BrainsWay Q4 2024 Earnings Call Transcript

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Provided by Quartr
March 31, 2025

There are 7 speakers on the call.

Operator

Welcome to the Telferra Fourth Quarter and Full Year twenty twenty four Financial Results Conference Call. This call is being webcast live via the Events page of the Investors section of Telferra's website, www.telferra.com. You may listen to a reply of this webcast by going to the Investors section of Telferra's website. I would now like to turn the call over to Raffia Zatorian, Telfera's Chief Financial Officer. Please go ahead.

Speaker 1

Thank you for joining us on the call today. Today, we announced our fourth quarter and full year twenty twenty four financial results and associated business updates in a press release. With me today are Vince Angotti, our Chief Executive Officer and Doctor. Shaquille Aslam, Telferra's Chief Medical Officer. Before we begin, I want to remind listeners that during this call, we will likely make forward looking statements within the meaning of the federal securities laws.

Speaker 1

These forward looking statements involve risks and uncertainties regarding the operations and future results of Telferra. Please refer to our press release in addition to the company's periodic, current and annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward looking statements. These documents can also be found on our website within the Investors section. I'll now hand the call over to Vince.

Speaker 2

Thanks, Raffi. Good afternoon and thank you to everyone joining our call today. We made strong progress in 2024 and anticipate furthering that progress in 2025 with the expectation that our nephro CRRT study should be completed by the end of the year. We have a number of important updates to share with you today, all of which support the timely development of NIAID and the planned submission of a PMA in the first quarter of next year. I'll first provide an overview and then hand it over to Doctor.

Speaker 2

Aslam to provide additional details on all the improvements being made in the study and with the clinical sites. First, as announced earlier today, I'm pleased to highlight an agreement with existing and new investors for a private placement investment of up to $14,800,000 in gross proceeds should all milestones be achieved. I want to thank Natahala Capital and Roslyn Advisors who remain committed investors supporting the company. This financing should provide us capital to a potential completion of the study by the end of the year. Rafi will provide additional details on the financing later in the call.

Speaker 2

I'll now provide key updates we've made to the nephro CRRT study. As a reminder, nifamistat has been approved and used for multiple indications in Japan and South Korea, including as an anticoagulant for the extracorporeal circuit for well over thirty years. This extensive clinical use demonstrating its safety and efficacy in those territories, as well as multiple studies performed outside The U. S, we believe will be corroborated by the data being produced from the nephro CRRT clinical study. If approved, NIAID would become the only FDA approved regional anticoagulant for use during continuous renal replacement therapy.

Speaker 2

We believe this profile would be impactful given the many disadvantages of the currently used products, heparin, which is systemic in nature and citrate, which is being used off label. Importantly, we announced that the FDA approved our request for a reduction in the size of the nephro trial from one hundred and sixty six patients down to seventy. And even with this significant study size reduction to seventy patients, the primary endpoint remains powered at ninety percent. This was a major step forward for the timely development of NIAID. We're thankful the FDA continues to meet or exceed the statutory timelines in responding to our requests.

Speaker 2

The FDA's responsiveness has been a key benefit of NIAID's breakthrough designation. During the same meeting held with the FDA in January, where we discussed the study size reduction, we also requested and the FDA approved two major protocol changes to the inclusionexclusion criteria. At a high level, one, we're now allowed to enroll patients that have been on CRRT for over forty eight hours and two, the inclusion criteria requiring documentation of heparin intolerance has been removed for institutions that do not use heparin as part of their protocol, which importantly is applicable to six of our seven current sites. All of these changes to the necro study are crucial modifications that support our projected timeline to complete the study by the end of the year. Doctor.

Speaker 2

Azim will provide more details on what these changes mean and how we believe they'll impact enrollment. In parallel to our work on the regulatory front, making changes to the study protocol, we've also been focused on adding new clinical study sites. Not only is the number of sites important, but also the site profile, specifically again one, the type of intensive care unit where the study will be performed, for example, medical ICUs instead of surgical or cardiothoracic ICUs. Two, the specialty of the principal investigator, specifically a nephrologist as a primary lead for selecting patients to enroll compared to an intensivist or other specialist and three, the efficiency of the administration to initiate a new study at their institution. Doctor.

