Biora Therapeutics Q1 2024 Earnings Call Transcript

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May 15, 2024

There are 7 speakers on the call.

Operator

Greetings, and welcome to Biora Therapeutics First Quarter 2024 Financial Results Call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I will now turn the call over to Chuck Pedala, Managing Director with LifeSci Advisors, Biora's Investor Relations firm.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Good afternoon, and welcome to the Biore Therapeutics' Q1 2024 Corporate Update and Financial Results Conference Call. Joining me on the call are Adi Mohanty, Chief Executive Officer and Eric Desparves, Chief Financial Officer. Before I turn the call over

Speaker 2

to Mr. Mahanty, I would like

Speaker 1

to remind you that today's call will include forward looking statements within the meaning of the federal securities law, including but not limited to the types of statements identified as forward looking in our quarterly report on Form 10Q that we filed or will file later today and there are subsequent reports filed with the SEC, which are available on our website in the Investors section. These forward looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control. Please note that the actual results could differ materially from those expressed in the forward looking statement. For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking statements as well as risks related to our business, please see the company's periodic reports filed with the SEC. With that, I will now turn the call over to Adi Mahati, CEO of Bayoura Therapeutics.

Speaker 1

Adi? Thanks, Chuck.

Speaker 2

And thank you everyone for joining us. In the short few weeks since our last corporate update, we had excellent progress in the execution of our clinical development plans for the NaviCap platform, successfully completing dosing study of BT600. For the Biojet platform, we have continued to advance our goals for both platform development and business development with pharma. 1st, an update on our NaviCath targeted therapeutics platform with our lead program BT600 in ulcerative colitis. The basis of our clinical approach to ulcerative colitis or UC is the importance of achieving higher drug exposure and activity in colon tissue.

Speaker 2

The battle in UC is fought in the tissue in the colonic mucosa. Research shows that higher drug exposure and activity in the colonic tissue is associated with a higher likelihood of better clinical outcomes across drug classes, including JAK inhibitors and anti TNFs. Achieving increased drug levels in colon tissue is not as simple as increasing the dose, since many of the advanced therapeutics for UC are dose limited due to systemic toxicity risks. That's why our NaviCap platform has been designed to provide anatomically targeted delivery of therapeutics directly to the site of disease in the colon. Studies with NaviCap have shown that payload is delivered along the entire length of the colon achieving complete colonic coverage.

Speaker 2

In fact, we will be sharing more of that data at the Digestive Disease Week Conference in Washington DC later this month. We will present clinical data on the function of the Mavicap device across 4 different studies in humans, including healthy participants and active UC patients. These data show successful performance of the device as well as the full colonic coverage achieved by the NaviCap platform. During our last update, we shared positive interim results from the single dose portion of our BT600 clinical trial. To recap, we found that all Mavicap devices performed as intended and were well tolerated, No safety signals were observed.

Speaker 2

Measurable toposignit in blood was first observed at approximately 6 hours with maximal concentration at approximately 8 hours post ingestion, which is consistent with drug delivery and absorption in the colon. That is what is intended with NaviCAP and it is in contrast to what is seen with conventional oral tofacitinib where maximum blood concentrations occur at 30 minutes to an hour after ingestion consistent with absorption in the upper GI tract. Colonic delivery of PT600 was associated with 3 to 4 times lower systemic levels of tofacitinib. These data suggest drug delivery and absorption in the colon as opposed to the upper GI tract. And they indicate the potential to achieve greater concentration of drug in the colon tissue compared with conventional methods.

Speaker 2

Everything we've seen so far indicates that our approach could lead to improved efficacy and reduced toxicity for UC patients. We're keen to see and share the data from the remainder of the trial and to that end, we recently announced completion of the remaining portion of the trial in which a cohort of 24 healthy participants received PT-six hundred at 5 milligrams or 10 milligram doses of tafasigimib or placebo with once daily dosing for 7 days. In addition to blood samples, we also obtained colon tissue biopsies in this part of the study. We're now awaiting the analysis of those results and we anticipate sharing full study data in late June. These data will also be discussed with GI experts and key opinion leaders, including those on our clinical advisory board.

