Biora Therapeutics Q2 2024 Earnings Call Transcript

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August 12, 2024

There are 6 speakers on the call.

Operator

Welcome to the Biora Therapeutics Second Quarter 20 24 Financial Results Call. At this time, all participants are in a listen only mode. A brief 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 Padala, 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 Biora Therapeutics' Q2 2024 Corporate Update and Financial Results Conference Call. Joining me on the call are Aadi Mohanty, Chief Executive Officer and Eric Despartes, Chief Financial Officer. Before I turn the call over to Mr. Mahanty, I would like to remind you that today's call will include forward looking statements within the meaning of the federal securities laws, 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 our subsequent reports filed with the SEC, which are available on our website in the Investors section.

Speaker 1

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 actual results could differ materially from those expressed in the forward looking statements. For 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'll now turn the call over to Adi Bahanty, CEO of Biora Therapeutics. Adi?

Speaker 2

Thanks, Chuck, and thank you everyone for joining us. It's been a very productive and busy quarter for BioWare. With the announcement of our successful Phase 1 clinical trial for the BT600 program using our NaviCap platform and significant work and progress with partners on the Biojet platform. I'll begin with our Navigat platform. We were pleased to see the large number of people who joined our recent KOL event, which was co hosted by Doctor.

Speaker 2

Bruce Sands of Mount Sinai and Doctor. Brian Fagan of the University of Western Ontario. These two physicians are legends in the treatment of IVD. And if you look at many of the major clinical trials in UC therapies, you'll see both these names appear over and over, including as principal investigators. It was great to have them help us present and contextualize our clinical trial results for BT600.

Speaker 2

BT600 is being developed for the treatment of ulcerative colitis, which is an inflammatory disease that affects the mucosal and submucosal layers of the colon. It's largely a local disease of the colon tissue. Despite knowing for over 30 years that UC is a disease of the colon tissue, even now patients are treated by receiving powerful drugs systemically in an attempt to reach therapeutic levels in the colon. Research shows that UC patients with higher drug exposure in the colon tissue have significantly better responses to therapy. Although several attempts have been made, there has not been a reliable way to achieve colon tissue targeted delivery of therapeutics.

Speaker 2

With our approach, we aim to achieve iro drug exposure and activity in colon tissue by delivering drug directly to the site of disease. Our Phase 1 clinical trial was a very big step forward in demonstrating the NaviCap platform's ability to achieve this direct topical delivery to the colon and we're incredibly pleased to have met all our objectives with this study. Looking at the pharmacokinetic data, we achieved a PK profile consistent with drug delivery in the colon. The timing of when tofacitinib shows up in the blood at about 6 hours compared to 30 minutes for conventional oral therapy is an indicator of the drug entering systemic circulation via the colon. With this delivery approach, we wanted to see lower levels in systemic circulation and we did.

Speaker 2

Systemic levels were 3 to 4 times lower than with conventional oral delivery. We believe this could help reduce toxicity risks, which are a known issue with many UC drugs, including JAK inhibitors. We also wanted to get some data on colon tissue exposure to tofacitinib. As you may recall, Navigap has been programmed to deliver at the entry to the colon. We wanted to confirm that drug travels from the proximal colon to the distal or far side of the colon as we saw with payload delivery in several previous device function studies.

Speaker 2

Our Phase 1 results did indeed confirm this with tofacitinib detected across all three biopsy sites in the distal colon. We anticipated that tissue levels at these biopsy sites could be quite low because of a trial design that required performing those at 24 hours or 4 to 5 half lives after the final dose along with extensive colon prep before the procedure. Despite the late timing of the biopsy, we observed drug tissue concentrations above the IC50 level for all three locations. This is especially notable since we studied daily doses of 5 mgs 10 mgs in this trial, which are a quarter to half of the approved doses for conventional tafacitinib. The data also showed a strong correlation between plasma and tissue levels.

Speaker 2

And because of this correlation, we were able to model tissue concentrations at earlier time points, which predicts that tissue levels should exceed IC90 through at least 16 hours after dosing. Across both study arms, we saw greater than 95% accuracy of release in the colon with no early release before colon entry, which is excellent performance. We also saw excellent safety data in the trial. A lot of the details were included in our KOL presentation. If you haven't viewed that event yet, I invite you to watch the replay where our Chief Medical Officer, Doctor.

