Biora Therapeutics Inc (BIOR) 2022 Q3 法說會逐字稿

Welcome to the Biora Therapeutics' third-quarter 2022 earnings call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator Instructions)

I will now turn the call over to Alexandra Schuman, Associate Director with LifeSci Advisors, Biora's Investor Relations firm.

Thank you, operator. Good afternoon, and welcome to Biora Therapeutics' third-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 statements. For a further description of the risks and uncertainties that could cause the actual results to differ materially from those expressed in the forward-looking statements as well as the 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 quarter, we continued to focus on execution and made important progress towards our IND filing for PGN-600.

We presented at key scientific conferences more detailed data from our device function studies for our targeted therapeutics program. In our systemic therapeutics program, we continue to optimize our device and presented important new data at multiple scientific conferences.

While almost all our energy and focus is on our therapeutics pipeline, we remain committed to capturing value from our legacy assets through sale, licensing, or other agreements. We recently completed our transaction with Roche to sell some of our legacy IP. And earlier this year, we completed the spin out of our liquid biopsy assets to a company now funded by an experienced venture capital firm to further develop the program.

As those programs move forward towards key value inflection points, our stake in the assets could eventually result in meaningful financial return to Biora. We continue to pursue opportunities to create further value with our other remaining legacy assets. We also opportunistically raise incremental capital to extend our runway towards key data readouts next year. Eric will cover the details later in the call.

We're very happy with the continued support from our largest current investor, Athyrium. Their additional investment in Biora illustrates not only their commitment to the therapeutics programs we're developing, but also their belief which we share, that our stock is currently undervalued.

First, let me cover our targeted therapeutics platform with our lead program in ulcerative colitis. 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.

Currently, available therapeutics work by being taken up systemically throughout the body with a limited amount reaching the disease area or tissue in the colon. Moreover, most therapeutics are given via IV or needle-based administration, which adds to the patient's burden.

Our lead program, PGN-600, is a proprietary liquid formulation of tofacitinib in an easy-to-administer oral device that can deliver drug to the colon using our targeted technology. The device is approximately the size of a 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 improve safety.

We're extremely pleased with the ongoing development of our targeted drug delivery device. At the recent American College of Gastroenterology annual meeting, we shared the results from our PM-602 study. This study assessed the safety and performance of the device in active UC patients. Given the different GI 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 orally ingested by patients with active, moderate to severe ulcerative colitis. After identification of colon entry, we showed the device released a saline solution payload that included radioisotopes. Scintigraphic imaging was used to independently indicate device localization and payload delivery targeted to the lower GI tract.

The device was well tolerated. And the study demonstrated that in all patients, the device accurately identified entry into the colon, triggered release of a liquid payload, and importantly, achieved distribution across the entire lower colon.

The results of this study have been reviewed by world-renowned gastroenterologists including members of our IBD clinical advisory Board, who have provided feedback that these results demonstrate the potential of the targeted therapeutics platform to transform management of ulcerative colitis by improving efficacy through increased drug concentration in the colon, while potentially minimizing the harmful side effects associated with high systemic drug uptake.

This successful study in ulcerative colitis patients supports the safety and performance of the device and is a key step in advancing our PGM-600 program. We have now completed three successful human studies with our device, which demonstrates the potential of the platform for localized delivery of drugs. We're not aware of any other oral drug delivery technology that can accurately detect colon entry especially in an environment of inflammation, bleeding, and highly variable motility seen with patients who have UC.

As previously shared, we're planning a Phase 1 single and multiple-ascending dose study to 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 also planned to include 24 healthy volunteers with repeat-daily dosing for seven days. And in addition to drug concentrations in serum and faeces, 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 have included a diagram of our clinical study design in the corporate presentation on our website.

We have shown important data on the correlation between tissue concentration of tofacitinib and improved patient outcomes. If the clinical data generated in our Phase 1 trial confirms that we can safely achieve high tissue concentrations just as we have seen with PGN-600 in preclinical studies, we believe there is a high likelihood of improving remission rates in UC patients compared to current therapies. Because of the well-known therapeutic profile of tofacitinib in standard oral formulations, 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 will evaluate clinical remission after eight weeks treatment with PGN-600 in active UC patients. We received constructive feedback from the FDA earlier this year that helped clarify our next steps. And we have been able to incorporate suggestions generally aligned with our development plans. We're continuing active engagement with the agency over the next few months as we prepare to file our IND early next year.

