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Cleveland BioLabs, Inc. (NASDAQ:CBLI)

FDA Update Conference Call

September 03, 2014 11:00 AM ET

Executives

Rachel Levine – Vice President, Investor Relations

Yakov Kogan – Chief Executive Officer

Ann Hards – Executive Vice President of Regulatory Affairs

C. Neil Lyons – Chief Financial Officer

Analysts

Walter Schenker – MAZ Partners

Robert Brous – Wunderlich Securities

Thomas Ulie – First Island Capital

Operator

Greetings, and welcome to the Cleveland BioLabs FDA Update Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host Rachel Levine, Vice President of Investor Relations. Thank you. You may begin.

Rachel Levine

Good morning, thank you. Good morning everyone, thank you for joining us to discuss the outcome of our July meeting with the FDA and our plans to proceed with a pre-Emergency Use Authorization or pre-EUA submission for entolimod’s use as a radiation countermeasure.

Joining us today, are Dr. Yakov Kogan, Chief Executive Officer; Dr. Ann Hards, Executive Vice President of Regulatory Affairs and Mr. Neil Lyons, 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 plan and involve risks and uncertainties.

Additionally, I want to emphasize that some of the information discussed on this call, particularly are financial and cash outlook or forward-looking development plans are based on information as of today, September 3, 2014 and then 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 and 10-Q. The information provided on this 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 start the call with a high-level recap of the outcome of our meeting with the FDA and next steps, will then pass the call over to Ann to review more specific details about our eligibility for pre-EUA and our general discussion of the process. Neil, will then comment on the anticipated budget for the pre-EUA submission and cover a few additional topics. Before handing the call back to Yakov for closing remarks and questions.

At this time, I’d 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. We arranged a special conference call to update you regarding the results of our recent meeting with the FDA. I’m extremely pleased to share what the agency has given us a green light to submit a pre-EUA application for entolimod’s biodefense indication. First, I am going to thank the CBLI team to work tirelessly to achieve this wonderful result to professionalism, belief and dedication to a program are invaluable.

Next, I want to talk about what this means for the company and what we need to do to reach this milestone of our Pre-EUA submission. Pre-Emergency Use Authorization is a vehicle for which the U.S. government is able to administer unlicensed rescue therapies in emergency situation. If the FDA grants a pre-EUA status, purchases of entolimod could be made for stockpiling in the event of a disaster. Actual use of a stock pile drug and conversion of a pre-EUA to EUA, would occur only in a declared emergency situation.

We believe what achieved in the pre-EUA status in the United States could support partnerships and foreign government interest in this program as well. Our top priority is to put together as quickly as possible a pre-EUA application, what has the highest chance of acceptance by the FDA. We believe that it will be in position to submit such a pre-EUA application in the first half of 2015.

This is an aggressive goal, but I’m confident what the CBLI team will meet this challenge and you’ll describe the work ahead in more detail. In parallel trial preparations for a pre-EUA submission, we are continued our discussion with various US government agencies.

We have three primary goals for this meetings. One, to determine the interest and ability of these agencies to co-sponsor and provide support for the pre-EUA submission. Two, to determine the interest and ability of these agencies to provide ongoing funding for the remaining development steps required for full licensure. And three provided what entolimod to refuse EUA approval to begin positioning entolimod for stockpiling as a part of a nation's defense against a radiological or nuclear disaster.

At this point I would pass the call to Ann to provide more background detail on pre-EUA requirement outline what goes in the pre-EUA submission and our anticipating timings. Ann?

Ann Hards

Thank you, Yakov. As Yakov just mentioned pre-Emergency Use Authorization by the FDA allows government stockpiling, distribution and use of an unapproved drug in an emergency situation. For example, following the detonation of a nuclear bomb, four criteria must be met for a pre-EUA, to be considered. First the condition for which the drug will be used in the case of entolimod potentially lethal radiation must be both serious or life threatening.

Second, the drug has been shown an adequate well controlled studies to be effective in treating the series conditions. Third, the potential benefits of the drug must outweigh the potential risks. And fourth, no adequate approved alternative drug is available for treating the condition. We believe that entolimod meets each of these criteria.

First entolimod would be used following potentially lethal radiation. Second, in a pivotal efficacy study of a radiated non-human primates, entolimod given 25 hours after high dose, whole body radiation increased survival from 27.5% in the control animals to 75% in treated animals, a highly statistically significant, nearly threefold improvements. Third, entolimod safety has been characterized now in 175 humans, 150 healthy subjects and 25 patients with advanced cancer. And fourth there is no adequate approved radiation countermeasure that represents an alternative to use of entolimod.

