Celcuity Q1 2024 Earnings Call Transcript

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May 15, 2024

There are 8 speakers on the call.

Operator

Good afternoon, ladies and gentlemen, and welcome to Saltivity First Quarter 2024 Financial Results Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for a question. I would now like to turn the conference over to Maria Yankosky with ICR Westwicke.

Operator

Please go ahead.

Speaker 1

Thank you, operator, and good afternoon to everyone on the call. Thank you for joining us to review Celcuity's Q1 2024 Financial Results and Business Update. Earlier today, Cellcuity released financial results for the Q1 ending March 31, 2024. The press release can be found on the Investors section of the website. Joining me on the call today are Brian Sullivan, Acuity's Chief Executive Officer and Co Founder Vicki Hahn, Chief Financial Officer as well as Igor Gorbachevsky, Chief Medical Officer, who will be available during Q and A.

Speaker 1

Before I 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 strategic decisions, forecast 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 afternoon, everyone. We appreciate your interest in Celcuity. Our Phase III trial, VICTORIA-one, remains on track to report top line data for the PIK3CA wild type subgroup in the second half of twenty twenty four. Enrollment continues to proceed well. During the Q1, in conjunction with an update related to our debt facility, we reported that the wild type subgroup was more than 50% enrolled.

Speaker 2

Achieving this enrollment threshold during the Q1 gave us the right to draw down an additional $10,000,000 tranche from our current debt facility. The patients we're evaluating in this study have HR positive HER2 negative advanced breast cancer whose disease progressed while receiving treatment with a CDK4six inhibitor and an aromatase inhibitor. And patients are eligible for enrollment if they've received up to 2 prior lines of endocrine treatment. But we anticipate that most of those enrolled will be receiving second line treatment. And these patients typically remain on their first line CDK4six inhibitor plus letrozole regimen for a median of 18 to 22 months depending on the CDK4six inhibitor.

Speaker 2

This compares to the 13 months medium duration of prior treatment reported for patients enrolled in the comparable arm of our Phase 1b breast cancer study that evaluated gatatelisa combined with palbociclib and fulvestrant. Patients who received prior chemo in the advanced setting are not eligible for our Phase 3 study unlike the comparable arm of our Phase 1b study. And this is relevant since the prognosis tends to be worse for individuals who have previously undergone chemotherapy for advanced breast cancer compared to those who are chemo naive. Another difference in the Phase 3 eligibility criteria relative to our Phase 1b study is the allowance of patients with bone only disease. Based on data from other Phase 3 trials, we expect that roughly 20% of the patients enrolled in our Phase 3 study will have bone only disease.

Speaker 2

Our Phase 1b study did not allow bone only patients, only those with visceral disease were enrolled. And this is relevant since patients with non bone only disease generally have worse prognosis than those with bone only disease. By not allowing patients who have received prior chemotherapy in the advanced setting and by including those with bone only disease, we're eliminating 2 factors in our Phase 3 study that correlate with worst outcomes. As we begin preparing for gatafilisib's potential position in the future treatment landscape, we will take into account the criteria oncologists use to select a cancer therapy. We think these criteria in order of importance are efficacy, then safety, then mode of administration.

Speaker 2

This is consistent with guideline recommendations, which are based on efficacy and safety considerations, not mode of administration preference, especially in advanced breast cancer. The current second line treatment paradigm for ER positive HER2 negative patients with advanced breast cancer are selective estrogen receptor degraders or SERDS like fulvestrant or elacitrant as single agents or 1 of 3 approved PAM inhibitors combined with fulvestrant. However, each of the PAM inhibitors only targets a single PAM node such as PI3K alpha, AKT or mTORC1, which is suboptimal because the uninhibited PAM nodes can induce compensatory resistance. In patients who have received prior treatment with a CDK and foursix inhibitor, none of these drugs has demonstrated efficacy in patients who have PIK3CA wild type tumors, while only the PI3K alpha and AKT inhibitor have reported benefit in patients with PIK3CA mutations. And these results are consistent with the non clinical data that shows these single node inhibitors are 3 to 4 times less potent in breast cancer cells without PIK3CM mutations than in those with them.

