Cytocom, Inc.
Q2 2015 Earnings Call Transcript

Published: 12 Aug 2015

[Operator:]

Greetings and welcome to the Cleveland BioLabs Second Quarter 2015 Investor Update Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded and webcast. I would now like to turn the conference over to your host, Rachel Levine, Vice President of Investor Relations. Thank you, Ms. Levine, you can now begin.

[Rachel Levine:]

Thank you and good morning, everyone. Joining us today are Dr. Yakov Kogan, Chief Executive Officer; Dr. Langdon Miller, President and Chief Medical Officer; and Mr. Neil Lyons, Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind all listeners that throughout this call, we may make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or the successful execution of the company's strategic plans, and involve risks and uncertainties. Additionally, I want to emphasize that some of the information discussed on this call, particularly our financial and cash outlook and our forward-looking development plans are based on the information as of today, August 12, 2015 and that actual results may differ materially from the expectations and assumptions discussed today as a result of various factors. Such risks, uncertainties and factors, include the risks outlined in our company's filings with the Securities and Exchange Commission, including our most recently filed 10-K, 10-Q and S-1. The information provided in this conference call should be considered in light of such risks. CBLI does not assume any obligation to update information contained in this conference call. Dr. Kogan will open this morning's call with a review of recent events and pass the call to Dr. Langdon Miller to share additional updates on our clinical program. Mr. Lyons will then provide financial results for the period; update the financial outlook and hand the call back to Dr. Kogan, for closing remarks. We will then host a Q&A session. At this time, I'll like to turn the call over to Dr. Yakov Kogan, CEO. Please go ahead.

[Yakov Kogan:]

Thank you, Rachel, and thank you to everyone for joining us this morning. This has been both busy and exciting time for us. We have achieved several developmental milestones followed to programs. We have simplified our corporate structure, the sale of our equity interest in Incuron. And most recently, we have secured a 25 million financing from a strategic investor Mr. David Davidovich, who values our team and believes in conventional potential of our science and pipeline. We are very pleased to have Mr. Davidovich an experienced venture capital investor in healthcare, technology and our sectors as a partner. This additional financial resource behind us, we believe we are all well positioned to pursue commercialization of Entolimod's biodefense indication, our pre-Emergency Use Authorization or pre-EUA dossier was submitted to FDA for the review in June and the division has already started its evaluation. Pre-EUA is a regulatory path through which the FDA determines that certain unapproved medical product may be used in an emergency when there are no adequate, approved, and available alternatives. The FDA does not have a PDUFA deadline to complete the review for a pre-EUA application. However, we currently anticipate the review process less than six to nine months depending on the extent of FDA’s comments and questions. We cannot guarantee any timeframe or a successful outcome but we believe our data very strong and our team has worked hard to put together a compelling submission in lined with our previous FDA discussion. We do not intent to comment on details of the review process until it is completed and/or there is a definitive outcome. Products with a pre-EUA status can be purchased by the U.S. government for stockpiling in the event of a disaster. We believe that achievement of a pre-EUA status in the United States will facilitate Entolimod's commercialization in the U.S. as well as partnerships and boost interest in this program from foreign governments. We have already started reaching out to select foreign countries in order to educate and update them on Entolimod's advanced development status and our progress with the FDA. In a separate, parallel initiative, we continue our negotiations with the Department of Defense regarding two proposal supporting additional studies in animals and in humans. This study are no required for pre-EUA status but can support for advancement of Entolimod development to full licensure for filing of Biologics License Application or BLA. These proposals have a combined amount of approximately 15 million and have been recommended for funding by peer reviewers as was disclosed in our prior press releases. While some of these negotiations have been ongoing for several months. It is our understanding that program funding for these proposals need to be allocated by September 30th, 2015, the end of government fiscal year. At this point, I will hand the call over to Langdon to review some of our progress we have made is our clinical programs and what activities we will focus on in the coming months in addition to support our pre-EUA review.

