Processa Pharmaceuticals, Inc.
Q1 2021 Earnings Call Transcript

Published: 14 May 2021

[Company Representatives:]

David Young - Chief Executive Officer Jim Stanker - Chief Financial Officer Mike Floyd - Chief Operating Officer

[Operator:]

Greetings! And welcome to Processa Pharmaceuticals, First Quarter 2021 Earnings Conference Call and Corporate Update. 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 call is being recorded. I would now like to introduce Jim Stanker, Chief Financial Officer. Thank you, sir. You may begin.

[Jim Stanker:]

Thank you, operator. With me on the call are Dr. David Young, our Chief Executive Officer and Mike Floyd, our Chief Operating Officer. Before we begin, I’d like to remind everyone that a PowerPoint presentation will accompany Dr. Young’s prepared remarks.

[David Young:]

Thank you, Jim. Good afternoon! Thank you for joining us today. Since everyone on this call knows the Processa story, what I plan to do is highlight what we have accomplished so far in 2021, review our clinical drug pipeline, then briefly share what you should be expecting over the next five to six months. I will not be covering all the in-depth details on all the slides. We have presented the first slide before. This is a slide which lays out the overall timeline for the drugs in clinical development. Nothing has changed from what we have stated before. I will be updating you on the status of each drug in subsequent slides. It is important to note that we have achieved our first quarter drug development and corporate goals that we defined for ourselves. Our overall development goal is to move specific drugs closer to FDA submission and we accomplished that. For 449 we selected clinical sites for the Phase 2b Ulcerative NL trial and we have begun to screen patients this week. Similarly, we have selected clinical sites for 6422 and are now initiating these sites. For both trials we are in the process of adding more sites over the next few months. For 12852, we completed our pre-IND, FDA meeting and have begun working on the protocol and IND for the use of 12852 in gastroparesis. And for 11T, our second cancer drug, we have begun to evaluate contract manufacturing organizations to make drug supply and drug product for toxicological and clinical studies. Regarding our corporate goals on the right, we had a number of potential investors who want to invest in Processa. So we raised $10.2 million in a pipe in Q1. This pipe also provided additional cash to further support the study and all our overhead through 2023. We also added more drug development staff and we plan to hire additional staff to support our drug development and corporate requirements over the next 12 months.

[Operator:]

Certainly. .Your first question is coming from Robin Garner. Your line is live.

[Robin Garner:]

Hi! Thank you so much. Good evening and thanks for taking my question. I have a few if I may. First, congratulations on publishing the clinical study design for both 6422 and for 499. I’m curious if you could give us an update on the total number of clinical sites you have enrolled so far, and how many you anticipate needing to achieve the patient enrollment numbers that you’re targeting?

[David Young:]

Hi Robin, this is David. So are you referring to both studies or are you just referring to the 499 which is one we are already starting screening for?

[Robin Garner:]

Yeah, it would be great to hear about both.

[David Young:]

Okay. You know I don’t have the exact numbers in terms of what we are going to be putting into each study, but I can tell you right now in terms of the ballpark numbers. We already have five U.S. sites for 499. We are going to be adding another anywhere from three to four more sites and that will be a combination between U.S. and Europe, right. And it really will depend on which sites they are, whether it will be three, four or five that we have. So we expect to have at least somewhere between six and 10 sites for 499. For 6422, we have a couple of sites we are now initiating, for 6422. We expect to have about four or five sites for 6422 and they will all be U.S.

[Robin Garner:]

Great! Thank you for that additional color. In terms of the interim analysis and again, maybe considering both studies separately, but what kind of data would you be looking to share at that point, at the end of the year and then early next year.

[David Young:]

Okay, so for 6422, the interim analysis is actually going to be looking at if in fact the dose that we think will work for 6422 versus Capecitabine, if that’s doing what we think it should do. All the evidence we have both in preclinical studies, as well clinical studies that we have done before, says the dosing regimen we chose should work, we just want to confirm that. We want to confirm it in a design study that actually looks at the enzyme abilities at BPD, we want to look in terms of metabolism, of all the , etc., so that’s what we expect out of cohort 1 and cohort 2. We will also be able to understand in fact if those doses are tolerated well, right. And so from the ability to tolerate the drugs of Capecitabine at that doses for cohort 1 and cohort 2, the PK information and metabolite information in cohort 1 and cohort 2, we think we’ll get enough information to say we’re doing everything right, we’re going in the right direction, but we will not have the MTD at that time, unless it happens to be cohort 2, but we don’t think it’s going to be cohort 2. So we will not have the MTD determined, but we think this kind of proves that what we believe is right. Our hypothesis is correct and we just have to find that MTD in the next couple of cohorts, so that’s 6422. With 499, the interesting thing about 499 is it’s a placebo controlled trial. So one of the questions that we have, as well as the KOLs have been sharing with us, is that there’s a belief that the placebo group will have no response rate; they will not be responding to the drug. They will not be responding over the six months and they will not have natural healing of the ulcers over six months, because typically it doesn’t occur right in these people. So that’s kind of part of our confirmation, so we’ll be looking at the treated versus the placebo group, and our expectation is that the placebo group will have zero response or maybe one patient randomly and the treated group will have three or four, depending on the numbers. So we expect to actually see some differences between the groups early on, just to make sure we’re going in the right direction.