Speaker 2

In addition to the conclusion of our clinical trial of healthy volunteers, we continue to plan for a study in UC patients to begin later this year. Getting data and patients would add to our learnings from Phase 1 and help us prepare for future trials with an eye towards maintaining our accelerated clinical development cadence for the NaviCap platform. We're gratified to see the excellent results so far and we're excited to share the remaining data from our clinical trial later this quarter. Despite all the advanced therapies for UC, patients continue to experience tremendous difficulties in achieving and sustaining remission and we remain focused on the serious unmet need in patients with UC. We believe we can optimize tofacitinib therapy in UC by achieving higher, potentially more efficacious drug exposure in tissue without the need for high systemic exposure.

Speaker 2

Beyond BC600, we believe the NaviCap platform has the potential to create a portfolio of optimized UC therapies. Moving on to our Biogen Systemic Therapeutics platform. The Biogen platform continues to exceed its performance targets and shows outstanding promise to solve the challenges of oral delivery of large molecules, which has been called the Holy Grail of drug delivery. Liquid Jet Delivery is the foundation of the Biojet platform. It uses a small capsule that once swallowed delivers drug through liquid jet into the lumen of the small intestine, where it is absorbed into systemic circulation.

Speaker 2

We believe the Biojet platform can provide an alternative to needle based delivery of complex molecules. It also enables those molecules to more efficiently reach the liver, which is difficult with other oral delivery methods. We've completed further animal studies over the past few months that demonstrate advances in consistency and bioavailability for our peptide candidate and for adalimumab, our antibody candidate in addition to collaborator molecules. As a reminder, the performance target that is considered commercially viable by us and our pharma collaborators is 15% compared to IV. We now have preclinical data demonstrating the BioGen platform's ability to achieve category leading bioavailability of complex molecules, to deliver existing formulations without complex reformulation, to deliver large payloads in the multi milligram range and its potential to enable liver targeted delivery of large molecules.

Speaker 2

With all of these competitive advantages, we believe we're in an excellent position with the Biogen platform. Our work with collaborators is progressing well and we look forward to sharing an update on our preclinical data at an upcoming conference in June. Our initial focus with Biogen was on creating an in vivo proof of concept that liquid jet injection technology successfully inject and deliver large molecules into the small intestine. We used our 1st generation device to assess performance with semaglutide and an ablumab variant as well as with molecules from our collaborators. Through those experiments, we were able to achieve an average bioavailability of over 20% for animals with detectable drug in blood.

Speaker 2

We have continued to make improvements to the Biogen assembly and manufacturing process, which are acquired for later stages of development for this platform. We successfully evolved our NaviCap device from proof of concept to clinical stage under an IND. We're able to leverage that expertise with our Biogen platform. This will serve us well as we prepare for further development, including future clinical studies with Biogen. We are currently running a partnering process for interested parties and are flexible on the way we may work together.

Speaker 2

We're encouraged by the engagement shown with this process by some of our current collaborators and we're also seeing strong interest from new companies. The goal is to have a critical mass of data and interested parties to have partner stated interest confirmed by mid year. We're evaluating like minded partners who see the potential for the Biojet platform and are eager to bring this technology to the clinic. Now to summarize our anticipated milestones. For our NaviCap platform, we have completed execution of the Mab portion of our clinical trial for BT600.

Speaker 2

We plan to share data from the completed SAD and Mab study toward the end of the Q2. We will present clinical data on the function of the NaviCath device across 4 different studies in healthy human participants and active use in patients at the Digestive Disease Week Conference in Washington DC later this month. We anticipate initiating a clinical study with BT600 in patients with UC during the second half of twenty twenty four. For our Biojet platform, an update on data from recent animal studies will be shared at the next gen peptide formulation and delivery summit in June. We continue to progress toward our goal of an enhanced partnership for the Biogen platform in 2024.

Speaker 2

With that, I'll now turn the call over to Eric for a review of our financial results and capital market activities.