[Langdon Miller:]

Thank you, Yakov. As we mentioned on our last quarterly call, our efforts are concentrated on generating clinical data supporting the potential utility of Entolimod also CBLB612 as immune activators. Preview for our Phase 1 open ideal dose escalation trial of Entolimod in patients with advanced cancer represented in a poster at the 2015 annual meeting of the American Society of Clinical Oncology or ASCO the formal publication summarizing this study is being prepared. Probably six patients were involved in the study at Roswell Park Cancer Center all of previously treated metastatic cancers including colorectal, lung, breast, anal and urothelial cancers. The study evaluated does ranges, subcutaneous dose level for five to 40 micrograms per dose administrate as four or five injections within a two week period. Pharmacokinetics and pharmacodynamic measurements in the immune function samples were to improve post dosing. That stable disease to more than six weeks that observed eight patients with various cancer types, among these three patients with anal, colorectal and urothelial cancers had made that stable disease for more than 12 weeks. Patients exceeded its CD8 positive T-cell activation of stable or decreasing levels of myeloid-derived suppressive cells, accompanied by increased immunostimulatory cytokines G-CSF, IL-6, and IL-8. We believe our observations made in this trail corroborate preclinical findings and support hypothesis that Entolimod has potential as an immunotherapeutic agent. We are now performing a follow-on study in Moscow, Russia, to extend the clinical observations from the higher Entolimod dose levels evaluated in the trial performed in the U.S. Given the safety and immunological data acquired in this completed Entolimod study, we are evaluating combinations of Entolimod with immune checkpoint inhibitors in preclinical models of breast, colon and bladder cancer and continuing to explore the potential for Entolimod as a local or intravesical therapy for non-invasive bladder cancer. Our preclinical experiments with Entolimod in combination with immune checkpoint inhibitors are ongoing while immune checkpoint inhibitors are delivering greater results in several challenging indications. Overall tumor response rates are only in the range of 20% to 30%. We believe there is an opportunity to increase response with the addition of another immunotherapy like Entolimod as it could improve immune response enhanced the efficacy of the strides. Our goal is to create a compelling data package for potential partners. With the recent funding, we are now also moving the preparation to study Entolimod is a local therapy in non-invasive bladder cancer. As we have previously discussed, current first-line therapy for this indication is an immunotherapy agent targeting a different toll-like receptor. Unfortunately, recurrence rates for that drug are high, leaving patients without adequate treatment options. We believe that bladder cancer may be a particularly interesting indication for Entolimod given the high level of expression of Entolimod's target receptor in the bladder and the ability to assess potential response in a Phase 1 study through [indiscernible]. The FDA has also been encouraging new entrants into the field. We do have preclinical data for this indication that need to complete appropriate IND-enabling studies before moving into the clinic. Our newest immunotherapy initiative for Entolimod is to explore its potential use as a vaccine adjuvant. As we mentioned on our last call, any vaccines require an adjuvant to endues sufficient immune response and there is an opportunity for the enters of new vaccine boosters combining classic adjuvant with immunomodulators like Entolimod. We have filled intellectual property clears in this area already have been working with one top leader in the anti-addiction space was NIH and NIDA funding to run clinical studies. Our goal is to validate the use of such adjuvant for many vaccine applications and we’ve working on additional academic or commercial collaborations to generate such date. Let’s now turn to CBLB612. We recently release top line date from a Phase 1 single-blinded, randomized, placebo-controlled, healthy-subject study conducted in Russian Federation. Analysis of data from the 56 healthy volunteers involved in the study indicates single subcutaneous injections in CBLB612 with doses ranging from 2.5 to 4 micrograms generally well tolerated with a 4 microgram dose identified as the maximum tolerated dose. Single injections of CBLB612 reduce dose dependent increases in absolute neutrophilia counts lasting approximately 20 hours. Administration of the drug also resulted in rapid, dose-dependent increases of plasma levels to specified cytokines, including G-CSF, IL-6, IL-8, IL-10, inducible 1-alpha. As expected, cytokine levels pretend to base line several hours after administration of the drug. We believe an opportunity may exist for CBLB612 to offer a single-dose alternative to existing hematopoietic blood factors such as G-CSF, which comprise of multi-billion dollar market in support of chemotherapy administration. G-CSF modestly shortens the duration of chemotherapy-related neutropenia, but does not improve thrombocytopenia or anemia and does not provide antitumor efficacy. Unlike G-CSF, which acts specifically to mobilize immunocytes and increased our production and decreased our generation time. The potential utility of CBLB612 to countermine suppression results from Toll-like receptor 2 mediated myelo protective and myelo restorative effects as demonstrated in studies performed in mice and non-human primates experiencing life myelosuppression, due to whole body radiation. Recently preclinical research with CBLB612 also indicates the stimulation of Toll-like receptor 2 and 6 and enhance efficacy. The next step of this program includes a Phase 2 study of CBLB612 in a clinical mile of chemotherapy induced myelosuppression. The study will be supported by an existing contract with the Russian Ministry of Industry and Trade. We are working on the protocol now and hope to launch this trial later this year. At this point, I will hand the call over to Neil to review the financials.

