Plus Therapeutics Inc (PSTV) 2020 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Plus Therapeutics Second Quarter 2020 Earnings Results Call.

(Operator Instructions) Before we begin, we want to advise you that, over the course of the call and the question-and-answer session, forward-looking statements will be made regarding events, trends, business prospects and financial performance which may affect Plus Therapeutics' future operating results and financial position. All such statements are subject to risks and uncertainties, including the risks and uncertainties described under the Risk Factors section included in Plus Therapeutics' annual reports on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission from time to time. Plus Therapeutics advises you to review these risk factors in considering such statements. Plus Therapeutics assumes no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made.

It is now my pleasure to turn the floor over to Dr. Marc Hedrick, Plus Therapeutics President and Chief Executive Officer.

Sir, you may begin.

Thank you, Erica. And good afternoon. As Erica said, welcome to our Q2 fiscal year 2020 earnings call.

My name is Dr. Marc Hedrick, President and CEO of Plus Therapeutics. And joining me is our Chief Financial Officer, Mr. Andrew Sims.

Today, I am very pleased to report the results from the second quarter of our fiscal year 2020. However, before I get to our Q2 update and results, I would like to update you on the COVID-19 situation as it applies to Plus. First, on behalf of all of us on the Plus Therapeutics team, we sincerely wish that you and your families, friends and colleagues are in the best possible health and spirits as the pandemic continues to affect us all. While in no way minimizing the horrible impact of the virus on the world in 2020, this present crisis points to the critical importance of our industry not only directly to the health of ourselves and our fellow man but of the importance of our industry to the health of the economy as a whole. During the pandemic, Plus' capital-efficient and substantially virtual operating model continues to serve us well. Our facilities are open and staffed in a flexible manner to provide maximum ability to fully operate the company at 100% and help support our employees and their families. We are following Texas Governor Abbott's lead and specifically the language from his August 8 proclamation that says, "Everyone must do their part to slow the spread of COVID-19 by wearing a mask, practicing social distancing and washing hands frequently and thoroughly. We will overcome this challenge by working together." We agree. Similar to my report last quarter, no significant supply chain interruptions have occurred, and we currently expect no material impact on results for fiscal year 2020, which ends December 31, 2020.

Now I would like to discuss in detail our drug development activities, and specifically, I'll focus my remarks on 3 key topics: first, progress on the clinical development of our lead drug Rhenium NanoLiposomes or RNL currently being developed for recurrent glioblastoma, also called GBM. Second, I'll report progress on bringing forth additional indications for our RNL products apart from recurrent GBM. And finally, I'll have an update on other important business matters.

The lead in-licensed drug asset in our rare cancer-focused portfolio is RNL, which as mentioned, is currently being developed for recurrent GBM or brain cancer. Recurrent glioblastoma is nearly a universally deadly cancer that affects about 13,000 people per year in the U.S. Essentially all primary tumors go on to recur after initial treatment. There are currently few approved treatments in the recurrent setting that, in aggregate, provide only marginal survival benefit, in contrast to emerging therapies for many other types of cancer types, so glioblastoma is still a very bad problem. As it stands today for glioblastoma, standard external beam radiation therapy or EBRT is still the most effective component of the standard multimodal therapeutic regime. Multiple randomized studies show a 5-month improvement in survival with EBRT radiation, as compared to an additional only 2.5 months with the addition of chemotherapy and 3 months for added specific tumor-treating fields.

Now our team has a number of specific reasons why we are very high on the recently licensed RNL platform for glioblastoma. It's got an impressive scientific pedigree, and that first caught our attention. Its development actually began about a decade ago by a multi-institutional consortium at the University of Texas: Mays Cancer Center, UT Health San Antonio and MD Anderson Cancer Centers. Since its initial development, it has received funding from the now $6 billion funding mechanism called the Cancer Prevention and Research Institute of Texas, first to get off the ground, and now its development is partially funded by the U.S. National Cancer Institute. Now having successfully brought the technology in house to Plus and with further in-depth scientific and clinical diligence, we continue to be more and more impressed by the number of unique aspects to the overall value proposition of RNL, both for recurrent glioblastoma and other cancers, potentially, as well. I'd like to highlight some of those for you on the call.