Speaker 2

Azim identified these site characteristics after his review and learnings from assessing the existing sites as critical to successful and timely enrollment. At the end of twenty twenty four, we had five enrollment ready sites, four of which were inherited relationships from our acquisition of Lowell Therapeutics. And upon Doctor. Aslam's review do not meet our ideal site profile moving forward. The fifth site identified by Talferra meets our target site profile and has enrolled five of the six patients who have completed the study.

Speaker 2

The principal investigator at this institution is a nephrologist and is enrolling patients from the medical ICU. We added three new sites in the first quarter, '2 of which are just now starting to screen patients for a total of eight sites that are now enrollment ready. We expect to bring five additional sites on by mid year. Before I turn the call over to Shaquille, I want to reiterate our belief that the three critical risk elements, clinical, regulatory and commercial for the nephro program are low for a number of reasons. First, with over thirty years of use as an anticoagulant during CRRT in Japan and South Korea, we know in the famestat's track record of efficacy and safety minimizing the clinical risk.

Speaker 2

The trial design has been agreed with the FDA, including broader inclusion criteria and a reduced number of patients, all of which help minimize execution risk. Second, we have a clear regulatory path, including breakthrough designation from the FDA, which has provided us with efficient access to the agency, leaving the quick review and response times. Lastly, while we know there's always commercial risk, we believe this is mitigated given the disadvantages of the products currently being used for anticoagulation of the CRRT circuit, namely heparin and citrate. In fact, we recently attended the thirtieth annual AKI and CRRT meeting in San Diego, where a number of physicians asked us if they could have access to nifamistat through a compassionate use program where neither heparin nor citrate meet their needs. I'll now turn the call over to Doctor.

Speaker 2

Aslan, who was named as Telfaira's Chief Medical Officer in October. He's been critical in instituting the major changes to the protocol as well as the site selection process. Doctor. Aslam?

Speaker 3

Thank you, Vince. We have been busy making changes to the study protocol as well as evaluating the characteristics of clinical sites to improve the study enrollment. I'm happy to say, as Vince highlighted, we have had success on both fronts as the FDA has approved the changes we requested. We now better understand the profile of an ideal clinical site for our registrational trial. The three newest sites have our target profile with the higher CRRD volumes and two of these sites are just beginning to screen patients.

Speaker 3

This brings our current total enrollment ready sites to eight, seven of which are screening today. Before providing more information on the study site, I would like to elaborate on the reasons we believe the FDA agreed with our request to significantly reduce the study size from 166 patients to 70. With 166 patients, the study was overpowered with over 99% power to meet the primary endpoint. Despite a significant size reduction, it's important to note that even with 70 patients, the study has at least 90% power to meet the primary endpoint. You are probably wondering why this study was so overpowered in the first place.

Speaker 3

It is our understanding that Lull Therapeutics proposed a study size of 166 patients to assure the FDA that a sufficient number of patients would be exposed to NIAID from a safety perspective. In In our meeting with the FDA in January, we presented the safety data from the existing large safety datasets and the published literature on the real world use of nifamostat across multiple indications in Japan and South Korea for over thirty years. We were able to assure the FDA that nafamostat had a well characterized safety and a favorable benefit risk profile based on over three decades of use across multiple indications including CRRT. Based on the screening data from our active study sites and input from our PIs, we identified two eligibility criteria, which were responsible for several screen failures and could be modified without affecting the study outcome. The first was an exclusion criterion, which excluded patients from the study if they had been on CRRT for more than forty eight hours.

Speaker 3

The sites informed us that many patients who were started on CRRT late Friday or over the weekend were no longer eligible by the time the study team returned on Monday. The FDA allowed us to remove this exclusion criterion agreeing with our rationale that time on CRRT before study enrollment had no impact on the primary endpoint. 15 patients were excluded from the study because of this criterion. We believe this protocol change will be impactful to the enrollment speed going forward. The second change we requested was the inclusion criterion that required the sites to document either intolerance or contraindication to heparin.

