Matinas BioPharma Holdings Inc (MTNB) 2021 Q1 法說會逐字稿

Hello, and welcome to the Matinas Biopharma's Q1 2021 Results Conference Call and Webcast. (Operator Instructions). As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Peter Vozzo, Investor Relations. Please go ahead.

Thank you, Kevin. Good morning, everyone, and thank you for joining the Matinas Biopharma First Quarter 2021 Results Conference Call. Early this morning, we issued a press release with our financial results along with business updates. This release is available on the Matinas Biopharma website under the Investors section.

Speaking on today's call will be Jerry Jabbour, Chief Executive Officer; and Keith Kucinski, Chief Financial Officer. We also have Dr. Terry Ferguson, Chief Medical Officer; and Dr. Terri Matkovits, Chief Development Officer, who will be available to answer questions during our Q&A session.

At this time, I would like to remind our listeners that remarks made during this call may state management's intentions, hopes, beliefs, expectations or projections of the future. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the safe harbor provisions of the federal securities laws. These forward-looking statements are based on Matinas Biopharma's current expectations and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are discussed in the periodic reports Matinas Biopharma files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the SEC's website. An archive of this call will be posted to the company's website also in the Investor Relations section. Following the company's prepared remarks, we will open the call for a question-and-answer session.

I will now turn the call over to Jerry.

Thank you, Peter. Good morning, everyone, and thank you for taking the time to join us today as we review our 2021 first quarter financial results and provide a brief business update. At this point in the year, the reporting calendar becomes a bit compressed, as we reviewed our 2020 financial results and provided an operational update a short while ago on March 29. And are now providing our first quarter report just 40 days later. Despite the short reporting interval, we continue to be very pleased with our overall progress as we work towards several meaningful catalysts and milestones throughout 2021.

In March, we outlined our plan and strategy to identify the right partner for our potential best-in-class prescription omega-3 drug, LYPDISO. Following the announcement of data from the ENHANCE-IT head-to-head trial versus Amarin Corporation's Vascepa, where we once again showed superiority in the ability to achieve elevated levels of eicosapentaenoic acid or EPA in the blood, which has been demonstrated to correlate directly with the overall reduction of cardiovascular risk. The partnership process is ongoing with interested parties coming across the globe. Including the U.S., EU and China. At the same time, we discussed finding the right partner to advance development of LYPDISO. We also announced that we were reallocating our internal resources and expertise fully behind our lipid nanocrystal or LNC platform delivery technology.

Following more than 2 years behind the scenes, it was now time for this proprietary and highly differentiated technology to take center stage. Ultimately, while we continue to believe that there is great value associated with LYPDISO, the opportunity to focus on and advance the LNC platform, its associated drug candidates and the multitude of possibilities for application across molecules and therapeutic areas is one that we believe will fundamentally change the perception and trajectory of Matinas moving forward.

The response from analysts and investors alike has been very positive as people really dig in and evaluate the wealth of data generated to date and better understand the value to be generated moving forward with our LNC platform. We believe 2021 is going to be a transformational year for our company and our technology, and we are committed to realizing the full potential of what could be the most promising drug delivery platform technology to come forward to date. We are genuinely excited by the opportunities ahead for our LNG platform and have made meaningful progress moving this platform forward since the beginning of 2021 with our own drug candidates as well as promising collaborations with some of the world's leading pharmaceutical companies.

For those of you who may be new to Matinas and to our LNC platform technology, what we are fundamentally talking about with our platform is intracellular drug delivery. For many therapeutic categories and related disease treatments, the ability to efficiently and safely deliver molecules across the cell membrane and inside a cell is imperative. This has come more into focus with recent medical innovation and the advancement of treatments from being chemistry based to more biology based. How do we effectively protect these complex molecules and the body from one another? And then how can we facilitate delivery in such a way so as to avoid toxicities or unintended immune system responses, each of which can have very significant and dangerous consequences.

Our LNC platform, which we believe can be applied to both small and large molecules, such as gene therapy, also has flexibility for route of administration, meaning it can be used to deliver drugs orally, intravenously and even through inhalation or intranasally. We continue to believe that the unique capabilities of our LNC formulations to mimic enveloped viruses differentiates our technology from any other available intracellular delivery technology being applied today.