Now that we have achieved agreement with the FDA that entolimod may be considered for pre-emergency or for pre-EUA and then our existing efficacy and safety data and animal to human dose conversion are sufficient to proceed, we need to compile the submission. This is not a light undertaking a Pre-EUA submission is very involved and covers many aspects of entolimod’s development. For example we need to provide summaries and formal reports for previously conducted efficacy and safety studies we need to update recently acquired clinical data and perform additional analysis as requested by the FDA.

We also need to finalize our Chemistry, Manufacturing and Controls or CMC information including testing of anticipated storage and transferred conditions for an emergency scenario. We also need to address plans and control for administration of entolimod in such cases of emergency. Based on our understanding of the types and nature of the different activities involved in putting together the submission, available resources and the need for quality controls and final submission preparation. We currently anticipate having a final submission ready in the first half of 2015. Then it will be up to the FDA to review the submission and make a determination. There is no formal PDUFA timeline for review of a pre-EUA.

Technically, anything with the PDUFA timeline will take precedence, this being said we do intend to follow-up with the FDA and see if they can provide any general expectations regarding their workload around the anticipated time of our submissions and/or how long their review process might take. We do not know, if they will be able to provide such expectations, but we will have.

I will now hand the call to Neil for some commentary on the cost associated with the pre-EUA submission and other topics. Neil?

C. Neil Lyons

Thank you, Ann. Based on activities described by Ann, the third-party cost for preparation of a pre-EUA submission are estimated at $1.25 million. In addition to third-party out of pocket costs are estimated set time is approximately five full time employees.

As we noted on our second quarter call, CBLI’s standalone cash resources that is without Incuron and Panacela are projected to last into the first quarter of 2015, and that continued financing of our operations is one of our top priorities. Presently, these pre-EUA activities do not change that guidance.

Pending new resources of financing, we will be able to commence these pre-EUA submission activities by reallocating budgeted expenditures that were otherwise planned for entolimod bladder cancer trial activities.

Certainly, I would like to comment on our current deficiency in continued listing requirements for the NASDAQ capital markets, which requires listed securities to maintain a minimum bid price of $1 per share. The initial 180 day period in which to regain compliance ends on September 8. However, we believe we are eligible for an additional 180 day extension period and have submitted a written request for such to NASDAQ.

That concludes my comments Yakov, please continue.

Yakov Kogan

Thank you, Neil. We believe – of a pre-EUA for entolimod is a significant prospect for CBLI to deliver shareholder value. Our successful meetings with the FDA give us an opportunity to engage U.S. government agencies. As partners in the pre-EUA process to receive additional funding support for remaining requirements to achieve full licensure and start positioning entolimod for future stockpiling.

I’m confident, in our team stability to execute a pre-EUA submission. They have done an outstanding job, getting us to this level of agreement with the FDA. We believe what entolimod has enormous potential to save lives as part of the nation’s defense against a radiological or nuclear disaster and recognize it on moving this forward.

We will now open the call to questions. Operator, please begin the Q&A?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from the line of (indiscernible). Please proceed with your question.

Unidentified Analyst

Certainly is a good news that you got the green light from FDA to submit this EUA application. In terms of costs I thought earlier maybe a couple of quarters ago there was commentary from management saying that it would cost about 600,000 or something of that range. This is the $1.25 million that you’re proposing today. Is this different or I did not understand the previous number up correctly?

Yakov Kogan

Thank you for your question. I’ll ask Neil Lyons to answer at this point.

C. Neil Lyons

Yes, the 600,000 guidance that we had given previously was to prepare pre-EUA submission package as we anticipated the need. After the meeting with the FDA they requested additional CMC work that Ann mentioned, which was not originally considered. And they also requested additional statistical analysis activity to be done and we have also considered the value which accelerates the reviewed process of converting the data into electronically readable format, which in itself is not attributable costs, so the combination of those extra items added to our original budgets.

Unidentified Analyst

Okay, thank you. And regarding the process itself and in terms of the government ordering the drugs for stockpiling. How does it work as one few – once the FDA approves that EUA is a government – immediately going to action and/or the material or how does the stockpiling system work?

Yakov Kogan

Integrated session so, as I mentioned during the call, we are reaching out to several government agencies to discuss on the recent FDA meetings, the outcome of those meetings, meeting our plans to pre-EUA submission. Some of these meetings were already scheduled some will be confirmed shortly. At this time, we would not comment anything about structures intend for a government, before any definitive outcome of these meetings would be secured and we would update our shareholders.