First, in terms of pharmacokinetics, our RNL drug has a very long half-life and low dispersion or drug distribution in the brain, meaning it stays around for a long time where you put it, maximizing the time on tumor of the radiation and therefore, in turn, maximizing the cancer-killing effects. In terms of the isotope we use, the radiation itself is delivered via a unique theragnostic radioisotope, both therapeutic and diagnostic, called rhenium, which is made in a nuclear reactor and emits both the cancer-killing beta particle or high-energy electron and gamma energy useful for conventional imaging. In terms of manufacturing, our proprietary liposome construct and loading technology containing BMEDA allows reproducible and scalable loading of high dosages of radioactive rhenium into the liposomes. Now the therapy is highly targeted to the tumor; and that's achieved by precision imaging, preoperative in silico surgical planning and advanced machine-aided stereotactic delivery technology. The safety margins are thought to be high, as RNL appears to be selective to cancer cells, sparing normal brain tissues. Prognostically, the gamma emission feature of the RNL may provide significant prognostic accuracy by allowing for real-time imaging and dosimetry calculations, and we're seeing that real time in our cohort 5 patients.

In terms of dosing, we can potentially deliver 25x to 30x as high a radiation dose as the next best therapy, namely external beam radiation. And then finally and importantly, patient convenience. RNL is administered in a single treatment and short hospital stay versus EBRT that's fractionated and may require 20 or more treatments -- visits for a full therapeutic course. There are other aspects of the value proposition, but you get the idea.

So last quarter, we listed several important milestones for the program for the remainder of 2020, and let me briefly review our progress to date. Most critical for us was optimization of the regulatory plan, completion of the clinical trial and bringing the manufacturing and supply chains forward to industry standards in anticipation of next steps in clinical development. We're making good progress on all 3. First, we have transferred the IND to Plus and we are now the registered trial sponsor with the FDA. We completed a quality assurance audit and assume primary responsibility for the safe conduct of the trial. We are also in the process of seeking orphan designations and fast track alternatives, including potentially breakthrough designations, based on the ultimate data obtained in the trial.

Second, since closing on the transaction, we have named the trial "ReSPECT," R-E-S-P-E-C-T, launched in a clinical trial website related to that trial name. We've added a second site at UT Southwestern in Dallas and completed enrollment of cohort 5. Assuming the clinical data continues to meet the safety threshold, we should be ready to commence dosing in cohort 3 in late August, as stipulated by the present protocol, pending DSMB review. We also hope to have a third site onboard, MD Anderson in Houston, later in 2020 to further support enrollment. Finally, we have transferred the Phase I responsibility for manufacturing of RNL to complete the current trial to Plus and are actively working on our plan for scale-up to GMP-quality standards and to provide for late-stage clinical batch sizes.

Now let me update you on the ReSPECT safety and feasibility trial. As I referred to previously, the fifth dose-escalation cohort is now complete, and 15 patients have been treated thus far with RNL. Single treatment dosing is now above 500 gray. Escalation of the treatment volume is such that the estimated treatment volume in the planned sixth cohort will accommodate tumors of up to 4.5 centimeters, which should include the majority of tumor recurrences seen in glioblastoma. As per the protocol, we are also increasing the number of delivery catheters up to a planned max of 4 catheters per patient. And in the last cohort, in 2 of the 3 patients, we actually used 3 catheters, and that went very well. That's important because it permits us to target a variety of tumor shapes and locations within the brain. It's all about capturing the most number of patients possible that have recurrences. There have been no treatment-related SAEs observed thus far, and there appear to be early signals of efficacy in patients with adequate dosing and tumor coverage. Thus far, 2 patients with good tumor coverage have survived greater than 30 months versus a mean survival of 9 months with best available care. However, I must caution this is not an efficacy trial. It's a safety dose escalation and feasibility trial. We expanded enrollment activities, including those to increase trial awareness at a second trial site; and we hope to expand soon to site number three, as mentioned.

