Cytocom, Inc.
Q2 2021 Earnings Call Transcript

Published: 16 Aug 2021

[Operator:]

Good morning, ladies and gentlemen. Thank you for joining us for Cytocom, Inc.'s Second Quarter 2021 Financial Results Conference Call. Following prepared remarks from the company, we will open the call for questions. I would now like to turn the call over to Cytocom’s Senior Vice President of Investor Relations, Nichol Ochsner. Nichol?

[Nichol Ochsner:]

Good morning everyone and thank you for joining today to discuss our second quarter financial results and business update. Earlier this morning, Cytocom, Inc. issued a press release detailing the financial results for the former Cleveland BioLabs for the three and six months span ended June 30, 2021, which we encourage listeners to read. The press release is available on the company's Web site, cytocom.com, in the Investors section. Second quarter results for Cleveland BioLabs are also included in a 10-Q this morning, which is available on sec.gov. I would like to remind everyone that certain statements made during this conference call maybe forward-looking statements. Such statements are based upon current expectations and there can be no assurance that the results contemplated in these statements will be realized. Actual results may differ materially from such statements due to a number of factors and risks, some of which are identified in our press release, quarterly and other reports filed with the SEC. These forward-looking statements are based on information available to Cytocom today, and the company assumes no obligation to update statements as circumstances change. An audio recording and webcast replay for today's conference call will be available online in the Investors section of the company's Web site. With us on today's call is Michael Handley, President and Chief Executive Officer of Cytocom, Inc. who will provide an update on Cytocom's recent corporate and clinical achievements. Mr. Handley will also discuss Cytocom's financial position following the completion of the merger between Cleveland BioLabs and formally private Cytocom completed on July 27, 2021. Mike, please go ahead.

[Michael Handley:]