Speaker 2

This is in sharp contrast to the non clinical and preliminary efficacy data we've reported for getatilisit. And studies evaluating breast cancer and prostate cancer cell lines, gatifelisib was found to be equally potent and efficacious in cell lines with and without PIK3CA mutations and at least 300 times more potent on average in breast cancer cells than the improved single node PAM inhibitors. Consistent with these non clinical results, preliminary efficacy we reported in our Phase 1b breast cancer study that evaluated getetulosib combined with palociclib and either leprosyl or fulvestrant was comparable in both treatment naive and second, third line patients with and without PIK3CA mutations. And we think these results demonstrate that along with the estrogen receptor and CDK4six pathways, the PAM pathway plays an intrinsic role as a disease driver in HR positive HER2 negative advanced breast cancer that's independent of the presence of an activating mutation like PIK3CA. And that's why we believe development of an optimized PAM inhibitor like getatilisib that targets all Class 1 PI3K isoforms and mTORC 1 and 2 represents one of the most important opportunities to improve the standard of care in HR positive HER2 negative advanced breast cancer.

Speaker 2

Now obviously, the foundation of gatapolisib's potential future positioning will require the getethelisib report a clinically meaningful MPFS benefit. The current median PFS benchmarks for patients pretreated with a CDK4six inhibitor are modest. Published reports of median PFS for the surge range from 2 to 3.8 months and in patients with PIK3CA mutations, 5.5 to 7.3 months for the AKT and PI3K off inhibitors respectively. The 2 most recently approved therapies for this patient population reported 2 to 3.5 months of incremental PFS benefit, the threshold KOLs generally consider to be clinically meaningful. In addition, we've consistently heard from oncologists that they lately prefer to delay use of chemotherapy or ADCs until the benefit from endocrine backbone regimens is exhausted.

Speaker 2

And this perspective was actually recently echoed by senior management from an ADC sponsor that characterized ADCs as creating a 3rd pillar in the treatment landscape for HR positive HER2 negative breast cancer that sits between endocrine therapy based regimens and classical chemotherapy. And these comments are consistent with the sponsor's drug development strategy in breast cancer, which includes development of an oral SERD and AKT inhibitor. We also think gatapolisib safety profile may favor its potential positioning in a future treatment landscape. Gatatelisib's treatment related discontinuation rate was only 4% in the Phase 1b arm with the Phase 3 intermittent dose schedule, which is comparable to the 6% to 8% discontinuation rates for CDK4six plus fulvestrant regimens. And these results compare favorably to the treatment related discontinuation rates reported in the Phase 3 studies for opalypsib plus fulvestrant were 26% of patients discontinued and everolimus plus examestane were 24% of patients discontinued.

Speaker 2

The results for getafilisib are especially encouraging given the patients in the Phase 1b study did not receive prophylactic treatment for stomatitis. Since we're prescribing stomatitis prophylaxis in our Phase 3 trial, we would expect fewer stomatitis related adverse events, which would further enhance getatulisib's already promising safety profile. And finally, in office administered therapies such as an infused therapy like getatulisib have several key advantages relative to orally or self administered drugs. In a real world setting, convenience is only a meaningful consideration when the efficacy and safety profile of the alternative drugs are comparable or when a patient lives a significant distance from the treatment site. Otherwise, a well tolerated therapy that offers a clinically meaningful PFS benefit will be overwhelmingly preferred by oncologists relative to one that offers less efficacy, but is more convenient.

Speaker 2

In office administered therapies such as getatilisib fall into the medical benefit category, which has a far more streamlined reimbursement process than orally administered drugs, which fall into the pharmacy benefit category. And this has several implications. First, oncologists can recover additional costs associated with treating our patients. 2nd, oncologists have more autonomy to select therapies and payer management process is much less burdensome. And 3rd, payer contracting is less frequent, which results in fewer price discounts for the pharmaceutical company.

Speaker 2

And 4th, patients typically incur lower out of pocket costs with an infused therapy, which is an important consideration for most patients. Beyond our breast cancer program, we're excited about the opportunity to develop gatapalucid for patients with metastatic castration resistant prostate cancer or CRPC. This past February, we dosed our 1st patient in a Phase 1btwo trial evaluating gatapelisib in combination with darolutamide and androgen receptor inhibitor in CRPC patients previously treated with an AR inhibitor. Like HR positive breast cancer, prostate cancer involves both the hormonal pathway and the PAM pathway. The role of PAM pathway plays in prostate cancer has been well characterized non clinically and in 2 since discontinued PAM inhibitors, which showed compelling proof of concept clinical trial data in 2 randomized studies.

