Biora Therapeutics Inc (BIOR) 2022 Q2 法說會逐字稿

Greetings and welcome to the Biora Therapeutics second-quarter 2022 earnings call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Alexandra Schuman. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Biora Therapeutics' second-quarter 2022 corporate update and financial results conference call. Joining me on the call are Adi Mohanty, Chief Executive Officer; and Eric d'Esparbes, Chief Financial Officer.

Before I turn the call over to Mr. Mohanty, I would like to remind you that today's call will include forward-looking statements within the meaning of the federal securities laws, including, but not limited to, the types of statements identified as forward-looking in our quarterly report on Form 10-Q that we will file later today and our subsequent reports filed with the SEC, which will all be available on our website in the Investors section.

These forward-looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control. Please note that the actual results could differ materially from those projected in any forward-looking statement.

For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements as well as risks related to our business, please see the company's periodic reports filed with the SEC.

With that, I will now turn the call over to Adi Mohanty, the CEO of Biora Therapeutics.

Thanks, Alex, and thank you, everyone, for joining us. During the second quarter, we completed our transition from a diagnostics company into Biora Therapeutics, a biotherapeutics company that's working on changing the way large molecules can be delivered to patients with potentially game-changing outcomes.

Biora is much more resource efficient and making rapid progress in its development. We've continued to generate human safety and performance data with our targeted therapeutics program where we recently shared top-line data from a human study, demonstrating that the performance of our ingestible device is not impacted by food.

Additionally, we recently concluded another study in active UC patients with outstanding results, demonstrating the device functions as intended in these patients despite disease of the colon. We received constructive feedback from the FDA on our UC clinical development plan, where they generally agreed with our proposed trial design and provided comments that we expect will allow us to have a more robust IND filing.

We very much appreciate the FDA feedback and intend to implement their recommendations, including their suggestions on the tox studies, which were already planned for Q4 of this year. We expect these activities to allow us to file an IND in Q1 of 2023, so we can begin our Phase 1 study.

Our Systemic Therapeutics program continues on plan and is currently generating additional bioavailability data in animal models. We expect these data to be generated in the third quarter of this year and believe that is what will allow us to progress our plans with current collaborators and potential partners.

We gave very well-received presentations at the DDW and CRS conferences and recently announced that several abstracts covering our targeted and systemic programs were accepted at the upcoming ACG conference in October. Finally, we were awarded very important patents, which continue to expand the protection of our two platforms and beyond. I'll cover these in more detail in a moment.

First, our targeted therapeutics platform. As a reminder, our first program with this platform is in ulcerative colitis or UC. Annual global sales for UC drugs are estimated to be approximately $7 billion, and the inflammatory bowel disease or IBD space overall is about $19 billion globally.

Our lead program, PGN-600, is a proprietary liquid formulation of tofacitinib delivered in the colon using our targeted delivery technology, which is a device approximately the size of the fish oil pill. A commercially available version of tofacitinib is approved for the treatment of UC.

Tofacitinib is administered orally and like other drugs that are orally delivered is mostly absorbed in the stomach or the upper GI tract, whereas UC is a disease of the lower GI tract. By delivering drug topically at the site of disease where it is needed, PGN-600 has the potential to improve efficacy and also limit systemic exposure to improved safety. We're extremely pleased with the development of our drug delivery device.

We have now completed three human studies with our device. The first study was completed last year and showed our device's performance in a fasted state. Fasting is the norm for ingestible devices, but fasting is not ideal for patients, especially for patients requiring frequent administration or dosing, which is what is required in chronic diseases like ulcerative colitis.

We recently announced top-line results for a study we completed in Q2 that included multiple dosing events per subject with different feeding schedules. Healthy participants were required to ingest a total of four devices each, with administration occurring following excretion of the previous device as per study protocol. This study specifically included administration of the device with food.

The study demonstrated that all devices were safely ingested and exited the body naturally. 43 capsules are recovered for analysis, and performance was measured by retrieving data from the recovered devices. Data was successfully retrieved from 39 capsules, with four capsules damaged during data retrieval.

All 39 devices indicated entry to the colon, activation, and deployment regardless of fasted or fed schedule with no failure modes observed in the analyzed devices. To our knowledge, this could be the first ingestible therapeutic delivery device that may not require fasting or other food restriction for use, greatly enhancing patient convenience and particularly helpful for chronic diseases.

