TriSalus Life Sciences Q3 2023 Earnings Call Transcript

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November 14, 2023

There are 7 speakers on the call.

Operator

Good morning, and welcome to the Trisales Life Sciences Third Quarter 2023 Earnings Conference Call. At this time, all participants are on listen only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, the call is being recorded for replay purposes. I would now like to turn the call over to your host, Jim Young, Senior Vice President of Investor Relations and Treasurer at Trifallis for a few introductory comments.

Speaker 1

Thank you all for participating in today's call. Joining me today from Tricelis Life Sciences are Mary Zella, President and Chief Executive Officer Sean Murphy, Chief Financial Officer and Doctor. Steven Katz, Chief Medical Officer. Earlier this morning, Trisales released financial results for the quarter ended September 30, 2023. A copy of the press release is available on Trisales' website.

Speaker 1

Before we begin, I would like to remind you that management will make Statements during this call that includes forward looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of to Private Securities Reform Act of 1995. Any statements contained in this call other than statements of historical fact are forward looking statements. All forward looking statements, including without limitation, statements relating to our sales and operating trends, Business and hiring prospects, financial and revenue expectations, reimbursement proposals and future Product development and approvals are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties, including the impact of macroeconomic conditions and global events that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place Undue reliance on these statements.

Speaker 1

For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our Form 10 Q on file with the SEC and available on EDGAR and in our other reports filed periodically with the SEC. Tricelis disclaims any intention or obligation, except as required by law, to update or revise This conference call contains time sensitive information and is accurate only as of the live broadcast today, November 14, 2023. And with that, I'll turn the call over to Mary.

Speaker 2

Good morning, everyone, and thank you for joining us today to review Tricallis Life Sciences' 3rd quarter results for 2023. This marks our 1st quarterly earnings call as a publicly And we're excited to report on our progress towards our mission to extend and improve the lives of people Living with liver and pancreatic tumors. We greatly appreciate your preference today on the call. Trichallis founded in 2018 to address the 2 main barriers that inhibit treatment success in liver and We have a combination of our proprietary technology that can deliver high concentrations of a range of therapeutics to the site of disease with a novel immunotherapeutic focused on attacking the immunosuppression environment and Enabling Checkpoint Inhibitor Response. Entertomoral hypertension is a pervasive An underappreciated problem that causes collapse of vessels in tumors, limiting blood flow and therapeutic uptake.

Speaker 2

Our pressure enabled drug delivery, PEDD technology, has been shown to enable superior delivery of a broad range of therapeutics into tumors with improved accuracy, predictability and at higher tissue levels with better clinical outcomes. TEDD allows enhanced delivery to increase therapeutic delivery to the tumor, while decreasing exposure in normal tissue to minimize toxicity and enable treatment of patients with more advanced disease. Our PrimaV infusion system, which was launched in 2020, leverages our PEDD technology to overcome the infusion barriers that limit therapeutic uptake in solid tumors, including pancreatic, adenocarcinoma, hepatoccellular carcinoma and liver metastases. TriNet has demonstrated the ability to deliver high concentration of therapeutics into high pressure tumors, while limiting exposure to normal tissue, avoiding off target toxicity. We believe this is game changing, First of a kind technology and the adoption by interventional radiologists we have achieved today is a reflection of its patient impact and efficacy.

Speaker 2

Our TriNet business has grown at an annualized growth rate of approximately 50%, despite at the same time at the start of the pandemic. And in the Q3, we achieved our highest ever sales figure of $5,200,000 We're delighted to report that this business continues to demonstrate robust revenue and market share growth throughout the United States. Our strategic investments in physician education, clinical and sales personnel have allowed us to successfully educate the interventional radiology This business has single digit market share and superior gross margins, which provides significant opportunity for future profitability. Following my remarks, Sean Murphy, our Chief Financial Officer, will provide a more in-depth analysis of our quarterly results and key operating metrics. In addition to our TriNav technology, in 2020, we acquired SD-one hundred and one, an investigational toll like receptor 9 agonist.