Speaker 2

In each of the clinical trials for these other PAM inhibitors, clinically meaningful treatment benefit was reported relative to the androgen receptor inhibitor control arm in patients with CRPC. This is especially encouraging since gatapilisib is significantly more potent and efficacious than these PAM inhibitors in vitro. Primary objectives of the Phase 1b portion of the trial include assessment of the safety and tolerability of gatatholucid in combination with darolutamide and determination of the recommended Phase 2 dose of gatotelisib. We anticipate reporting initial preliminary data in the first half of twenty twenty five. And with that, I'll turn the call over now to Vicki Hahn, our Chief Financial Officer, to review our financial results.

Speaker 3

Thank you, Brian, and good afternoon, everyone. I'll provide a brief overview of our financial results for the Q1 of 2024. Our Q1 net loss was $21,600,000 or $0.64 net loss per share compared to $11,900,000 net loss or $0.55 per share for the Q1 of 2023. Because these quarterly net loss includes significant noncash items, including stock based compensation and interest, we also included in our press release 0 $0.59 per share for the Q1 of 2020 $900,000 or $0.55 per share for the Q1 of 2023. Research and development expenses were $20,700,000 for the Q1 of 2020 4 compared to $11,300,000 for the Q1 of 2023.

Speaker 3

Of the approximately $9,400,000 increase in R and D expenses, dollars 7,900,000 primarily related to activities supporting the VICTORIA 1 Phase 3 trial and the initiation of the prostate Phase 1b2 clinical trial and $1,500,000 was related to increased employee and consulting expenses. General and administrative expenses were $1,800,000 for the Q1 of 2024 and that compared to $1,300,000 for the Q1 of 'twenty three. Employee related expenses accounted for $300,000 of the increase. The remaining increase of approximately $200,000 resulted from professional fees and other administrative expenses. Net cash used in operating activities for the Q1 of 2024 was 17,100,000 dollars compared to $12,900,000 for the Q1 of 2023.

Speaker 3

We ended the quarter with approximately 177,700,000 dollars of cash, cash equivalents and short term investments compared to cash and cash equivalents of 180,600,000 at December 31, 2023. The decrease in cash quarter over quarter of $2,900,000 is primarily the result of non GAAP adjusted net loss of approximately $19,900,000 offset by a warrant exercise yielding $14,000,000 in proceeds and working capital adjustments of approximately 3,000,000 dollars I will now hand the call back to Brian.

Speaker 2

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

Operator

Your first question is from Mary Raycroft from Jefferies. Please ask your question.

Speaker 4

Hi, good afternoon. This is Yao on for Maury. Thanks for taking our questions. So for the Phase 3 study, can you remind us how the primary analysis is going to be triggered in terms of events and maturity? And what were the PFS assumptions for treatment and control that went into the guidance of second half twenty twenty four top line data?

Speaker 2

Sure. Well, the study primary analysis will be triggered by hitting an event threshold number of events and that's independent of follow-up, although there are assumptions made about the follow-up period to derive an estimate of the timing, when we would expect those events to occur and which informs the sample size assumptions. We haven't published the assumptions we used to do that analysis, but we have presented data and there's publicly available data particularly for fulvestrant that suggests that 2 to 3.5 months would be the most likely in that range, probably centering around 2.7 for fulvestrant.

Speaker 4

Maybe a quick follow-up. You recently said some KOLs think the bar for well type patients is 8 months PFS or 5 months delta versus fulvestrant. And there is one, epirotomist study in post CDK4six patients that showed PFS in that ballpark. So how does the current trial compare to the epirotomist trial? And what in the current trial gave you confidence that you should show better PFS?

Speaker 4

Thanks. I'll hop back in the queue.

Speaker 2

So all the numbers for PFS should be on a relative basis because obviously it's relative to the control. And I think generally KOLs think or would consider a clinically meaningful benefit to be about 3 months or certainly more is better. But that's the threshold. If you're referring to I'm not sure whichever line of study you're referring to. Could you tell me what study you're referring to?