Thank you, Nichol, and thank you to everyone for joining our conference today, particularly those who are dialing in for the first time. Today marks the first time I'm speaking to investors as the CEO of the new publicly traded Cytocom, Inc. The merger between Cleveland BioLabs and formerly the private Cytocom, first announced in October 2020, was completed this summer on July 27 and the shares of our common stock under our post merger name Cytocom, Inc. are currently trading on NASDAQ under the ticker symbol CBLI. The completion of the merger marks a long awaited milestone for Cytocom, representing more than a year of hard work and dedication by many talented people at both CBLI and Cytocom. First, I want to thank everyone involved for their time, their expertise and their perseverance during a time when the COVID-19 pandemic has disrupted so many aspects of our daily life. The SEC filings issued this morning detailed the financial results for Cleveland BioLabs for the second quarter ended June 30, 2021. Further regulatory filings will follow by the end of the month that provide a financial picture for the post merger Cytocom that consolidates the data from Cytocom's legacy operations, Cleveland BioLabs and ImQuest Sciences, a drug discovery and development company purchased by Cytocom last year that is now operating as a Cytocom subsidiary. I look forward to speaking with you again in November when we announce Cytocom, Inc.'s third quarter consolidated financial results. So let me state, this is a very exciting time for Cytocom and our shareholders. We believe that we are now positioned to become a potential world leader in the field of immune modulation. In terms of our financial and cash position, Cytocom is well capitalized. The commitments for over 90 million in debt and equity financing from GEM Global Yield, Avenue Capital, Adit Ventures that we have and will be able to pull down at our own discretion and opportunistically provide capital to advance growth initiatives and further development of our internal pipeline, which should allow us to build on the momentum of recent weeks. The listing of our stock on NASDAQ should raise our visibility among the investment community and public markets, enhancing trading liquidity and driving long-term shareholder value. In the next several months, we expect to initiate clinical trials on four investigational drug assets, including a Phase 3 trial for a lead pipeline candidate, CYTO-201 in Crohn's disease. Cytocom recently announced a drug discovery alliance with the La Jolla Institute of Immunology to leverage a world class research infrastructure, and Cytocom's proprietary AIMS discovery platform to research potential new immune-modulating agents for the treatment of cancer, emerging viruses, autoimmune and chronic inflammatory diseases. We are exploring opportunities for the immune-stimulatory agent entolimod and its next-generation drug candidate GP532. These were core assets inherited from Cleveland BioLabs that we believe have great potential in hematology indications as we will further discuss. Before I go into more detail on our plans for these clinical and development stage programs, I would like to take a moment to provide some background for those of you on the call today who are new to the Cytocom story. Cytocom is a clinical stage biopharmaceutical company creating next-generation immune therapies. These immune therapies focus on immune-modulation and the restoration of immune homeostasis. In simple terms, we believe that an overactive or an underactive immune system can drive disease progression, especially autoimmune disorders, infectious disease and cancer. We're developing drugs to restore and rebalance the immune system. Work is underway to integrate the former Cleveland BioLabs as well as its subsidiaries and joint ventures with the formerly private Cytocom. In the coming months, we'll decide which development programs from Cleveland BioLabs to advance and expect to explore opportunistic monetization opportunities for non-core assets. Furthermore, Cytocom is well positioned to further the development of our clinical stage pipeline and showcase the power of our expanded drug development capabilities. The merger joined two companies, each harnessing different but yet promising technologies focused on delivering immune therapies for oncology, emerging viruses and other indications that treat disease in a manner that no one has pursued before. Toll-like receptors are central to the immune system and immune response, connecting innate and adaptive immune compartments, and playing a key role in fighting disease and restoring immune homeostasis. With Cytocom’s toll-like receptor 4 and toll-like receptor 9 antagonists, and Cleveland BioLabs' toll-like receptor 5 agonist, entolimod and GP532, Cytocom now has one of the largest platforms of toll-like receptors in the pharmaceutical industry. Our pipeline includes eight development and clinical stage immune-modulating assets across 21 potential indications. Among them, several very large multibillion-dollar market opportunities exist, especially in anemia and neutropenia, emergent viruses, cancer and autoimmune diseases. We are pursuing alliances with renowned oncology and immunology research facilities. Last week, Cytocom announced a five-year partnership with the La Jolla Institute of Immunology, where we will provide a total annual discretionary funding contribution of up to 1.4 million annually to secure the use of up to four research laboratories dedicated to the discovery and development of potential new immune-modulating agents. Under this agreement, we will also provide research funding to these laboratories. The alliance with the academic institution with the caliber of La Jolla Institute marks a major achievement for Cytocom and our mission to advance best-of-class immune-modulating therapies. The partnership is keeping in line with the relationship that Cleveland BioLabs has with Roswell Park Comprehensive Cancer Center in Buffalo, New York. Cytocom is well capitalized for its current development programs. The company has approximately 23 million cash on hand currently, and expects the cash position to increase to 30 million by the end of this month, August 2021. We also have additional commitments of 60 million that can be pulled down at the company's discretion and opportunistically. This and other capital resources are sufficient we believe to fund the continued advancement of our current clinical pipeline and drive Cytocom towards multiple value inflection points in the coming months. Over the next 12 months, we have the potential to be transformative in terms of developmental milestones in Cytocom. Our lead investigational drug candidate, CYTO-201, is being studied for the treatment of pediatric patients with Crohn's disease. And it's an inflammatory bowel disease that causes chronic symptoms such as persistent diarrhea and abdominal pain. Studies show that because the signs and symptoms of the disease are unpredictable, patients endure significant emotional, physical and economic burdens. Cytocom completed a productive end-of-Phase 2 meeting recently with the FDA. This was done on July 27 of this summer. We expect to begin enrolling pediatric patients in our Phase 3 clinical trial before year-end 2021. As we previously reported, Cytocom is reviewing in research the development pipeline inherited from Cleveland BioLabs. We plan to evaluate ongoing development requirements and medical needs of their toll-like receptor 5 agonist for acute radiation exposure emergencies. We see a tremendous opportunity additionally for entolimod and GP532 based on the potential that a toll-like receptor 5 agonist has shown in a hematological indication, specifically for the treatment of neutropenia, anemia and cancer patients, which is a multibillion-dollar market. We plan to provide more information about entolimod and GP532 at a later date. Meanwhile, pancreatic cancer Phase 1b/2 clinical trial should begin early next year. We are developing CYTO-401, an agent that is an adjunct to standard of care therapy to extend the duration of disease remission in patients with pancreatic cancer. Cytocom received feedback earlier this month from the FDA regarding our clinical development program and established an advisory panel of oncology experts. We're now evaluating contract research organizations and expect to initiate patient enrollment first half of 2022. And last but not least, we have a PK and safety studies planned for CYTO-205 in acute and post-acute COVID-19. An IND has been cleared by the FDA and Cytocom expects to begin the initial PK in acute COVID-19 in the third quarter of 2021 this year. And we also expect a Phase 2 clinical trial in the post-acute setting for COVID patients in the fourth quarter of 2021 to evaluate safety and the ability to improve disease progression or resolve long-term symptoms in these post-acute patients. Cytocom is finalizing protocols to evaluate CYTO-205 in patients with this post-acute COVID-19 syndrome, often referred to as long-haul or syndrome. This is a market with high unmet need with roughly 30% of all COVID-19 infections developing into long haul or syndrome, Cytocom believes this is a perfect opportunity to use our drug to help patients. Cytocom plans to conduct the trial under the existing IND and expects to begin enrolling patients by the end of this year 2021. As I said earlier today, the management team is very excited for the future of Cytocom and of our shareholders, and we look forward to building our current momentum throughout the second half of 2021 and into 2022. Our ultimate goal as a company is to make a difference in the lives of patients and their families fighting serious illnesses. I would now like to take questions. And joining me for the Q&A portion of this call is our Chief Financial Officer, Peter Aronstam; our Chief Operating Officer, Taunia Markvicka; and VP of Finance, Chris Zosh. With that, I will open up the call to questions. Operator?

