Armata Pharmaceuticals, Inc.
Q2 2017 Earnings Call Transcript

Published: 15 Aug 2017

[Operator:]

Welcome to the AmpliPhi Biosciences Business Update Call. [Operator Instructions] As a reminder, this conference is being recorded August 15, 2017. I would now like to turn the call over to Matt Dansey. Please go ahead.

[Matt Dansey:]

Thank you, Skinner. Good afternoon and welcome to our conference call. This is Matt Dansey, Business Development Manager at AmpliPhi Biosciences. Joining me on today's call are AmpliPhi's Chief Executive Officer, Paul Grint; our Chief Operating Officer, Igor Bilinsky; and our Chief Financial Officer, Steve Martin. During today's call, we will be making statements related to our business that may be considered forward-looking. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based upon AmpliPhi's current expectations and involve a number of risks and uncertainties including the risks and uncertainties described in our Form 10-Q for the quarter ended June 30, 2017, as filed with the Securities and Exchange Commission. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the time they were made. Furthermore, the information discussed by AmpliPhi in this call is accurate as of today, August 14, 2017. Except as required by law, AmpliPhi disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Now, I'd like to turn the call over to our CEO, Paul Grint. Paul?

[Paul Grint:]

Thanks Matt. Good afternoon everyone and thank you for joining us. Today, I'm pleased to be speaking with you on my first conference call as CEO of AmpliPhi Biosciences. I joined the AmpliPhi Board of Directors in November 2015, have been recognized the potential of bacteriophage technology in the battle against antibiotic resistant. Now I am very pleased to be working even more closely with the AmpliPhi team on the effort to develop our highly promising technology and leverage my expertise that includes the development and commercialization of anti-infective products for multi-drug resistant infections at [Cerexa]. This is a pivotal time in the global effort to combat antibiotic resistant. You may be aware that the threat of antimicrobial resistant to global health and economic growth was the priority topic at the G 20 Summit held last month in Hamburg, Germany. By Summit close, world leaders had called for the formation of the Global Antimicrobial Resistance Collaboration Hub to investigate actions that will maximize the impact of existing antimicrobial research initiatives and support the advancements of new ones including exploring market incentives to encourage new product development and commercialization. Our bacteriophage technology has promised as an important therapeutic approach in treating patients who suffer from multi-drug resistance infection both by precisely targeting the pathogenic bacteria and by restoring antibiotic sensitivity. In June, we presented AmpliPhi's approach on the panel on Antimicrobial Resistance at the BIO International Convention. The panel included representatives of Big Pharma, biotech companies, and academic opinion leaders and focused on the search for new technologies such as phage and stemming the tide of multi-drug resistance pathogens and improving the utility of our current clauses of antimicrobial drugs. We also joined BIO's Antimicrobial Resistance working group which comprises both large pharmaceutical companies and early stage projects at Norwegian companies like AmpliPhi to support means of developing and bringing innovative new medicines to patients. In June, BIO released the white paper on Antimicrobial Resistance incentive policies to consideration by U.S. policymakers. This document outlines the economic challenges in product development and presents a many of general incentives that policies could result to advance a development of a range of products. We believe these joint efforts by industry and governments to promote development of innovative strategies will be critical in fostering advancements of promising technologies such as bacteriophage therapies. I am also pleased to report that bacteriophage has an important therapeutic approach to Antibiotic Resistance is also gaining greater acceptance within the scientific, medical, regulatory and public policy communities. Last month, the FDA's senses CBER for biologics, evaluation, and research and the NIH's National Institute of Allergy and Infectious Diseases sponsored the special workshop specifically on bacteriophage technology. The two-day event featured presentations by academic, regulatory and industry leaders in phage technology covering topics like recent regulatory considerations, and clinical case studies. Presenting AmpliPhi was our senior scientist, Susan Lehman who discussed the many advances we have achieved in overcoming the commonly acknowledged challenges in phage developments. It's against this dynamic environment that we're implementing a well conceived plan to advance our phage therapies towards regulatory approval. Our strategy is to utilize single patients expanded access guidelines from the FDA and other regulatory agencies to treat serious life-threatening infections in patients who have limited or no treatment option. With those comments, I'd like to turn the call over to our Chief Operating Office, Igor Bilinsky to discuss our plans in greater detail.