We also recently announced top-line results from another study that assess the safety and performance of the device in active ulcerative colitis patients. Given the different gastrointestinal physiology and disease activity in these patients, it is critical that the device performs as intended and can identify entry into the colon, activate, and release a payload in UC patients.

In this study, the device was ingested orally by seven patients with active ulcerative colitis. After identification of colon entry, it released a saline solution payload that included radioisotopes. Scintigraphic imaging was used to independently indicate device location and payload delivery to the lower GI track.

The device was well tolerated, and the study demonstrated that in all patients, the device accurately identified entry into the colon, triggered release of liquid payload, and achieved distribution across the entire lower colon as confirmed by an independent scintigraphic imaging method. The study is being completed with no further enrollment planned.

We're not aware of any other oral drug delivery technology that can accurately detect colon entry, especially in the environment of inflammation, blood, and highly variable motility seen with these patients. This makes the targeted therapeutics platform a potential game-changer in the management of diseases like ulcerative colitis.

These successful studies in humans support the safety and performance of the device and are key steps in advancing towards our PGN-600 clinical program. It also demonstrates the potential of the platform for localized delivery of other drugs. As you know, PGN-600 is our lead program in our targeted therapeutics platform and is a combination of our device and our proprietary formulation of tofacitinib.

In Q2, we have submitted a Type-C filing to the FDA asking for feedback on our proposed clinical development plan. The FDA response was constructive and extremely helpful. They generally agreed with our trial design and provided helpful feedback on the protocols. The FDA also reviewed our proposed supporting data package and confirmed the need for animal toxicology data.

As we have previously mentioned, we had already planned for an animal tox study later this year. We believe that with the final reports of the recently completed human functional studies and the planned animal tox study this year, we will be in a position to file an IND in Q1 2023 to support the initiation of our Phase 1 study.

Following FDA feedback, we move ahead with more certainty and clarity and are able to share our proposed design for the study. The Phase 1 single- and multiple-ascending dose studies will evaluate safety, tolerability, pharmacokinetics, and pharmacodynamics of PGN-600. We expect that the single-ascending dose study will include 24 healthy volunteers and evaluate drug concentration in serum and feces.

The multiple-ascending dose study is planned to include 24 healthy volunteers with repeat daily dosing for seven days. And in addition to drug concentrations in serum and feces, we will also measure drug concentrations in colon tissue. Two different doses of PGN-600 are planned for both studies, 5 milligrams and 10 milligrams of tofacitinib daily.

These doses are well below the commercially approved induction dose of tofacitinib of 10 milligrams twice daily. We're including a diagram of our clinical study design in the updated corporate presentation on our website.

Given the data already generated and presented on the correlation between tissue concentration of tofacitinib and improved patient outcomes, if the clinical data generated in our Phase 1 trial confirm that we can safely achieve high tissue concentrations just as we have seen with PGN-600 in preclinical studies, we believe there's a high likelihood of improving remission rates in UC patients compared to current therapies.

Because of the well-known therapeutic profile of tofacitinib and standard oral formulations and the ability to utilize or reference these existing data, we believe our development risks for PGN-600 are reduced. Soon after the Phase 1 trial is completed, we plan to move into a disease interventional study where we plan to evaluate clinical remission after eight weeks treatment with PGN-600 in active UC patients.

We're now entering an important phase of development for this program and are very excited by the opportunity to help UC patients and address their substantial unmet needs. Data supporting the need for high tissue concentrations to achieve remission in ulcerative colitis was presented at Digestive Disease Week in May.

Key opinion leader Dr. Séverine Vermeire gave a presentation titled Tofacitinib Tissue Exposure Correlates with Endoscopic Outcome, which Dr. Vermeire co-authored with lead author, Dr. Bram Verstockt, and others. in the presentation, Dr. Vermeire presented patient data confirming a significant relationship between drug levels and tissue and endoscopic improvement in patients with moderate to severe ulcerative colitis who were treated with tofacitinib.

Specifically, the study supports the hypothesis that a tissue concentration of tofacitinib at or exceeding IC90 is directly correlated to significant improvement in patient outcomes. Preclinical data indicates that these tissue concentrations can be achieved with PGN-600, even with lower doses and commercially available oral doses of tofacitinib.