Now as I mentioned on the last call, we are actively evaluating from a strategic perspective bringing forth additional clinical development programs for RNL outside of recurrent glioblastoma. The potential indications we are interested in developing today represent indications for RNL for which there is substantial preclinical information already published. And actually, some of that can be found on our website, and we're happy to share that if you reach out to us. In particular and by no means to limit the scope of our analysis, leptomeningeal carcinomatosis, perineal carcinoma and recurrent head and neck cancer represent 3 promising potential indications, with solid preclinical data already published. Each of these indications also are consistent with our previously stated portfolio investment strategy, namely to address an unmet or substantially underserved medical need. All 3 of those qualified. Combine known active pharmaceutical ingredients that have solid safety and efficacy information available with new delivery technologies that improve both safety and efficacy. Again, all 3 meet that criteria. And third, we prefer that they have at least a $250 million annual addressable market opportunity. Again, check all 3 boxes there. So our plan is to complete this analysis and potentially move forward before the end of 2020, consistent with previous guidance.

Now just a brief comment about our licensing activities and, first, out-licensing. We have initiated discussions with potential partners to discuss opportunities to help us expand RNL development more rapidly. Our preference with RNL is to keep the U.S. rights and seek partners internationally. Regarding our 2 other clinical-stage assets DocePLUS and DoxoPLUS, as previously mentioned, we plan to further their development only with partner support. We are and have been in such discussions, but our development focus is obviously pressing on RNL and moving it rapidly forward. Additionally, we are committed to continue a deliberate and disciplined outreach program geared to identify other possible strategic in-licensing candidates that either logically expand our drug pipeline or related technology capability. Similar to our RNL transaction, and I think that's a good example for what things that we're looking for, we look for technology that has good science, a good pedigree; is appropriately valued; and can be developed in a capital-efficient manner, for example, potentially utilizing development grants in the case of RNL from the NIH or potentially from the State of Texas, specifically the separate funding mechanism I mentioned before.

So with those comments complete, let's turn the call over to Andrew for a review of the quarterly financials.

Andrew?

Thank you, Marc. And good afternoon, everyone.

I'll be discussing Plus Therapeutics' financial results for the second quarter of 2020 as presented in our earnings release today.

For the 6 months ended June 30, 2020, our net cash used in operating activities was $2.9 million, as compared to $4.4 million in 2019. Our Q2 2020 net cash used by operating activities was $1.4 million compared to cash used by operating activities of $1.2 million in Q2 2019. The overall reduction in cash burn for the 6-month period was mainly related to discontinued operations, which resulted in reduced operating expenses.

Net loss for Q2 2020 was $1.8 million, as compared to a net loss of $9.1 million in Q2 2019. The decrease in the loss is mainly due to the approximate $7 million loss from discontinued operations in 2019 that related to the Q2 2019 asset divestiture.

Now with respect to revenues. Q2 2020 total revenues were $0.2 million, as compared to $0.3 million in Q2 2019. For the 6 months ended June 30, 2020, total revenues were $0.3 million, as compared to $1 million in 2019. The decrease in revenues is due to the anticipated closeout of the BARDA contract.

For research and development expenses. In Q2 2020, our research and development expenses were $0.3 million versus a $1.2 million expense in Q2 2019. For the 6 months ended June 30, 2020, R&D expenses were $1.2 million compared to $2.7 million in 2019. The decrease in research and development year-over-year spending was primarily attributed to the completion of the BARDA contract in 2019. Approximately $0.8 million was incurred in Q2 2020 relating to the in-license agreement with NanoTx. $0.4 million was paid in cash at close in early May, with the balance in stock.

Now on to our sales and marketing. Our sales and marketing expenses were approximately $0.1 million for both Q2 2020 and 2019 and $0.2 million for the 6 months to both June 2020 and 2019. G&A expense was $1.3 million for Q2 2020, as compared to $0.9 million in Q2 2019. For the 6 months ended June 30, 2020 and 2019, G&A expense was $2.8 million, as compared to $2.2 million. The year-on-year increase reflects an increase in professional fees in Q2 relating to the recent in-licensing transaction. This increase was partially offset by a decrease in payroll and related expenses.