We know that a vast majority of UC patients are still suffering with a large unmet need. Our solution can potentially solve one of the main gaps of all the current therapeutic options which is the inability to get enough drug to the disease tissue. So we're keen to move this program forward expeditiously while ensuring that we follow the necessary regulatory and clinical steps.

Next, I'll cover our systemic therapeutics platform. During the third quarter, we continued development of our systemic delivery device. As mentioned before, we have seen very encouraging data from this platform early in the year. Over the last several months, we've been moving forward with development of the device to evolve from a research-grade device to a clinical-grade device.

Our ongoing improvements and evolution of the device will ensure sourcing of parts from suppliers that can meet the stringent regulatory requirements for medical human use. We had expected to complete these improvements in late summer. However, some supplier sourcing challenges affected our timelines by a few weeks.

Having worked through these supply issues, we're now moving forward with our studies and hope to complete these in the coming months. If successful, these data could be sufficient to progress our program towards our goal of expanding our pharma collaborations and partnership discussions.

As a reminder, our systemic therapeutics platform aims to facilitate oral administration of drugs that would otherwise require injection or infusion. Our solution is an oral device, which provides liquid jet delivery of large molecules to the small intestine to maximize systemic uptake.

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

During the third quarter, we presented data on both our preclinical model development as well as other key data at scientific conferences including the American College of Gastroenterology annual scientific meeting, Controlled Release Society annual meeting, and the Parenteral Drug Association Universe of Pre-Filled Syringes and Injection Devices Conference.

As we progress our clinical-grade device, we're conducting animal studies to ensure that we can generate data that is similar to the data generated with our research-grade device. We expect to continue to evolve the device and generate data in the coming months. Our collaborators continue to be very supportive of our work on this platform.

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. And we believe that data from these studies could be sufficient to progress our collaborations and potential new partnerships into next stages.

To summarize some of our anticipated upcoming milestones for both platforms, we plan to initiate a tox study with PGN-600 after we obtain final feedback from the FDA on our study protocols later this year and based on the results, intend to file an IND in Q1 2023 to support the initiation of our Phase 1 study. We expect to start having interim data around mid-next year and to complete the study by Q3 '23.

We're continuing to optimize our next-generation systemic therapeutics device to support additional preclinical data generation by Q1 '23. And based on the additional data, we expect to expand our collaborations during the remainder of 2023. Finally, we expect to initiate our Phase 2 trial for PGN-600 after completion of Phase 1 next year.

With that, I'll now turn the call over to Eric d'Esparbes 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 therapeutics pipeline and extending our cash runway. We recently announced a registered direct financing. We raised $9.7 million in total with $6 million in gross proceeds from an existing investor, while Athyrium reinvested $3.7 million from the interest under convertible notes to ensure the company's funds are allocated in priority to our programs.

The continued commitment by our investors to support Biora's key programs is very encouraging. Those funds will help the company work towards important clinical milestones coming up in 2023, which Adi just highlighted. Separately, in the face of challenging markets, the stock of many smaller public companies especially in biotech have not been performing well irrespective of progress in their development or clinical activities, and Biora is no exception.

We firmly believe our programs are progressing well as Adi described earlier, but it may take time for our stock price to properly reflect the value we generate from our programs. As a result, following our last capital raise, we filed last week a preliminary proxy statement to seek approval from our shareholders to affect a reverse stock split to ensure compliance with NASDAQ requirements and enhance our public company profile.

Management and our Board believe this is the necessary path forward in the face of unprecedented and difficult capital market conditions. We believe this exercise is procedural in nature, doesn't change the way stockholders should look at value, and preserve investors' opportunity to generate a return on their investment as we generate data and achieve important milestones.