[Igor Bilinsky:]

Thank you, Paul. Good morning, good afternoon everyone. As Paul mentioned, our strategy for the next 6 to 12 months is to provide all therapeutic candidates AB-SA01that targets Staphylococcus aureus and AB-PA01 that targets Pseudomonas aeruginosa to patients under the expanded access regulatory guidelines, also known as compassionate use that I established by the FDA in the U.S. and by the Therapeutic Goods Administration in Australia. As we had previously reported, AB-SA01 demonstrated activity against 97% of multi-drug resistant clinical isolate globally over a multiyear period and AB-PA01 against 70% to 80% of such multi-drug resistance Pseudomonas clinical isolates. Drug resistance Staph and Pseudomonas bacteria are both on the World Health Organizations priority pathogens list published earlier this year. We plan to provide AB-PA01 and AB-SA01 that upgrade used at our GMP manufacturing facility to patients who suffer from serious or life-threatening multi-drug resistant infections such as endocarditis, bacteremia, prosthetic joint infections, cystic fibrosis, complicated urinary tract infections and others. Our objective is to treat at least 10 patients with AB-SA01 or AB-PA01 by the end of 2017 and additional patients in early 2018. Helping such seriously ill patients who don't respond to conventional antibiotics will also enable us to demonstrate real-world clinical evidence without therapeutic candidates. Based on the clinical and microbiological data that we're currently collecting, we plan in the first half of 2018 to select lead indications for further clinical development and in consultation with the FDA and other regulatory agencies define the potential path to regulatory approval. As you may recall in a meeting with AmpliPhi earlier this year, the FDA expressed a commitment to working with us to design a regulatory path for phage therapies. Positive data over the next 6 to 12 months may enable us to initiate Phase 2 studies of AB-SA01 and/or AB-PA01 which may potentially be registrational studies as early as the second half of 2018. Implementation of this strategy is proceeding as planned. We recently supplied AB-PA01 to a major U.S. teaching hospital for patient suffering from life-threatening multi-drug resistant Pseudomonas lung infection. Under an emergency IND along with the FDA, the patient received multiple doses of AB-PA01 administered intravenously and by an inhaler. The treatment was well-tolerated. We're pleased with the results so far and the analysis of the data is ongoing and we anticipate that the academic and clinical team involved in this patient's treatment will submit the detailed results for presentation at the future medical conference. We achieved several important milestones for AmpliPhi in this case. It was the first-in-human administration of our AB-PA01 therapeutic candidate. It was also the first intravenous and inhaled administration of AB-PA01. As a final topic, we're pleased to share with you that our manufacturing facility successfully completed the periodic regulatory GMP inspection and our GMP certification was renewed. AmpliPhi has the world's only GMP certified facility that is dedicated to manufacturing bacteriophage therapeutic candidates for human use and this certification enables us to continue supplying drug product to support our strategy. Now I'd like to turn the call over to Steve Martin for review of our financial results. Steve?

[Steve Martin:]