Speaker 2

In clinical studies performed prior to the acquisition, SC-one hundred and one demonstrated the ability to favorably reprogram the tumor microenvironment and promote responses to immunotherapy. Later in the call, Doctor. Steven Kaps, our Chief Medical Officer, will share recent encouraging data from our Phase 1 PEREAL 1 trial for uveal melanoma with liver metastases and our PARIO-three trial for pancreatic adenocarcinoma. These results further validate our company's proof of concept, the effectiveness of our pressure enabled drug delivery in combination with SD-one hundred and one in overcoming critical mechanical and biological barriers in the treatment of solid tumors. In summary, We're very encouraged by the remarkable progress our team has made in our commercial and clinical endeavors and are very excited about the future of Trisales.

Speaker 2

At this time, I'm proud to introduce Sean Murphy, our Chief Financial Officer, to discuss our operating results and key financial metrics.

Speaker 3

Good morning, everyone, and thank you, Mary. I'm pleased to announce that Trisales achieved outstanding results in the Q3 that ended September 30, 2023. Our revenue, solely driven by the success of the TriNab device, reached $5,200,000 This sales achievement represents the highest quarterly sales in the company's history, reflecting a 32% increase compared to the same period in 2023. TriCellis has a growth record as illustrated on Slide 1, which the company has grown at a compound annualized growth rate of approximately 50% since the launch of our product in 2020. This segment of the business is approaching breakeven late in 2024.

Speaker 3

It is worth noting that the Q3 of 2022 was a particularly strong sales period, making this year's performance more remarkable. In terms of the year To date revenues, as of September 30, 2023, we have reached $12,800,000 a 39% increase from the prior year. These results can be attributed to several factors, including the adoption of TriNav in new accounts, increased utilization of existing accounts and the continued expansion of our sales force, all of which has led to an increase in our market share. In the Q3, we captured 15 new hospital accounts in the quarter and 44 accounts year to date. Our account utilization reached 10 units per account, an increase of 2 units or 25% increase over last year.

Speaker 3

Finally, we are increasing our sales team with the funding we received by going public. At the beginning of 2023, we started the year with 10 representatives. And by the end of the 3rd quarter, We had reached 21. We expect to continue our sales force expansion during the balance of the year and into 2024. We are proud to report a robust gross margin profile of 88.7% in the Q3 of 2023, and 84.2% gross margin year to date, compared to 82.1% in the 3rd quarter 84.3% year to date in 2022.

Speaker 3

This favorable margin profile in 2023 can be attributed to increased factory volumes, improved batch yields and other operating efficiencies. We believe our facility in Westminster, Colorado has the capacity to support our growth over the next 5 years. In terms of our investment in research and development, expenses in the Q3 of 2023 totaled $9,400,000 an increase of 95% from the Q3 of 2022. Year to date R and D expenses amounted to $21,900,000 reflecting a 45% increase from the corresponding period in 2022. These investments are primarily related to the additional patient enrollments in our 3 perio clinical trials.

Speaker 3

Our dedication to growth is also evident in our sales and marketing expenses. In the Q3 of 2023, we invested a total of $4,700,000 a 55% increase from the Q3 of 2022. Year to date sales and marketing expenses reached $11,400,000 marking a 29% increase from 2022. These investments are closely tied to the ongoing sales force expansion. Moreover, General and administrative expenses for the Q3 of 2023 totaled $9,000,000 representing amounted to slightly over 100% more than in 2022 at 17,500,000 These increased costs include one time costs of $4,800,000 in the 3rd quarter and $7,700,000 year to date related to the completion of our de SPAC process in August of 2023.

