Altamira Therapeutics Ltd (CYTO) 2019 Q4 法說會逐字稿

Good morning, and welcome to Auris Medical's conference call. On today's call are Thomas Meyer, Auris Medical's Chairman and Chief Executive Officer; and Elmar Schaerli, Auris Medical's Chief Financial Officer, who will present the company this financial results for the second half and full year 2019 and provide with a business update.

The accompanying slides can be found on our website in the Investors section. Earlier today, Auris Medical issued a news release with the second half and full year 2019 financial results as well as a business update. The release is available on the company's website, aurismedical.com and filed with the SEC.

I would like now to hand the conference over to the Auris' Investor Relations to read the forward-looking statements.

Thank you, operator. During today's call, we'll be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that address future operating, financial or business performance or our strategies or expectations.

Forward-looking statements are based on management's current expectations and beliefs and involve significant risks and uncertainties that could cause actual results developments and business decisions to differ materially from those contemplated by these statements. These risks and uncertainties include, but are not limited to, the timing and conduct of our clinical trials, the clinical utility of our product candidates, the timing or likelihood of regulatory filings and approvals, our intellectual property position and our financial position as well as those described in the Risk Factors section in our annual report on Form 20-F and future filings with the Securities and Exchange Commission. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change.

With that, I hand the call over to Thomas Meyer.

Thank you, Anne. Hello, everyone, and thank you for taking the time to join Auris Medical's Second Half 2019 Earnings and Business Update Call. On the call, I will provide an update on our operating activities was in each program as well as an overview of recent corporate development.

Following my update, our new CFO, Elmar Schaerli, will provide an overview of our second half and full year financials. Finally, I will discuss key milestones for 2020. We will then open the call for any questions.

During the second half of 2019, we continue to make significant progress with our intranasal betahistine clinical program. The key highlights from this program included: We extended our patent coverage, both in the U.S. and the EU to 2038. We initiated our Phase II trial assessing AM-125 in acute peripheral vertigo. And we have an interim analysis in our Phase Ib trial, assessing AM-201 in antipsychotic-induced weight gain. We look forward to reporting data from these trials in the current and the following quarters.

In addition to our betahistine programs, we made progress with our efforts to move our late-stage programs in tinnitus and hearing loss forward. This included the recent setup of a wholly owned subsidiary, Zilentin Ltd, to bundle our development products in these indications in order to facilitate partnering. We also obtained positive FDA and EMA guidance for our late-stage Keyzilen trial and set up a new scientific advisory board dedicated solely to this program. I hope to have exciting developments to share here in the coming months.

Finally, from an operational and financial standpoint, we continue to reduce our operating expenditures and cash burn rate. Given the stage of the company, this is a very crucial exercise, and I'm pleased to announce that we have made great progress in preserving capital. In addition, we welcomed a new CFO to our team, Elmar, who you will hear from in a few minutes.

Moving to Slide 3. I will now provide an update on each of our development programs. On to Slide 4. I will start the update with AM-125, our intranasal betahistine for the treatment of acute vertigo following neurosurgery. As a reminder, oral betahistine is the standard of care treatment for vertigo in many countries around the world, but its therapeutic potential is limited due to its low bioavailability. AM-125 is currently being assessed in our TRAVERS Phase II trial.

As a reminder, we randomized patients with acute unilateral loss of listable input due to a neurosurgical intervention. The surgery is typically performed for the removal of vestibular schwannoma, a benign tumor, growing behind the inner ear and frequently results in the sectioning of or serious damage to the vestibular nerve. But it can also be for the outright resection of the nerve in case of intractable Ménière's disease, which is called vestibular neurectomy or labyrinthectomy when the inner year or parts thereof gets removed for various reasons.

In all of these cases, patients are frequently unable to walk or stand after the surgery and experienced vertigo. In the weeks and months thereafter, they usually recover at least part of the vestibule function through vestibular compensation. In the trial, we treat patients for 4 weeks with AM-125 to reduce the acute symptoms of acute vestibular dysfunction such as vertigo or postural instability and to accelerate vestibular compensation. The objective is to allow patients to regain control of their balance sooner and to improve the quality of life. We randomized the first patient in July 2019 into the study and have since been progressing with the dose escalation.