There are a few key areas I would like to highlight this morning that illustrate the progress we have made with our LNC platform. First, patient enrollment in cohort 2 of the second part of the EnACT study with MAT2203 in cryptococcal meningitis has reached approximately 70%, with DSMB review and cohort progression anticipated in the third quarter of 2021. The SMB evaluation of full safety and efficacy data from cohort 2 provides a near-term opportunity to further validate the LNC platform and highlights its ability to facilitate oral bioavailability and then carry molecules effectively across the blood-brain barrier in combating deadly invasive fungal infections.

Unfortunately, we know that even with treatment, there has historically been more than the 30% to 40% mortality rate for patients infected with cryptococcal meningitis. To date, however, the survival rate for patients on MAT2203 is exceeding expectations. We view this as extremely encouraging and a good indication that MAT2203 is having the intended effect for patients. Recall the second part of EnACT, which is designed to assess both safety and efficacy of MAT2203, began enrolling patients in July of 2020. In October of 2020, the independent DSMB completed a prespecified review of the first cohort and unanimously recommended progression into the second cohort of patients, which is where we are now.

We view cohort 2 as extremely important for several reasons. First, increasing the duration of oral MAT2203 during the induction phase to 12 days, should provide more detailed insight on the efficacy of MAT2203 in this vulnerable patient population. We would expect to see continued improvement in reduction of CSF fungal counts and the achievement of sterility without rebound during maintenance. This would be additional validation that MAT2203 is effectively crossing the blood-brain barrier and treating this deadly infection.

Second, following DSMB evaluation of the data from cohort 2 and our own internal review, we anticipate meeting with the FDA to allow them to review all data generated to date in EnACT and to discuss opportunities to potentially accelerate development of MAT2203 through the limited population pathway for antibacterial and antifungal drugs more commonly referred to as the LPAD pathway. This pathway was created to encourage and facilitate the development and approval of certain antibacterial and antifungal drugs to treat serious or life-threatening infections in limited populations of patients with unmet needs.

We believe that MAT2203 is an ideal candidate for this pathway, and we look forward to our discussions with the agency. Given the design of EnACT, we believe there are opportunities for a variety of indications here, with the potential early approval as step down therapy from IV amphotericin B. Recent M&A activity in the anti-infective therapy space, such as Pfizer's recent acquisition of Amplyx, illustrate the continued high unmet medical need for new and novel approaches to successfully treating life-threatening fungal, bacterial and viral infections. And the COVID pandemic has also emphasized the devastating impact of infectious diseases, highlighting the need for new therapies as well. We are confident that as we advance our drug candidates, they will receive more and more attention for patients, KOLs and interested pharmaceutical partners.

Regarding our second LNC platform drug, MAT2501, and with the support of the -- and validation from the Cystic Fibrosis Foundation, we have advanced this important drug into preclinical toxicology and efficacy studies with the goal of completing a Phase I single ascending dose pharmacokinetic study in healthy volunteers by the end of 2021. Thereafter, we expect to initiate a Phase II program in CF patients with nontuberculous mycobacterial infections. Our goal is to develop the first oral aminoglycoside. This could essentially transform the use of this important class of drugs. Our initial target is an indication for the treatment of nontuberculous mycobacterial infections, followed by a potential indication to treat gram-negative bacterial infections.

believe's we that MAT2501's ability to orally deliver high levels of amikacin directly to the lung and without use limiting toxicity, distinguishes it from all available therapies and could provide an important solution for patients and physicians. We are encouraged by the success that Insmed has seen with its inhaled amikacin, ARIKAYCE, despite its black-box or safety warning and very limited indication. Our expectation is that our oral amikacin, given the benefits of our LNC technology could eliminate safety concerns and be positioned for a much broader label.

Regarding our collaborations, we continue to make important progress in expanding the utilization of the LNC platform through our work with Genentech and with the National Institute of Allergy and Infectious Diseases in creating an oral formulation of Gilead's remdesivir. As we discussed previously, Genentech recently extended its collaboration with Matinas, and in the first quarter of this year, we sent NIAID multiple potential oral formulations of remdesivir to begin evaluation in various COVID-19 in vitro models. We expect to be in position to evaluate those data from these early in vitro studies shortly. Although we are extremely limited through agreement in what we can say about this collaborative work, we are confident in our technology and that ultimately, we will be in position to comment more fully.

