Bio Path Holdings Inc (BPTH) 2019 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Bio-Path Holdings First Quarter 2019 Earnings Conference Call. (Operator Instructions)

I would now like to turn the call over to Will O'Connor, Stern Investor Relations. Please proceed.

Thank you, operator. Welcome to the Bio-Path Holdings conference call and webcast to review the company's first quarter of 2019 earnings results and to provide an update on recent pipeline and corporate developments. Earlier, issued a press release which outlines the topics that we plan to discuss on today's call. The release is available at biopathholdings.com.

With me today from Bio-Path are President and CEO, Peter Nielsen; and Vice President of Finance and Accounting, Anthony Price.

Before we begin the call, I would like to remind you that today's discussion will contain forward-looking statements that involve risks and uncertainties. These risks and uncertainties are outlined in today's press release and in the company's recent filings with the Securities and Exchange Commission which we urge you to read. Our actual results may differ materially from what is discussed on today's call.

With that, I'll now turn the call over to Bio-Path's CEO, Peter Nielsen.

Thanks, Will. Good morning, everyone, and thank you for joining us today. During the first quarter, we continued to execute on our strategic initiatives to build our DNAbilize technology platform and advance our clinical development programs. As I'll describe in greater detail later in the call, we were delighted to present data from preclinical studies supporting the potential of BP1003, a novel liposome-incorporated STAT3 oligodeoxynucleotide inhibitor for the treatment of pancreatic cancer, non-small cell lung cancer and acute myelogenous leukemia, or AML, at the American Association of Cancer Research Annual Meeting before an audience of world-leading oncologists.

I'll begin my discussion with the review of our platform technology. As you know, the DNAbilize platform is our proprietary antisense RNAi nanoparticle technology, which we use for the creation of nucleic-acid therapeutics.

DNAbilize therapeutics integrate with the cellular membrane because of their unique structures, allowing the antisense drug to be delivered to the disease cells with high uptake into the cell via incorporation into lipid layers. There has been no evidence of toxicity associated with our technology. We are extremely enthusiastic about the potential of our DNAbilize platform for developing novel treatments for patients suffering from diseases with high unmet medical need.

Let's review the preclinical data we recently presented from our third drug candidate BP1003, which targets the STAT3 protein. We are studying BP1003 for the treatment of pancreatic cancer in a patient-derived tumor model. Previous models have shown the drug to successfully penetrate pancreatic tumors and enhance the efficacy of standard frontline treatments. The results from our preclinical studies of BP1003 were accepted as a poster for presentation at the American Association of Cancer Research Annual Meeting in Atlanta in April. We are excited to be targeting STAT3 for a number of reasons. Signal transduction and activator transcription 3 or STAT3, though typically inactive in normal cells is advertently active in cancer cells. The abilities of tumor cells to proliferate uncontrollably, resist apoptosis, induce vascular formation and invade distant organs are well-recognized hallmarks of cancer. STAT3 is a regulator of the genes involved in these cancer processes. More recently, the capability of tumors to evade immune surveillance and avoid destruction by the immune system has also gained significant acceptance in the cancer research field. STAT3, which is a point of convergence for many oncogenic pathways, has emerged as a critical mediator of tumor immune evasion at multiple levels.

Activation of STAT3 has been found in many types of cancers, including non-small cell lung cancer, AML and pancreatic ductal adenocarcinoma cancer. Activation of STAT3 correlates with poor clinical outcome, high-grade disease and metastasis and has been linked with resistance to chemotherapy, including gemcitabine, considered a standard-of-care agent for advanced pancreatic cancer. Therefore, inhibition of STAT3, in combination with chemotherapy, is expected to produce enhanced clinical benefit. The poster at AACR highlighted 4 antisense oligo sequences directed against STAT3 messenger RNA, identified by Bio-Path and manufactured using DNA -- DNAbilize antisense RNA nanoparticle technology. Cell viability tests and Western blots were conducted to determine the inhibitory effects of liposome-incorporated STAT3 antisense oligo on non-small cell lung cancer and AML cells. And ex vivo live tissue sensitivity assay was performed with a panel of 20 pancreatic patients-derived xenografts to study the overall activity of BP1003 alone and in combination with gemcitabine. Using previously defined criteria, tissue slice viability inhibition greater than 30% and with a P value less than 0.05 was a response. For validation of ex vivo results, pancreatic cancer patient-derived xenografts of tumor-bearing mice were administered to BP -- with BP1003 and gemcitabine twice a week for 28 days. Tumor volumes were monitored for up to 49 days.