Thanks Igor. I'd like to share some highlights from our financial results provided in our quarterly report filed with the SEC today and as announced in our press release. In May 2017, we completed an underwritten public offering and we received net proceeds of approximately $9 million after underwriting commissions in all related expenses. Cash and cash equivalents were $9 million as of June 30, 2017 compared to $5.7 million as of December 31, 2016. With this financing and based on our updated operating plans focused on single patient expanded access treatments, we believe our existing cash resources will be sufficient to fund our operations until mid 2018. The company currently has 8.7 million common shares outstanding. We have made operational changes in 2017 to reduce costs and align our spending with the focus on precisely targeted bacteriophage therapies. We have decreased our spending in 2017 in R&D and G&A and continue to focus our resources on clinical data. R&D expenses for the six months ended June 30, 2017 decreased by $0.6 million to $2.6 million from $3.2 million for the six months ended June 30, 2016 due primarily to approximately $0.4 million of expense recorded in connection with assets acquired from Novolytics Limited in 2016. The decrease results was due to a $0.4 million decrease in costs from the completion of the CRS Phase 1 clinical trial in 2016 and a decrease in recruiting costs offset by a $0.2 million increase in payroll related costs. G&A expenses for this first six months of 2017 decreased by $0.4 million to $4.7 million from $1.5 million for the six months of 2016. The decrease was primarily attributable to declines of $0.9 million in non-cash stock-based compensation expense and $0.5 million in legal and professional fees partly offset by $0.4 million severance charge, a $0.3 million increase in payroll related costs and a $0.4 million non-cash charge related to the fair value of the roughly 523,000 shares of our common stock to be potentially issued to certain former Series B preferred shareholders. Operating expenses included a non-cash charge totaling $5.8 million for the impairments of intangible assets and for the excess of book value over the competitive fair value of those assets as of June 30, 2017. The imperative assets were recorded in connection with acquisitions of predecessor companies in 2011 and 2012. With that, I'd like to turn the call back to Paul.

[Paul Grint:]

Thanks Steve. To summarize, we're making good progress on our strategy to demonstrate clinical validation of phage therapy under expanded access regulatory guidelines. We are on track with our objective of treating at least 10 patients by the end of 2017. We expect to treat additional patients in early 2018 to further expand our clinical datasets ultimately demonstrating compelling clinical proof-of concept of our phage therapeutics AB-SA01 and AB-PA01 for Staph and Pseudomonas. Importantly our therapies hold tremendous promise to provide treatment for patients suffering from antibody resistant infection who have few if any other options. With those comments, I’d like to now open the call to your questions. Skinner, could you help us please.

[Operator:]

[Operator Instructions]

[Paul Grint:]

While waiting for our first question, I'd just like to mention that we will be presenting at several investor conferences during September and October. We will presenting at the Rodman & Renshaw Global Investment Conference on September 11 in New York. Also presenting at the BIO Investor Forum held October 17 and 18 in San Francisco, and we’ll also be attending Dawson James Security Small Cap Growth Conference in Jupiter Florida on October 18 and 19. Thank you.

[Operator:]

And first question comes from Joe Pantginis from H.C. Wainwrigh.

[Joe Pantginis:]

First obviously it's unfortunate for the patient to have to reach this level, but it is good news that the PA01 has been dosed in the first patient and so it's good you’re going to be getting some info from that. So first question is with regard to the nebulizer, is this is something that was used as a standard device or something that was characterized more specifically for your product and will you have a standard device going forward?

[Paul Grint:]

So Joe I'll ask Igor to comment in a bit more detail thank you for the question, good question. We have done a lot of work looking at the appropriate compatibility with nebulization devices and I am going to handover to Igor to give you a bit of the detail of that.

[Igor Bilinsky:]

We have explored a number of various nebulizers with the various mechanisms of action. We actually are settled on one. For this patient we used a similar one but that’s commercially available. For the future we plan to switch to custom that's more efficient and that could potentially be part of the ultimate product for inhaled administration for example for this type of lung infections or for patients with cystic fibrosis.

[Joe Pantginis:]

And then I know you're going to look to hold on to the data for medical meeting but do you have any further clarity with regard to how the patients doing I know you said you’re pleased with the results?

[Paul Grint:]

Actually at this point all we can really say we’re pleased with the results. I mean clearly these treatments are primarily driven since it is an emergency IND driven by the key physicians that back the academic institution. So we obviously need to wait for them to comment appropriately on the patient's well-being. We'll obviously take the first available opportunity to do that whether it's a medical meeting or as it happened before maybe the institution might decide to press release the information.

[Joe Pantginis:]

And my last question if you don't mind is and a question certainly doesn't apply to PA01 or SA01 because they’ve already been characterized but as you look to more potential custom stage or cocktails for compassionate use, can you describe a little bit with regard to the minimal characterization process that would be required from a regulatory standpoint even as far as sequencing before or after other minimal characterization you would need?