During the quarter, we continued to invest in our organization by recruiting and hiring 6 new employees, predominantly focused on delivering on our mission of advancing our LNG platform. Most of these individuals have been focused on drug delivery and advanced science. And will be working closely with Dr. Lu and Dr. Mannino as we look to expand the LNC platform into other innovative areas, such as messenger RNA and gene therapy.

Finally, we are also excited to announce that Matinas will be hosting its first virtual R&D Day on June 17, 2021, to provide an overview of our LNC platform, including a detailed discussions on the platform's clinical programs. If you would like to virtually attend our presentation, you will be able to register at the Investors section of our website in the coming days.

Looking ahead, I see a more focused organization centering our attention and resources on our LNG platform. Unlike lipid nanoparticles and viral vectors, where multiple companies are working in crowded competitive environments and with technology limitations, no other company is working with phospholipid-based lipid nanocrystals. We continue to invest in extending the intellectual property surrounding this potentially disruptive technology. And to further demonstrating how LNCs can and should be viewed as a potentially superior drug delivery solution to both lipid nanoparticles and viral vectors.

I would now like to turn the call over to Keith Kucinski, our CFO, who will discuss our financial results.

Thanks, Jerry, and good morning, everyone. Turning now to our financial results. Cash, cash equivalents and marketable securities at March 31, 2021, were approximately $60.7 million compared to $58.7 million at December 31, 2020. The company reported a net loss attributable to common shareholders of approximately $5.2 million or $0.03 per basic and diluted share. These results are identical to those of the first quarter of last year. Research and development expenses were approximately $3.2 million in the first quarter of 2021 compared to approximately $4.1 million in the same quarter of 2020. The decrease was due primarily to the completion of the ENHANCE-IT study of LYPDISO in January 2021.

General and administrative expenses were approximately $3.1 million in the first quarter of 2021 compared to $2.3 million in the same period of 2020. The increase was primarily due to higher compensation expense related to the exercise of stock options during the first quarter of this year. Finally, pursuant to our at-the-market sales agreement with BTIG, the company sold approximately 3 million shares of its common stock during the first quarter of 2021, generating net proceeds of approximately $5.6 million. Based on current projections, management believes that cash on hand is sufficient to fund operations into 2024.

I will now turn the call back over to Jerry.

Thanks, Keith. In summary, 2021 represents a transformational year for Matinas. As we focus our attention and resources on our LNC platform and anticipate important and meaningful data from the EnACT trial in the near term. That, combined with progress on MAT2501 and in our collaborations and focus on expanding the utilization of our potentially disruptive delivery technology, we believe we have positioned Matinas and our LNC platform for significant growth. The maturation of our LNC technology has enabled us to move it into the spotlight, and we look forward to continuing to share our progress with you during 2021 and beyond. We move forward from a strong financial position and committed to creating significant value for our shareholders.

With that, we have reached the conclusion of our prepared remarks, and I will turn the call over to the operator for a question-and-answer session.

(Operator Instructions). Our first question today is coming from Bert Hazlett from BTIG.

Congratulations on the continued progress. Jerry, just on 2203 initially, do you have any sense of how much data might be necessary for you to really enthusiastically pursue the kind of an LPAD more rapid advanced pathway? And then I have a strategic question after that.

Yes. Bert, thanks for the question. It's a good one, but it's one that comes with some uncertainty, right? Because at the end of the day, you're talking about a pathway that's relatively new within FDA. But at the same time, one that has received increased attention and emphasis from the agency in terms of incentivizing companies to drive these drugs forward. So in terms of magnitude of data, I don't know that, that's really well understood. But what we do know is that the EnACT trial really represents a great opportunity in a very vulnerable patient population to highlight the attributes of 2203, both from a safety and efficacy perspective.

And uniquely, it also gives the agency the opportunity to evaluate MAT2203, both from a step down therapy perspective and in induction. So in those discussions with FDA, what we will be focused on is really highlighting the potential for MAT2203 in both of those areas. And the first 2 cohorts of EnACT really highlight the ability to effectively be used as a step down therapy, and the next 2 cohorts really will focus on showing the ability of MAT2203 as induction, although you certainly can draw some conclusions from the first 2 cohorts about the overall efficacy profile of MAT2203. We're not going to be in a position then to have to force the agency to look at the whole. And so we think that, that is going to give us an opportunity for them to really evaluate and perhaps accelerate what a maintenance or consolidation or step down approval will look like, followed quickly by an approval for induction therapy.