Speaker 2

Ariela Kelman, who did an amazing job leading this clinical trial, presents the data. Patients with UC continue to experience tremendous difficulties in achieving and sustaining remission. And we remain focused on the serious unmet need. Despite the many approved advanced therapies, a therapeutic ceiling exists at about 30% above placebo, A delta of 15% to 30% induction efficacy simply isn't good enough for a condition that causes tremendous suffering for so many. We believe the NaviCap platform is important because it has the potential to break this therapeutic ceiling through several approaches.

Speaker 2

First, we think this platform can optimize JAK inhibitor therapy by achieving better therapeutic outcomes while reducing safety risks. Our Phase 1 data demonstrate a proof of mechanism for this. 2nd, research shows that colon targeted delivery could also improve outcomes for other drug classes such as TNF inhibitors and integrin inhibitors. We believe the NaviCare platform could deliver those molecules and we ultimately envision a portfolio of optimized UC therapies. 3rd, leading physicians talk about the importance of enabling combination therapy for UC in order to target multiple inflammatory pathways.

Speaker 2

We believe the NaviCap platform would be very well positioned to facilitate combination therapies. In the near term, our Phase 1 results clearly support a clinical development plan that moves us into a clinical study in UC patients. Our objective with that study is to confirm the PK profile in UC patients and to inform dose selection for a subsequent induction efficacy trial. Everything we have seen indicates that our approach should lead to improved response and reduced toxicity for UC patients and we're eager to continue with clinical development to prove that out. We're also looking forward to the American College of Gastroenterology's Annual Meeting in October, where we will be presenting data from our Phase 1 clinical trial to the medical community.

Speaker 2

Moving on to our Biogen Systemic Therapeutics platform. The Biogen platform continues to exceed its performance targets and shows outstanding promise to solve the challenge of oral delivery of large molecules, which has been called the Holy Grail of drug delivery. Our goal with Biogen is to provide an alternative to needle based delivery of complex molecules. The platform could also enable those molecules to more efficiently reach the liver, which is difficult with other oral delivery methods. As I shared with you last quarter, we established a defined partnering process with interested pharma parties and during the past quarter we've made significant steps forward with that.

Speaker 2

Our goal was to achieve a critical mass of data and to have partner stated interest confirmed by mid year. We met that goal and we're currently in active partnership discussions with more than 1 large pharma company. We anticipate bringing at least one of these through to completion in the near term. I'm unable to provide details until we conclude, but I can say that we remain on track to achieve our partnership goal for 2024. This progress has also been recognized by several of our large shareholders who are stepping up to support our operations while we conclude our partnership process.

Speaker 2

Eric will speak a little more about that shortly. In June, we shared an update at an industry meeting, the Next Gen Peptide Formulation and Delivery Summit, where our Head of Research, Doctor. Sharath Singh, presented on a panel discussion alongside his peers from Lilly, Merck and Novo Nordisk who are all pursuing oral delivery of peptides such as GLP-one receptor agonists. Doctor. Singh also presented a session focused solely on the Biojet platform where he shared our continued progress in demonstrating category leading bioavailability across multiple complex molecules, including antibodies, peptides and antisense oligonucleotides.

Speaker 2

We remain encouraged by the interest in Biojet platform's ability to deliver multi milligram payloads using existing liquid formulations and its potential to enable liver targeted delivery of large molecules. With all of these competitive advantages, we're in an excellent position with the Biogen platform and we look forward to evolving our plans as we bring on pharma partners. To summarize our anticipated milestones, trial of BT600. We will next be presenting trial data at the American College of Gastroenterology Annual Meeting in October. We anticipate initiating a clinical study with BT600 in UC patients towards the end of the year.

Speaker 2

For our Biogen platform, we're in active partnership discussions with more than 1 large pharma company as part of our defined process. We remain on track toward our goal of partnership for the Biogen platform in 2024. 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. Earlier today, we announced a capital raise that provides crucial funding for the company. We're happy to see the continued support from investors as we progress towards important milestones for Bayer. I'll first cover our financial results and then provide more background on our transaction. Operating expenses during the Q2, excluding stock based compensation expenses were $14,500,000 with continued investment in device development, preclinical and clinical activities.

Speaker 3

To break this down further, G and A expenses in the 2nd quarter, excluding stock based compensation expenses, were $7,500,000 of which approximately 60% was core activity spend, leaving nearly 40% of G and A costs associated with legacy matters, which we are working to eliminate by the end of the year. R and D expenses, excluding stock based compensation expenses, were $7,000,000 As a result, Bayera's core OpEx spend was $11,700,000 in Q2, with the majority of the spend allocated to our R and D programs, including execution of our clinical development with NaviCap and BT600 and preclinical work with Biogen with our pharma collaborators. 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 on our actual operating cash burn. We also have other non cash items in our income statement, including changes in derivative and warrant liabilities. As a result, we are posting a $6,500,000 net income position for the Q2 of 2024.