Speaker 3

Thanks Eddie and good afternoon everyone. We remain very active with capital market activities during the Q1. I'll first cover our financial results and then provide more background on the continued positive evolution of our balance sheet. Operating expenses during the Q1, excluding inspect based compensation expenses, were $14,500,000 with continued investment in device development, preclinical and clinical activities. To break this down further, G and A expenses in the Q1, excluding stock based compensation expenses, were $8,100,000 of which 60% was core activity spend, leaving almost 40% of G and A costs associated with legacy matters, which we are actively working to eliminate by

Speaker 2

the end of the year. R and

Speaker 3

D expenses excluding stock based compensation expenses were $6,400,000 The result, Vira's core OpEx spend was $11,500,000 in Q1 with the majority of the spend allocated to our R and D programs, including execution of our clinical development with NaviCap and preclinical work on Biogen with our pharma collaborators. Net loss was $4,200,000 for the 3 months ended March 31, 2024, which included non cash stock based compensation expense and gain for change in warrants liabilities. I'd like to remind investors that our financial results include many non cash items, which is why we also refer to operating expenses excluding those elements for better guidance around our actual operating cash burn, which was $11,500,000 for the quarter as I just noted. Moving on to our capital structure. As a reminder, we reduced outstanding notes by more than $80,000,000 in 2023, a 75% reduction in the company's net debt in 2023 alone.

Speaker 3

We made further progress during the Q1 by completing 3rd note exchange combined with new capital investments, bringing total new institutional investment into Biolog through these exchanges to $19,800,000 in the last two quarters. As a result, we materially reduced our convertible note balance to approximately $52,000,000 by the end of the first quarter. We truly appreciate this commitment from our institutional investors as their agreement to trade debt for equity demonstrates continued confidence in the potential value of our stock. During the quarter, we complemented this funding from noteholders by securing $3,000,000 from the monetization of legacy assets, equity proceeds of $2,900,000 and a $6,000,000 raise through a registered direct placement, which closed in early April. This brings our total capital raise over the last 4 months to more than $31,000,000 demonstrating strong access to capital markets.

Speaker 3

We are making good progress with our efforts to further optimize our capital structure and we expect to have additional updates soon. We believe this series of transactions set up the company for success ahead of our important clinical data readout later this quarter and the eventual development of partnerships with pharma. With that, I will now turn the call back over to Ali.

Speaker 2

Thanks, Eric. We're excited Thanks, Eric. We're excited to present data from our BT600 clinical trial for the Navigap platform in the coming weeks. For the Biojet platform, we're focused on progressing towards partnerships this year. We look forward to providing further updates as we continue to achieve our milestones.

Speaker 2

Operator, we're now ready for questions.

Operator

Thank you, sir. Ladies and gentlemen, at this time, we will be conducting a question and answer The first question that we have comes from Joe Pantginis of H. C. Wainwright. Please go ahead.

Speaker 4

Hey, guys. Good afternoon. Thanks for taking the questions. So first, I'm just curious, if you could give a little perspective. With the NaviCap program with tofacitinib, it's obviously it appears encouraging that your plasma levels that you're seeing are 3 to 4 times lower as you talk about.

Speaker 4

So I'm just wondering if you could give a little perspective about physicians' views towards that and is that within the target range you were looking for? Would you like to see even lower levels or sort of where does it play on the physician expectation continuum? Thanks.

Speaker 2

Yes, Joe. So you're right. We are seeing 3 to 4 times lower. What I can say is, we know from conversations with physicians, low is better 3 to 4 times matters a lot. That is probably slightly higher than physicians' expectations.

Speaker 2

But you have to combine that with what we're also doing, which is a much lower dose because on the other side, which is the tissue side. So the plasma side were 3 to 4 times less. On the tissue side, were multiples higher. So the goal being to get much more in the tissue, which we believe we can do within lower dose than the current label dose for telfacitanib for Xeljan. And there's actually publications that talk about how a 10 mg dose behaves with a single ascending dose like we have.

Speaker 2

And so we can look that we get more in the tissue likely because we see the 6 hour delay. And yes, initial conversations with a couple of our clinical advisory board members were, well, quite encouraging. They seemed quite interested in the data and this is good so far, so good, really what we wanted.

Speaker 4

That's helpful. Thanks. And then I guess, looking forward a little bit to the second half, can you give some more, maybe brushstrokes with regard to the design of the UC study?

Speaker 2

So we'll get to the UC study in a few weeks. What we're really excited about is, well, in like hardly in a few weeks, right, we said in the later part of June. So in a few weeks, we're going to have the MAD data. And the data is starting to roll in. We're getting ready to share it with everybody, having some information on what that MAD data looks like will help us as we've already started work on that UC patient study, we've got protocols, we've got things, but we will make some final determinations after we look at the MAD data, after we get reactions from GI experts, from key opinion leaders, and we'll have some time.