[Robin Garner:]

Right, thank you for that. And then in terms of 6422, the study design less GI tract tumors, which is actually quite broad. Do you anticipate treating patients that have other cancer types besides colorectal?

[David Young:]

Yeah, so the end indication that we’re going for in the 6422 is metastatic colorectal cancer. That will be the indication. When we go to the pivotal study and when we go further we will be actually just making it a metastatic colorectal cancer. However, given this is an MTD study, typically what I’ve done in the past is I’ve done MTD studies where I choose a wider group of patients, because all I’m trying to determine really is the tolerability of the drug, and whether you had pancreatic cancer or you had any other, you know stomach cancer or colorectal cancer, that doesn’t really matter, because I can determine if you can tolerate the drug, and that’s really what this first study does, it determines the tolerability of the patient for this drug, for these specific doses. So I’m less concerned about getting only colorectal cancer patients. Now we know though that in terms of numbers of patients there’s more colorectal cancer patients than pancreatic cancer patients for example. So we expect to have some colorectal cancer patients in the study. The key to it is all the patients though have to be able to tolerate the drug, there has to be a projection that their survival is long enough to get to the MTD to finish the cycles and there is also the hope that maybe we might be able to see some positive results clinically, but again that’s not what the goal is.

[Robin Garner:]

Okay, great, Thank you. Perhaps just my last question for tonight. In terms of a biomarker for 6422, can you share more detail on that and if that needs to be vague at this time, is it a biomarker that currently used to evaluate patient progress, currently by your physicians?

[David Young:]

So yeah, I have to be vague on this. We are working out some IP on this and so I do have to be vague. It is not a biomarker that’s presently used to monitor dosing or to determine what patients should receive the drug or to determine how much drug they should receive. It’s not a biomarker that is presently used, and that’s one reason I have to be very vague.

[Robin Garner:]

Okay, understand. Thank you very much for answering my questions and we look forward to all the milestones.

[David Young:]

Thank you.

[Operator:]

. Your next question is coming from . Your line is live.

[David Young:]

Hi Aden. Good evening.

[Unidentified Analyst:]

Hi! Thanks for taking my questions. I have a couple. First on PCS499, could you comment what’s the most frequently used off label drug to treat NL. So given that nothing has approved obviously, and could you give us a break down in percentages, what is actually kind of used the most and just – I’m just trying to understand what kind of drugs PCS499 is going to be competing with.

[David Young:]

Okay, so you know there’s kind of multiple levels of drugs being used. There are drugs that are being used topical, like Topical Steroids, but – and that is part for the itching and softening of the skin, plus some of the treatment of the inflammation. The problem with those steroids, Topical Steroids is Topical Steroids also cause hardening of the skin, causes change to the dermis and that also then can result in ulcers, right. So you could do that for a little bit, but you can’t do it forever, right. But it does not solve the ulcerations, so people don’t typically stick it on, the steroids on the ulcer itself. The other drugs that are used are pentoxifylline is one which is the parent drug of 499, the non-deuterated version of that, that is used. Unfortunately patients - a lot of the patients can’t tolerate the drug and so they have to lower the dose or they can’t take the drug. Those who can tolerate the drug at the highest prescribed dose or the highest label does, some of those patients do respond and they have closed ulcers, but those who can’t tolerate or those who, they really need a higher dose, they can’t get to the higher dose because of the side effects. There are also immunomodulator that are used you know, and they are all different ones that have been tried, those are the injectables we’re talking about. But again, there is mixed results with those and nobody’s been able to prove that the immunomodulator are a good option, again because there’s side effects, as well as there’s anecdotal positive evidence, but it’s all mixed right now.

[Unidentified Analyst:]

Right, I appreciate that. I’m looking at the clinical trial for both, so its 20 patient study excluding the criteria within four-weeks, no nothing to file in because it’s a new drug, for four weeks, so. In your opinion how hard it would be to recruit these patients if there is – because there is a function that they’re going to use something, but in order to participate they need to stop any treatment for four weeks right.

