Capstone Holding Corp (CAPS) 2015 Q1 法說會逐字稿

Good day, everyone, and welcome to today's Capstone Therapeutics conference call. As a reminder, today's call is being recorded. (Operator Instructions) At this time for opening remarks, I'll turn the call over to Jock Holliman, Executive Chairman of Capstone.

Thank you, Nicole. Hi, everybody. Appreciate you joining us for today's call. We have completely updated our website. And if you would like to follow the PowerPoint deck, please go to www.capstonethx.com; and on the top of the first page, you'll see an Investors icon. Open that, and on the right-hand side of the Investors page you will see a reference to the presentation for today.

I am obligated to mention Safe Harbor relating to forward-looking statements that may be made today on this call. We encourage you to look at the risk factors discussed in our Form 10-K for the fiscal year ended December 31, 2014, and any other relevant SEC documents that are certainly on our website or available on EDGAR.

If you will turn to slide 3, this is our corporate fax sheet. All of you on the call are familiar and long-time investors, so I think you know the facts of the Company. On page 4, our cash balance is $1,540,000, and you see that we have substantially decreased our spending at all levels. We are not engaged presently in clinical trial in LipimetiX, so that helps us preserve some cash there.

On slide 5, this is the big news. We released a press statement a couple of weeks ago. The six-year ordeal of the Qui Tam lawsuit brought against our former legal entity OrthoLogic Corp. relating to the bone growth stimulation device business -- legal issues dating back to 1998 to 2003. With the help of counsel and a very cooperative and supportive involvement from plaintiff's counsel, we did reach a settlement: a one-time payment of $50,000.

There was a joint filing with all parties consenting, requesting dismissal, that was filed with the federal court in Massachusetts Monday two weeks ago. And we are awaiting the judge's action on the order of dismissal. This is a major gating milestone for our Company and should allow us to act like a company again and conduct our business. Once the order of dismissal is final, we will plan to issue a press release with a few more details and a little bit more perspective. But until that event, we won't be commenting further on the Qui Tam.

Dr. Dennis Goldberg, who runs our LipimetiX joint venture in Boston, is on the phone. And Dennis will talk about the most recent human clinical results and about our renewed interest in acute pancreatitis with high triglycerides. Dennis?

Thanks, Jock, and good afternoon, everyone. If you look at slide 6, this is a slide you've seen before. And I'm going to run through this really quickly. This was the top three doses of our 2A study. We used the 1, 2, and 3.54 milligram per kilogram doses.

The patients were healthy volunteers, but because of the results in the phase 1, we had opened up enrollment to get patients with higher fasting triglyceride levels. And you will see why as I show the data. The results were similar to the phase 1. We had acceptable safety; we had some mild injection-site irritation, but we saw some really interesting and unique results in terms of lipid lowering with the peptide.

So if you go into the slide 7, what you see is that, if you look on the left, that's triglycerides. We reduced triglycerides to about 25% of baseline with the 2 milligram and the 3.5 milligram dose. This occurred in just a matter of hours.

Those were statistically significant reductions, even though the clinical trial was very small. It's a remarkable result. Just to give you a number, these patients had a fasting triglyceride of about 140 milligram per deciliter, and within an hour they were down below 40.

On the right slide you see the VLDL. VLDL is where the triglycerides are carried in fasting subjects. And you will see the ramp is very similar; and, again, we had a similar result, reducing VLDL cholesterol by about 80%. These subjects had a VLDL cholesterol level of 8 milligrams per deciliter after treatment.

So the result, as you go onto slide 8, really triggered an interest in acute pancreatitis. Our Science Advisory Board said, you've got to look at this.

So let me go over to slide 9. Slide 9 -- acute pancreatitis is a horrendously painful and difficult rapid-onset condition. It has severe pain and morbidity associated with it. It is associated with elevated triglycerides in about 70% of the cases. And what you see there is a quick definition of the levels of triglycerides.

When the patient is hospitalized for -- they go into acute or intensive care unit, they are given opiates for pain. They put them on fibrates and fish oil to lower lipids, but that takes weeks to show an effect. They put them on IV fluids with no fat in their diet. And then, as it's been described by pancreatologists, they just pray.

And the key to a successful outcome is that you've got to drop the triglycerides and get them below 500 milligrams per deciliter within 24 hours. Because if you don't, you start to get inflammation and damage to the pancreas and necrosis.

And if you look on slide 10, here's a couple of CAT scans. You see on the left, patient one is normal pancreatitis. You see that the pancreas -- in the middle, that curve-shaped organ there, is normal. If you look over on the right, you see a diseased pancreas that is horrendously swollen. It's full of debris and gas pockets. That patient is going to have chronic pancreatitis, which is a very difficult thing to treat and an intractable condition.

Part of that death there is due to the inflammation and hypoxia related to the elevated triglycerides, which clog up the capillaries in the pancreas. So our approach is get them in there, drop their cholesterol very -- their triglycerides very rapidly. Patients are put on an IV bag immediately in the intensive care unit or in the emergency room. They do a lipid panel on them, and if their lipids are elevated, put them on AEM-28 immediately.

If you look on slide 11, you see the etiology. There are about 74,000 patients a year who are admitted to the hospital in this county with acute pancreatitis. About 25% have gallbladder or gallstone problems. And those patients don't have elevated triglycerides. All of the rest of the patients do. And those patients require a very rapid drop in triglycerides. So that gives us about 45,000 hospitalizations a year.

