Vyant Bio Q3 2021 Earnings Call Transcript

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November 10, 2021

Key Takeaways

  • Viant Bio completed its second full quarter post-merger and has been fully focused on executing its business plan as an emerging global drug discovery company targeting CNS and oncology therapeutics.
  • The company onboarded Robert T. Fermeau Jr. as Chief Scientific Officer to lead drug discovery efforts from target identification through IND submissions, leveraging his two decades of neuroscience R&D experience.
  • Preclinical programs advanced with AI-driven screenings in the Rett syndrome collaboration with Atomwise and the CDKL5 deficiency partnership with Cyclica, yielding novel hits and validated disease models.
  • Key collaborations include a co-development agreement with Masori Therapeutics in Japan and the Ordeus Bio/Solaria alliance to apply AI for rapid biologic candidate design and patient-derived avatar testing.
  • As of September 30, 2021, Viant Bio held $23.2 million in cash, generated Q3 revenues of $1.5 million, and secured additional financing that supports its cash runway into mid-2023.
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Earnings Conference Call
Vyant Bio Q3 2021
00:00 / 00:00

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Operator

Good afternoon, and welcome to the Vyant Bio third quarter 2021 conference call and webcast. Today, November 11, 2021, the company issued a press release summarizing results for the third quarter 2021 and will be filing its Form 10-Q tomorrow morning before the market opens at 9:30 A.M. Eastern Time. Today's discussion will provide an overview of activities in the quarter and is being recorded, and a replay of the webcast will be available on the vyantbio.com website following the call. Alternatively, the link can be sent to you by contacting ir@vyantbio.com. All participants on this call will be in a listen-only mode during the presentation. The presentation will be followed by a question-and-answer session. At this time, I would now like to turn the conference over to Jay Roberts, Chief Executive Officer of Vyant Bio. Please go ahead, sir.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Thank you, operator, and thank you all for joining the Vyant Bio Investor conference call and webcast for the third quarter 2021. We're pleased to have completed our second full quarter as Vyant Bio. Now that the merger and related integration activities are completed, we have directed our full focus on executing our business plan. It is also a great pleasure to speak with you today to share our enthusiasm and to give you some insight into how we envision the near-term future of Vyant Bio. Additionally, we're going to present the financial results for the third quarter ending September 30, 2021. On the call with me today is Vyant Bio's Chief Financial Officer, Andy LaFrence, and our Chief Scientific Officer, Bob Fremeau. Following the safe harbor statement, I will provide a strategic overview and update on recent corporate developments and the vision ahead.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Andy will take us through a brief financial update and discuss key accounting matters for the third quarter. I will make some closing remarks, and then we will open up the lines for questions for Andy, Bob, and me. I will now turn the call over to our CFO, Andy LaFrence.

Andy LaFrence
Andy LaFrence
President and Chief Executive Officer at Vyant Bio

Thank you, Jay, and welcome to all. We would like to remind you that various comments about future expectations, plans, and prospects constitute forward-looking statements for purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Vyant Bio cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated, including risks described in the company's filings with the SEC. Any forward-looking statements made on this conference call speak only as of today's date, Thursday, November 11, 2021, and Vyant Bio does not intend to update any of these forward-looking statements to reflect events or circumstances that would occur after today's date. This conference call is also being recorded for audio rebroadcast on Vyant Bio's website at www.vyantbio.com. With that, I would like to turn the call back over to Jay Roberts.

Andy LaFrence
Andy LaFrence
President and Chief Executive Officer at Vyant Bio

Jay?

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Thanks, Andy. As I begin the call, I think it's important to remind everyone that the third quarter was the second full quarter our company has operated as Vyant Bio. Today, we will highlight the progress and accomplishments we have made in the seven and a half months operating as one business since the closing of our merger. We have repositioned Vyant Bio as an emerging global drug discovery company focused on identifying small and large molecule therapeutics to treat central nervous system and oncology-related diseases. We believe there are significant value creation drivers in the drug discovery sector, and we intend to use our discovery engine to drive cost savings, speed, and insightful decision-making to identify unique biological targets and novel therapeutics to treat patients with acute neurological and oncological indications. We have made promising progress, which we will highlight for you today.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

To begin, I'd like to recap a few non-financial highlights from the third quarter. First, we hired Robert T. Fremeau Jr. as our CSO to lead our drug discovery efforts, including lead target and candidate identification all the way to IND submissions. Dr. Fremeau joined us a few weeks ago and is already having a meaningful impact on our efforts in discovering novel therapeutics. He brings over two decades of drug discovery experience in academia and industry with a proven track record of excellence in next-generation drug development focusing on severe neurological disorders and neuroscience disease indications. His scientific expertise is recognized internationally.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Dr. Fremeau's extensive experience with scientific research and drug discovery will be invaluable to us as we complete feasibility programs with leading biopharma companies and further develop our preclinical and translational strategy for driving a portfolio of therapeutic candidates from early discovery to human proof of concept.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