[A - David Young:]

That’s correct. In our experience of talking to KOLs and previously when we talked to patients, if they don’t – if the drugs or treatments or therapy does not help their ulcers, they don’t just keep taking the drug, because there’s too many side effects. So if it doesn’t help, it doesn’t seem to be doing anything, they stop taking these drugs. So most of these patients are not on any drug; most of these ulcerate patients are not on any drugs.

[Unidentified Analyst:]

Understood, understood. Alright, although I have one financial question. So it appears you burned $2.2 million this quarter and the first quarter obviously wasn’t that active in terms of the active clinical trials. So once the trial begins, do you expect this pace to accelerate throughout the year? Just trying to get a sense for modeling purposes.

[A - David Young:]

Yes, we do – yes, we do. We do expect the burn rate to be higher. So we do expect to be using more cash, there’s no question about that. You know I can’t right now give you the exact amount until the studies actually gets started, but you know we do expect it to increase in the following quarters. Now some of the money that you talk about, you know the $2.2 million, that also included some up-front money to CROs. So it’s not actually burning in terms of you know actual work that went on. Its some of the up-front requirements or some of the CROs to start the study up.

[Unidentified Analyst:]

Understood, understood, thank you. And the last question I have is regarding the timing for professional milestones. So I think you mentioned six months, but we have some new patient investors who would want to hear what happens from three months. So can you give any kind of projections what we’re going to hear on the next call, by the next call, quarterly call? Is there any chance that you can complete enrollment for example in any of those two trials by the end of the next quarter?

[David Young:]

So there are a couple of things that I think you’ll hear about. I think you’ll hear about you know our progress of enrolling patients in both studies, that’ll be you know both 6422 and 499. I think you also – it is possible, though outside possible. You know I don’t know the probability. It’s not probably a high probability, but it is possible that we could quickly enrolled 6422 and have the two cycles or the one month of treatment done to get something by the end of the third quarter or the end of the second quarter. But it’s probable, it’s not likely, it’s not likely. So I think the only thing you really – you know that I can be sure that you’ll be hearing about is the update on the progress of the enrollment and are we are rolling in our patients moving forward, and you know if there’s any serious adverse events that are occurring or anything like that, which we don’t expect, but those are some of the things that you might hear about. The other thing too is if you’re talking about the second quarter, which is really coming up in the end of June, you know we will not have anything going on with 12852, because we’re preparing the IND for 12852, that IND won’t go in until the third quarter, so you won’t have anything there. But I think that’s all that you can really expect right now. It’s just an update on enrollment.

[A - Jim Stanker:]

But one other thing that you would see – and one of the things that you would see though is, you would anticipate that the cohort would be full in the third quarter in order for us to have results, interim analysis of 499 in the first quarter of ‘21, ‘22 rather – in the first half of ’22. So we’re projecting that we would be enrolled in the third quarter and we would have that data available for the first part of 2022.

[Unidentified Analyst:]

Okay, thank you very much for taking my questions. I’m looking forward to the update. Thank you.

[David Young:]

Thank you.

[Operator:]

Your next question is coming from Hogan Malalie . Your line is live.

[A - David Young:]

Hi Hogan!

[Unidentified Analyst:]

Hi David! Hi Mike! Just a quick follow-up question from an earlier question you received about the interim results we’re going to see on 6422. You mentioned that we’re going to see some – for cohorts 1 and 2 we’ll see some data on key metabolites and I’m assuming you’re referring to F-Bal and DPD. Can you maybe frame for us and investors what exactly you’re expecting, we should see if 642 is behaving as expected on those sort of key metabolites?

[A - David Young:]

Sure. So, you are correct. As I said, as we expect that from the first two cohorts, we will be able to determine the pharmacokinetics or the level of F-Bal that exists in the body right, in these patients and the cohorts. Our expectation is that over time the amount of F-Bal initially will start very low, practically zero, and over time in the first seven days there will be nothing, there will be no F-Bal, right. If that occurs, that’s great. That’s our expectation, that’s our hypothesis. Over the next week after that, that may be seven days later, so 14 days total after you gave 6422, there may be some F-Bal, but we don’t expect it to be much alright. Not the “normal levels” that exist if you don’t get 6422 and that’s really what we’re looking for. We’re looking to compare the F-Ball levels. If you give 6422 versus what is typically occurring if you don’t give 6422, and our expectation is that seven days after you give 6422 there practically will be no F-Ball and at 14 days there’ll be a little bit maybe, but not a lot, and if we see that, that’s fantastic, our hypothesis is correct.

[Unidentified Analyst:]

Fantastic! Look forward to seeing that data.

[A - David Young:]

Yeah, me too.

[Operator:]

We have no further questions from the lines at this time. Thank you ladies and gentlemen. This does conclude today’s event. You may disconnect at this time and have a wonderful day! Thank you for your participation.

[David Young:]

Thank you.

[Jim Stanker:]

Thank you.