Celcuity Inc (CELC) 2018 Q3 法說會逐字稿

Good day, everyone, and welcome to the Celcuity Release of Third Quarter of 2018 Financial Results Call. (Operator Instructions) It is now my pleasure to turn the call over to Brian Sullivan. Please go ahead, sir.

Thank you, and thank you all for joining our call. We announced the financial results for our third quarter ended September 30, 2018 a few minutes ago.

But before I begin, I'd like to remind everyone that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, which are outlined in today's press release and in our reports and filings with the SEC.

Our actual results may differ materially from those in the forward-looking statements.

On this call, we'll also refer to non-GAAP financial measures. You can find a table reconciling the non-GAAP financial measures to GAAP financial measures in our earnings release for the 3 and 9 months ended September 30, 2018, which was included in today's press release.

Today's press release is available on our website, www.celcuity.com, under the Investors section.

I'm pleased to also have on the call with me today, Vicky Hahne, our CFO.

I'd like to make some comments on our third quarter results first and then Vicky will follow with more details on a few items. And then we will open the line up for questions.

Well, on October, we announced the signing of a second clinical trial agreement with Puma Biotechnology and the West Cancer Center. Our approach to identifying new cancer subtypes is new and the patient populations we identify aren't initially on the clinical roadmap for the targeted therapies of interest to us.

So discussing and negotiating these arrangements with major pharmaceutical companies and other leading cancer research organizations is, as you'd imagine, a complex and lengthy process. The arrangement with Puma and West Cancer Center marks an important milestone in our long-term strategy of building partnerships with pharmaceutical companies, research organizations and key opinion leaders.

So we're now very excited to begin working with Puma and West Cancer Center to implement this clinical trial. We'll refer to this trial as the functional analysis of live cell signaling transduction 2 trial, or the FACT 2 trial. FACT 2 will evaluate the efficacy of Puma's pan-HER inhibitor, Nerlynx, also known as neratinib, in early stage triple-negative breast cancer patients who have hyperactive HER2 signaling tumors as identified by our CELx HSF Test. Nerlynx received its approval for extended adjuvant treatment for early stage for HER2 positive breast cancer in mid-2017.

Our preclinical studies evaluating Nerlynx and HER2 negative breast cancer tumor samples that have hyperactive HER2 signaling show that Nerlynx is a very effective inhibitor of HER2-driven signaling activity as well as independent HER1 and HER3 signaling activity.

We're excited now to study Nerlynx in a clinical center. The trial's planning to enroll up to 27 patients, we expect enrollment to begin in 2019 once institutional review board approval is received. And based on West Cancer Center's estimate of patient enrollment rates, Celcuity expects to obtain interim results in 10 to 12 months after the first patient's enrolled and final results within 18 to 24 months.

Our first clinical trial arrangement, we are fielding in collaboration with Genentech and the NSABP Foundation is also continuing to progress. This clinical trial, which we refer to as FACT 1, is designed to evaluate the efficacy of 2 of Genentech's HER2 drugs, Herceptin and Perjeta in HER2 negative breast cancer patients selected by our CELx HER2 Signaling Function test. This trial in combination with the FACT 2 trial means we will have 2 clinical trials in process to evaluate the efficacy of anti-HER2 drugs in early stage HER2 negative breast cancer patients selected by our CELx HSF Test. Our clinical collaborators, the NSABP Foundation and the West Cancer Center, are amongst the most well-respected cancer research organizations in the country.

We're hopeful that these clinical trial collaborations can eventually lead to better treatment options for breast cancer patients.

In addition, Puma and the NSABP Foundation are fielding a Phase II study evaluating Puma Technology's pan-HER inhibitor, Nerlynx; Genentech's HER2 antibody, Herceptin; and Bristol-Myers Squibb's EGFR inhibitor, Erbitux, in metastatic colorectal cancer patients. This trial is progressing and our CELx test will be used to evaluate patient samples after they have been enrolled in the trial.

We expect our CELx test will provide critical insight after the trial is completed about the patient characteristics, most correlative to drug response.

During the trial, we also continued our efforts to develop our CELx Signaling Function tests for breast cancer and 2 new signal types. To support these projects, we're advancing our cell microenvironment technology and furthering our capability to assess different types of signaling dysfunction. Our efforts to initiate additional collaborations with pharmaceutical companies continued. We hope to work with these companies, first, to evaluate the efficacy of their targeted therapeutics and the new patient subgroups our CELx test identify. And if successful, to help these therapies gain FDA approvals to treat these patient populations.

We believe our CELx test offers the opportunity to expand the patient population through targeted therapeutics beyond patients selected using a molecular biomarker. And we hope to evaluate the efficacy of additional targeted therapies in breast cancer patients, who have either hyperactive HER2 signaling tumors or hyperactive and co-activated HER2 and c-Met signaling tumors.

In addition, we continue to identify leading cancer researchers interested in collaborating with us to study the efficacy of targeted therapeutics in the patient populations our CELx test identifies.

So overall, we're very excited about the progress we made during the quarter.

I'd like now to turn it over to Vicky to review on our financial results.

Thank you, Brian. Our third quarter net loss was $1.9 million or $0.18 per share compared to $1.8 million net loss or $0.26 per share for the third quarter of 2017.