While we have yet to announce the completion of a biopharma co-development or licensing agreement, we are continuing to make progress in this regard, evidenced by two feasibility programs we are running with potential long-term partners. We believe these programs will show additional validation of our platform in conjunction with other proof points that are being worked on and will result in these potential partnerships taking shape early next year. To further support our biopharma partnering efforts, a few weeks ago, we announced a collaboration partnership we entered into with MASORI Therapeutics. MASORI is a U.S. and Tokyo-based technology and marketing focused company with a successful track record in the pharmaceutical industry.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

We entered into this engagement with MASORI to jointly pursue co-development and out-licensing partnerships with pharmaceutical and biotechnology companies with our initial activities focused in Japan that leverage Vyant Bio's advanced analytics and complex human-derived biology to drive drug discovery. The MASORI Therapeutics team has decades of experience in all areas of drug discovery and development, including building biopharmaceutical commercial infrastructures and partnerships from concept to consummation. In terms of our disease model development and compound discovery efforts, we continue making progress on our internal lead compounds and have deeper investigation of their efficacy and toxicity. In addition, we are deep into the investigation of the biological basis of potential lead compounds, specific mechanisms of action. Additionally, we completed a second large screening of AI-generated novel compounds for the Rett syndrome program in conjunction with our collaboration partner, Atomwise, yielding promising results.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

These results include further hit expansion across two unique biological targets and several novel compounds. Our Rett program continues to positively iterate on narrowing our lead indication identification. To further validate our Rett syndrome disease model, we recently ran additional screenings to show concordance of our data with clinical data, have begun some animal efficacy and safety modeling, and are about to run a comparative screen of over 5,000 compounds to create additional validation data, and we'll then be moving through the hit to lead optimization process. Also in Q3, we entered into a collaboration agreement with Cyclica, combining Vyant Bio's patient-derived complex organoid biology alongside Cyclica's proteome-wide artificial intelligence-enabled discovery platform to identify new treatments for CDKL5 deficiency disorder. We have made significant progress in the CDKL5 program.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Initially, we established and further optimized our internal microBrain platform to minimize variability and adapt it to specific neuronal phenotypes. On that note, we developed different state-of-the-art assays to characterize the disease etiology further and advance our portfolio of genetic epilepsy readouts. Additionally, we have designed a library with more than 5,000 compounds focusing on well-defined mechanistic relevant compounds with proven low toxicity and high clinical relevance for this disease category. Using our customized Vyant Bio library, we performed one of the most extensive functional phenotypic screenings, leading to identifying many compounds that recover the CDKL5 phenotype, as well as novel potential molecular targets for CDKL5. Finally, we identified new targets for further evaluation based on Cyclica's machine learning proteome-wide platform and our internal expertise. The Ordaōs Bio and Cellaria collaboration also remains on schedule.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

As we previously announced, this collaboration is intended to introduce a drug discovery process to rapidly design, redesign, and optimize biological drug candidates using artificial intelligence and in vitro patient cell-based avatar clinical trials. The goal of the collaboration is not only to design candidates that are likely to be successful in clinical trials, but have also been assessed for efficacy in numerous patient-specific cell-based models before even making it to the clinic. The in silico protein design has been updated to include state-of-the-art recurrent neural network structure with additional incorporation of new attention mechanisms. In addition, the in silico model has been further trained on more than 20 million protein sequences. These improvements have formed the basis for a second round of novel protein sequences.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Protein production will begin shortly on these novel designs, and binding and functional assays for further proof of functionality will follow in the coming month. I will now turn the call over to Andy LaFrence, our Chief Financial Officer, to discuss the financial results for the third quarter. Andy?

Andy LaFrence
Andy LaFrence
President and Chief Executive Officer at Vyant Bio

Thank you, Jay. Hello, everyone, and thank you again for joining our call. Today, we'll review our balance sheet position as of September 30, 2021, and our financial results for the third quarter of 2021. As StemoniX was deemed to have acquired Cancer Genetics for accounting purposes and the merger closed on March 30, 2021, the company's current year financial results include the Cancer Genetics operations since the merger date, and the 2020 financial results are based on StemoniX operations. As increases in revenues, cost of goods sold, and operating expenses during the three- and nine-month periods ended September 30, 2021, as compared with the corresponding prior year periods, largely reflects the impacts of the merger. I will focus my comments on current year post-merger activities. Cash and cash equivalents totaled approximately $23.2 million as of September 30, 2021.