In addition, current data suggests a need for combination therapy to target multiple inflammatory pathways in some patients with UC. However, combination therapies must overcome the systemic toxicity limits of current approaches.

Biora's targeted therapeutics platform is designed to achieve high doses in tissue while significantly reducing toxicity due to systemic uptake. Our approach could facilitate combination therapy to simultaneously target multiple inflammatory pathways leading to improved therapeutic outcomes for the many UC patients who today are unable to achieve remission of symptoms.

With respect to our IP in this area, we recently announced the issuance of a US patent, the granting of two European patents, and the allowance of an additional US patent with claims directed at our device, including the localization technology that enables detection of colon entry. This technology is essential for accurate and consistent targeted delivery to the colon.

In addition [to use in] our drug delivery device, the localization technology is a standalone unique technology that has the potential to be used broadly for ingestible devices.

Next, I'll cover our Systemic Therapeutics platform. The goal of this platform is to facilitate oral administration of drugs that would otherwise require injection or infusion. Our Systemic Therapeutics delivery solution is an oral device, which provides liquid jet delivery of large molecules to the small intestine in order to maximize systemic uptake.

We believe this platform can help improve disease management and associated patient outcomes, reduce intravenous infusion costs, help expand the market for drugs across a range of chronic use indications, and help biotherapeutics such as monoclonals become more competitive with small-molecule substitutes.

Our platform has the potential to deliver a broad range of approved or other large molecules such as proteins, peptides, and nucleic acids without complex reformulation.

During the second quarter, we've continued to make progress with device design and manufacturing. Although we have data with several molecules on this platform, such as anti-TNF alpha and monoclonal antibodies, our initial focus is on a high concentration formulation of the peptide liraglutide, a GLP-1 receptor agonist.

We believe that achieving 10% to 15% bioavailability through oral delivery would enable our platform to be commercially viable with a broad range of large molecules.

At the Controlled Release Society annual meeting in July, we presented results of early preclinical research on the Systemic Therapeutics platform, including the development of preclinical models that enable further evaluation of device performance and pharmacokinetics.

We also presented the results of a preclinical study where we demonstrated monoclonal antibody bioavailability of up to 55% with an average of 25% in animals with drug detected in blood. These results are an order of magnitude greater than the current oral protein or peptide delivery methods and support the broad potential use of the platform.

We expect to share existing and future results at other upcoming conferences, including the Parenteral Drug Association Universe of Pre-filled Syringes and Injection Devices Conference and the ACG Annual Meeting in October. We currently have multiple animal studies ongoing with liraglutide and other molecules. Data readouts are expected in Q3.

We believe that data from these studies could be sufficient to progress our collaborations and potential new partnerships into next stages as well as allow us to be ready for human clinical trials next year.

We recently received notice that an important Biora patent application has been allowed by the USPTO for our Systemic Therapeutics platform. The application covers oral delivery of a liquid formulation of any GLP-1 receptor agonist using any method of liquid jet delivery in the small intestine.

It strengthens the intellectual property position of our PGN-OB2 candidate, which consists of a novel liquid formulation of liraglutide delivered via liquid jet to the small intestine for the treatment of type 2 diabetes. The only currently marketed oral GLP-1 receptor is about 1% bioavailable. We believe we can do significantly better than that as we have already shown preclinical bioavailability averaging over 20% with proteins.

This allowed patent application, combined with the rest of our IP portfolio, provide a strong footprint for Biora in the GLP-1 market, which is forecasted to be well over $20 billion by 2025.

To summarize some of our upcoming milestones for both platforms, we will be finalizing reports for the PM-611 and PM-602 studies that were recently completed to facilitate future publication of the results. We plan to initiate a tox study with PGN-600 later this year. And based on the results, we'll file an IND in Q1 2023 to support the initiation of our Phase 1 study.

We're currently running multiple animal studies with our Systemic Therapeutics program with liraglutide and expecting data generation through Q3. We expect to execute animal studies for molecules of our pharma collaborators by Q4 this year.

We will be presenting several abstracts covering both our targeted and systemic programs at the upcoming ACG conference in October. We expect a pre-IND filing with the FDA for our Systemic Therapeutics program with one of our molecules next year, and we expect to initiate our Phase 2 study for PGN-600 next year.

With that, I'll now turn the call over to Eric for a discussion of our financial results and capital market activities.