Speaker 3

Our operating losses for the Q3 2023 totaled $18,500,000 compared to losses of $8,100,000 in the Q3 of 2022. Year to date losses in 2023 amounted to 40,000,000 compared to losses of $24,700,000 in 2022. The increased losses And 2023 can be attributable to higher operating expenses in research and development, sales and marketing and general and administrative expenses, as mentioned earlier. These increased expenses were partially offset by the increased gross margin resulting from increased TriNet revenues and improved gross margin profile. We believe that operating earnings provide the most accurate insight into our ongoing profitability.

Speaker 3

This figure closely aligns with EBITDA and excludes non cash valuation adjustments related to equity issuance, fair value adjustments of the tranche and warrant liabilities and the fair value adjustments of contingent earn out liabilities. It is important to note that these non cash valuation adjustments may continue to produce material fluctuations in our net earnings resulting during the next several years. In terms of net loss attributable to common stockholders, we reported a loss of $1,700,000 in the Q3 of 2023 $27,000,000 year to date compared to a loss of $8,100,000 in the Q3 of 2022 $24,600,000 year to date. These results are significantly influenced by non cash gains and losses on the valuation of contingent earn out liabilities, tranche and warrant liabilities and equity issuance. In conclusion, we remain dedicated to our mission and excited by Our Future.

Speaker 3

With this, I will pass the call to Doctor. Steven Katz, our Chief Medical Officer, who will provide further highlights about our perio clinical programs.

Speaker 4

Good morning, everybody, and thank you, Sean. We appreciate your interest in learning more about the progress our company is making on behalf of patients with liver and pancreas cancer. While immunotherapy has unquestionably yielded transformative results in several solid tumor indications, Patients continue to confirm unmet medical needs with primary liver cancer, liver metastases and pancreatic adenocarcinoma. As Mary noted earlier, our Tresalis approach harnesses the power of PEDD to overcome mechanical tumor microenvironment barriers. We combined our PEDD technology with SD-one hundred and one, a carefully selected drug capable of addressing the biologic and immunosuppression related challenges in these organs.

Speaker 4

Importantly, we believe the mechanical and biologic barriers that our trials seek to address are prevalent across multiple cancer types. SD-one hundred and one broadly stimulates the immune system and acts to eliminate a specific cell type known to be significant in hindering the success of immunotherapy in the liver and pancreas, the MDSC or myeloid derived suppressor cells. Pre clinically, we confirm that SD-one hundred and one has favorable properties relative to other classes of TLR9 Agonists in targeting MDSC. Historically, Delivery and optimal dosing have posed challenges for this class of drug, but our clinical trials have been designed to address these challenges. In 2021, we launched a series of PARIO or pressure enabled regional immuno oncology trials, Starting with our PARIO-one trial involving patients with uveal melanoma liver metastases.

Speaker 4

We believe this data highlights how pEDD has the potential to enable SD-one hundred and one across multiple indications. Doctor. Satnav Patel from the MD Anderson Cancer Center presented the data at the recent Society of Immunotherapy for Cancer meeting in San Diego. Key highlights from the presentation include: Data encompassing 56 patients across various dose levels and cohorts in this Phase 1 study, which was a dose escalation study. Patients were treated with SD-one hundred and one delivered by the innovative TriNav device targeting the arteries feeding the liver and the liver After establishing safety with single agent SD-one hundred and one, patients were then enrolled in treatment in combination with intravenous checkpoint inhibitors.

Speaker 4

The enrolled patients had significant prior treatment with 71% having received previous therapies, including 16% treated with chemtrax. Safety data reported at SITC indicates that the SD-one hundred and one infusions with PDD with or without intravenous checkpoint inhibition were well tolerated. There were no serious grade 3 or 4 treatment related adverse events in the single agent SD-one hundred and one cohort and 4% with SD-one hundred and one in combination with nivolumab. These rates in line with or even lower than expected in the absence of checkpoint inhibition. The safety profile may be attributed to the pharmacokinetic data associated with utilization of PEDD, which demonstrated High levels of SD-one hundred and one in the liver with limited systemic exposure as measured in the serum.

