Biodexa Pharmaceuticals PLC (BDRX) 2019 Q2 法說會逐字稿

Hello and welcome to this Midatech interim results call. Please note, the call is being recorded. (Operator Instructions) I would now like to hand over to your host, Craig Cook, to begin the call. Thank you.

So good afternoon or good morning all depending on whether you're dialing in from the U.K. or U.S., respectively. Welcome to the Midatech interims presentation.

I'm joined today by Stephen Stamp as well, who recently joined Midatech as our new CFO. The format for today is we have a brief presentation, about 15 minutes, and then after that, we'll take the Q&A.

So starting with Slide 3 then. You may already be familiar with this slide, but it's a useful slide to open with and set the scene since it captures: number one, the essence of what Midatech does, i.e., make medicines better by improving biodelivery and biodistribution of existing agents; and number two, how we do that using our proprietary technologies, which we do in 1 of 3 ways, either we have sustained release, which purposes APIs for release over weeks to months, and that's using our Q-Sphera technology and that's to improve biodelivery and biodistribution by controlling or prolonging the release of the API.

Our second technology is MidaSolve where we improve biodelivery and biodistribution by local delivery. We take insoluble drugs, solubilize them into a liquid form such that they can be administered directly into the site of disease or into the tumor, again, improving biodelivery and biodistribution.

And our third technology, MidaCore, that improves biodelivery and biodistribution by targeting. So these are small gold nanoparticles, about 2 nanometers in size, which as far as we know, the smallest particles in biomedical use. We decorate those with APIs and targeting ligands. And upon injection, they seek out the site of disease.

So just to recap and emphasize, we focus on improving existing agents through different methods depending on which technology we deploy with the API. Importantly, on each of these technologies, they are successfully translated or transitioned into the clinic, they each have an ongoing clinical program. And given that they're platform technologies, there are obviously multiple opportunities beyond the current programs.

Our 2 lead programs in the green boxes at the bottom of the slide are MTD201 for acromegaly and neuroendocrine tumors and MTX110, which is for DIPG childhood brain cancer.

So that leads nicely on to the next slide. MTD201, as you may know, is our lead program for the Q-Sphera technology, our sustained-release technology. And you will recall our decision earlier this year to develop MTD201 as a better product than the market leader, Sandostatin LAR, for several reasons or attributes that are captured on this slide. The slide outlines the fact that there are 8 attributes or reasons as to why we believe MTD201 will be a better product than Sandostatin LAR. Six of those are already proven, and we have data generated in this regard.

So let me walk you through the slide. First of all, the Phase I study completed in 2018. Here, it's in light blue. And there's also a recap slide in the backup section with some of the data that was generated during that study. But it demonstrated several advantages over Sandostatin LAR, including number one, a favorable 4- to 6-week profile. So it was a comfortable and steady release of the API Octreotide over a 4- to 6-week period with a smooth uptake, a stable plateau for the observation period and then a gentle taper off towards the end of therapy. So that's number one.

Number two, the release profile or the release kinetics of MTD201 was very predictable, very consistent, very linear and with low or no variability compared to Sandostatin LAR, which was highly variable, very inconsistent and very difficult to predict and nonlinear in the release of the API. That's number two.

Number three, MTD201 has no burst release at injection compared to Sandostatin LAR where there's effectively a big burst or dump release of a large amount of the API Octreotide at injection and really what can be described as almost out of control at injection because such a large amount is released into the body. MTD201 doesn't have that. That's an important and -- which is obviously important from a safety and efficacy perspective.

Number four, smaller needle gauge. MTD201, the Midatech product, uses 21, 22 gauge versus a 19 or 18 gauge, even an 18-gauge needle for Sandostatin LAR. That's obviously a very important factor for patients and manifest as pain and injection site reactions. And in this particular study, the data indicated that for MTD201, the pain and injection site reactions, as reported by patients, were less than 10%, 8% to be specific, whereas for Sandostatin LAR, it was well above 80%. And that just reflects the small needle gauge, which itself is dependent on the superior technology that Midatech has compared to the MTD201 polymer technology.

And then number five, a much simpler reconstitution or preparation process. And this is a multifactorial points or factors since it comprises many different aspects. First of all, in terms of preparation, Sandostatin LAR takes up to 40 minutes to prepare from when it's taken out of the fridge to when it's ready to be administered to the patients. And it's very time-consuming and a nurse has to be there all the time.