Thanks, Adi, and good afternoon, everyone. Our near-term focus remains optimizing capital allocation to our targeted therapeutic pipeline and systemic therapeutic pipeline with the goal of generating value through the achievement of key development milestones and data generation.

We're now a more focused organization with a much-reduced cash burn profile. With the spin out of our single-molecule detection platform, we've created the opportunity to generate a return on our past investment while eliminating the associated cash burn.

Operating expenses, excluding stock-based compensation expenses, were $12.9 million in the second quarter of 2022, a reduction of $5.1 million compared to Q1 as we've now completed a transfer of our molecular test testing assets. And we expect further reductions in G&A by the end of the year as we continue to align the organization to our needs.

More specifically, G&A expenses in the second quarter were $8.4 million, including $0.7 million in stock-based compensation expense, a 38% reduction compared to Q1, while R&D expenses in the second quarter were $5.9 million, including $0.7 million in stock-based compensation expense.

As we've mentioned in our previous call, we expect R&D expenses will mainly track our clinical studies workflow, and combined with further G&A cost savings, we maintain our expectation of ending the year with a monthly operating cash burn of less than $4 million.

We had a cash balance of $48.5 million as of June 30, 2022, giving us runway well into 2023, thanks to our reduced cash burn. We are maintaining a very active IR plan to engage with investors, tell our story, and make sure our important programs have adequate visibility with the investor community.

We are seeing an increasing following from biotech analysts and invite investors to contact us if you have interest in our programs and development strategy. With that, I will now turn the call over back to Adi.

Thanks, Eric. So we're making good progress with our pipeline and are excited about how our programs are moving ahead. We look forward to providing further updates as we continue to generate more data. With that, operator, we're now ready for questions.

Thank you. (Operator Instructions) Julian Harrison, BTIG.

Hi, thank you for taking my questions and congrats on all the recent progress. I'm curious if you could share in any more detail what the FDA wants to have better characterized before you file your IND for PGN-600. Generally, just want to better understand what is contributing to the slightly updated timeline there.

Hi Julian. Yeah, if you remember, in the past, we said we are approaching them with a slightly aggressive approach on the supporting data package. Even though we had internally already planned the animal tox study -- and by the way, some of these animal tox studies, they book out like a year ahead of time. So we are -- we had already booked it for some time in the coming months.

So I'm not referencing any existing animal tox study, but using our own, it was one of the main things. And so, we're planning to do that. And we didn't have any of the current studies like 601, 602 completed at the time. Now that we have that information and we have this planned tox study coming up anyway, we think it's best we include all of that, get all these reports, and meet the requirement of that filing.

And so that takes us to that Q1 filing, along with the fact that they gave us quite detailed input. So the good part was we proposed our design, we proposed both Phase 1 and Phase 2, and that's why we're sharing so much more.

If you look at the actual design itself, those are things that we have not shared before, and we feel more comfortable sharing because of all the inputs that they gave us. Some of that will just help us make our protocol a little tighter, but most of that gave us comfort that they generally think this is a good plan and a good idea.

So we feel pretty good about getting that input because it's not just the drug, it's not just the devices, the combo. So we're not worried about any of it. We expect to execute this study, get all the packages buttoned up and filed.

And hopefully, people look at the fact that we're looking at a dose somewhere in the range of five to 10, which is, what, maybe about a quarter of the current commercial dose? That makes it really interesting.

Okay, great. Thanks for clarifying that. And then, can you remind us of what the PK parameters you're most interested in for the Phase 1 healthy volunteer study you plan to start early next year? Generally, just curious, what would be a win in your mind for this early study beyond safety?

Yeah. And so, we referenced, I think, just earlier in the call the IC90 tissue levels. And so, for us to be able to get a tissue level somewhere in that range at a very low plasma level -- so the plasma levels are the problem with the toxicity, and that's for safety issues if we can show what we showed in our animal models, right? So far, we have shown in our animal models multiple factors, lower systemic uptake, and a much higher tissue uptake.

So we know what the IC90 is. We know what that number looks like, and if we can get anything in that range in the tissue and anything in the range of much less than current systemic uptake -- those are the places we can reference existing commercial data from Xeljanz, that would be very interesting and then all of that comes out in this Phase 1.

Excellent. Thanks very much.

Mayank Mamtani, B. Riley.