Speaker 3

We found this requirement irrelevant and restrictive because many institutions, including most of our study sites, do not use heparin during CRRT. The FDA agreed to remove this requirement for these sites. 10 patients were excluded from the study because of this criterion. As a note, only one of our current sites uses heparin for anticoagulation during CRRT and this dissatisfaction with heparin is universal amongst the physicians we speak with. In addition to these protocol changes, we analyzed the screening data to understand the study site profile that would predict better patient enrollment.

Speaker 3

We identified an ideal site profile based on the type of ICU, the specialty of the principal investigator and the time to complete the start up paperwork. The start up activities were the main bottleneck in site activation previously. As part of our strategic review, we identified that nephrologist led sites were an important differentiator since nephrologists effectively decide on CRRTUs and study enrollment. The other key factor was the type of ICU. We determined that medical ICUs were the most appropriate type of ICU for study enrollment.

Speaker 3

In contrast, our initial less productive sites relied on the cardiothoracic and general surgical ICUs, where most patients on CRRT received systemic heparin for other indications or had active bleeding, excluding criteria for nephro enrollment. The one initial site that has been the most productive has a nephrologist as the PI with all enrolled patients coming from medical ICU. As a result, our new and future sites target a nephrologist as the PI and draw patients primarily from the medical ICU. This includes the two new sites that just began screening and the six additional sites expected to be activated in the first half of twenty twenty five, all of which are similar in profile to our current highest enrolling site, but with higher CRRT volumes. Our most productive current site has about 20 CRRT patients per month, while the three new enrollment ready sites range historically between 9,100 CRRT patients per month.

Speaker 3

With many of the additional sites planned by mid year having even higher monthly CRRT volumes. Because of our selection of sites with a quick administrative timeline, we have experienced a much shorter time for their activation. For example, our most recent site took us less than four months to activate compared to over a year for some of the initial sites. In summary, we expect to have 13 sites enrollment ready for mid year and we continue to pursue additional sites after the limit of 14. And with that, I'll turn the call over to Vince.

Speaker 2

Thank you, Doctor. Aslam. I'd like to highlight Doctor. Aslam's expertise in CRRT and experience both drug and device trials during his accomplished career that have facilitated these enhancements to the program. And I'll hand the call over to Raffi for a financial update.

Speaker 1

Thanks Vince. As mentioned, we have been highly focused on delivering a completed nephro study by the end of this year. Accordingly, we have reduced our operating expenses to reflect this objective. Also, as announced earlier today, we signed agreements with investors regarding a private placement financing with existing and new fundamental investors led by Nantahala Capital and Rosland Advisors, who remain committed and supportive shareholders. The amount of the financing is expected to provide capital to support the targeted completion of the study by the end of twenty twenty five.

Speaker 1

The financing was structured in three equal tranches of $4,925,000 with the first tranche received at the initial closing expected shortly here in April. And the two additional tranches based on achieving an enrollment of 17 patients and 35 patients and with the stock trading above $0.73 per share. In total, the $14,800,000 commitment is expected to be achieved later this year as we expect acceleration in enrollment rates given all the changes made to the nephro CRRT study and the new sites that are coming online. As mentioned, this financing combined with the $8,900,000 in cash at 12/31/2024 supports the completion of the study anticipated by the end of the year.

Speaker 3

Our

Speaker 1

combined R and D and SG and A expenses for the fourth quarter of twenty twenty four totaled $3,000,000 compared to $4,600,000 for the fourth quarter of twenty twenty three. Excluding non cash stock based compensation expense, these amounts were $2,800,000 for the fourth quarter of twenty twenty four compared to $4,300,000 for the fourth quarter of twenty twenty three. The decrease in combined R and D and SG and A expenses in the fourth quarter of twenty twenty four was primarily due to reductions in personnel expense and other general and administrative expenses. We expect cash operating expenses or SG and A and R and D excluding stock based compensation to be in the range of $18,000,000 to $19,000,000 in 2025. I'll now turn the call back to you, Vince.