Interest expense decreased in the 6 months (sic) [3 months] to June 30, 2020, to $0.2 million from $0.6 million in the 6 months (sic) 3 months to June 30, 2019, reflecting the principal paydowns in 2019 and 2020.

Turning to the balance sheet. As of June 30, 2020, we had $9.3 million of cash on hand and $4.3 million of debt principal. In April 2020, we amended our debt with Oxford, providing additional flexibility by pushing out our interest-only period through May 2021, together with a paydown of $5 million of principal. Our liabilities decreased to $10.6 million at June 30, 2020, as compared to $22 million at December 31, 2019. This decrease is primarily driven by 2 factors. The first was the $5 million paydown of the Oxford debt facility in April 2020. The second was the amendment and resulting re-class of the warrant liability to stockholders' equity in Q2 2020 of $6.7 million.

And now I'll turn it back to Marc.

Thank you, Andrew.

So to finish up before Q&A, I'd like to just recap the progress with our stated 2020 milestones.

Our primary year-end goal is to complete enrollment of the dose-finding feasibility safety study for RNL. We plan then to report that data and work to subsequently publish it in the medical literature. That goal is predicated on the assumption that cohort 6 -- cohort 5 is completed. Cohort 6 is the final dosing cohort, which is a reasonable judgment at this point. To that end, we intend to begin to treat patients at the planned 2 new trial sites of UT Southwestern and ultimately MD Anderson. We'll also continue to optimize the regulatory and clinical program for RNL for glioblastoma; and at the appropriate point in time, obtain FDA guidance on next steps, including development of a Phase II and/or pivotal study planned for glioblastoma.

In parallel to the trial, our CMC team is in the process of substantially upgrading the supply chain for RNL as well as the manufacturing controls and scalability of the product to late-stage clinical trial standards. And it's actually our team that's manufacturing the liposomes for the current patients and the last patients in cohort 5. Soon, we intend to complete our internal review of additional indications for RNL and execute any required IND-enabling studies required for clinical introduction. We're going to continue to be aggressive but highly disciplined in assessing new pipeline enhancement opportunities for the company. And we'll continue partnering discussions, with the goals of finding strategic development partners for our programs RNL, DocePLUS and DoxoPLUS.

With that, I'll turn it over to the operator, Erica, for any questions that might be in the queue.

(Operator Instructions) Our first question is from Robert LeBoyer with Ladenburg Thalmann.

Congratulations on the progress. My question was just partially answered by Dr. Hedrick, and I was going to ask if you were going to complete a sixth cohort of 3 patients. And any estimate of timing as to when that would be?

Robert, thanks for participating. It's Marc. Yes. So the NIH protocol actually calls out 8 cohorts and goes up to a total radiologic activity of about 41 millicuries, and right now we're substantially below that. However, we've increased it to a volume and to a dose. And we're still -- it still appears to be safe with a nice safety margin that we think that, with the increase in dose and volume with cohort 6, we can pretty well cover with adding multiple catheters the lion's share of recurrent tumors. So the -- it's a little bit of an issue of diminishing returns as to whether you continue to go on and push the dose and the volume higher. So our instinct from talking with our clinicians involved in the trial is that 6 cohort is probably the right number. And so the plan there would be we have to wait 30 days after the last patient in cohort 5. Then we can begin to treat the 6 patient -- the first patient in cohort 6. We'll need to wait and just make sure at the higher volume and radiation dosage that the patient tolerates that well. And then we can go on complete the cohort, and if that indeed is the last cohort, we'll do a total of 6 patients at that cohort. And given that -- what we're seeing with our efforts to communicate the trial and bring patients into the trial from around the country, in fact we're getting some input from patients outside the U.S., we think that those efforts, plus adding the additional sites, gives us a good shot at completing that by the end of the year.

(Operator Instructions) Our next question is from Ed Woo with Ascendiant Capital.

