrents and overdose protection respectively. We've strategically positioned our products as next generation opioids that improve the delivery and effectiveness of analgesic prescription drugs, while reducing abuse potential. In 2023, we focused on the execution and completion of a number of PF614 and PF614 NPAR clinical trials, boosted capital resources and scaled manufacturing procedures, which provided a solid operational foundation and resulted in favorable FDA discussions in early 2024. Following these valuable meetings, Incyte is well positioned to enter the pivotal Phase III trials for PF-six fourteen in the second half of twenty twenty four. I will take you through a review of our 2 technology platforms and then Doctor.

Speaker 1

Bill Schmidt, our Chief Medical Officer, will expand on our clinical trial progress over the last year. TAP stands for trypsin activated abuse protection, which is the chemical modification of an active medication designed to make it inactive until it is swallowed and reaches the small intestine, where it's exposed to the natural enzyme trypsin. Trypsin, only found in the small intestine, initiate the 2 step process to effectively release the active opioid. In other words, our TAP prodrugs are activated or turned on by normal digestive enzymes that we use to digest our proteins in the small intestine. It's important to point out that trypsin is not found in other tissues.

Speaker 1

So our chemistry limits our top opioids to oral administration, which in turn is a means to reduce abuse. The second step of the opioid release, which is designed into the chemistry, determines whether our TAPPRO drugs provide either an immediate or slow release profile, as is preferred for drugs that are required 20 fourseven to treat pain. Based on this 2 step release mechanism, we refer to TAP as clever chemistry. And from our clinical studies, we've shown it to work as designed to improve safety and overall drug efficacy. Additionally, TAP can be applied to other types of medicines to provide a delivery mechanism to the gut, to improve safety or to simply make them more effective.

Speaker 1

Our second technology platform, MPAR, our multi pill abuse resistant is our smart overdose protection technology, an industry first. We've designed MPAR as a combination product of our TAP prodrugs with a small dose of trypsin inhibitor called nifamistat. This combination allows pain relief coupled with overdose protection. Empire is designed to turn off the release of the active ingredient if more than a prescribed dose is consumed orally. This protection is smart since it only kicks in, in an overdose situation.

Speaker 1

We have applied these highly novel technologies to several opioids and specifically to oxycodone for our lead product PF614. We believe our entire TAP drug class is set to become the next generation of opioids to treat severe pain in a safer manner than ever existed for opioid analgesics. We believe that controlling severe pain appropriately may prevent it from spiraling into chronic pain, which frequently leads to the use of opioids long term. The initial role for our lead product PF614 may be an indication such as traumatic injuries or invasive surgeries. Additionally, we foresee PF614 future role in chronic pain conditions such as treating osteoarthritis pain in patients who cannot use or do not respond well to less effective anti inflammatory analgesics and where high levels of pain negatively impact quality of life.

Speaker 1

CS-six fourteen NPAR with overdose protection is their follow on product and we believe it will provide an extra layer of safety for treating both acute and chronic pain. In brief, our TAP and MPAR technologies have been developed to address and reduce both prescription drug abuse and overdose. These are unique to the opioid and provide a number of advantages over the currently marketed abuse deterrent formulated products, advantages which we believe will provide both patients and prescribers more confidence in their medicines' safety. Although we have focused on applying CAP and MPAR to opioid analgesics, we have explored applications with other classes Our current pipeline includes a number of TAP and MPAR Opioids, TAP and MPAR ADHD products and a discovery program of novel TAP and MPAR agents for the treatment of opioid use disorder. Here's a brief summary of our programs before turning over to Doctor.

Speaker 1

Schmidt to provide more clinical details. PF-six fourteen, an oxycodone tap product is designed to replace OxyContin in the marketplace. The FDA has granted PF614 fast track status for the use in chronic pain, which suggests regulatory confidence that PF-six fourteen may fulfill an unmet therapeutic need. We have completed the non clinical package for PO-six zero four. We've completed 5 clinical trials for safety, efficacy and abuse potential and we've completed key manufacturing activities that position us to initiate our Phase 3 program.