Andy LaFrence
Andy LaFrence
President and Chief Executive Officer at Vyant Bio

In October 2021, we signed a $1.5 million lease line of credit and completed a $496,000 sale-leaseback transaction. Total revenues increased by $1.2 million to $1.5 million during the third quarter of 2021 as compared with the same prior year quarter. For the nine months ended September 30, 2021, total revenues increased by $3.1 million to $3.7 million as compared with the prior period. Cost of goods sold service aggregated $1.1 million and $2.1 million during the three- and nine-month periods ended September 30, 2021, resulting in a service cost of goods sold of 79.9% and 66.1%, respectively.

Andy LaFrence
Andy LaFrence
President and Chief Executive Officer at Vyant Bio

The increase in the cost of sales percentage for the third quarter of 2021 as compared with the 2021 nine-month period was the result of deleveraging of the service revenue cost structure from a reduction of service revenues in the 2021 third quarter as compared with the second quarter of 2021. Specifically, service revenue declined from $1.8 million in the second quarter of 2021 to $1.3 million for the third quarter of 2021. The company expects service revenue growth in early 2022 when contracted customer projects are expected to commence.

Andy LaFrence
Andy LaFrence
President and Chief Executive Officer at Vyant Bio

Cost of goods sold product aggregated $355,000 and $1.1 million for the three and nine months ended September 30, 2021, resulting in the cost of goods sold margin deficit of $196,000 and $715,000, respectively. As previously disclosed, our product manufacturing capabilities at our Maple Grove, Minnesota facility currently have excess capacity to support future growth. During the fourth quarter of 2021, the company commenced the technology transfer of certain research and development activities that are currently being performed at the La Jolla, California facility to the Maple Grove facility, which is expected to substantially increase this facility's utilization in 2022.

Andy LaFrence
Andy LaFrence
President and Chief Executive Officer at Vyant Bio

Research and development expenses for the three- and nine-month periods ended September 30, 2021 increased by $349,000 and $472,000, respectively, to $1.2 million and $2.9 million, respectively, as a result of additional payroll costs and staff in the current year periods. Selling, general and administrative expenses were $3.3 million and $8.2 million for the three- and nine-month periods ended September 30, 2021. These expenses included $482,000 and $1.4 million of non-cash expenses for depreciation, amortization, and stock-based compensation. I will close for now and hand the presentation back over to Jay Roberts for closing remarks. Jay?

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Thanks, Andy. As we come to the final part of this presentation, I would like to conclude with the following takeaways. First, I'd like to reiterate how pleased we are with the progress our scientific teams are making on multiple fronts related to the existing programs we discussed today, and our activities in the third quarter focused purely on establishing Vyant Bio's foothold in the industry and helping to fuel our activities into the fourth quarter and beyond. Please stay tuned as we continue to make progress and begin to provide further validation and proof-of-concept results in the fourth quarter and first quarter of 2022. We also invite new listeners to become more familiar with Vyant Bio. As news and information becomes available, we'll be communicating updates via press releases, LinkedIn, the new Vyant Bio website, and other social media outlets.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Interested parties are invited to sign up for the press release distribution list. Please visit our website. With that, I invite Andy LaFrence to join me in the opening up of the line, for our Q&A.

Operator

Thank you. The floor is now open for questions. If you have a question, please press star one on your phone at this time to enter the queue. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Once again, please press star one on your keypad now if you would like to ask a question. Please hold a moment while we poll for questions. There is a question from Ed White from H.C. Wainwright. Ed, your line is live. Please go ahead.

Ed White
Ed White
Managing Director and Senior Biotechnology Analyst at H.C. Wainwright

Good evening. Thanks for taking my call, my question.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Ed.

Ed White
Ed White
Managing Director and Senior Biotechnology Analyst at H.C. Wainwright

Just a couple, you know, maybe just for Bob. Just wanted to get your thoughts on how Vyant is going to make sure preclinical data validation translates into clinical data.

Robert Fremeau
Robert Fremeau
Chief Scientific Officer at Vyant Bio

That's an excellent question, and we're starting with diseases now for which there are monogenic defects that have been well documented in terms of the pathophysiology in the clinic. One of the key indications is going to be to be able to verify in the spheroid organoid system that we can measure the biomarkers that are known to be clinically translatable in the human situation.