Speaker 2

Thank you, Raffi. Before we open the line for questions, I'll reiterate that we've made significant improvements in the study design in concert with the FDA. We now have an improved trial design with the right types of ICUs as operating sites. I look forward to showing our progress in the NIAT registrational trial over the course of the year. And I'd like to open the line up for any questions you might have.

Speaker 2

Operator?

Operator

Thank Your first question is from Ed Arce from H. C. Wainwright. Please go ahead.

Speaker 4

Hi, good afternoon, everyone. This is Thomas. We have asking a couple of questions for you. Thank you so much for the kind of questions. So first, regarding the changes and the inclusion criteria, those are formally approved now by the FDA.

Speaker 4

It sounds like a mix of sense, but can you discuss the what was the original line of thoughts for excluding these patients in the previous protocol?

Speaker 2

So we'll have that over to Shaquille. Again, the question is changes in the inclusion criteria. What were the original thoughts on I just want to be sure, Thomas, why that protocol was written originally as it was with Lowell?

Speaker 4

Yes. Yes. That's where I meant. Thank you.

Speaker 2

Okay. So Shakir, you want to answer that, that's relative to the heparin and relative to the forty eight hours on CRRT and why they were originally included that way?

Speaker 3

Sure. So since I was not part of the initial protocol development, so I can only guess or the reason that make the medical sense from my point of view. So forty eight hours restriction perhaps was done if you were to look at some important clinical endpoint. And my thinking on this was, since we are not really looking at clinical endpoint as a primary efficacy endpoint, time on CRRT had no impact on how somebody is going to respond to NIAID. So that's why we changed it.

Speaker 3

But my understanding is that because of impact that longer duration on CRRT, for example, could have patients who are longer on CRRT, they may take longer time to recover their kidney function or they may have higher mortality because they're not recovering their kidney failure quick enough. So that's my guess that was the reason. The second in terms of contraindication to use of heparin, FDA's position has been that heparin is FDA approved for this indication and it is and perhaps should be used or at least offered to every patient who starts on CRRT. As we approached many of these sites and activated these sites, we did not find that to be the case. What we found was the most of the sites were not offering heparin at all to their patients.

Speaker 3

So as a result, they didn't really make any sense for us to require these sites to document contraindication to use of heparin. FDA, as Vince mentioned, also agreed to remove that restriction. Does that answer your questions?

Speaker 4

Yes. Thank you so much for clarification. Both updated endpoints have come out of sense.

Speaker 2

Nikhil, can I ask you also to quickly elaborate on why have these institutions decided not to use heparin for the most part? In your clinical experience and discussion with these sites, what has been their main rationale for those on the phone today to understand why they're not using the heparin even though it's indicated for this condition? Right. So

Speaker 3

there are many reasons. I think overall most institutions do not feel that the risks from heparin justify the use of heparin routinely in all patients. Heparin is kind of difficult to use in this patient population. Number one, it has a long half life, approximately two to three hours and the half life can change within the same patient. So that makes it very difficult to use.

Speaker 3

And titration of heparin is quite difficult. It takes a while before you titrate to the target therapeutic activated prothrombin time, which is the marker that we use in the clinic. And I think the most important thing perhaps is that it's a systemic anticoagulant. So you are trying to prevent clotting in a circuit, which is outside the body. So there really is no justification to expose the whole patient to anticoagulation because these patients are very high risk of bleeding from many organs.

Speaker 3

And so this increases their risk of systemic bleeding. So those are I think my top few reasons why I never liked that happening and most physicians don't.

Speaker 2

Thanks, Kiok.

Speaker 4

Got it. Thank you so much. Perhaps a couple of questions regarding the private placement that was announced today. Just wonder the second and third milestones tied to the patient enrollment 17 and GERD CAR patients respectively. Is there any time limit tied to these achievements of the milestones?

Speaker 1

No, they're not.

Speaker 4

Okay. So just to be clear, the funding will trigger as soon as both the number of patients being enrolled and also the share price hitting the five day package?