Speaker 4

Immunologically, Doctor. Patel detailed the elimination of immunosuppressive MDSC and regulatory T cells through examination of liver metastasis biopsy specimens. There was also evidence of T cell activation within the liver and systemically. Early efficacy data at the optimal dose of 2 milligrams of SD-one hundred and one in combination with intravenous nivolumab revealed promising results. These included a median progression free survival of 11.7 months, a 1 year overall survival rate of 86%, a disease control rate of 81%, and a ctDNA clearance rate of 57%.

Speaker 4

The optimal dose in these 7 patients was determined based upon the efficacy data in addition to multiple immune signals. Across all evaluable patients, 86% demonstrated a reduction in circulating tumor DNA. In addition to PARIO-one, Doctor. Michael Lee, also from the MD Anderson Cancer Center, presented safety and feasibility data from our PARIO-three study at the SITC meeting. The PARIO-three Phase 1 study is enrolling patients with treatment refractory, locally advanced pancreaticadenocarcinoma.

Speaker 4

They are receiving single agent ST-one hundred and one with our groundbreaking Trisales infusion system, which utilizes a retrograde venous approach to circumvent anatomical constraints on the arterial side. There have been no serious Grade 3 or 4 treatment related adverse events in the 3 subjects treated at the lowest dose level. Immunologic data from pancreas tumor biopsy specimens indicates effects consistent with those observed and the PARIO-one study liver metastasis specimens, suggesting effective ST101 delivery into the pancreas and consistency in TLR9 biology in both organs. In summary, we are encouraged by the Phase 1 uveal melanoma liver metastasis data and are optimistic that these findings will pave the way for success in other indications we are Additionally, we are excited about the early experience in our locally advanced pancreatic adenocarcinoma clinical trial, which holds promise due to the innovative delivery technology being employed. We eagerly anticipate further follow-up and enrollment in the PARIO studies.

Speaker 4

And now, I'll pass the floor back to Mary for closing remarks.

Speaker 2

Thank you, Doctor. Katz, and a warm welcome to all of you participating in the call today. At Trisales, we're delighted to share our achievements during the quarter, We've made meaningful progress in expanding our TriNet business and continue to advance our perio clinical program, both of which are shaping an exciting future for our company. With that, I'll open the floor for any questions you may have. Your insights and questions are valuable to us.

Speaker 2

Thank you.

Operator

Please standby while we compile the Q and A roster. One moment for our first question. And our first question comes from for Jason McCarthy of Maxim Group.

Speaker 5

Hi, guys. Chad on for Jason. So what would be a meaningful response in liver tumors and any extension in overall survival and quality of life? And what do you think you need to see to advance to a later stage program?

Speaker 1

Chad, this is Jim Young. It's nice

Speaker 2

Actually, I think it's probably a better question for Stephen to respond to. Stephen, you want to jump in?

Speaker 4

Yes. I'd be happy to do so, Mary. This of course will vary by indication. But taking uveal melanoma liver metastases As an example, I think 1st and foremost, we're very interested in the safety profile that we're seeing in the early perio data. I think that is a backdrop that is going to be critical to moving any program forward.

Speaker 4

And then beyond that in terms of efficacy signals, We believe that circulating tumor DNA provides a very useful early readout of biologic activity. And then beyond that, As a regulatory endpoint, we're optimistic about using progression free survival as a measurement of disease control, And then of course, overall survival as a longer term measurement of outcome.

Speaker 6

Okay, great.

Speaker 5

And Given the unmet need in uveomelanoma mess, and this is the first proof of concept study for the combo, is it possible a Single arm open label Phase 2 may be sufficient for registration?

Speaker 4

We believe that ultimately for full approval, a 2 arm study will be required. There is precedent with the agency for openness using a single arm study for an accelerated approval, but we believe that a 2 arm study would ultimately be needed for Full approval.

Speaker 5

Got it. And then in pancreatic cancer, the data in Phase 1 at TTSE was very encouraging, albeit early. What would be a meaningful outcome in that study to move to a Phase 2?