Speaker 4

It's just I think you recently said one of the ebrotomed study in the post CDK4six patients that showed PFS in the, I think, maybe 6 to 8 months?

Speaker 2

No. That's why I asked. That's not correct. So there's been some retrospective analyses of everolimus that doesn't break out what their activity is between PIK3CA wild type and mutant patients. But those are retrospective analyses, there are 3 of them as we aggregate the data and wait it for the number of patients in each study, the median PFS was 4.2 months.

Speaker 2

But again, given the non clinical data, which suggests Everolimus is more likely to be more effective in patients with mutations than not with mutations, I think there's an open question about how effective Everolimus is in the wild type, PIK3C wild type patients. And as I mentioned, there's been no randomized data that provides any informed information or credible data about the activity of the drug in patients who've received prior CDK4six.

Speaker 4

I see. Thanks for the clarification. That was really helpful. And thanks so much for taking our questions again.

Speaker 2

You're welcome.

Operator

Thank you. Your next question is from Tara Bancroft from TD Cowen. Please ask your question.

Speaker 5

Hi, good afternoon. I have one clarifying question. Can you explain the reasoning that you have behind stratifying patients by 6 months on prior therapy versus 12, as these are chemo naive patients and that essentially implies that many will have a longer time on prior therapy. And do you expect that the prior therapy will be almost entirely all prior CDK4six or will it be including others like Afrolimus or 3rds too if it's appropriate? As you know, the time on prior CDK4six specifically is important for outcome.

Speaker 5

So it'll be helpful to know. Thank you.

Speaker 2

Sure. So the stratification factor for prior treatment duration was based on ESMO guidelines, which define endocrine resistance in the advanced setting as less than patients receiving less than 6 months PFS on an endocrine therapy. So we felt that was a validated way of defining a patient population. There's a clear demarcation in responsiveness to subsequent rounds of chemotherapy, which is why the benchmark or that guideline identified 6 months as the threshold. To the extent that people want to look at more than 12 months, I would say the bulk of the differentiation in outcomes, it probably occurs in 6 months.

Speaker 2

And so what you'll see is a bit of an upward flow from curve that correlates highly with prior treatment that is much more gradual than the curve for patients who have progressed on less than 6 months. And what you'll see when you're looking at some data for therapies under development, particularly the SIRDS, it appears the strategy of the patient population they're going after, really sets who they're enrolling in some of their studies, are patients who have they're only enrolling patients who've had more than 6 months of benefit PFS on their prior endocrine therapy. So essentially they're selecting out the patients who are endocrine resistant. In our study, since we that's a meaningful and important group of patients to treat, We are including those patients. Stratification variable factor though allows us to do an analysis and make sure that the arms of the study are well balanced.

Speaker 5

Okay. Thank you so much. Perfect.

Operator

Thank you. Your next question is from Brad Cagnino from Stifel. Please ask your question.

Speaker 6

Thank you. And good to see the reiteration of the second half twenty twenty four top line guidance. Brian, maybe another timing question to layer on top of that. I'm just wondering how important is it for your strategy to be able to report the full data for the wild type cohort at the San Antonio Breast Cancer Meeting in

Speaker 2

December? Again, what's going to be most important is what the data says. And it certainly be nice if the data was available, we could present it. I don't think it's essential to be frank. I think it's a very secondary consideration.

Speaker 2

And we don't control the timing of that. And there's other complicating factors that you have to weigh. So we'll see basically. But I don't think it's a nice to have and need to have and certainly what's more important is the data itself.

Speaker 6

Okay. And then you also mentioned in your comments about the prior chemo and bone only patient factors between your Phase 2 and Phase 3. Could you point us to any data that might help quantify the degree of impact these factors can have on durability and PFS or any other comments on how you think about the potential directional impact? Thank you.

Speaker 2

Sure. So there's data across many tumor types that will show patients who've received chemo and then are subsequently treated on targeted therapy will have a worse outcome than patients who hadn't had prior chemo. In the breast cancer space, I guess the data that's probably most meaningful was reported out of the Byleaf study. Cohort A enrolled kind of a first line, second line population, no chemo naive patients. And then Cohort C of that study enrolled or allowed patients who had prior chemo to enroll.