BP1003 was selected as the most potent liposome-incorporated STAT3 antisense sequence in decreasing non-small cell lung cancer viability. Further, validation in AML cells demonstrated BP1003 inhibited cell viability and STAT3 protein expression. In the ex vivo live tissue sensitivity assay, BP1003 at a dose of 10 micromole, significantly inhibited the tissue slice viability in 9 out of 18 pancreatic cancer patient-derived xenografts by more than 30%, again, with a P value less than 0.05. The combination of BP1003 and gemcitabine further enhanced ex vivo efficacy in BP1003 in a subset of patient-derived xenografts. In the ex vivo study with pancreatic cancer patient-derived xenograft models, a combination of BP1003 and gemcitabine caused tumor regression during the 20-day -- 28-day drug treatment period. This anticancer activity was maintained for another 21 days even when drug treatment had ceased.

We are excited by these preclinical data and to be tackling solid tumors with our proprietary technology platform. We look forward to continuing our IND-enabling studies of BP1003 in 2019 with a goal to enter first-in-human trial with this very promising product candidate next year.

Let's now review the progress we've made in advancing our lead product candidate, prexigebersen. Prexigebersen is being studied in a Phase II clinical trial for the treatment of the acute myelogenous leukemia or AML. As a reminder, this trial is a multi-center study of prexigebersen in combination with low dose cytarabine, or LDAC, in de novo patients with previously untreated AML, who are not otherwise eligible for standard or high-intensity chemotherapy regimens or who have elected a low-intensity regimen. This trial is open-label with the 2-stage design to assess safety profile, pharmacokinetics, pharmacodynamics and efficacy of prexigebersen. The primary endpoint of the study is complete remission, including patients who achieve incomplete hematologic recovery, or CRi, and complete remission with incomplete platelet recovery. Secondary endpoints will assess the safety and efficacy of prexigebersen, including overall survival, time to response, duration of response and adverse events as evaluated by physical examination findings, vital signs and clinical laboratory tests.

In April 2018, we presented exciting interim results from our Phase II study. And during the first quarter, we were pleased to report additional analysis from this study. In our original interim analysis from this ongoing Phase II study, our results showed that 47% of the evaluable patient showed some form of response to the combination treatment, including 4 patients with complete remission, or 24%, and 4 patients with stable disease, including 1 patient who achieved a leukemia-free status, 1 patient who had significantly reduced bone marrow blast. As you may recall, during the first quarter, we announced updated interim results from this study. These results now show that the efficacy profile has improved to where 11 or 65% of the 17 evaluable patients had a response, including 5 or 29% who achieved CR, including 1 CRi and 1 morphologic leukemia-free state and 6 stable disease responses, including 2 patients who had greater than 50% reduction in bone marrow blast. Importantly, through investigations by our principal investigators, it was observed that 68% of these patients were secondary AML patients, an extremely difficult class to treat.

These updated interim data from stage 1 of our Phase II study of prexigebersen in de novo, AML patients only increase our confidence in the safety and efficacy profile of prexigebersen and underscore its potential to treat AML patients. The complete response rate for LDAC treatment alone for the class of patients in this study was benchmarked at 7% to 13%.

Whereas prexigebersen treatment with LDAC is currently showing a 29% rate with a highly favorable safety profile.