My question is more on opportunities right now. Obviously, there's a lot of disruption with COVID going on. Have you seen increased opportunities for you to evaluate new products? Or has it been shut down?

Ed, from the perspective of RNL for glioblastoma, with the exception of very early on where we were just uncertain how the hospitals would look at this and our ability to take over the trial having disclosed a recent transaction, we weren't really sure, but just as I mentioned, it really hasn't affect us as it relates to the glioblastoma trial. To the additional indications related to RNL, again, don't see an issue there. Related to looking at other assets, I think the only issue there is now everything's done virtually. And I think, upfront, there was sort of a -- this kind of awkward transition between what everybody was used to in terms of business development activities to the new world. And it really is a new world, but we're seeing continued opportunities out there in our sweet spot. And we're continuing those discussions and we're evaluating those in the context of other places we might put capital. So I think right now I don't see much of a difference other than we're doing it differently and we're not meeting in person. We're meeting online.

Great. And then my question is obviously you're thinking about opening additional sites in Texas to do the study. Obviously, Texas is one of the hotspots for COVID right now. Do you see any impact? Or is it manageable?

Yes, good question. We were concerned upfront, but what we're hearing from both of our 2 sites, San Antonio and UT Southwestern, is this is an essential activity. These patients are desperate, as you know. They're going to die without intervention. It's inevitable, so they are prioritized. And there's just -- there's been no delay that we see, in fact, if you look at the fact that we closed this relatively recently, the fact that we got 2 patients in. We've got our trial website up and running. We're getting inbound requests for people to participate in the trial. We're handing those off to the 2 involved institutions. Just don't see a delay there. I think we're feeling pretty confident that COVID won't affect our ability to get this trial with Phase I fully enrolled.

Our next question is from [Emad Samad with Octavian].

I have a question. You mentioned something about evaluating other programs to launch with the RNL program. How quickly does the CPRIT funding come into play, and how soon does it come into play as you're making that evaluation? Could you just talk about that a little bit so we understand and -- how that funding comes through and how much it could potentially offset and when?

Yes. Good question. Now that -- CPRIT is still a little bit up in the air. We are waiting for word any minute about any changes to the funding cycle. Typically they would take grants around this time every year. They have 2 funding cycles. And then we would be potentially receiving funding from that in the first of the year. So my guess is that's going to get pushed off because we haven't heard anything, at least not in the last few days. So we'll see. I mean that's already been approved by the voters. And so I don't anticipate that goes away, but I think they're having some logistical challenges in Texas related to CPRIT.

So CPRIT will fund preclinical or clinical. It'll fund up to Phase II and up to $20 million. So we think that there is an opportunity to seek funding potentially for further R&L development for recurrent glioblastoma, irrespective of the NCI funding that we have today, but also funding to bring the additional RNL assets into the clinic. As I mentioned, CPRIT had previously funded the RNL program and helped get it off the ground. So they've already seen a positive impact of that funding by virtue of the fact that it's gotten funding and now is heading towards the next clinical step and appears to be a promising therapy. So I think the RNL for other indications have some opportunity to be funded, and our plan is to -- honestly, to file every cycle. One of the reasons, not the only reason but an important reason, relocating to Texas around our San Antonio facility was that we can take full advantage of that. We think there's an enormous opportunity there. And we're actually getting inbound calls from companies who are not in Texas but are looking for potential partners to help work together to access the funding available in Texas. So bottom line is the timing's up in the air, but I think we don't see that funding source going away or being carved back.

There are no further questions at this time. Dr. Hedrick, I will now turn the call back over to you for closing remarks.

Great. Thank you, Erica.

To close, I'd just like to thank everybody for joining us on the call today. I'd like to just take the -- take a moment to specifically point you to our new clinical trial website at www.respect-trials, trials plural, T-R-I-A-L-S.com. And then much more information can be found at our corporate website plustherapeutics.com and on our LinkedIn and Twitter and social media sites. As always, on behalf of the Board, management and employees, thank you for your support of the company and have a good evening. Thank you, Erica.

Thank you. This does conclude today's conference call. Please disconnect your lines at this time, and have a wonderful day.