On to Slide 5. The TRAVERS trial is being conducted in 2 parts, Part A and B. In Part A, 3 ascending doses of AM-125 or placebo administered 3 times daily over a total of 4 weeks are tested in a total of 30 patients. Initially, we plan to test 5 ascending doses of AM-125.

However, since the other clinical trial with intranasal betahistine provided already positive safety data, we reduced that number. The primary efficacy endpoints will be the time standing on foam and the tandem Romberg test, which were pictured on the previous slide. The outcomes from Part A will inform the selection of 2 doses for further testing against placebo in an estimated 72 patients in Part B of the trial.

In addition to the ongoing intranasal dose-escalation, open-label testing of all betahistine for reference purposes has commenced. Based on increasing enrollment rates since the beginning of the year, we were confident until very recently that we would obtain the results from the interim analysis of Part A in the second quarter of 2020. However, the outbreak of COVID-19 has unfortunately impacted also the TRAVERS trial.

Candidates for participation in this trial undergo neurosurgery and this is an elective procedure. Due to the COVID-19 out rate, the sites participating in the TRAVERS trial have postponed elective procedures and temporarily reduced or suspended clinical research activities. As a result, enrollment came to a halt towards the end of March 2020. We, therefore, expect that the interim analysis following Part A of the trial will be completed only in the third quarter of 2020 at the earliest. Since most of these elective procedures are only postponed and, therefore, going to happen at some point, it appears likely that enrollment rates will bounce back once the situation in our health systems normalize.

Now I will move on to an update on the AM-201 program on Slide 6. We continue to make very good progress with our AM-201 Phase Ib trial in healthy volunteers and anticipate a full data readout in early May of this year. As a refresher with AM-201, we are seeking to prevent major side effects of second-generation antipsychotics such as olanzapine, in particular, weight gain and somnolence. These side effects arise from the antagonistic effect of the antipsychotic drugs at histamine 1 receptors in the brain. It is well-known that histamine plays a key role in the brain's regulation of food intake and wakefulness.

In a Phase Ib trial, study participants receive intranasal betahistine placebo for 4 weeks in parallel with all oral olanzapine. The objective is to reduce the weight gain and daytime sleepiness compared against placebo. We started recruitment in Q1 of last year and in October performed an interim analysis. We recently announced that the last subject had its last treatment with it.

Moving to Slide 7. Part 1 of this trial enrolled 50 healthy volunteers who received either AM-201, 1, 2.5, 5, 10 or 20-milligram or placebo concomitantly with olanzapine. The intranasal treatment also administered 3x daily. The interim analysis showed good safety and tolerability of AM-201 up to a dose of 3x 20 milligrams daily. Further, the data revealed relevant reductions in weight gain and daytime sleepiness. In female study participants who overall show more pronounced changes than male participants, a reduction in weight gain of 1.1 kilogram against placebo was observed at the highest tested dose.

We are now progressing towards the final readout from Part 2 of the trial, which we commenced following the interim analysis. In Part 2, we proceeded to test an additional 30 healthy volunteers at a higher dose level of 30 milligram. This brings the total number to 80. The primary efficacy outcome for the study will be the reduction in weight gain and the secondary outcome, the reduction in somnolence.

Now on to Slide 8. In the second half of 2019, we significantly expanded our intellectual property estate. First, we were granted a U.S. patent title pharmaceutical composition comprising betahistine, which covers the composition of matter and methods of use for formulations of betahistine dihydrochloride for intranasal delivery. Second, we received an intention to grant notice from the European Patent Office for the corresponding European patent applications. Both of these patents have expected coverage until February 2038.

In addition to our additional patent coverage granted in late 2019, we have learned from a study published in a journal Epilepsy & Behavior about yet another potential therapeutic use for betahistine. In this study, an independent research group presented exciting results with betahistine in a mouse model of epilepsy. While we have no immediate plans for testing betahistine in epilepsy, it is great to see further potential for the compound beyond vertigo, antipsychotic-induced weight gain and somnolence as well as many other indications that have already been identified.