For Midatech's MTD201, it takes no longer than 10 minutes, in fact, it's 5 to 7 minutes on average. So a dramatic difference in preparation time, number one. Number two, Sandostatin LAR, as per the label, has up to 26 steps involved in reconstitution. For Midatech, it's 6 to 7 steps for MTD201. And the final piece of this is, as a result of that, the simplicity of MTD201, there is no errors or wastage, whereas for Sandostatin LAR, up to 30% of injections fail for several reasons and have to be discarded as a result of those errors.

In addition, via laboratory work, we've also confirmed higher strength per vial. So many of these patients, these vials come with 30 milligrams of Octreotide in both Sandostatin LAR as well as MTD201. Many of these patients need sometimes 45, 60, even more. For Sandostatin LAR, that means 2 injections since it's not possible to increase the dose as a result of the underlying technology, whereas for MTD201, we have no problem increasing the dose to 45, 60, even above, meaning that the patient always only gets 1 injection. And all of those attributes that I've just mentioned now, they are proven, we've shown them and they've been demonstrated.

Moving forward, some additional significant advantages that we plan to establish include subcutaneous dosing. And this is going to be the focus of the upcoming Phase I study, which has just been approved and is basically started. We're also going to generate pivotal data for acromegaly and NET indications in the 2 registration studies planned for 2020. And then longer-dosing intervals are similarly planned to be part of these studies up to 6 to 8 weeks, which means that instead of a patient coming in for an injection 12 times a year, they'll come in 6 times a year. And that's obviously important from several aspects.

So I hope it's clear that the clinical program has been designed to pull out all advantages of MTD201 versus Sandostatin LAR. The majority of those advantages we have already approved -- sorry, proved or demonstrated. The others, we are confident and we're going through the process of establishing those, specifically subcutaneous dosing and the longer-dosing intervals. And it's important to add that all of these advantages, including subcut dosing, longer-dosing intervals and the higher strengths are not possible with Sandostatin LAR because of the underlying technology. It's just not feasible and cannot be achieved and -- despite them having tried each of these previously, whereas for Midatech and our Q-Sphera technology, these not only had been achieved, but we aim to leverage them as part of our competitive advantage.

Moving on to the next slide then. This is just a description or illustration of the upcoming Phase I study designed to confirm subcutaneous dosing of MTD201. It starts off with a -- an immediate release, Sandostatin dose, single dose. And then thereafter, it's followed by MTD201, either dosed intramuscularly or subcutaneously. And then we observe up until the end of the study, and we compare subcutaneous and intramuscular. And as I mentioned, the focus here is to confirm subcutaneous as an additional administration option over and above the intramuscular route. And pending the outcome of this study, we will then commence with the pivotal study, either with subcutaneous or intramuscular route of administration.

The next slide talks about our second lead program using our MidaSolve technology in this MTX110 for DIP childhood brain cancer. Last year, May, a combined Phase I/Phase II study commenced in -- at UCSF in the States. And the Phase I is scheduled to complete imminently. We have already established the recommended Phase II dose. And pending the recruitment of an additional 2 patients, we then expect to close out this Phase I study -- or Phase I component of this broader program and commence with the Phase II efficacy component immediately thereafter.

Importantly, the original study was designed with 5 dose levels, and the drug was very well tolerated. And for that reason, we actually added an additional 2 doses, such that a total of 7 doses have been studied in this Phase I component to get to the recommended Phase II dose, which is currently set at 90 micromolar. And then thereafter, their efficacy component will be conducted in 19 patients, of which, 12 patients -- the end point's overall survival and 12 patients -- for the study to be successful, 12 patients need to be alive at the end of the first year, and we will have a successful study.

Next slide, 7. Although R&D is core to what Midatech does, uniquely, we also have our own manufacturing and do all of our own manufacturing for our technologies and programs in-house. And for several reasons, it allows us to control our IP and our know-how, controls time lines and costs. So there's a whole host of reasons and combined with the support that we receive from the local Spanish government. But this is a key activity for the next 24 months in order to prepare for submission of the NDA. We've commenced the project. And right now, it's estimated to conclude second half of 2021, which is well in time for the submission of the NDA together with the clinical data from the clinical -- the registration studies.