Speaker 3

Moving on to our capital raise announced this afternoon. We made a series of transaction last year and in early 2024, where we substantially reduced our outstanding notes balance, but more importantly, we brought in $19,800,000 in new investments from a core group of large institutions. We are happy to see these same institutions adding an additional $60,000,000 to their capital commitment Bayer. The transaction is structured as an additional $16,000,000 contribution from our note holders to the existing facility to be provided in tranches of $4,000,000 increments as needed by the company. This allows us to raise complementary capital from other sources, if available, and preserve this funding as required.

Speaker 3

In addition, there's a large equity component to this capital raise from convertible features and warrant solicitation, highlighting a strong focus on the future value of our stock. We and our investors view and structure this transaction as a bridge to an anticipated pharma partnership and we're excited by what lies ahead for Bayer. With that, I will now turn the call back over to Adi.

Speaker 2

Thanks, Eric. We're actively working towards completing our 1st pharma partnership for the Biojet platform and we look forward to sharing more. And for BT600 and the NaviCap platform, we're preparing for the next stage of clinical development as we work to break the therapeutic ceiling in UC. Operator, we're now ready for questions.

Operator

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. The first question is from John Vandermosten with Zacks. Please go ahead.

Speaker 4

And good afternoon, Adi and Eric. I want to start out with a question on just the topics of negotiation with your partnership. I know you can't say too much about it, but is it revolving around market assumptions, pricing, penetration, technical execution or I'm just wondering kind of how the talks are going and what are the main areas of focus?

Speaker 2

Hi, John. Yes, the discussions are narrowing. So they did start very broad with all the things you're talking about. But they are starting to narrow and we're trying to figure out the best way to work with potentially more than one partner and how that would work. So we're getting there.

Speaker 2

Would love to tell you more, but it's kind of difficult. We're really close to the end of it. And so hopefully, we'll be able to share fairly soon.

Speaker 4

Great. Exciting times for that. And then I had a couple of technical questions about the results from the VT600 trial. When we look at the uptake of the drug from the oral versus when it's given through the pill. In one way, it's getting to the tissue through the vasculature.

Speaker 4

And the other way is through direct contact with the tissue. And I'm wondering if there's any if you looked at that at all and have anything to say about the difference in the way it kind of gets to where it needs to go?

Speaker 2

Interesting question because for us that is the core of why we believe we can do what they have not been able to do, which is get a lot more tissue where I mean drug where it matters. So Xeljanz or oral tofacitinib basically gets absorbed just after the stomach in that small GI tract, which is where a lot of these oral medications get absorbed. Lots of vasculature, it goes in to the entire blood system and certainly the blood circulates everywhere, including the colon. So it comes in through the blood into the colon and you get to a certain quantity. And all the published data shows what quantities they get to.

Speaker 2

So we are able to compare because there's enough publications that show, hey, if you had a 10 mg dose and if you had it twice a day, how much do you get in the tissue? And the difficulty there is, if you want to increase that, how do you do that? And they've tried. So on our QOL events, I think it was Doctor. Fagan, who also mentioned that, look, people who did these drug trials also tried 30 mgs and got better outcomes response.

Speaker 2

However, with the toxicity, the adverse events were worse. And so the approved label is 10, twice a day. So 20 mgs and not 30. All of these telling you look through the blood, you get to the colon, but in order to get enough, you just cannot dose high enough. We get past the small intestine into the colon and when we drop the drug along the colon, one of the concerns was would you actually have uptake in the tissue.

Speaker 2

So when it goes through the tissue, again, in that KOL event, there's actually some really nice how it works, presentation done by Doctor. Sands as well as there's some pictures. So if you look it up, it goes through the tissue and comes out some of it into the blood. And so our when we noticed first time is about 6 hours into the dose that you start seeing drug in the blood and then it peaks around 8 to 10 hours. So it's over time getting more and more absorbed in the tissue and coming out of the blood.

Speaker 2

Being in the blood systemically is not great. You need just a really small amount, not the high amounts. So we can get large quantities into that tissue that we need to reach without having to get a lot into the blood. And that was the beauty of it. So if you look at it, it's there is some information in clinical trials already that says more would give you better outcomes.

Speaker 2

And you can compare with other JAK inhibitors also where they keep dosing higher and higher, response is great, it's the adverse reactions they have to stop. So the fact that we can get extremely high tissue exposure with very small systemic exposure is a big deal. And we did walk through how we got that information, partly in the KOL, partly in the decks. And also I encourage people to look it up. It's really exciting.