Speaker 1

That's correct. As opposed to and some normal closing conditions, but yes, that is correct.

Speaker 4

Okay. And then one final question on also on the private placement. Just wonder if you have disclosed which member of management team participated and then also what was the amounts?

Speaker 1

Yes. I mean, we didn't, but it's Vince.

Speaker 2

That would be me, Thomas.

Speaker 1

The member of management.

Speaker 2

And you'll see the amounts, I suspect, with the filing, Mark. Right.

Speaker 4

Thank you so much. Let's get our questions again. Looking forward to hearing progress for the study throughout the year.

Speaker 2

Thanks, Thomas.

Operator

The next question is from Jim Molloy from Alliance Global Partners. Please go ahead.

Speaker 5

Hey, guys. It's Matt on for Jim. Congrats on the quarter and the private placement this morning. First question, I wanted to follow-up on the private placement for those milestones at seventeen and thirty five patients. Have you guided at all to when you might see that come in 2017 maybe next quarter?

Speaker 5

Is that a fair assumption?

Speaker 1

Yes, we haven't. But yes, we're expecting kind of mid year for the first '1 and the third quarter, so for the second one.

Speaker 5

Got you. And then as far as the existing sites, do you have any plans to shift the PIs to nephrologists and maybe make those sites look a little bit more like the highest enrolling? Is that a possibility?

Speaker 2

Yes. I'm going to turn that one over to Shaquille and just preface it by Shaquille. Can you also include in your answer, as we continue to find highly productive sites that really meet our criteria with a high number of CRT patients, one, would you ever consider deactivating the unproductive sites? And two, especially with the demand that we're starting to see to get into the trial? And two, for those sites that we have been very close with, which is all of them, the work you're doing to potentially shift those PIs over to the specialty that most fit our needs?

Speaker 3

Absolutely. So yes, that is the case. We are in discussions with these PIs to see if either they can shift the primary responsibility to a nephrologist or they can broaden their patient population by including medical ICUs. In terms of closing any of the sites that are not being productive, I think that's possible. Once we recognize or close to getting the 14 sites up and running.

Speaker 3

And by then, if any of these sites have not performed, we would like to swap them for better performing sites. So right now, we have lot of interest in joining this study and we are activating those sites as quickly as we can.

Speaker 2

I think an important additional color I'll add on that is, these sites were the ones that really brought to our attention the challenges that they were experiencing with the protocol and the two particular exclusion criteria. So kudos to them, even though they haven't been as productive on their engagement enthusiasm for the study. And I think you have to remember, these are very prominent sites around the country related to the reputation of the institutions. And the PIs are extraordinary, but these are the same PIs that worked with the founding company, Lowell and prior to that La Jolla on GIAPREZA, which is a vasopressor. And then it starts to make a lot of sense, the comfort level that was with these PIs as intensivists in the ICUs they were pulling from being cardiothoracic and or surgical.

Speaker 2

And I think that LowellLa Jolla leaned on those relationships, extraordinary talents, but might not be the best fit as Doctor. Azim has explained for many reasons for this particular study.

Speaker 5

Got it. Okay. Thank you for the color. I appreciate that. And lastly, do you have any clues yet to the enrollment rate with this new revised criteria?

Speaker 5

And or should we assume those six patients that have completed the study are the six patients fully that have been enrolled, as of right now?

Speaker 2

Yes. So those are the original six. Again, I reiterate, we said in the script that five of those six are coming from one of the institutions that we had identified to add into the study. That really met the criteria that Doctor. Aslam has framed out moving forward.

Speaker 5

Got it. And any clues to the enrollment rate going forward based on these new criteria that have been agreed upon by the FDA or is it too early to tell?

Speaker 2

No, I think it's too early to tell. Again, I'll reiterate what we said that we had 25 patients excluded since the enrollments started in the trial for these two criteria, 10 on one and fifteen on another. I think it was 15 on the forty eight hours, ten on the heparin exclusion. So you can see a number of patients were screened out from these original sites based off of those two criteria. We expect those original sites to have some production moving forward, but we really expect that change in the criteria to more heavily affect these higher potential sites.