Moving now to our financial performance for the third quarter. We are a focused organization with a much-reduced cash burn profile. Operating expenses, excluding stock-based compensation expenses, were $11.8 million in the third quarter of 2022, a reduction of $1.1 million compared to Q2 as we continued to align the organization to our more focused needs. As a result, we are meeting our original goal of having monthly operating cash burn at/or below $4 million.

More specifically, G&A expenses in the third quarter were $8.1 million including $1.3 million in stock-based compensation expense, a slight reduction compared to Q2; while R&D expenses in the third quarter were $5.8 million including $0.8 million in stock-based compensation expense. As we 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 $37.1 million as of September 30, 2022. And combined with the additional $9.7 million capital raise just recently, we have extended our runway towards key data readouts in Q3 next year, thanks to our reduced cash burn.

With that, I will now turn the call over back to Adi.

Thanks, Eric. Biora continues to make good progress in both our targeted therapeutics and systemic therapeutics programs. We are excited about a number of our near-term milestones. We look forward to providing further updates as we continue to generate more data.

With that, operator, we're now ready for questions.

(Operator Instructions) Joe Pantginis, HC Wainwright.

Hey, guys. Good afternoon. Thanks for taking the questions. A few questions, a couple of them are logistical. So first with regard to the IND. Obviously, you mentioned the tox study. Is there anything else that's outstanding or that might be considered a rate limiting step at this point besides tox?

No.

Great. Simple answer. Okay. Yeah. No, I love it. Simple is great. And then when you look towards the multiple-ascending dose study or even the SAD part of the Phase 1 or Phase 1/2, is the FDA requiring any time delays between patients for safety observations?

No, actually. So this is why that the previous interaction was great. It's going to be pretty smooth, the SAD. We're getting the serum and feces. We're not really waiting, but we're taking a small wait, like a few days between the SAD and the MAD, which is again, typical. But no waiting between patients.

Great. That's great. And then when you look towards the MAD, and you talked about getting colon tissue samples, I guess. Can you talk a little bit about the process, the commonality of the procedure? Just to give listeners a little bit of a teaser, if you will.

Yeah. Well, so in the MAD, like you mentioned, our intention is to not just get serum and feces, but also at a couple of points, get some biopsies. So get a tissue sample so that we can actually check what concentration of drug is in that tissue.

That procedure itself is really not that uncommon, it's pretty -- it's not common to do it for UC patients. But it is common medical procedure done routinely in so many different settings, that it's really nothing unique and special about it other than we just want a little bit of tissue, like they normally do any other sampling.

And so here's where we think the big value that will be in what we provide, which is getting a tissue concentration like what we have shown matters in UC patients with some of the papers that are published.

So straightforward, but really important. Because that's what flags or separate us from everybody else, right? That we can get drug into the tissue where others cannot. And we have a target we are shooting for that is also well known in terms of drug concentration in the tissue. Simple procedure, extremely valuable data.

Got it. Got it. And then my last question just switching gears to the legacy company. I guess, obviously, you have already established a track record in being able to monetize the path. So I guess with regard to what's remaining, can you describe, I guess, the level of maturity of the discussions with regard to the legacy assets?

Let me just verify. So regard the level of maturity of conversations?

Yes, of conversations. Sorry.

Okay. Yeah. No, that's fine. Because there is a lot of IP, it's all over the place. Some needing a little bit more work; some fairly mature. We have had several conversations. Some have been going on for a while and have progressed quite well.

But in these kinds of conversations, you never know. It could happen in a couple of weeks; it could take a couple of months. But these are not really long term. In the way we're thinking, it's fairly near term is where we hope that we'll have some things.

Great. Appreciate all the extra details, guys. Thanks a lot.

Thanks, Joe.

Julian Harrison, BTIG.

Thank you for taking my questions. And apologies if I missed any of this. I got to the call a few minutes late.

First, on your systemic delivery platform, wondering how soon you can enter clinical testing. Does sometime next year seem reasonable at this point? And also wondering if the benchmark from a PK standpoint varies at all across different payloads, beyond antibodies. How much have you characterized at this point? Thanks.