[Operator:]

Thank you. We will now begin the question-and-answer session. . Our first question comes from Scott Kronig with Equity Partners. Please go ahead.

[Unidentified Analyst:]

Hi, Mike and team. How are you? Congrats.

[Michael Handley:]

Great. Thanks, Scott.

[Unidentified Analyst:]

I'd like to ask you to just expand a little bit on the first program you mentioned, this pediatric Crohn's initiative. What's the basis for that in terms of patient enrollment, scope of the possible market you're addressing? Is there anybody addressing the pediatric market now for Crohn's? And how could that lead you into an expanded kind of view of Crohn's and other potential IBS issues?

[Michael Handley:]

Great question, Scott. I'll start off and then I'll have Taunia, our Chief Operating Officer comment as well. We believe the Crohn's opportunity is very large. As we all know, Humira, one of the largest selling drugs in the world, has a big portion of their sales based on treating Crohn's disease. Currently, there are no approved drugs without a black box warning for pediatric patients. So there's an opportunity there to be the first drug for pediatric patients without a black box warning. We believe this study in its current structure and form, and as reviewed by the FDA, is the best path forward to getting this initial drug on the market for a large unmet need in pediatric patients. We will be hopefully starting later this fall with first patient in and we believe that we can quickly enroll over the next 12 to 24 months the amount of patients we need to show clinical significance in this patient population. Taunia, would you want to comment further on the detail of this study and the design of this study?

[Taunia Markvicka:]

Sure. Thanks, Mike. I think what's important here in the pediatric population is that we've actually heard also from parents that have children suffering with this disease that they have concerns around giving their children medications that have warnings associated with them that might describe . So there is a real need for this product. And so we have many parents reaching out to the company requesting either access to our medication or participation in our clinical trials. So that's interesting to us. And we hope that that reflects positively in our ability to enroll in the clinical programs. We'll actually conduct a study for induction, which is a 12-week study induction of maintenance, a 12-week study in -- we'll start with older pediatric patients and then we'll transition down to a bit younger pediatric patients with a liquid formulation of our medication. So we look forward to being able to enroll a wide spectrum of pediatric patients here over the next 24 months in order to deliver the results from our induction trial.

[Michael Handley:]

And I'd also like to add on to that. The pediatric indication would allow us Orphan Designation status as well, which is an advantage to us commercially. Scott, does that answer your question?

[Unidentified Analyst:]

Yes. Thanks, guys. I appreciate it.

[Michael Handley:]

Absolutely.

[Operator:]

. This concludes our question-and-answer session. I would like to turn the conference back over to Mike Handley for any closing remarks.

[Michael Handley:]

Great. Thank you, Sarah. As you have heard from today's discussion, in the coming months, we expect to achieve multiple significant clinical milestones as we advance our new expanded pipeline, which includes Cleveland BioLabs assets as well as Cytocom assets and pursue research alliances that, one, validate our approach to immunotherapies and then support further drug development and discovery. By this time next year, we should be treating patients in five clinical trials across four clinical programs, including a Phase 3 trial that we just discussed in pediatric Crohn's patients. Our strong financial position provides a firm foundation to fund our ongoing clinical programs. As you can see, the pieces are starting to fall into place and we look forward to providing periodic updates. I'd like to thank our employees for their dedication and loyalty, our stakeholders and shareholders for their continued support. And I appreciate your time and attention today and would like to extend my sincerest wishes to all in good health. Thank you very much.

[Operator:]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.