The recent approval of the frontline therapy venetoclax provides an opportunity for combining prexigebersen with the combination venetoclax plus decitabine for the treatment of de novo AML patients. As we have said before, we view prexigebersen as an ideal combination candidate with frontline therapy. Our aim is to match prexigebersen with the leading frontline therapies to improve treatment options for patients.

As the treatment landscape evolves, we will continue to respond to those advances. The plans for a registration-directed clinical development program for prexigebersen as a treatment for AML reflects these changes. Firstly, we have amended the existing stage 2 cohort of prexigebersen plus decitabine in untreated de novo AML patients to add untreated high-risk myelodysplastic syndrome, or MDS, patients. High-risk MDS patients are typically treated with hyperventilating agents alone, and the combination treatment may benefit these patients. We canceled the stage II cohort of prexigebersen plus low dose cytarabine, or LDAC, for untreated de novo AML patients. Although we have had good success with prexigebersen plus LDAC, there is a strong preference by oncologists for decitabine over LDAC. We amended the existing Phase II protocol to add a cohort of prexigebersen in combination with decitabine in refractory/relapsed AML patients plus high-risk MDS patients. In addition, we will continue our preclinical efficacy studies for prexigebersen in combination with decitabine and venetoclax to confirm the incremental efficacy benefit of this triple combination.

Once we have confirmed the incremental efficacy benefits of the triple combination, we will amend the protocol of the Phase II trial to perform a small safety assessment of the triple combination prexigebersen with decitabine and venetoclax in the refractory/relapsed AML plus high-risk MDS patient cohort. Following a successful safety assessment, we will initiate a registration-directed cohort of the trial by adding venetoclax to the prexigebersen plus decitabine combination treatment of refractory/relapsed AML plus high-risk MDS patients.

Finally, we will amend the protocol of the Phase II trial to initiate prexigebersen plus decitabine plus venetoclax registration-directed trial for untreated AML and high-risk MDS patients to determine if a more durable response and longer survival is observed compared to patients first treated with the decitabine plus venetoclax combination.

Overall, these transformational steps will result in 2 registration-directed cohorts of our Phase II clinical trial in AML. Both cohorts will study prexigebersen plus decitabine plus venetoclax, one for untreated AML and MDS, the other for relapsed/refractory AML and AMS.

We have also updated our plans for BP1002, our second therapeutic candidate, which targets BCL2. Venetoclax has also shown activity against the antiapoptotic protein BCL2 and works by neutralizing the protein's BH3 domain. It is an approved treatment for chronic lymphocytic leukemia, or CLL, patients, however, with the exception of some patients treated with allogeneic hematopoietic cell transplantation, disease relapse invariably occurs often times due to BH3 domain mutation over time. BP1002 also targets the BCL2 protein. However, BP1002 activity is based on blocking the BCL2 messenger RNA and not the BH3 domain. As a result, we believe that BP1002 could provide an alternative venetoclax patients who have relapsed. Further, we believe there will be an AML patient relapses from venetoclax treatments, representing an addition in AML patients -- representing an additional opportunity for Bio-Path to treat those patients with BP1002.

As a result, we believe we will be able to file for registration of BP1002 for the treatment of venetoclax relapses in both CML patients and AML patients. The planned modification of our Phase II clinical program in AML to include venetoclax combination treatment with prexigebersen will give us early experience with treating BCL2-driven antiapoptosis in these patients.

And as always, we continue to evaluate opportunities to expand DNAbilize technology platform to other oncology indications.

Finally, I'd like to briefly highlight a significant corporate update. During the first quarter, we successfully raised $21.3 million. In March 2019, Bio-Path issued 712,910 shares of its common stock at a price of $25.95 per share for gross proceeds of approximately $18.5 million in one transaction. In addition, Bio-Path completed 2 smaller offerings during this first quarter. This financing enables us to fully execute on our clinical development plans for our 3 promising therapeutic candidates. With these additional funds, we now have the resources to achieve a number of key milestones that we believe should significant enhance shareholder value.

With that, I'll now turn the program over to Anthony Price for a brief review of our year-end financials. Anthony?