And just to orientate you a little bit, the middle photo there is the current facility which provides all of our clinical trial supplies. And the bottom photo is the commercial facility or the scaled-up facility that provide manufacturing for commercial supplies.

So for the next 2 slides, I'm just going to hand over to Stephen, and then I'll conclude.

Thank you, Craig, and good afternoon, everybody. This is Stephen Stamp.

I'm now looking at Slide 8. The profit and loss for the first half of 2019 was somewhat unexceptional. It does reflect 2 things: first of all, the revised R&D-focused strategy of the company following the sale of the U.S. commercial activities; and secondly, a lower cost base and therefore, lower losses as a result of the extensive restructuring the company undertook in 2018.

So revenues of about GBP 0.5 million were roughly half-half R&D collaborations and grant funding. The R&D number includes the cost of the MTX110 Phase I study that Craig was just speaking about and the preparation for the 201 intramuscular versus subcutaneous study, which is about to start. The finance costs in the prior period relate to the mid-cap loan, which was repaid when the U.S. commercial operations were sold and therefore, interest is reduced. All of this resulted in a net loss per share on a continuing operations basis of GBP 0.01 per share compared with GBP 0.09 in the prior period.

Moving on to Slide 9 and the cash flow. This is arguably more important for the company at this stage. You'll recall that the company raised GBP 12.3 million net in a placing and subscription in February of 2019. Of that GBP 12.3 million, GBP 8 million came from CMS, our licensee for Greater China. The other unusual item in the first half was a 900,000 -- GBP 947,000 deposit that was paid against a potential warranty to the purchaser of Midatech U.S. This related to some PDUFA fees, which we expect to recover based on the innovation status of Midatech with the FDA.

So that left us with GBP 9 million of cash at the end of the first half. Today, we have about GBP 13 million of cash with the Reindus loan coming in. But of that GBP 13 million, GBP 2.6 million is a deposit and therefore, restricted. So we have a net just under GBP 11 million of cash, which will allow us to progress both programs into the pivotal phase and continue with the manufacturing scale-up giving us a cash-out -- theoretical cash-out date in the middle of the second quarter of 2020.

So at that point, I will hand back to Craig.

Thanks, Stephen.

So in summary, I think it's clear that significant progress is being made and a solid base being established to deliver on the key value inflection points over the next 18 to 24 months. The R&D-focused strategy is paying off in terms of advancing our lead clinical programs to key clinical stages and securing meaningful business partnerships, such as that with CMS.

Some key underpinning or support activities in terms of manufacturing are essential and progressing according to plan and funding as well is in place with that. And the current runway takes us well into 2020, which gets us further along the program or generating some of the key data that we need to establish along the route of progressing these products to market.

So that concludes the presentation, and we'll now take questions.

(Operator Instructions) Our first question comes from Mike Mitchell from Panmure Gordon.

Regarding CMS, which you just touched on sort of towards the end of the presentation obviously the sort of the presentation is focused on the lead candidates. But in terms of the licensing agreement with CMS, what should we realistically expect coming from that in the near term?

In terms of the upfront, that was part of the placing in February this year, but there are regulatory milestones and sales milestones as part of that agreement for any of our pipeline products. The first of those milestones would be at NDA submissions. So it won't be in the near to middle term. It's longer term when we submit the NDA for either of our products. But most likely, it would be MTD201, so that would be around about the end of 2021.

And then separate to that, CMS, as part of the agreement, may opt to develop -- to further develop some of the other programs that we have in-house, which we're not pursuing or -- at this point in time just because of resources. We need to focus resources on 201 and 110. But if they do identify other programs that are of interest for them to develop, then that would be a separate initiative which they would fund through to IND and beyond.

Okay. And in terms of that, on that latter activity, I mean is there sort of active screening process that's currently ongoing or an active sort of [DD] process? Or is that -- or has that not yet been commenced on their side?

I know it is active. And I think the original -- the -- of a list of -- there's probably about, I don't know, 50 potential projects and compounds that we have in-house with the 3 different technologies, and a short list was generated earlier this year. And right now, it's been finalized as a program to pursue that will probably commence this year if everything goes according to plan.

(Operator Instructions) Thank you. We have no further questions.

Great. Well, thank you, everyone, for your time. And we are available via email or any other information you may require. Please feel free to reach out. Thank you.

Thank you very much for joining today's conference call. You may now disconnect your lines.