Speaker 1

Our accomplishments in 2023 include completion of PF-six fourteen-one hundred and four, a study that evaluated the oral abuse potential of PF-six fourteen. We reported positive results in April of last year. Importantly, the secondary endpoint, take drug again, was significantly lower at both the low and mid doses of PS-six fourteen and was even numerically lower than comparator at the high dose, demonstrating that recreational drug users may be less motivated to abuse PF614 compared to immediate release oxycodone. A second study PF614-two zero one was designed to measure the onset of pain relief for PF614 in the cold presser test. Establishing the time for drug onset was suggested by the FDA prior to initiating larger efficacy studies.

Speaker 1

Initiated in mid-twenty 23, enrollment was rapid and the study was completed by year's end to support our end of Phase 2 meeting with the FDA in January. We have used the data from this study to support the design of our Phase 3 protocols, which were discussed at this end of Phase 2 meeting. This meeting provided feedback and support for our non clinical package and enabled a constructive discussion regarding Phase 3 clinical trial design for PF-six fourteen, as well as suggestions that we believe will support a successful new drug application or NDA. This end of Phase 2 meeting signifies a major step in the regulatory approval process of PF-six fourteen. As previously mentioned, the results and analyses from our completed Phase 2 II studies have informed our strategy and design of Phase III studies, which are expected to begin in the second half of twenty twenty four.

Speaker 1

Last year, we also completed a 3 part Phase 1 study for our follow on product PF614 MPAR that ultimately provided us with the first data demonstrating the potential for preventing prescription drug oral overdose, something felt to be a Holy Grail for opioid. Because of our positive data, the FDA encouraged us to apply for breakthrough therapy designation in late 2023. On January 19, 2024, we were informed that the FDA had granted us breakthrough therapy designation, which to date has only been provided to less than 300 drugs. Importantly, opioid analgesics have not previously been included in this exclusive drug classification. Breakthrough therapy is a process designed to expedite the development and review of drugs that are intended to treat a serious condition and that show preliminary clinical evidence of having a clear advantage over available therapies.

Speaker 1

We are highly encouraged by our innovative MPAR technology, which is truly groundbreaking and could save many lives. Strategically, to broaden our portfolio, in November 2023, we executed a letter of intent with Sweden based Oncozenge to explore a collaboration for the U. S. Development of bucozenge, which is in Phase 3 clinical trials in the European Union. Bucozenge is a non opioid lozenge to treat pain caused by oral mucositis, a condition resulting as a side effect of cancer therapies.

Speaker 1

We believe this collaboration could allow Ncythe to diversify its pain pipeline and discussions are continuing. Finally, I want to stress, our programs are protected by a global intellectual property portfolio of over 100 patents issued in 25 countries, ensuring an opportunity to address the need for safer pain medication globally. We have built a strong, motivated and experienced team to usher our programs through each stage of development in an attempt to launch our next generation products as quickly as possible. Now I'm pleased to turn over the call to Doctor. Bill Schmidt, our Chief Medical Officer to further elaborate on our recent clinical study results.

Speaker 1

Bill?

Speaker 2

Thank you, Lynn. I'm pleased

Speaker 3

to provide an update on NICE's significant progress with our clinical program and further development of PF614 during 20 23. We believe the results from our trials throughout the year have provided a formative structure as we advance to Phase 3 studies of PF614 in 2024. As Lynn mentioned, we are developing a next generation opioid analgesic, which promises strong efficacy with less potential for abuse and overdose, something the industry and society really need. Over the past year, we've been perfecting our clinical package to ensure it will support a successful NDA. In all, we have completed 5 clinical trials with PF614, a single ascending dose study also known as a SAD study, a multiple ascending dose study also known as a MAD study that was combined with a bioequivalence arm demonstrating that PF6 14 delivers oxycodone in a dose equivalent fashion similar to OxyContin to support our use of the 505(2) shortened regulatory pathway, 2 human abuse potential studies to support abuse deterrent labeling, and most recently an analgesic study that evaluated the time to onset of analgesia following oral dosing of PF614.