[Paul Grint:]

Again I’ll let Igor to speak in a little bit more detail to that in a moment. Yes, we got - we obviously have two phase therapeutics now and that we're very pleased with and Igor briefly spoke to the obviously the antimicrobial coverage that they provided. The good news is in our toolbox so to speak we have the potential to produce therapeutics against obviously other important resistant bacteria particularly a number of those that are in the WHO pathogen priority list with. Looking internally now working out what should be the next one or two priorities for us and that is what we definitely talked about and have a plan to undertake. So Igor maybe to talk a little bit about the characterization.

[Igor Bilinsky:]

And Joe and great question and maybe I start initially by saying that as Paul and I mentioned for the next step six to 12 months our primary focus is on the Staph aureus multi-drug resistant Staph aureus and multi-drug resistant MRSA as well as multi-drug resistant Pseudomonas. And it’s for several reasons on the one hand both of these infections are high priority. For example on the WHO list both of them has significant unmet need in terms of the number of patients who don't respond to antibiotics and both of them have a pretty significant incidence. So it’s both the high unmet need for patience and the ultimately the market opportunity. And we also happen to have two predefined products SA01 and PA01 that are sequence characterize manufactured under GMP and SA01 covers 97% of global Staph multi-drug resistant clinical isolates and PA01 70% to 80% of Pseudomonas. So basically we have - it’s a precision treatment, but we can use it predefined GMP manufactured product to satisfy the needs of these patients. That’s how focused for the near term for the next six to 12 months before we expand to other bacterial pathogens other infections. And again the reason is that we’d like to pave the path to regulatory approval and the easiest way to do that maybe with one of these two products that are manufactured under GMP and are well defined as therapeutic agents.

[Operator:]

[Operator Instructions] Our next question comes from David Bautz from Zacks Investment Research.

[David Bautz:]

So for the patients that you're treating under the expanded access guidelines. Are these sent to you by the doctor - did the doctor's approach you or is the company have a mechanism where you can actually try to identify patients to include in the study?

[Paul Grint:]

This is Paul Grint speaking. Great question. So what we’ve done as we are in the process we have some institutions already and we’re in the process for expanding that, if you like setting up a network with key infectious disease physicians who obviously have an interest and an insight with regard to the potential of phage therapy. And they are the ones that obviously are in their given institutions are called in to look at the drug-resistant infections in patients that difficult to treat. So basically they are the ones that identify the patients. We obviously have a number of things in place then to facilitate the rapid provision of the phage treatment then for those patients. So we have a network and we’re expanding that network currently with sites both in the U.S. and Australia that’s how we’re approaching it.

[David Bautz:]

Are you at the point where you’re just accepting essentially all cases that are sent your way or are you able to be more choosy?

[Paul Grint:]

I wouldn't call it more choosy, but I think we are focused more on certain types of infection, I mean as Igor indicated in his remarks there are a number of infections now that are problematic for infectious disease physicians to treat and they’re obviously the ones that they talk to us about. Say for example resistant Staph infections and these prosthetic joints infections with obviously with the baby boom and in the aging population there are more and more joint replacement happening infectious - those joints can infect to back the problem to keep it in MRSA infection. Unfortunately with the significant increase we’re seeing in certain geographies of increase in intravenous drug use, we’re seeing a rising problem again of resistant endocarditis or bacteremia in relatively young individuals. And so we tending to focus on those types of diseases because these are the ones that we hearing from the key infectious disease physicians are ones that very difficult to treat and are ones where there is a clear medical need.

[David Bautz:]

And one last quick question about the patient that was recently treated since you mentioned they had a Pseudomonas lung infection would you be willing to say whether they were a cystic fibrosis patient?

[Paul Grint:]

I think at this point we would rather not talk about that the medical history of the patient. I think that's not to say again as I said [indiscernible] the actual institution where the patient was treated decides to say more about the medical background and obviously the outcome of that individual we’ll have to remain little quite.

[Operator:]

There are no more questions at this time. Please proceed with any closing remarks.

[Paul Grint:]

Well so thank you very much for your time everybody and appreciate you listening and the questions.

[Operator:]

This does conclude today's call. You may now disconnect. Thank you for your participation.