Speaker 2

We were thrilled with what we saw exactly what we hoped for.

Speaker 4

Great. And that was a good technical description there. And then kind of on the same line, when you take the oral product, that's already approved, the entire amount of drug is processed to the body. But when you're using the mechanical pill, not all of it is really processed, some of it passes through. Have you done any work to estimate how much of the drug kind of passes through and not and doesn't touch upon the body at all?

Speaker 4

Or is that something that's very difficult to measure?

Speaker 2

Interesting question. So we do have some of that information. So we collected all these different things and we'll be sharing more information. Majority of it does get absorbed in the colon. Some of it in sometimes does come out the other end without getting absorbed, but we did collect that information.

Speaker 2

We know because we dropped the load at the beginning entry to the colon and over time it crosses the entire colon and remember we took biopsies, so we know it went all the way to the end of the colon. The majority of it does get absorbed and the small quantities that come out and we'll share some more of that data in the coming conference as we mentioned. So we do have that and we'll continue to collect more of that information to see how much of this drug goes in tissue and what if any comes out the other end. Great.

Speaker 4

All right. We're looking forward to it. And thank you, Eddie.

Speaker 2

Thank you.

Operator

Thank you. The next question is from Joe Pantginis with H. C. Wainwright. Please go ahead.

Speaker 5

Hey, everybody. Good afternoon and thanks for taking the question. So, two questions. First is a logistics question and second is a perspective question. So on the logistics front, in anticipation of more advanced clinical studies, whether in your hands or in a partner's hands, I was hoping you could discuss your relative current capacity and intermediate needs for device availability and manufacturing?

Speaker 2

Yes. So you're talking about NaviCap?

Speaker 1

Yes.

Speaker 2

Yes. So NaviCap, which is being used in our BT600 for the UC trial, We have some contract manufacturers already that we work with. We have our internal team that has the expertise to build a handful of these, but we even already work with some contract manufacturers that we could make several 100 and we plan to be able to make several 1,000. We're ready to do that in the short period of time. But in the meantime, we're working on further automation, so that when we need them, we'll be able to make plenty of these.

Speaker 2

So all of that is in motion for the next short period of time, which would be 12 to 18 months. The ability to make a few thousand of these pills exists and we have those vendors and contract manufacturers set up to go. So we don't see that as a huge thing. Down the road though, we do need to do a little more work as we have started building the automation required to build to be able to make the 100 of 1000 that we would need to down the road.

Speaker 5

That's very helpful. Thanks for that. And then, the perspective question is, I was hoping you can provide some information because obviously with Biojet, the bioavailability is one of the key attributes of the asset. Now some of the data or a lot of the data that you put out there and you talk in your press release also as a reminder, you're seeing in the range of 40% bioavailability. So I was hoping you could offer up some perspective as to how that really compares to IV formulations of drugs?

Speaker 2

Wow, It is it's really interesting. So, I can just look back to this when our Head of Research, Sharath was presenting. There were others on that panel. They were from all a lot of large pharma companies. They were all talking about the most commonly used methods of trying to make these available through permeability enhancers, through entire coding, all of those, they end up being sort of single digits or mid single digits and it's really hard to get that beyond.

Speaker 2

There are some technologies that have claimed to have higher numbers, but there's nothing that has consistently shown the ability to reach even double digits. So it's basically comparing to under 10% for things that potentially could be done reliably. And for us to be able to have a technology, which is what Biojet is, the platform where we can essentially take your formulation that you currently use in your needle based delivery system and get close to 40%. So when you compare to IV, IV being the gold standard, subcu injection ranges in sort of 50% to 60% of IV. And so getting to 40% of IV, it's almost as good as a subcu injection.

Speaker 2

We think that's phenomenal and so do our collaborators and the fact that we can do this with such minimal manipulation of whatever formulation you have is another big advantage. Over time, we see this as being applicable to so many places. We just got to get to that step 1 and step 2, which is coming up really in the near term. So thanks for that question. Perspective wise, we're thrilled.

Speaker 2

We keep looking at all these different places for others to show a broadly applicable platform that could do even double digits and it's hard to see. We don't see them.

Speaker 5

Great. Thanks for the added details.

Operator

Thank you. As there are no further questions, I would now like to hand the conference over to Adi for closing comments.

Speaker 2

Well, I want to thank everyone for joining us. We look forward to keeping you updated as we continue to advance our programs. Good afternoon.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time.

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