Hi, this is Yuan on for Mayank. Thank you for taking our questions. We have a few of them. So first, on the IND feedback, can you clarify what's the [result of study]? And has FDA commented on whether it is related to the JAK inhibitor specifically or the device itself?

Yes. So if I understand your question correctly, you want to know if the FDA was worried about the JAK inhibitors or our device?

And I can tell you that there was no concern about the JAK inhibitor, that they expressed to us there was no concern about safety, especially given that we explained to them the levels that we were trying to go to, which is much lower than the commercially approved dose, and the fact that we have some data that shows the kind of systemic uptake, which is much lower.

They were generally in agreement with what we have proposed and like the idea. There was no concern there. It was the combination of a drug and a device, meant that we couldn't quite reference the previous animal tox studies. We have to generate our own, and that's what we're doing.

So the combination -- which is not a worry, it's just something that we need to do. So the combination going through animal tox study is the main requirement that we have to complete. All the other comments, there was no real concern about safety around any of the JAK inhibitor or dose or proposed design. Those are not the comments that came.

Got it. That's helpful color there. Just want to confirm, if you use the same device carrying a different drug, [will FDA asking] for more tox study, or will the IND filing be easier?

That would require me to do a little speculation. I'm not ready to do that. I absolutely believe that every program that we won gets easier once we have done the first one. So I cannot right now, in good conscience, predict what that next preclinical package or IND enabling package would look like.

But I'm quite sure we could leverage our own studies even though there were different molecules because the combination would have gone through. the drug-device combination would have gone through more data generation by the time we get to the next molecule.

Got it. And our next question is about when you show -- when you have those active UC patients, some of them could be associated with GI disorders such as diarrhea and open wounds in the GI tract. Just wanted to hear your thoughts from your trial study. Will those [side effects] such as diarrhea have impact on the drug absorption in the GI tract?

I want to make sure I understood that question completely, or you may clarify. Are you asking if our formulation or our device would work? Because it wasn't clear

Yes. So we are just trying to see, will side effects such as diarrhea have an impact on the PK profile of the drug when you have the device ingested by those patients.

Okay. So a fair question. I can point you to one of our recently completed studies, right? So one of the worries would be what happens when this device goes through in actual UC patients. So we had the PM-602 study that we just published. where we actually gave this to very active UC patients with pretty severe disease.

I can't quite share all the data yet. We're completing it -- completing the reports so that we can publish them, but they were very active, high scores in that study. And so there was bleeding, there was inflammation, there was varying rates of volatility in terms of like you said, right, many motions several times a day.

Our capsule, our device was still able to accurately locate in variable patients with variable disease the right location, deliver the drug. And independently, with imaging, we could show that the drug coated the entire colon.

So the expectation is that the formulation that we have would be able to coat the entire colon, which is where the uptake would happen. So even with all of those variation that you're talking about, motility, multiple motions, inflammation, bleeding, all of it gives us confidence that we believe that this would work quite well.

Got it. And our last question is about your device performance target. Just want to hear it in plain language, what does it mean for your future trial designs or product candidate selections for clinical trial design?

Yeah. So we're actually extremely thrilled, right? Look at the two studies we just reported on. We have now done many devices through many different people, healthy volunteers, UC patients, and all of that work. So all of them accurately detected that transition that it went into the right spot in the intestine. It dropped the drug in the right location.

We're quite excited by the fact that it also worked with different feeding regimes to not have the restriction, potentially, on the label of fasting requirements before or after the pill. These are all things that give us great confidence that our device is working really well. It is now through multiple different trials shown that it works. We are now able to say that we think that the device functions quite well.

We now need to put the drug in so that we can find out when the drug is delivered to the right location at the uptake in like we saw in the animals. This gives us a lot more confidence going into our next molecule.

But we're not looking at the next molecule right now. We want to do all the work that's necessary over the next few months to make sure we continue that progress on that first molecule and take it into clinic. At the same time, our other device on the systemic also continues to progress well, and we look forward to sharing more of that data. So quite happy about where our device development currently stands.

Got it. Thanks for the additional comments. That's all from us.

(Operator Instructions) Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Aditya Mohanty for any closing remarks.

Thank you. Thanks, everyone, for joining us. We look forward to coming back with more interesting data as we go through our programs. Thanks.

This concludes today's conference. Thank you for joining us. You may now disconnect your lines.