With this, I will now turn to our tinnitus program on Slide 9. The most important thing to note here is that we have received FDA and EMA guidance for our Keyzilen late-stage clinical program. As a refresher, in the first half of 2019, we developed a protocol for a Phase II/III trial with Keyzilen. The trial show 2 stages, reaffirm the compound efficacy in the treatment of acute tinnitus and provide confirmatory efficacy data to support a filing for marketing authorization. It will incorporate learnings from the previous late-stage trials. In addition, it will explore the use of a novel method for objective tinnitus diagnosis and measurement.

Both agencies support the use of the tinnitus functional index questionnaire as the primary efficacy outcome measure. In addition, the agencies agreed on a weekly collection of patient-reported tinnitus loudness, which is less frequent than in the previous trials where daily ratings proved to be problematic. The FDA considers the reduction in tinnitus loudness, a co-primary fixing point whereas the EMA considers it a secondary endpoint. Last but not least, the 2 agencies endorsed the planned sample size for the trial. The alignment with the FDA and EMA is very important for us in our quest to develop Keyzilen as a first-in-class treatment for acute inner ear tinnitus. And I look forward to providing further updates on our development progress throughout the year. We are following with great interest, the expanded use of hydroxychloroquine, which counts tinnitus as a possible side effect.

Moving on to Slide 10. I will quickly run through a few other important updates for our tinnitus programs. In August of 2019, we successfully established the scientific advisory board for our tinnitus research. The board is comprised of 4 world-renowned tinnitus experts will be integral in guiding the company for it as we look to partner. In addition, we received the notice of intention to grant from the Europe Patent Office for our patent application, covering compounds, modulating the sodium potassium chloride co-transporter 1 for use in the oral treatment or prevention of tinnitus. As demonstrated in an animal model of acute noise trauma, administration of an NKCC1 inhibitor resulted in a significant reduction of a biomarker for the presence of tinnitus. Just recently, we received a notice of allowance for the related U.S. patent application from the U.S. PTO. This brings me to the end of the program update. And I will now run through a few corporate updates.

Moving to Slide 12. As previously indicated, we aim to implement a further development of our tinnitus in hearing loss programs with nondilutive funding. To this end, in December 2019, we established a subsidiary called Zilentin Ltd to bundle our development projects in these therapeutic areas. This separate entity shall facilitate partnering for the programs. Zilentin Ltd is currently a 100% subsidiary and is domiciled in Zug, Switzerland. In addition to the creation of Zilentin, we have had a few management changes over the last few months. We've welcomed a new CFO, Elmar Schaerli and effective November 1, 2019. We're also announcing the resignation of Raoul Dias, General Counsel effective March 20. We wish him all the best in his future endeavors.

With that, I will turn the call over to Elmar for some financial updates before reviewing our key milestones for 2020.

Thank you, Thomas. Before reviewing our financial results for the second half of 2019, I would like to note that the financial statements are presented in Swiss francs. To help you with interpreting the financials, please consider that the U.S. dollar and the Swiss francs are trading essentially at a rate of 1:1.

With this, let's move to Slide 14. The second half of 2019 saw a reduction in net loss to CHF 3 million or CHF 0.83 per share from CHF 6.7 million or CHF 5.17 per share in the second half of 2018. For the entire year 2019, the net loss decreased to CHF 6.6 million or CHF 2.28 per share from CHF 11.5 million or CHF 14.46 per share for 2018. The main factors contributing to the decrease in 2019 were a reduction in R&D expenses from CHF 6.7 million in 2018 to CHF 3.3 million in 2019 due to lower spending on the late-stage program with Keyzilen and Sonsuvi and an increase in the amount capitalized for the AM-125 program.

A reduction in general and administrative expenses from CHF 4.3 million in 2018 to CHF 3.9 million in 2019, with spending on the holding companies move from Switzerland to Bermudas, preventing a more pronounced reduction.