So we think that's a little bit unique here. And given the fact that you're dealing with a deadly fungal infection in patients who are likely in the hospital as a result, step down is a natural place to begin and one that we think won't require a tremendous amount of patients to be able to get FDA comfortable that this is an important solution for patients.

Okay. Just a quick follow-on on the 2203 comment. As we get through cohort 2, assuming progression there, do you expect to provide a little more data in terms of the results for the first 2 cohorts? Will we get that? Or will we just potentially get a progression to cohort 3 and beyond?

Yes. That's a good question and an important one. Because when we announced cohort progression the first time, that's really all we did was we relied sort of on the independence of the DSMB. And because it was only 10 patients, we really just announced cohort progression. The plan for cohort 2 is going to be different. So as of now, we anticipate that we will be sharing data from both of the cohorts should the DSMB recommend progression, and we feel good about that. And we would release that data, we would likely have a call around that data. We would involve the principal investigator. And so we will be able to go into much more detail in terms of what we're actually seeing in these patients.

Cohort 2 is 4x the size of cohort 1. So you're really starting to get a meaningful amount of data, and we think it's important that people have the opportunity to evaluate that in and of itself. So that would be our plan for the third quarter time frame.

Looking forward to that. And then with regard to just a bigger picture strategy, are programs like 2501, Jerry, ones that you think that you will continue on to fruition. Just given some of the successes that you've mentioned in the space with various companies? Or do you expect this to be largely a partnership strategy in the near term? Like maybe some of the development deals you have with Gilead and others? Just your thoughts on...

Yes, it's a fair question because I think with our platform technology, you're seeing that the breadth of possible applications here lead you down a lot of different pathways. We continue to believe that the infectious disease area provides a great opportunity to demonstrate and validate the LNC platform technology. So 2203 and 2501 are very important products for us. But we do believe that they could be important products for larger companies that already have commercialization organizations intact. And I think Pfizer's recent acquisition of Amplyx highlights that for these products that are differentiated and have an impact in infectious diseases, there is large demand. And so our goal is to advance 2203 and 2501, 2 points where they then become attractive to third parties.

That doesn't mean we have to decide today on May 10, whether we're going to go alone or we're going to have opportunities to partner. We think there will be opportunities there, and that's going to do a couple of things for us. If there are the right opportunities with the right value proposition, both inside and outside the U.S., we will partner. And sometimes, you don't have to give away the whole thing, you can keep some rights for ourselves to co-promote or do other things. But if we are able to find partners and generate value through those sort of licensing arrangements, that does give us additional resources to then dive more fully into these more innovative areas like gene therapy, like messenger RNA, where we believe we can become very, very impactful.

And so this is a multipronged strategy. Having these early clinical stage candidates give us the opportunity to generate meaningful data, which could translate into partnerships. But it's kind of a good position to be in because realistically, our work in gene therapy, messenger RNA, things that we're doing with Genentech, they're earlier stage. So by advancing our infectious disease candidates, we are allowing then our work in gene therapy, for example, to mature a little bit. So the future -- exact future remains to be seen, but we do think there will be demand for both an oral amikacin and in oral amphotericin by large pharma.

Our next question today is coming from Yasmeen Rahimi from Piper Sandler.

I actually had only one question, and the question is related to LYPDISO. I would love to hear your thoughts on sort of what type of key questions are coming up as you're having discussions with partners. And whether -- how mature those discussions are ongoing, and as you're noting in your press release, you're thinking about more partners. Is there a strategy why it makes more sense to hand it over to multiple people instead of one global partner that could actually develop this and commercialize it? So I would just love to hear a little bit more granular details on those discussions and when we should be expecting some insight.

Great. Yasmeen, thank you for the question because we don't want LYPDISO to get lost in this. And it's been an interesting beginning to this process because there have been expressions of interest across the globe. And it's not surprising given the expansion of Vascepa, certainly an approval in EU and China and the growing problem of cardiovascular disease, for example, in China, that there's interest there. It's too early to tell whether this will be a situation whether for one global partner to take over development or it will be more regionalized. But the key questions are involving things like IP, like supply chain and commercial differentiation, specifically when you're talking about the U.S. And we feel like we have good answers to each of those 3 questions. To take them in reverse order, for commercialization in the U.S., this is a differentiated product. And so whether you're talking about a party that wants to push this into SHTG or take on cardiovascular risk reduction. We've shown not once, but twice how this drug is differentiated from Vascepa and any generic copy.