Speaker 2

And so we'll be able to share a lot more. Let's get past the MAD in the coming weeks.

Speaker 4

Absolutely fair. And then my last question, if you don't mind, and I guess this is a little more even more forward looking statement, if you will. When you talk about potential partnerships in 2024, what would be essentially looking for? These sort of like early collaborations to do some maybe models or maybe clinical partnerships or what sort of continuum are we looking at?

Speaker 2

Fair question, Joe. So I will tell you we are pretty excited with the fact that when we talked about in our prepared remarks that we actually are running a process. We're running a process trying to get to a conclusive answer very soon and we'll have a lot more specifics in a short few months that we can share with everybody. Clearly, we're past the feasibility collaboration kind of stage. We'll be happy to do more for others who might want to do it, but that's really not our focus.

Speaker 2

What we want to get to is somebody who's willing to say we're getting we want to take this into the clinic. And then we can work on the specifics of their molecule, their disease indication, combine it with what we have and prepare to take this into the clinic. So it would be that kind of collaboration, doesn't mean we would say no to a commercial collaboration. That's not kind of anything that makes sense right now. Ideally though, we are looking for somebody and we've seen that interest.

Speaker 2

And so we're looking for somebody who wants to take something into the clinic that we can work together on and clearly beyond a collaboration, but a serious partnership.

Speaker 4

Great. Thank you, Adi.

Operator

Thank you. The next question we have comes from Julian Harrison of BTIG. Please go ahead.

Speaker 5

Good afternoon. This is Rae on for Julian. Thank you for taking our questions and congrats on all the progress. Just a follow-up on a previous question. Are you framing how are you framing expectations for the BT600 top line data that is expected within the next few weeks?

Speaker 5

Are you guiding to a certain bar for success? And then we have a follow-up.

Speaker 2

Yes. So to us, a confirmation of SAD data would be success, because we clearly saw that 6 hour delay in the uptake and all the data kind of supported colonic uptake, supported more in the colon, supported even if you look at the data that we shared that showed how it washed out through the body over time. And so to have multiple dosing over several days and have no issues with all these multiple devices being in the body potentially at the same time, that would be something that we would want to confirm and getting similar data to SAD would be awesome. We will have some tissue data to support it, but we kind of already know, right, with the plasma data that we're getting colonic uptake and that needs to be confirmed over multiple doses over multiple days. That to us would be success because that's what we're looking for.

Speaker 5

Great. Thank you. Looking forward to the data. And then turning to your adalimumab biosimilar program, what are some factors that might influence a go no go decision there?

Speaker 2

It's a little early to be making a gono go. I think we're so we're extremely encouraged by what's happening with the TOFA. We have some early data with ATA. We want to take this TOFA a little further, maybe beyond that, get some patient data and that would guide us in our ATA. We think potentially that it could be a shorter development program for the ADA.

Speaker 2

Because if you remember what we keep saying with tofacitinib, we're actually expecting to have eventually a much better initial remission rate than what is currently approved and what is currently available with the various molecules. That significant gap of almost all, even the latest drugs that are approved are in that 15% to 30% remission rate in the beginning. We think we can do better than that. So taking our BT600 program to a point where we can show better outcomes is important. However, with the ADA, we could take the learnings from the BT600 a little bit, but also look for a slightly different outcome that could be a much shorter and faster development

Speaker 5

plan. Great. Thank you. Very helpful. And I guess, looking a little forward more forward, how are you thinking about the obesity opportunity with your pipeline?

Speaker 5

Are there certain payloads that you're more interested in than others? I understand it's early days.

Speaker 2

Yes. So we have done a fair amount of work as you know with seloblutide, but that's not necessarily the molecule we're right now talking about taking to clinic. We decided that in the short run, we want to get this partnership that would allow us to take something into the clinic potentially with a partner's molecule in the partner's preferred indication. That would allow us to with the current resources progress this platform really much faster and more efficiently even for the investors. And so we'll get back to a clinical program for Biojet that would be our own sometime past that maybe next year.

Speaker 5

Great. Thank you. Congrats again on all the progress and looking forward to the BT600 data.

Speaker 2

Thank you.

Operator

Thank The next question we have comes from John Vandermosten from Zacks. Please go ahead.