Speaker 4

Similar to the intrahepatic programs like UBL, We believe that progression free survival would be a very meaningful clinical endpoint to provide a signal for moving forward into a Phase 2. One of the things that we've learned from the data, particularly that data set presented at SITC is that conventional response assessment criteria like 1.1 may not capture the full biologic activity of immunotherapy in these organs. And So looking at progression free survival, which captures both responses and durable disease control, provides, We think a very comprehensive assessment of meaningful biologic and clinical activity. So we're looking toward a progression free survival In excess of 7 to 8 months is something that would be very meaningful in that disease.

Speaker 5

Got it. And then I guess lastly, In liver cancer, since you're using SD-one hundred and one in combination with a checkpoint, what is the impact of Tecentriq and Avastin moving to first line liver cancer and the potential use of docs not wanting to move a patient that may progress to another checkpoint. Does SD-one hundred and one sort of change that narrative?

Speaker 4

We hope so. We hope it has the potential to do that. For HCC, right now, we're focused on 2nd line and beyond. So the addition of Stentriq and Avastin in the first line, doesn't necessarily directly impact what we're doing in that regard. And based on the Immunologic data reported at SITC, we believe that SD-one hundred and one has the potential to address the immunologic reasons and biologic reasons for checkpoint failure.

Speaker 4

So we're hopeful that medical oncologists will see the data and agree that the rationale for using ST-one hundred and one in immuno Your checkpoint failure patients is there and we hope to generate additional data to support this.

Speaker 5

Great. Congrats on the progress and thanks for taking the questions.

Speaker 4

Thank you.

Operator

Thank you. One moment for our next question. And our next question comes from Justin Zallen of BTIG.

Speaker 6

Thanks for taking the question and congrats on the progress here. I'd like to ask Doctor. Katz, congrats on the promising Perrier data here at SITC.

Speaker 4

Thanks for the question, Justin. Right now, as we all know, we have one approved agent for uveal melanoma Stage 4 patients, Kimtrac, which is limited by HLA type. So Yes, there's certainly an unmet medical need for patients that don't express that HLA haplotype. So there's potential application there. And in addition to that, for patients who progress following receiving Kymtrec, There's need for 2nd line and beyond treatment.

Speaker 4

We believe that the safety profile that was presented at SITC, where the serious treatment related adverse event rate grade 34 for SD-one hundred and one with nivolumab of 4% really places it very well in the therapeutic landscape for uveal melanoma liver metastases. And if we see The disease control rate and the progression free survival and overall survival continue to play out as reported for those initial patients at the optimal dose. We think it could offer a very compelling therapeutic opportunity for those patients.

Speaker 6

Excellent. And Maybe just some of your thoughts on how this data might provide some read through to other potential solid tumor indications in other organs? Thanks.

Speaker 4

Yes, that's a great question and something that we think very deeply about. We're hopeful that because we are targeting The same protein Tolliperceptor 9 or TLR9 across all indications, which is present across all indications. We're hopeful that we will in fact see the same immunologic signals and similar clinical readouts in different liver metastasis and primary liver tumor indications. In addition to the pancreas, the early data that we presented at SITC from the PARIO-three locally advanced Pancreatic adenocarcinoma trial indicates that the immune signals that we are seeing in the pancreas and the liver are actually consistent with one another. And so that early data set gives us hope that we'll continue to see residents across multiple indications and disease types.

Speaker 6

Great. Thanks for taking my questions.

Operator

Thank you. I'm showing no further questions at this time. I would like to turn it back to Mirizala for closing remarks.

Speaker 2

Thank you, everyone, for taking time to listen to our and Inaugural Earnings Call at Trisales Life Sciences. We sincerely appreciate your interest, and I hope it was evident to all of you our

Operator

This concludes today's conference call. Thank you for participating and you may now disconnect.

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TriSalus Life Sciences Q3 2023
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