Unidentified Analyst

I’m not asking to do give us a guidance, what I’m trying to understand is how does the system normally works, you said an example of a product that has gone through an EUA submission and gone into stockpiling anything that can help us understand how the system works?

Yakov Kogan

Absolutely. So, if you look back for the last five years of purchases made by Department of Health and Human Services for example, about 70% of the drugs based on BARDA which were purchased to the national stockpile, were purchased under pre-EUA. The most recent and relevant example would be the example of GC effect, which were purchased on the pre-EUA side BARDA, last fall to be stockpile for emergency use during the radiation nuclear emergency.

Unidentified Analyst

Okay. Thank you. One last question, I also understand that once you get the EUA, it’s easier to talk with the other governments you know maybe some of the European governments and which might be more of an important thing right now. The way the world is running. How does this help during such conversations and can you comment on that?

Yakov Kogan

Absolutely. We believe what FDA agreement on a dose-conversion and billing wise to stockpiling for pre-EUA is a significant boost of our discussion with foreign government. We would be conducting this discussion in parallel this preparation with pre-EUA submission.

Unidentified Analyst

So do you have to do submission with each government there or run to have the EUA it’s easier, I mean you don’t have to do this call and applications, but you can get the governments to start stockpiling?

Yakov Kogan

The stockpiling as well as purchases and approval of a drug in each country is a subject to regulatory review – regulator agency in the particular country.

Unidentified Analyst

Okay.

Yakov Kogan

A review process.

Unidentified Analyst

Okay. Yes, thank you.

Operator

Thank you. And our next question comes from the line of Walter Schenker with MAZ Partners. Please proceed with your question.

Walter Schenker – MAZ Partners

Couple of questions I understand the value this is your comment about co-sponsor and support of government agencies I understand the benefit of financial support what will would they have in co-sponsoring and other support side from financial support. This is being done by Cleveland or it could be done by Cleveland in conjunction with other agencies?

C. Neil Lyons

The pre-EUA submission doesn’t technically require a sponsorship of a government agency. But we believe what is beneficial and preferred scenario and we would be meeting this possible government agency to discuss this matter.

Walter Schenker – MAZ Partners

And then it served like an Amicus brief they would be involved with the legal brief in support of your work or and I understand the money, did they saw it for money what are they doing with you?

Yakov Kogan

As Ann mentioned during her description that pre-EUA includes the protocols how a drug would be distributed during the cases of emergency. And how the safety data would be collected to demonstrate the use and the – kind of safety of the drug in the emergency situation. We would rely on the partner the government partner to administer the drug in the case of emergency. And we would like to work with them to determine such protocols.

Walter Schenker – MAZ Partners

Okay, thank you. And just a second question and talking about again a purchase per stockpile and you heard of G-CSF which was addressed by BARDA to other agencies by drugs to go into the stockpile beyond BARDA.

Yakov Kogan

Yes, its correct.

Walter Schenker – MAZ Partners

Such as…

Yakov Kogan

For example Department of Defense.

Walter Schenker – MAZ Partners

Okay. That’s it for me.

Operator

Thank you. (Operator Instructions) And our next question comes from the line of Robert Brous with Wunderlich Securities. Please proceed with your question.

Robert Brous – Wunderlich Securities

Hi, thank you for taking my question. On the submission with the pre-EUA could you tell me would that be under an IND or Master File and then I have a few follow-up questions?

Yakov Kogan

Ann, could you please address this question.

Ann Hards

Yes. So the pre-EUA submission is submitted under the IND.

Robert Brous – Wunderlich Securities

Okay. And then you indicated the fourth requirement would be that no other product exist, is that an approved product or product that’s in the stockpile and how would you couch that within the context of Neupogen?

Ann Hards

It is an approved drug and there are advantages to entolimod in the way that is administered being the single administration. And so you make comparisons not only on the approval status, but also on advantages. If there is not it’s currently stockpile drug that has the same advantages as your drug there is still not an alternate drug available.

Robert Brous – Wunderlich Securities

Okay. Thanks for your answer. The EUA file would exist with the FDA or with BARDA?

Ann Hards

With FDA.

Robert Brous – Wunderlich Securities

Thank you very much.

Operator

Thank you. And our next question comes again from the line of Walter Schenker with MAZ Partners. Please go ahead with your question.