Speaker 3

The efficacy study PF614-201 was designed after receiving feedback from the FDA on our plan to explore PF614 efficacy for the acute pain indication. PF614-two zero one was a Phase 2 study entitled a randomized double blind placebo controlled crossover study of PF614 on analgesic response in the cold presser test in healthy male subjects. It evaluated the time to efficacy onset for analgesia and measured pain intensity following 2 different oral doses of 14 versus placebo. The study was initiated and enrolled quickly to provide data for discussion with the FDA during our end of Phase 2 meeting early in 2024. The study measured the onset of pain relief versus time in male subjects who submersed their non dominant hand in a 2 degree centigrade freezing ice water bath.

Speaker 3

This is a well established method to measure pain and efficacy of novel pain products and provides a method to establish the time that the pain relief begins to occur. Following completion of enrollment in November 2023, we reported results in December that reinforced the efficacy of PF614 demonstrating the time of analgesia onset and its ability to provide significant pain intensity reduction, the first ever measured for any TAP opioid analgesic. The study pain endpoints matched all previous pharmacokinetic endpoints from prior clinical studies and supported the concept that NICE's TAP opioids deliver strong analgesia safely and effectively. Importantly, this time of onset study provided data that aided the design of key elements of our Phase 3 studies that we are aiming to initiate in the second half of twenty twenty four. Early last year, we also completed enrollment of the final part of our first clinical trial to evaluate overdose protection, PF614 MPAR-one hundred and one.

Speaker 3

This study was undertaken in partnership with Quotient Sciences using their integrated translational pharmaceuticals platform for the clinical testing of PF614 MPAR allowed us to complete this highly complicated study in record time. The final data from Part 3 of this trial confirmed that consumption of increasing amounts of PF614 MPAR at the 25 milligram dose level resulted in protection from oral overdose if 3 or more capsules were taken simultaneously. This part of the trial was designed to deliver increasing amounts of PF614 MPAR at the 25 milligram dosage. Specifically, we administered 1, 2, 3, 5 or 8 dose units at one time and measured resulting plasma levels of oxycodone. All of the subjects were naltrexone blocked for safety and the resulting oxycodone released into their plasma was measured and compared to previous data generated with the delivery of increasing doses of PF614 without MPAR protection.

Speaker 3

The data showed that delivery of 1 or 2 dose units of PF614 MPAR provided analgesic level doses of oxycodone as designed. Once the dose units were increased to 3 or more, the amount of oxycodone released was reduced as compared to levels of unprotected PF614. At 8 dose units, there was significantly less plasma oxycodone. This is significant at pH less than 0.0033 and if the same dose of PF614 was delivered unprotected. These data were presented to the FDA and was the basis for the grant of our breakthrough therapy designation, something highly unique for an opioid product and something we are exceptionally proud of.

Speaker 3

PF614 MPAR is the first ever opioid analgesic with oral overdose protection. Finally, results from our intranasal human abuse potential study provided the first human data to show that the intact prodrug PF614 when absorbed into the bloodstream does not convert to oxycodone. This confirms a key design feature of PF614 in that it requires exposure to the digestive enzyme trypsin to convert to oxycodone. As Doctor. Kirkpatrick mentioned, this can only occur in the human gastrointestinal tract.

Speaker 3

This information is important as it supports our contention that attempts to abuse PF-six 14 by direct intravenous injection will be unsuccessful for supporting the habits of IV drug abusers. I will now turn the call back over to Lynn.

Speaker 1

Thank you, Bill. In February, with breakthrough therapy designation granted for PS-six fourteen, MPAR, we held a constructive meeting with the FDA. The meeting focused on the non clinical data from our combination product that is designed for the treatment of severe pain integrated with multiple layers of safety. The FDA provided feedback and advice on additional non clinical studies that will be required for an eventual NDA submission and approval. The guidance will aid in streamlining the development plans for this innovative drug candidate.