Thanks, Peter. The company reported a net loss of $1.5 million or $0.89 per share for the 3 months ended March 31, 2019, compared to a net loss of $1.9 million or $3.38 for the 3 months ended March 31, 2018.

Research and development expenses for the 3 months ended March 31, 2019, decreased to $0.4 million compared to $0.9 million for the 3 months ended March 31, 2018 primarily due to decreased clinical trial expenses as we modified operations between stage 1 and stage 2 of our Phase II clinical trial in AML to include venetoclax combination treatment with prexigebersen.

General and administrative expenses for the 3 months ended March 31, 2019, increased to $1.1 million compared to $1.0 million for the 3 months ended March 31, 2018, primarily due to increased legal fees and insurance costs.

As of March 31, 2019, the company had cash of $19.3 million compared to $1.0 million at December 31, 2018.

Net cash used in operating activities for the 3 months ended March 31, 2019, was $2.0 million compared to $1.7 million for the comparable period in 2018. Net cash provided by financing activities for the 3 months ended March 31, 2019, was $20.3 million.

With that, I'll now turn the call back over to Peter.

Thanks, Anthony. In closing, 2019 has gotten off to a particularly strong and positive start led by our growing body of clinical evidence in support of our pipeline of RNAi nanoparticle drugs. Importantly, we've strengthened our balance sheet, which allows us to continue to support our compelling development programs in a number of cancer indications where current treatment options are limited.

With that, operation -- with that, operator, we are ready to open the call for questions.

(Operator Instructions) Our first question comes from Laura Engel with Stonegate Capital Partners.

So just given obviously, all that you have going on, especially with the busy pipelines and several products and development, could you just kind of give us insight for R&D, perhaps for the remainder of year, maybe you can compare it to last year given that the first quarter was so much lower than historically has come in. So just your thoughts on that for the remainder of the year?

The thing to -- looking at the R&D values in comparison and the period comparison, you have to remember a significant piece of our R&D expense is when drug product is released from the holding account and recall -- we don't have inventory, per se, because it's not an approved drug. So therefore, it's not something that has a market value. But nevertheless, when we manufacture drug, our drug is -- has 2 primary steps. We have the drug substance, which is the RNAi antisense. That typically with companies is their whole drug, but that's a raw material for our final drug product. So we have several steps, 2 separate clinical batches that go into that. And the accounting for that is to basically accumulate costs that go into the final drug product on the balance sheet as a prepaid expense. And those maintain there until the batch is released. And then once it's released then it is -- it doesn't go to an inventory account, it goes to expense. And so when you see those changes in activity or values like that, that's typically driven by the drug product being completed, therefore, released to us, and therefore, expensed in its entirety. So that's primarily what goes on. We've had, in fact, quite a bit of activity on the front. It is a little bit slow as we've kind of indicated because we are in between refocusing our AML Phase II to get it to the endpoints that we want, where eventually we will be 2 cohorts, 1 untreated, newly untreated and then the other relapsed/refractory, both with a triple combination. And so we've had to -- until we get to that point, enrollment has been slow because venetoclax has been tested against a lot of drugs and it takes up patients. So we have added things that will get our activity going, and we're halfway there, I think. And adding refractory/relapsed patients will, I think, give us access to patients sooner. And that protocols is in the process of heading out to a site for IRV reviews and whatnot. But a big part of the numbers change was -- is again just the accounting and the fact that these are batch spends. And those batch processes can take 6 to 9 months because remember, you're going through a queue and accumulating for the antisense drug substance and then that's a raw material input for the drug product, again, which has to go through its queue in testing. And testing is couple months at least for each step of the way. So that's -- I think that's substantially what you're seeing and why you are asking that question.

And I'm showing no further questions at this time. I'd like to turn the call back over to Peter Nielsen for closing remarks.

All right. Thank you, again, everyone, for joining us and for your continued interest and support of Bio-Path. Have a great day.

Ladies and gentlemen, this concludes today's conference. Thanks for your participation. Have a wonderful day.