If you look on slide 12, you see the pharmacoeconomics. Just going through this very quickly: if we can reduce their intensive care stay from three days to one and their acute care stay from three days to one, we will save the medical cost of about $1.35 billion a year. That includes the cost of AEM-28. So it's a very exciting opportunity for us.

We hired an independent company called Fletcher Spaght that is located in Boston to do a market analysis, and indeed, they came back -- surveyed 15 thought leaders around the world -- around the country, came back and corroborated what we have seen in the literature. There are 45,000 acute pancreatitis cases that would be appropriate for AEM-28 and the analogs.

And interestingly, there are about 900,000 people that have severely elevated triglycerides and either have had or are at risk of pancreatitis, and would be appropriate to be treated chronically -- which means every week or two -- with AEM-28. That gives us 110,000 patients, which would translate into more than 5 million doses per year. Very exciting result. Great opportunity.

The acute pancreatitis market, on page 14, an orphan drug. The refractory chronic care would be a longer, larger study program. It would require some outcomes, because we would have to show that we reduced the incidence of acute pancreatitis and helped survival in these subjects. But that is a $5.7 billion potential market.

So this is something that is really exciting. There is absolutely nothing in development to treat acute pancreatitis. Nothing works in the short-term, and we have a very unique opportunity with our very unique drug.

So that is the acute pancreatitis wrap-up in a very short period of time. Jock, do you want to take it back?

Thank you, Dennis. Well articulated. We really are excited about the pancreatitis indication.

We are also continuing to target, on slide 15, other hyperlipidemic conditions, including the HoFH -- homozygous familial hypercholesterolemia -- orphan indication. And we speak to that on slide 16.

If you look at the image on the right, it's a test tube of plasma that has been centrifuged. And you can see all the fat content, the yellow fat cream-colored content in the test tube. That represents lipid that has not been cleared by natural process and is representative of the type of blood you would find in an HoFH patient, because they have no LDL receptors on the liver and are unable to process that cholesterol.

There have been two drugs approved in the United States, Juxtapid and Kynamro. Both drugs have some side effects and toleration issues. Juxtapid has proven the market and has ramped sales very, very nicely; but for a variety of mechanistic reasons, we believe that our drug could still have a favorable position in this market.

On slide 17 we also have a list of additional orphan indications in hyperlipidemia that we would ultimately try to target. And from a mechanistic standpoint we believe that we serve all of these indications.

On slide 18, these are longer-term future target indications which include acute coronary syndrome, peripheral artery disease, and metabolic syndrome. Now all of these three indications would require longer-term clinical outcome studies. So these are not likely studies that we would embrace without partnership.

On slide 19, our summary slide: we have a new but historically proven Apo-E class of lipid-lowering drugs. This is a very powerful class of drugs. We are targeting acute pancreatitis with high triglycerides and other hyperlipidemic indications. The drug also has shown pre-clinically the potential to reduce atherosclerosis.

Our AEM-28 phase 1, phase 2, phase 1B and 2A studies met their objectives. We showed human proof-of-concept and efficacy and general systemic safety.

We are developing AEM-28-02, a new analog of AEM-28, which we filed composition of matter patent on July of 2014 and should provide 21-year patent life. We are developing that drug with a new formulation to enhance safety. So that is our lead molecule.

Our business plan is to continue the development program while exploring strategic joint development opportunities. That concludes the slide deck and overview. And operator, we would be happy to answer any questions.

(Operator Instructions) Steven Panetti, a Private Investor.

I've got a question about the cash levels and what the Company's plan is to raise additional cash to keep the operations heading in the right direction.

Thank you for the question, Steve. We have several possible pathways to consider capitalizing the clinical programs that we have discussed today. Until we have a definitive pathway to announce, we will not be getting specific. So stay tuned, and as soon as we have something of interest to the shareholders, we will certainly share that.

Sounds good. Thank you.

(Operator Instructions). Jim Strugger, Hilliard Lyons LLC.

Thank you. Jock, to you -- and to you, Dennis, I say congratulations, on a very limited budget, what has been accomplished thus far. And as a longtime shareholder, I wish you the very best of success as we continue to go forward.

Jim, that is a warm greeting. And we certainly appreciate it. Retrospectively, we delivered Phase 2A human results on a preclinical asset with $6 million in 27 months. And I really take my hat off to Dennis and his team in Boston for that kind of on-budget, on-time performance. So that is kind of rare in the pharmaceutical business.

We believe our prospects are extremely good moving forward. There are a lot of details to fill in. We are waiting for the Qui Tam final order of dismissal to be made public to us. We will certainly share that with you. And again, that is a gating item before we can move forward with our business plan.

So thank you all for being patient, and interested, and supportive. Please know we are doing our best, and we have our eye on the ball.

I certainly know that. Thank you.

Thank you. I'm showing no further questions at this time.

Okay, I think my last comments were concluding comments. And we appreciate the interest in the call today. We had a really good turnout, and we will be making announcements as we have things to share. Thank you all.

Ladies and gentlemen, thank you for participating in today's conference. That does conclude today's program. You may all disconnect. Have a great day, everyone.