Walter Schenker – MAZ Partners

Would you suggest the benefit that DoD may have supported drugs for use in the emergency stockpile, is the EUA available outside the United States or if U.S. citizen were most very personnel with someplace else in the world like the Middle East and needed the use of the drug this is applicable to that type of the use as well?

Yakov Kogan

Yes.

Walter Schenker – MAZ Partners

Okay, thank you.

Operator

Thank you. (Operator Instructions) And our next question comes from the line of Robert Brous with Wunderlich Securities. Please go ahead with your question.

Robert Brous – Wunderlich Securities

Yes, just a follow-up question I know that I understand the primary meeting with the FDA was discussed EUA. Was there any discussion or direction provided by the FDA as to remaining steps for BLA submission?

Yakov Kogan

Our July meeting was completely focused on previous submission. Our previous meetings with FDA, which we reported last year contains requirements for full licensure of a job.

Robert Brous – Wunderlich Securities

And could you just kind of expand on what remaining steps would you have for the BLA and or those to change or that kind of set going forward?

Yakov Kogan

Ann, could I just ask you to respond to this question.

Ann Hards

Yes, these steps – the primary steps that were previously discussed where the addition of dose-conversion and efficacy studies in the mouse. There have been no discussions to change that we will evaluate as we go forward based on what occurs with the pre-EUA whether or not we want to readdress it?

Robert Brous – Wunderlich Securities

So there would be no requirements I know there was a goal to potentially get an answer as to additional requirements for human safety. So, you are essentially done with human safety at this point?

Ann Hards

That will be another one of the points that’s evaluated in their response to the pre-EUA submissions.

Robert Brous – Wunderlich Securities

Great, thank you for the information.

Operator

Thank you. And our next question comes from the line of Thomas Ulie with First Island Capital. Please proceed with your question.

Thomas Ulie – First Island Capital

Yes, hi, thanks all for the – what seems to be pretty good news. I am wondering that the previous caller pretty much hit upon what I was going to ask. However, I wondered if you could shared a little guidance as to timing what’s your guesstimate is to timing for the critical steps remaining?

Yakov Kogan

Thank you for question. So I would like to clarify your question. When you ask about remaining steps, are you asking about the remaining steps for pre-EUA submission or for full licensure?

Thomas Ulie – First Island Capital

Full licensure and commercialization.

Yakov Kogan

Absolutely. So first of all, I would like to address the question about commercialization. We believe based on all historic examples what U.S. Government for civilian and military arms are capable of buying unlicensed drug under pre-EUA for stockpiling and so you don’t need full licensure to kind of initiate the stockpiling effort.

Nevertheless, interest of all parties including FDA as well as BARDA and DoD are to have a job fully approved. I would like to make a very clear statement was – as of today, we are focusing all of our efforts on pre-EUA submission. And they are not going to pursue any studies which Ann indicated. Needed to be done for full licensure, before securing additional funding from one of our U.S. foreign government agencies and these, the timing of this funding would have effect on this time of a full licensure.

Thomas Ulie – First Island Capital

Okay. So, what about then the timing for sales pre full licensure, can you provide a guesstimate there – for a range?

Yakov Kogan

As we mentioned during the call, we are going to – we are planning to submit the pre-EUA application to FDA in the first half of 2015. But there is no PDUFA date for the FDA to which require them to review application in certain number of days, but we will be working with the agency closer to – secure the more expedited review of application. In the meanwhile we are reaching out to Department of Defense, BARDA, Department of Homeland Security as well as other friendly foreign countries to discuss potential for stockpiling of a drug. So they are working on board arms of a development and commercialization in parallel.

Thomas Ulie – First Island Capital

And any sense of urgency to the precipitated sales pre full licensure, I gathered then would be driven by the buyer?

Yakov Kogan

I absolutely agree with you and as we move today there are no licensed drugs approved for the use to treat people or mitigate the emerging effects of high doses of nuclear or radiation. So, there is a clear the unmet medical needs and if you look at the public statement by U.S. Department of Health and Human Services or by members of a congress. As they continue to expect the great conserving over the lack of much countermeasures.

Thomas Ulie – First Island Capital

Great, thanks a lot. And obviously national leadership is not adding to the sense of security.

Operator

Okay, thank you. (Operator Instructions) And it seems that we have no further questions at this time. We would now like to give you the information on how to access the replay for this call. Replay for this call will be available approximately two hours after it has concluded by dialing 877-660-6853 or 201-612-7415 and entering conference ID number 13589652. Again that is 877-660-6853 or 201-612-7415 and entering conference ID number 13589652. As a remainder the call will also be archived on the Cleveland BioLabs website. This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.

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