Yeah. That's an interesting question, Julian. So you are correct that the bioavailability will vary depending on molecules. And some of it is how much bioavailability is necessary for it to be commercially viable. But some of it is also the dosing regimen could change.

So for example, for a couple of our molecules, we're pretty familiar with what kind of requirements they would have. There are commercially available drugs that are currently injected. And we can get a very similar profile to that with 10% to 15% daily dose. For some others like monoclonals, et cetera, a less frequent dosing would be sufficient at the same 10% to 15% bioavailability.

Each of these molecules are different. We have at least four or five different molecules worth of data. And in all of those, there's some amount of consistency in that. In general, 10% to 15% makes it commercially viable.

What's then possible with a higher bioavailability could be less frequent dosing. For some, even with the same bioavailability, you could change the dosing regimen. So it's a combination of different things depending on the molecule as far as progress.

Our focus as we said, right, is in a capital efficient way, move our company forward towards significant inflection. And that means making sure we get our targeted program enter the clinic or on that trial. So on the systemic side, we're focusing on this generation of data in the coming months that would allow us to progress our collaborations; maybe start new conversations, expand the collaborations that we have.

And we think that that could lead to significant value creation. And so that would be our near-term focus. We do have some data where we could had a critical-ready conversation with the FDA, but that's not the priority.

Our priority would be, let's make sure we get this clinical-grade device ready; get the data in a way that we can turn the data now is similar to the preclinical device. And that would allow us to expand the conversations. And that's our focus with the systemic program.

Okay. Great. Thanks very much.

Mayank Mamtani, B Riley Securities.

Hi. Yes. Thank you for taking our questions today. This is William Wood on for Mayank Mamtani. Congratulations on the success during the past quarter. I had two questions here. The first one centered around IND, I know you've touched on that a little bit already.

I think we just want a little bit of clarification on what maybe left in order to come to a full alignment with the FDA? I know you stated that you were generally aligned with the development plan. I'm curious if it's -- what maybe occurring over the next couple of months to get in alignment? And just any additional color you have would be appreciated.

Sure. Yeah. I mean with the FDA, it's always better not to say there's 100% until they give you the approval to the IND. So we're pretty good. We feel pretty good. We have filed our tox protocol with them just to be safe, extra safe, maintain a conversation.

So we want to do this completely with full interaction, open conversation with them. We feel that it's going well. So as soon as we have that back sometime soon, we'll run the actual tox study. So once you run the tox study, you have to get a report. And that's the final piece that will go into an IND filing.

So we expect still to be able to do all of this in Q1 of the coming year. No really reason to worry about anything other than just getting these things executed.

Okay. I appreciate it. Makes sense. And then my second question actually is centered around your GLP delivery, GLP-1 delivery via your systemic therapeutic platform. I was curious in regards to the patent. If this is specific for only GLP-1 single agonist, or if this actually is expanded out to say GLP-1 glucagon or GLP/GIP glucagon, a triple agonist, or something of that sort?

And then I know your current study, you're currently working with liraglutide. I'm curious if this has the potential to be expanded for sema or even potentially like a cag or sema, dual formulation of that sort. Any extra color would be great.

Okay. So first, the GLP-1 patent, we're pretty excited. It's a pretty broad patent. So it covers a lot of what you mentioned, which is it is not specific to the one molecule that we have. It is a broad coverage of all GLP-1s delivered through tissue orally. So it does cover dual ends. So all of the things is that it covers all of those. So yes, it covers dual, it covers -- it's very broad.

We have the patent on file. I mean you can read it and even through our website. So all the detail's are there. All the questions you asked, very valid. It is quite exciting that it's that broad and it covers all those different aspects. We'll initially try to stay a little bit focused to generate data with a focus molecule. But all of those dual and trips are possible and will be opportunities for us to expand.

Got it. I think I'll leave it there. I appreciate you taking our questions and congratulations again.

Thank you.

This concludes the question-and-answer session. I would like to turn the conference back over to Adi Mohanty for any closing remarks.

Thank you, all, once again for joining us. We are really excited about our progress and look forward to keeping you updated on all of our progress. Thank you.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.