[Neil Lyons:]

Thank you, Langdon. For Q2, our total revenues were approximately 330,000 compared to approximately 550,000 in the second quarter of 2014. Six months revenue decreased to approximately 900,000 compared to 1.9 million for the same period last year. These decreases related primarily to the deconsolidation of Incuron for the fourth quarter of 2014. Research and development expenses for Q2 were 1.6 million compared to 2.3 million in the second quarter of 2014. 300,000 of this decrease was due to the deconsolidation of Incuron and the remainder due to less outsourced research activity on our pipeline. Six months research and development cost decreased to 3.2 million compared to 4.8 million for the same period last year for similar reasons. For Q2 2015, general and administrative expenses decreased by 700,000 to 1.6 million compared to 2.2 million in the second quarter of 2014. 300,000 of this decrease was due to the deconsolidation of Incuron. Compensation expense decreased by 200,000 and professional fees also decreased by 200,000. Six months general and administrative costs decreased by 800,000 to 3.9 million compared to 4.7 million for the same period last year. 500,000 of this decrease was due to the deconsolidation of Incuron. Compensation expense decreased by 200,000 and recurring professional fees decreased by 100,000. Let’s now review our existing liquidity and capital resources. On July 9, the company sold approximately 6.5 million shares of the company’s common stock to a single individual investor David Davidovich for 25 million or $3.80 per share which was 21% training to the trailing 60 day. And on June 30th, the previously announced right to purchase our remaining equity interest in Incuron for 1 million was exercised with the frontage of which were received in July. Additionally, we have elected to prepay the outstanding obligations under the Hercules Loan which will amounts approximately $2 million. Considering these transactions and an estimated 1.5 million in transaction cost associated with the sale of equity. The pro form June 30th, 2015 cash, cash equivalent and short term investment amounted to 26.1 million, 1.3 million of which was restricted for the use of consolidated joint venture Panacela leading 24.8 million available for general use. We currently have approximately 10.7 million shares of common stock issued in outstanding. At June 30th, we had 1.4 million in those funded and unfunded contract backlog all related to contracts of the Russian Federation. And as Yakov mentioned, we continue to negotiate approximately 15 million in new contracts with the Department of Defense. Now moving on to historical cash burn and cash guidance, please refer to table of non-GAAP cash burn measures included in our earnings release this morning for a reconciliation of these non-GAAP measures to the comparable GAAP measures. Was in posted email that Incuron is no longer part of our consolidations, we will adjust cash burn on a consolidated basis which does not materially differ from our previous standalone guidance that excluded Panacela. Our consolidated average monthly cash burn was 990,000 for the second quarter and 990,000 for the - sorry 900,000 for the six month period in line with our guidance of 1 million on average per month. Respectively, we anticipate modest increases in R&D spending compared to historical rate, offset by the elimination of the Hercules debt service of approximately 76,000 per month due to the loan repayment. And we expect our current financial resources to fund operations for more than a year. That concludes my comments, Yakov, please continue.

[Yakov Kogan:]

Thank you, Neil. We are focused on commercializing Entolimod for biodefense and achieving clinical validation for Toll-like receptor platform. We have made great strides towards build of those goals. And these recent inputs of funding, we believe we have well positioned for success. We will now open the call to questions. Operator, please begin the Q&A.

[Operator:]

Thank you. [Operator Instructions] Thank you. Today’s call will be available until August 26, 2016. You may access the call by dialing 877-660-6853 and entering ID number 13613931.The webcast will also be archived in the IR section of the Cleveland Biolabs’ website. This concludes today’s call. Thank you for your participation. You may now disconnect your lines at this time.