Speaker 1

Looking ahead, the next stages for our PF-six fourteen and our PF-six fourteen NPAR clinical programs include more ambitious goals designed to enter the market as soon as possible and are outlined as follows. Firstly, following FDA final review of our Phase 3 protocols and statistical analysis plans, we intend to initiate the first of the Phase 3 acute postsurgical pain studies, PF614-301 abdominoplasty or PF614-302 bunionectomy in the second half of twenty twenty four. Secondly, we aim to initiate our second study of PF-six fourteen MPAR in the second half of twenty twenty four as well. PF-six fourteen MPAR-one hundred and two will be a Phase 1b study intended to confirm that the higher 50 milligram dose units of PEO-six fourteen MPAR also provide overdose protection. Thirdly, we are continuing to move our chemistry manufacturing and controls activity towards commercial scale with additional drug substance and drug product development activities that have already been initiated in the Q1 of 2024.

Speaker 1

Fourthly, given the expedited designations of both PF614 and PF614 MPAR, we are continuing our regulatory package development and plan additional meetings with the FDA for both products in the second half of 2024. I now welcome our CFO, Dave Humphrey, for a short financial summary. Dave?

Speaker 2

Thanks, Lynn. We ended 2023 with cash and cash equivalents of $1,100,000 as of December 31, compared to $1,500,000 as of September 30. We have boosted our cash balance in early 2024 with cash proceeds of $2,100,000 from the exercise of warrants to purchase 1,300,000 shares of common stock that were issued in the Q4 of 2023. Additionally, in February, we received gross proceeds of $4,700,000 from the exercise of warrants to purchase 3,600,000 shares of common stock that were originally issued in May 2023. Funding under federal grants was $500,000 for the Q4 of 2023 compared to $1,400,000 in the comparable 22 quarter.

Speaker 2

For the full year of 2023, funding federal grants was $2,200,000 compared to $2,500,000 for the full year of 2022. These decreases were a result of the timing of research activities eligible for funding, particularly for the MPAR program. We're continuing to explore non dilutive government funding to support this program through the NIH HEAL initiative, which stands for Helping to End Addiction Long Term. Our research and development expenses declined in 2023, totaling $2,200,000 for the Q4 compared to $6,400,000 for the same period in 2022. For the full year of 2023, R and D expenses were $7,600,000 compared to $19,800,000 for the full year 2022.

Speaker 2

The decreases were primarily the result of reduced external costs related to the clinical programs for PF-six fourteen and PF-six fourteen AMPAR, particularly regarding bioequivalence and immuno these potential studies for PF-six fourteen conducted in 20 22. General and administrative expenses were $1,400,000 in the Q4 of 2023, a slight increase compared to $1,200,000 for the same period of 2022. And for the full year of 2023, G and A expenses decreased 22% to $5,400,000 compared to $6,900,000 for the full year 2022. The slight increase in the quarter over quarter period was due to higher non cash stock based compensation, while the full year decrease was a result of reduced consulting, legal, liability insurance and employee bonus expenses. Total other income or expense net was an expense of approximately $300,000 for the Q4 of 2023 compared to income of $700,000 from the same period in 20 22.

Speaker 2

For the full year, total other income net was $92,000 in 2023 compared to $14,000 in 2022. These changes in other income expense are primarily due to non cash fair value adjustments for convertible notes and warrants. Net loss attributable to common stockholders for the Q4 of 2023 was $3,500,000 compared to $5,500,000 for the Q4 of 2022. For the full year of 2023, our net loss was $10,600,000 compared to $25,100,000 for the full year of 2022. As a clinical stage biotech company, our continued research and development efforts toward regulatory accruals for our product candidates are expected to result in losses for the foreseeable future.

Speaker 2

Operator, we will now take questions.

Operator

Thank you. At this time, we will be conducting a question and answer session. And our first question comes from the line of Ram Selvaraju with H. C. Wainwright.

Operator

Please proceed with your question.

Speaker 4

Hello. What is the current pro form a cash position?

Speaker 1

Dave, would you like to take that?

Speaker 2

Sure. Our cash was about $1,100,000 at the end of the year and then we had some warrant exercises and in the Q1. So our current funding allows us to fund operations into the Q3 of this year.

Speaker 4

And do you currently have sufficient resources with which to start the Phase III trial of PF614?