A reduction in interest expense from CHF 1.1 million in 2018 to CHF 29,000 in 2019 due to the repayment of the loan facility with HELCO's Capital. The absence of transaction costs, which amounted to CHF 0.5 million in 2018. The amount of capitalized R&D expenses related to the AM-125 program increased from CHF 1.9 million in 2018 to CHF 3.2 million in 2019. Operating expenses amounted to CHF 7.3 million in 2019 compared against CHF 11 million in 2018. When taking the capitalization of R&D expenses into account, our operating expenses in 2019 came in at the low end of guidance, which was CHF 10 million to CHF 13 million before capitalization.

With this, let's move to Slide 15. I would like to point out that in 2019, we managed to further improve our balance sheet and increase our corporate flexibility. With the early repayment of our loan facility with Hercules Capital, 12 months ahead of the original schedule, all covenants and collateral in favor of Hercules were lifted and as mentioned before, interest expense was significantly lower. At the end of 2019, total liabilities were down to CHF 3.2 million, compared to CHF 6.2 million at the end of 2018. Shareholders' equity increased from CHF 3.7 million at the end of 2018 to CHF 6 million at the end of 2019.

Thanks to the move of the holding companies domicile to Bermuda, we gained more corporate flexibility, achieved cost savings and can since operate under jurisdictions that is more familiar to U.S. investors.

Cash and cash equivalents at December 31, 2019, totaled CHF 1.4 million. We expect our total cash need in 2020 to be in the range of CHF 7.5 million to CHF 10 million, for our expected total operating expenses of CHF 3.5 million to CHF 4.5 million and our expected capitalized R&D costs of CHF 4 million to CHF 5.5 million. Due to the COVID-19 related delays in the recruitment for the TRAVERS trial, we have swiftly initiated several cost-saving measures including participate federal short-time work program for our stock in Basel. As a reminder, we have an equity line in place with Lincoln Park Capital, under which we can sell up to USD 8.2 million of additional common shares and an at the market offering program with AGP.

With that, I would like to turn the call back to Thomas.

Thank you, Elmar. Concluding on Slide 17. We've had a very productive 2019 and look forward to the important milestones ahead. In particular, we anticipate in the current and following quarters, the reporting of full data from our extended AM-201 Phase Ib trial, reporting interim data from our AM-125 Phase II trial and additional updates in 2020 from our programs with Sonsuvi and Keyzilen in acute inner ear hearing loss and acute inner ear tinnitus, respectively.

In conclusion, we have significant clinical inflection points in the coming quarters with 2 important data readouts. I'm proud of the immense amount of work our team has put into these development programs. And I believe what we are doing will be life-changing for a very important patient population.

While COVID-19 has slowed down activities, I'm confident that our trial sites in Europe will resume enrollment in the not-too-distant future. I look forward to sharing intermittent updates throughout the year as we continue to make progress.

With that, I would now like to turn the call back to the operator who will open the line for questions.

(Operator Instructions) We will now take our first question from the line of Max Jacobs from Edison Group.

First, I wanted to ask, would it be possible for you to open -- I'm talking about the AM-125 trial. Would it be possible for you to open centers in countries or regions where there are fewer restrictions in order to mitigate any delay with enrollment?

Max. Sorry, I just had to unmute. Okay. So we have already diversified a structure year of the trial. And we have, for example, after approximately 2 weeks of complete stop in enrollment, one site who happens actually to be the top enrolling principal investigator picking up activities again. We have also, in the pipeline, the addition of further countries. That was initiated already before the outbreak of COVID-19. And we are quite confident that here -- one or another country here will be up and running again earlier than the others.

So our expectation clearly here is that while these tumors, these surgeries, they have to be done at some point. Now most of them are simply put on a waiting list. And so we expect that here once these restrictions are lifted that then this backlog will start to be worked down, and so this enrollment will then come back. But at this point, obviously, we have limited visibility only.

Okay, great. That's helpful. And then my last question is just regarding the AGP, ATM and the Lincoln Park facility.

I was wondering if there are any restrictions to them being used, kind of like where the share price is right now or anything like that.

Well, they are basically fully accessible, and we expect them to continue to be fully accessible.

There are no further questions at this time. Please go ahead, sir.

Okay. Thank you very much, operator, and thanks to everyone for joining the call today and your interest in Auris Medical. Have a great day. Stay safe and healthy and take care of your ears. Thank you. Goodbye.