Net loss for the first 9 months of the year was $5.7 million or $0.56 per share compared to $4.5 million or $0.69 per share for the same period in 2017. Because these quarter and year-to-date net losses include a significant noncash item, stock-based compensation and noncash interest expense, we also included in our press release non-GAAP adjusted net loss for the quarter.

Our non-GAAP adjusted net loss was $1.6 million or $0.15 per share for the third quarter of 2018 compared to non-GAAP adjusted net loss of $1.4 million or $0.20 per share for the third quarter of 2017.

R&D expenses increased approximately $1.1 million during the first 9 months of 2018 compared to the first 9 months of 2017, primarily due to $0.6 million increase in compensation-related expenses to support development of our CELx platform.

In addition, other research and development expenses increased $0.5 million due to clinical validation studies and laboratory supplies to support the CELx platform and operational and business development activities. To support our R&D projects, we also invested approximately $146,000 in capital equipment.

G&A expenses increased approximately $0.7 million during the first 9 months of 2018 compared to the first 9 months of 2017, primarily due to $0.3 million increase in compensation-related expenses. Other G&A expenses increased $0.4 million due to professional fees associated with being a public company and director and officer insurance.

We ended the quarter with approximately $26.7 million of cash, cash equivalents and investments.

Thank you, Vicky. Operator, we'd like to now take questions, if there are any.

(Operator Instructions) And we'll go ahead and take our first question from Kevin.

I just wanted to see -- hey, Brian. So I wanted to see if you could provide an updated estimate on cash utilization. It looks like cash used this quarter came in at about $1.8 million. Is that kind of a good run rate? You guys have been doing a really nice job of managing costs.

It is. I think as we bring on new trials for instance, the expenses will increase as we kind of move forward with some of our R&D programs. The expenses might increase somewhat, but we're on track with the estimates we've been talking about as far as our cash consumption over the 2 to 3-year period we've described previously.

Got you. Great. That's helpful. And then just going back to the Genentech trial or FACT 1. Are the requisite IRBs now in place at all the targeted trial sites? And then can you talk about how many of the 54 targeted patients have been enrolled to date?

Right. So we have nearly all the sites enrolled. I mean, rather nearly all the sites' IRBs are completed. There are some sites that have some contract details to work through. And so that's ongoing. I think we are on track with what our revised estimate were -- the revised estimate we developed to get these sites onboard. We haven't been -- and we aren't going to break out enrollment numbers on an ongoing basis, part of our agreement with NSABP just doesn't allow us to disclose information about the trial except at pre-designated periods, you'll see an interim analysis and then the final analysis. But we're proceeding pace and progressing.

Okay. And so still on-track for interim top line data, I guess, mid-next year? Does that sound right?

Right. Right.

Okay, great. And then switching over to the Puma or FACT 2 trial now. 27 patients to enroll. I guess, how long does that typically take? And if we think about the 10 to 12 months to get interim data, would that put that out to the kind of first half of 2020, Brian?

If the estimates that they're making, the West Clinic is making are what we count on, then we would expect, based on those estimates, that data before -- by the end of next year, the end of '19.

Okay. That's really good, actually. And then can you talk about -- at all about the success measurements? Will it still be pathologic complete response? And then...

Yes.

It is, okay. That's great. And then what about cost to Celcuity for running the trial?

Sure. So our agreement with -- the financial arrangements with Puma are confidential. And so I -- there's a limited amount I can really describe for that. But we think this trial will allow us to get pharmaceutical companies involved in funding through a particular mechanism. But I can't really go into much more detail than that just because of the confidentiality.

Totally understand it. That's appreciated. And then lastly, any update on development timings of CELx tests for another tumor type besides breast cancer? If there's still potential later this year or maybe early next year?

I think early next year, we would expect to be able to start talking about the next tumor type that we're working on and we're continuing to work on additional pathways for breast cancer. Again, each pathway and particular tumor type that we identify as -- for a new subtype leads to potential drug programs. And so for instance, the programs that we're hoping to put in place for the c-Met HER2 combination significantly expand the range of alternatives for us. And so we think based on some of our current research that there's an opportunity potentially for us to increase the number of pathways that we study in breast cancer. And so -- again, we -- we're proceeding on a number of fronts to identify new patient populations, both within our existing tissue type as well as new tissue types.

And we will go ahead and take our next question from Yi.

Just wondering if the company has a target number on average per year that you would take on new projects for companion diagnostic tests?

Not sure I understand the question. Are you talking about the number of programs we might work on with a pharmaceutical company or just the programs that we're working on internally?

No, programs with pharmaceutical companies. Do you have a sort of internal target per year you need to achieve for new programs with pharmaceuticals?

We do. We have some internal goals. At the beginning of this year, we talked about our goal of signing up another collaboration with an additional -- for a new drug with a new pharmaceutical company. And then we accomplished that when we signed the Puma agreement to study their drug and patients selected with our test. And so we haven't described and disclosed our goals for 2019. But we would do that. We expect in our first quarter -- our year-end call rather at the beginning of next year. But we do have specific goals for a number of years. But we'll describe the specific goals we have for 2019 in a few months.

(Operator Instructions) And it doesn't look like we have any further questions on the phone line at this time.

Well, thank you, everyone, for participating. Look forward to updating you in the future. Talk to you later. Bye.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.