Speaker 2

Right now, we're working on preparation for Phase III trials and some additional work on our manufacturing of drug products. But we'd be looking to raise additional funding before we initiate the actual Phase 3 studies.

Speaker 4

Great. Thank you for answering my questions.

Operator

Thank you. Our next question comes from the line of Hunter Diamond with Diamond Equity. Please proceed with your question.

Speaker 5

Thank you. It was a fairly comprehensive call, so not many questions for me. But just a follow-up to the cash question. Considering the advancements of PF614, the exercise of the warrants and the issuances, Maybe just if you could provide kind of an update on the burn rate and what you think milestones you can reach with the current capital?

Speaker 2

Sure. In terms of burn rate, we're at a phase right now where we're spending a little bit less I think in the first half of this year. We'll probably continue R and D spending at about the rate we were in 2023, so maybe $1,500,000 to $2,000,000 a quarter. I would expect that to begin to ramp up in the second half of the year once we initiate the Phase III clinical trials depending on funding. And as that ramps up, might reach levels more closely aligned with what we were doing in 2022 with higher clinical activity in that year, so potentially $5,000,000 or more a quarter when fully ramped up for Phase 3.

Speaker 5

Great. Thank you. No, that makes perfect sense and congratulations on all the progress.

Speaker 2

Thanks.

Operator

Thank you. And our next question comes from the line of Brad Sormannen with Zacks Long Cap Research. Please proceed with your question.

Speaker 6

Yes. Thank you. Hi, Lynn and the team. Great updates and yes, very excited always to hear about it. Obviously, a huge need for the country.

Speaker 6

I read more about that this morning. You mentioned some partnership opportunities in or partnership opportunity in Europe, I believe. And I was just wondering if you had pursued any other or signed anything else in the pipeline with other partnership opportunities or additional government funding because this is a huge national problem, just those kind of issues, either a partner or government funding, if there's any developments in that area? Thank you.

Speaker 1

Thanks, Brad. And certainly, we appreciate the fact that, you recognize the need that we're trying to fill. As we mentioned, we have explored a partnership really to expand our pipeline and that is partnership we spoke about with Oncogene. We're continuing to examine opportunities for all of our programs. Certainly, the opioid products, which are more fully developed, we have had discussions with some groups.

Speaker 1

And we do have intellectual property in other areas. And the use of our TAP and MPAR platforms can be applied to other indications. So we've explored and have initiated discussions with that. So a fairly long process, but we are in discussions for that. And we are exploring other opportunities with the NIH, the HEAL program, as Dave mentioned, as there is funding opportunities there for various programs and we will continue to tap into that as necessary.

Speaker 6

Great, thanks.

Operator

Thank you. And we have reached the end of the question and answer session. And therefore, I would like to turn the call back over to Doctor. Kirkpatrick for her closing remarks.

Speaker 1

Thank you, operator. As we think about pain, we know there are many different products on the market that deal with different types of pain. Many patients don't need an opioid to relieve their discomfort. Additionally, we know there is a significant push to try to replace opioids with products that do not have their deleterious effects. Yet today, this has not been a reality.

Speaker 1

There has been significant press recently about a new pain product, a NAV1.8 inhibitor that purportedly does not have the same potential for addiction as an opioid. However, we believe the data recently presented indicated that this new product was inferior to the opioid control arm for reducing pain in its recent Phase 3 clinical study. This new pain product may have great potential for some types of pain, but the study showed that severe post surgical pain may still be better off treated with an opioid. Opioids have been used for 1000 of years and still play a major role in healthcare. Enzys believes its TAP and MPAR Opioid products will provide prescribers and patients with the next generation of safer opioids and the only opioid to date with oral overdose protection.

Speaker 1

We are working to bring these products to the market in a timely manner. I would like to thank each of you for joining our corporate update conference call today. We are encouraged by the positive developments that have transpired in early 2024 for both our unique products. I look forward to continuing to provide progress updates as we initiate our Phase 3 studies in the year ahead. Thank you.

Operator

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

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Network-1 Technologies Q4 2023
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