Ed White
Ed White
Managing Director and Senior Biotechnology Analyst at H.C. Wainwright

Great. Thanks, Bob. Maybe I can get from Jay some just some updates on the Rett syndrome your repurposed drug. I'm just wondering, I believe that you had been expecting that to perhaps get to lead identification by the end of this year. Also, if you can discuss the timelines you mentioned in your former presentations to INDs ready for submission per year. I believe in 2022, that would be Rett syndrome and CDKL5. We wanted to get your thoughts on timing.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Yeah, good. No, that's a great question. Yep, Ed, thank you. Just on the first part of that question, you know. Well, let me just say across both questions, with Bob now having joined the team and leading our scientific and data science teams, you know, he's got a significant amount of expertise and, you know, throughout his career having picked up kind of, you know, small groups of, you know, late stage discovery of promising therapeutic targets and, you know, carrying those all the way through IND. He's kinda walked teams through that very carefully many times in his career. That's a big part of, you know, why we're excited to have Bob join us, and that'll be a big part of what he's gonna take us through.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

As it relates to the repurposed question, you know, again, with Bob only been on the ground for two weeks, he's now deep into that program with us, and we anticipate that the timelines as we laid out originally will continue as we think about it. You know, we're certainly making good progress. If it's not this quarter, you know, we anticipate that we'll be, you know, making good progress into the first half of next year. To your point, the other two programs behind it, both Rett and CDKL5, will be put on a program as we announced today, as we talked about on this call. There's, you know, significant progress that has been made on both of those programs. We'll continue, again, under Bob's leadership, to drive those forward.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Our ability to, you know, get to a place where we're gonna be meeting two NDAs a year, we think is, you know, a big part of our strategy as we think about going into the, you know, upcoming several years in front of us. That's part of where we, you know, will continue to stay focused.

Ed White
Ed White
Managing Director and Senior Biotechnology Analyst at H.C. Wainwright

Okay, great. Can you make a comment or two on the status of the Parkinson's and Huntington's programs as well?

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Yeah, I think you know again those are two places where we've been building disease models and that we have expertise in terms of you know creating three-dimensional organoid platforms that allow us to take those disease categories forward. Bob is also obviously actively involved in you know getting his arms around the status and you know sort of the development of those programs. Those remain in our crosshairs as being programs that will be things that we'll continue to progress and to work on. You know as of now the scientific teams continue. You know every day we're doing work in those areas and progressing our disease model capabilities.

Ed White
Ed White
Managing Director and Senior Biotechnology Analyst at H.C. Wainwright

Thanks, Jay. Maybe a final question to Andy. Just wanted to get your thoughts on cash runway. You had mentioned you have cash of $23.2 million on book, as of the end of the quarter. Thank you.

Andy LaFrence
Andy LaFrence
President and Chief Executive Officer at Vyant Bio

Ed, thank you for the question. We continue to have the same sort of runway we articulated last quarter, where we believe that cash runway will take us into well into the first half of 2023. As noted this quarter, we burned about $1.1 million a month, and that we anticipate that would be a reasonable sort of cash burn. As I also noted in my prepared remarks, we've also have been able to leverage some equipment leasing capabilities as well, which will further augment our cash flow.

Ed White
Ed White
Managing Director and Senior Biotechnology Analyst at H.C. Wainwright

Great. Thank you.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Thanks, Ed.

Operator

Thank you. Ladies and gentlemen, if you would like to ask a question, the queue remains open at this time. Please press star one on your telephone keypad if you would like to enter the queue to ask a question at this time. Once again, ladies and gentlemen, that'll be star one on your telephone keypad at this time if you'd like to ask a question. It does appear there are no further questions in queue at this time. With that, I would like to pass the floor back to Jay Roberts for closing remarks.

Jay Roberts
Jay Roberts
CEO at Vyant Bio

Okay. Thank you, operator, and thank you all for joining the call today. We're very happy with our progress so far as an emerging global drug discovery company that is rapidly identifying small and large molecule therapeutics to treat CNS and oncology-related diseases. We look forward to keeping everyone informed of our progress along the way. Thanks again for joining the call today, and have a great evening.

Operator

Thank you, ladies and gentlemen. This does conclude today's conference call and webcast. You may disconnect at this time. Thank you again for your participation, and have a wonderful day.

Executives
    • Andy LaFrence
      Andy LaFrence
      President and Chief Executive Officer
    • Jay Roberts
      Jay Roberts
      CEO
    • Robert Fremeau
      Robert Fremeau
      Chief Scientific Officer
Analysts
    • Ed White
      Managing Director and Senior Biotechnology Analyst at H.C. Wainwright
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