Speaker 2

And so it was more of a second, third line study. The Cohort A, which is more similar to the patient population we're enrolling, reported 7.3 months Cohort B about 5.5 or 5.6 months. So essentially a 30% delta in favor of the patients who are chemo naive. And that's probably relevant benchmark just because they're hitting a similar pathway. As far as bone only impact or and essentially when you say bone only, there's 2 one qualification.

Speaker 2

Patients were enrolling a bone only, but they have to have a measurable lesion. So you can measure PFS. But in the PLOMA 2 study for palociclib, they did a follow-up analysis and found that patients with bone only disease had 38 months or 50% greater PFS than patients who had only that had visceral disease, not bone only disease, which suggests obviously there's a much greater, much more favorable prognosis for bone only patients who are more likely to get a favorable response to targeted therapy, at least one that includes a CDK4six inhibitor.

Speaker 4

Thank you.

Operator

Thank you. Your next question is from Chase Knickerbocker from Craig Hallum. Please ask your question.

Speaker 2

Hey, good afternoon, everyone. This is Connor on for Chase. Thanks for taking my question. I just have one here today. Last quarter, you brought on Eldon Mayer to prepare for a commercial launch of data.

Speaker 2

Since then, what initiatives has he implemented or plan on implementing to prepare for the launch on your own? Thanks for the question. So no, very happy to have Eldon on board. As folks who've invested in the space know, the preparation time for a launch is quite long. And I think launch preparation takes place in 2 time buckets.

Speaker 2

I would say there's the T minus 12, launch minus 12 months bucket, which is the most intense and expensive time. And that time can be gated or really begun once you have your Phase 3 data, essentially when you can really fully flesh out your product profile and be much more specific when you're doing research and characterize your positioning and your overall messaging in the marketplace and able to put together associates etcetera for payers. So we're in the T-twenty 4 timeframe, right. We're in between month 12, T-twelve and let's say T-twenty or so. And so the work that we're focused on now is, A, building the initial team, you need to bring on people who can lead the marketing effort, business operations effort, the managed market effort and that we're on track with identifying and getting those people on board.

Speaker 2

And that's those are individuals, those are not teams. And then you start to do research, which and layout the overall plan. So I would say the main focus for us by the end of this quarter was to essentially develop a preliminary plan, which would identify organizational structure that will be required in particular by month over the next, let's say, 20 months or so, the budget that's associated with that during that timeline as well as post launch, the 1st year of commercialization. We've identified the cross departmental dependencies that will require support of the launch, whether it's IT or administrative support or clinical operation support, medical affairs support, etcetera. And so and then making sure that all of that work is aligned with the landscape as we see it today or as we see it evolving down the road.

Speaker 2

Awesome. Thanks for the question. You're welcome. Thank you.

Operator

Thank you. Your next question is from Gil Blum from Needham and Company. Please ask your question.

Speaker 7

Hi, everyone. Thanks for taking our question. So maybe a bit of a rewording on a couple of previous ones here. So given you're enrolling patients with better or expected outcomes, shouldn't this overall extend timelines for a study readout? Mean increased benefit should be evenly spread across the treatment arms, but I'm assuming this went into your calculations.

Speaker 7

Thank you.

Speaker 2

It did. But I would say though, there's a cap on the potential for fulvestrant. If you look at the data, I don't think there's any data that would that has been reported in this patient population that suggests that VULVESTIN can do more than 3.7 months. If you aggregate the data that's been reported, you'd see it's about 2.7. If you look at the error bars on the data that has been reported, the upper bound of the 95% confidence interval is around 3.8.

Speaker 2

You can nudge that up and round it to 4. But just given the mechanism and those results, we think that there's much less upside, I guess, due to a more favorable patient population than there is by treating untreated disease mechanism, which is what we're doing with getupolusib.

Speaker 7

All right. Thank you. That's very helpful.

Operator

Thank you. There are no further questions at this time. Please proceed.

Speaker 2

Well, great. Well, thank you again for participating in our call today and for your ongoing support and interest in our company. We're participating in a number of conferences in the coming months and look forward to interacting with many of you soon. I hope you have a great evening. Goodbye.

Operator

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.

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Earnings Conference Call
Celcuity Q1 2024
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