Speaker 2

Remember, as Doctor. Aslam said, our most productive site to date is averaging about 20 CRRT patients per month. With the sites that Doctor. Aslam just activated and just started screening, they're averaging historically, now there's peaks in trust, but on average between 9,100 CRRT patients per month. So you see the magnitude of potential penetration of that population.

Speaker 2

And then the additional sites Doctor. Azim is engaged that we planned up having by mid year, some of those are even larger than those sites that are averaging 90 to 100 CRT patients per month. So it starts exponentially rising the pool of patients we can pull from and that should work in concert with the inclusion exclusion criteria the FDA just granted us.

Speaker 5

All right, great. Thanks for the color guys. Congrats on the progress and thanks for taking my questions.

Speaker 2

Thanks, Matt.

Operator

The next question is from Nazaraman from Maxim Group. Please go ahead.

Speaker 6

Hi, everyone. Thanks for taking my question and congrats on my progress. I guess in context of everything that's happened, what ultimately gives you confidence that you could have the Phase three can see in the data by the end of the year? You're saying that it still takes four months give or take to initiate a site which is faster than before, but that still seems like it will take a while to initiate additional screening and initiate additional site, which kind of takes us into midyear. All that considered, what gives you confidence you could have the data by the end of the year?

Speaker 2

Yes. So I can start on the answer to that question, Shaquille. Maybe you can add some additional color. So of our original seven sites you mentioned that we have two more we plan on adding here actually in April. So it's very early on.

Speaker 2

It's not an additional four months from here. And then the balance of the sites to get us to the 13 that we're currently engaged with will be by mid year. So it's not four months starting from now. We're already well into it with two of the sites and then fairly far along with the additional sites to get us to the 13 by mid year. When you just do the math on that Nas, I mean, you're looking at 13 sites with a balance of 64 patients left to enroll.

Speaker 2

So one to one point five patients per month with exponentially larger populations as I just outlined. I think from an engagement standpoint or other maybe Shakil you can add some color on the new sites, the engagement, the teams and the profile that we've kind of already reiterated.

Speaker 1

Did we lose Shaquille?

Speaker 2

Shaquille, you might be muted.

Speaker 1

There you are. There you are.

Speaker 3

No. Okay. Thank you. Yes. So the biggest change that we are seeing is the level of engagement that we are from the nephrologists.

Speaker 3

And now nephrologists deal with this issue of anticoagulating these patients and how do you anticoagulate just the circuit and not the patient. And they deal with this issue and every single time they start a patient on CRRT. So this is an issue which really is very, very close to them. So biggest difference that I see is these nephrologists, they are helping us with the paperwork. They want nifamastat available for their patients.

Speaker 3

Most of them don't use heparin. Most of them do not use citrate and they want an option, so that they don't have to throw away the circuits every six to eight hours in some of these patients. So that level of engagement is what gives me a lot of confidence that they are actually going to go and look for those patients. They know that this is not a big study and if they can help us and we can actually get this product in their hand next year. So I think that is the most confidence inspiring part of this new sites that I'm seeing.

Speaker 3

And Vince, you've been talking to some of those people as well. I don't know how you felt about their degree of involvement and how enthusiastic they are.

Speaker 2

Yes, I think it's very similar to Doctor. Aslam Deva. The engagement not that the engagement from the previous ones wasn't high, but the nephrologists make a big difference because this is their world every day that they're in the hospital doing CRRT.

Speaker 3

Got it.

Speaker 6

Thank you. That was very helpful.

Speaker 2

Thanks Nas.

Operator

There are no further questions at this time. Please proceed with closing remarks.

Speaker 2

Okay. Again, thank you for joining our 4Q earnings call. But we're excited about the study modifications to address enrollment and the continued alignment with the FDA, in particular, with the goal of completing the nephro trial in 2025 and an FDA approval of NIAID in 2026. I will remain disciplined on our cash management and we look forward to providing additional updates on our progress. Thank you for all your interest and that concludes our call.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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