And as more and more comes out from the REDUCE-IT trial about the importance of EPA levels, we saw recently, for example, Dr. Bhatt do another analysis where you start to see real levels of impact on cardiovascular risk when you achieve an EPA blood level of 104. While -- we saw, in ENHANCE-IT, the ability to get all the way to 143. And if you break down our ENHANCE-IT trial even further, there's a market difference between LYPDISO's ability to generate levels above 104 and Vascepa's ability to generate levels above 104.

So from the commercial perspective, we think that's there across the globe. If you think about IP, it's a very different situation from Vascepa. Our patents relate and directly kind of comment on deep compositions comprising DPA, and we will have the benefit of exclusivities in the U.S. and potentially the EU that Amarin was never really fully -- was never fully -- couldn't avail themselves of those.

And then from a supply chain, again, we feel good about where this is relative to development. It's a complex supply chain, but one that we have good expertise in, and we think that a partner can step in and take it over pretty easily. So it's going to be a few months though, Yasmeen. I think people are also looking forward to some additional data announcements at ACC in a week here. Let's see some more data from both REDUCE-IT and STRENGTH and how that sort of fits and provides additional pieces to the puzzle. So I would expect as we get into the third and fourth quarter that we would have more meaningful updates here. But to date, sort of very pleased with the interest. Certainly, given some of the uncertainty that Amarin has faced in the beginning of this year does not seem to have impacted people's desire to get in and really look at and evaluate everything about LYPDISO.

(Operator Instructions) Our next question is coming from Greg Fraser from Truist Securities.

It's Greg Fraser on for Gregg Gilbert. On that 2501, should we think about the sequence of development as getting to proof-of-concept data in NTM first? And then you consider other indications like gram-negative bacterial infections? Or can you move forward with the gram-negative program before you have efficacy data in NTM?

Greg, thanks. That's a very important question because it's not something that needs to be done one after the other. But there is a certain foundation that needs to be built. So part of the work that we're doing and that is being supported by the Cystic Fibrosis Foundation is establishing that short and long-term tox that would be supportive of going into programs targeting gram-negative bacterial infections. So you don't have to -- we're not going to necessarily go through the process of going into Phase II and Phase III on NTM and then coming back to graham-negative. But we do need to get through that foundation that shows that we continue to have a safe product, one that can have an effect certainly on NTM.

But it's really those 28-day and 90-day tox studies that will provide support for any number of programs that we want to undertake. And so as we get through those, as we get through a Phase I in healthy volunteers, then we will begin -- and we have an interaction with FDA around those data, then we will be able to better forecast how we may be able to do some of these things concurrently. And remember, there still is an opportunity that has been expressed by the Cystic Fibrosis Foundation to continue to be a key supporter of MAT2501 in NTM. So just because we would be doing things in parallel or concurrently, doesn't necessarily mean that we will be doubling our need for internal resources.

So building the foundation in 2021, and then it can go off in a number of different directions at the same time.

Got it. That's helpful. And then how should we think about R&D spend this year and next year, assuming that continues and 2501 advances into Phase II next year?

Yes. It remains relatively consistent, Greg, when you look at it a year-over-year basis, especially with EnACT, since that trial is financially supported by the National Institute of Health. Our cost obligations there really are from -- certainly from a supply perspective and then from an oversight perspective and meeting our obligations as a sponsor. So they don't change meaningfully, where they could change is dependent on what we would discuss with the FDA, for example, on LPAD approval, are there adjustments that can be made? Or will we need some patients in the U.S., for example, for 2203? The trade-off there would be a much earlier approval.

So that's something that I think we would trade every day. And on 2501, that will change. But again, it remains sort of contingent on what support we get from the Cystic Fibrosis Foundation. So year-over-year, right now, the way we forecast things, it looks pretty similar, but that could change depending on regulatory interactions and a trade-off for an earlier commercial opportunity.

We have reached end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Thanks, Kevin, and thanks to everyone for joining us today. We appreciate your continued interest in Matinas, and the entire team here looks forward to providing you with updates on our future progress. Have a great day.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.