Speaker 6

Great. Thank you and good afternoon, Adi and Eric. Let me start out with a question on the BT 600 Phase 1 trial. I know you're looking at safety and TK. What else might you share at the June conference from the trial?

Speaker 2

So clearly, what we want to confirm is what we have been talking about from the beginning that we can deliver more drug in the tissue, less in plasma at a lower dose than what is currently being used. We got that first indication in animals, then we got that next indication with our single dose, which said, yes, it goes through the colon and over time comes out. We want to make sure we can do that in a sustained way over multiple doses. Getting those data truly is the confirmation of our approach. As tofacitinib has already been proven, right?

Speaker 2

Everybody kind of knows that tofacitinib works. The issue there has been in order to make it work, doctors keep having to prescribe even a higher dose than what's on the label. So that's really toxic. To be able to get the tissue concentration with low plasma concentration really is a home run. So that's kind of what we're looking to get.

Speaker 6

Okay. And looking at Biogen, based on your commentary in the press release and on the call, it seems like there may have been some new inquiries since the last earnings release. And I'm wondering what the conversations are evolving around. Is it more the financial aspects of moving forward? Or is it related to device design or something else?

Speaker 2

Yes, John. So yes, we got more interest. You are correct in picking that up. Part of that has also been us driving to this process and making people aware that look, we are running a process. Of course, we'd love to continue collaborating, learning more along with you, but we need to make some choices on who we work with going forward getting into the clinic.

Speaker 2

And so when we drove this process that drove some of the timeline in some ways, which is great, I think for us, for them, for investors that we're getting to going to have a decision fairly soon. We're still fairly open with the conversations at this point are around the various entities that we're talking to. Some have a clear idea for molecule they want to take forward and want to talk through that. Some have a broader number of molecules they might want to take forward. Agreeing on, yes, the idea here is to take it to clinic.

Speaker 2

Now in going to the clinic, if we need to optimize certain things for that specific indication, that specific molecule, we have that ability with our platform and we'll do that, but that's all going to be based on agreeing to something that gets us to clinic. That's really the conversation. And then because there's multiple conversations, we just got to get people approximately within a certain timeline to a point where we can make decisions.

Speaker 6

Okay. And another thought that came to mind is how you negotiate with multiple parties when you have probably the big pharma, they want to get as broad a license from you as they can to perhaps block others. But you'll want to keep it as narrow as possible. I guess, how do we look at that? Are you negotiating on specific biologics?

Speaker 6

Or is it or is there some other kind of way that you narrow down what they will be able to license?

Speaker 2

So I appreciate we have to get the specifics. The good news is we're getting very close to being able to share specifics in a short few months. Okay. The breadth of your question, Vivek, we could take a long time to get through. We have answers very soon.

Speaker 2

We're absolutely but we are focused on trying to maximize the value and maintain optionality. So we're trying not to give away a bunch of our optionality. That is clearly a priority for us.

Speaker 6

Right. You've got to walk that narrow path, I guess, between the 2.

Speaker 2

Yes.

Speaker 6

And then last question on what is next for capital structure. There's been a lot of movement over the last several months and we've seen the capital structure improve dramatically. What do we see next in terms of that?

Speaker 3

Yes. So thanks, John. This is Eric here. So we've talked here about having a lot of milestones coming up, very important catalysts. I think those will be pretty much the key to establish how we take the capital structure next.

Speaker 3

I think we can expect to have further simplification of the node structures. And if we achieve our milestones and the expected results, we could potentially see an improvement in the market capitalization of the company. So the way I would answer is, let's wait and see how we generate that. I think it will answer a lot of those questions.

Speaker 6

Okay, great. Thank you, Eric. Thank you, Andy.

Speaker 3

Thank you.

Operator

Thank you. Ladies and gentlemen, just a final reminder. We'll pause a moment to see if we have any further questions. So at this stage, there are no further questions. Ladies and gentlemen, we have reached the end of our question and answer session.

Operator

And I would like to turn the call back to Adi Mohanty for closing remarks. Please go ahead, sir.

Speaker 2

I want to thank everyone for joining us today. I really appreciate your time. We are eager and looking forward to coming back and sharing updates very soon. Thank you.

Operator

Thank you. Ladies and gentlemen, that

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