Biora Therapeutics' (BIOR) CEO Adi Mohanty on Q1 2022 Results - Earnings Call Transcript

May 10, 2022 10:16 PM ETBiora Therapeutics, Inc. (BIOR)
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Biora Therapeutics, Inc. (NASDAQ:BIOR) Q1 2022 Earnings Conference Call May 10, 2022 4:30 PM ET

Company Participants

Chuck Padala – Managing Director, LifeSci Advisors

Adi Mohanty – Chief Executive Officer

Eric d’Esparbes – Chief Financial Officer

Conference Call Participants

Julian Harrison – BTIG

Sahil Kazmi – B. Riley Securities

Operator

Welcome to the Biora Therapeutics First Quarter 2022 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session. [Operator Instructions] As a reminder, today’s conference is being recorded.

I’ll now turn the call over to Chuck Padala, Managing Director with LifeSci Advisors, Biora Therapeutics Investor Relations firm.

Chuck Padala

Thank you, operator. Good afternoon, and welcome to Biora Therapeutics first quarter 2022 corporate update and financial results conference call. Joining me on the call are Adi Mohanty, Chief Executive Officer; and Eric d’Esparbes, Chief Financial Officer.

Before I turn the call over to Mr. Mohanty, I would like to remind you that today’s call will include forward-looking statements within the meaning of the federal securities laws, including, but not limited to the types of statements identified as forward-looking in our quarterly report on Form 10-Q that we will file later today and our subsequent reports filed with the SEC, which will all be available on our website in the Investors section.

These forward-looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control. Please note that the actual results could differ materially from those projected in any forward-looking statements. For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements as well as risks related to our business, please see the company’s periodic reports filed with the SEC.

With that, I will now turn the call over to Adi Mohanty, CEO of Biora Therapeutics.

Adi Mohanty

Hello, everyone, and thank you for joining us. First, I’ll review our recent corporate highlights. And then I will recap where we are with each program. We took a big step forward in our transformation as we launched Biora Therapeutics today. The name Biora was chosen to reflect our focus on oral biotherapeutics. Biora’s mission is to reimagine therapeutics and we envision a world where patients have access to life improving therapies without needles.

Biora’s purpose is to develop therapies that improve patient’s health and quality of life by developing innovative smart pills. We’re initially focused on two platforms. One is our novel approach of targeted therapeutics for the treatment of serious GI diseases. We believe we can help patients by delivering a therapeutic formulation directly to the site of disease in the GI tract. Our first program with this platform delivers drug by coding the large intestine with a formulation that’s optimized for topical application. Our targeted approach has been shown to reduce systemic uptake, which has been implicated in toxic or adverse impacts to patients.

Second is our technology that allows for oral delivery of therapeutics. Most of which today can only be administered using needles. With this platform, we’re aiming to maximize systemic uptake of large molecules by using liquid jet delivery to the smallest intestine via an easy to use oral capsule.

In the few weeks since our last call, we’ve made significant progress on our transformation. We announced last week that we completed a transaction for our single molecule detection technologies, which were designed to enable rapid low cost assessment of biomolecules by liquid biopsy.

We’ve contributed all assets related to these technologies to newly formed Enumera molecular, which intends to develop and commercialize the platform and will be funded with an initial $12.5 million Series A financing round led by Arboretum Ventures, a sophisticated healthcare investor.

We’re pleased to enable Enumera and Arboretum Ventures to develop this opportunity for which we have a minority ownership stake with potential financial upside and without committing any funds or resources from the company. This is an example of our commitment to maximizing value from our legacy diagnostic assets while maintaining focus on our core future therapeutics programs.

We will continue to look for ways to maximize our legacy assets. We recently announced the appointment of Paul Shabram as SVP, Technical Operations. Paul brings over 30 years of biotech experience leading successful development programs and commercial products, while implementing novel manufacturing processes. I’m very happy to have Paul join our team where his focus will be on growing our device and therapeutics capabilities to optimize performance and manufacturing in support of our clinical programs.

We continue to build the skills and capabilities required to be a successful biotherapeutics company. We also recently expanded our internal engineering and manufacturing capabilities with the addition of a new technical operation space.

Moving on to our programs. First, with our Targeted Therapeutics platform. As a reminder, our first program with this platform is an ulcerative colitis or UC. Annual global sales for UC drugs are estimated to be $7 billion globally and the inflammatory bowel disease or IBD space overall is $19 billion globally.

Our lead program, PGN-600 is a proprietary liquid formulation of tofacitinib delivered in the colon using our targeted delivery technology, which is a capsule approximately the size of a fish oil pill. A commercially available version of tofacitinib is approved for the treatment of UC. Tofacitinib certain currently is administered orally and like other drugs that are orally delivered is mostly absorbed in the stomach or the upper GI tract whereas UC is a disease of the lower GI tract.

In conjunction with our scientific collaborators, we will present at Digestive Disease Week, DDW in San Diego later this month, data that builds upon presentations at the European Crohn’s and Colitis Organization and the Belgian Week of Gastroenterology conferences earlier this year. Data presented at these conferences was from moderate to severe UC patients taking to [indiscernible] GI tissue biopsies were obtained from these patients and a clear correlation was identified between higher concentrations of drug in the tissue and improved endoscopic outcomes. We believe our proprietary platform can achieve the goals of significantly increasing drug levels in disease tissue while reducing systemic exposure.

Our preclinical results show that successful targeted delivery with PGN-600 enables about 25 times higher concentration in colon tissue compared to the equivalent standard oral dose, while showing significantly less systemic exposure. This demonstrates the potential for PGN-600, the safely increased drug levels at the site of disease, which could dramatically improve disease management for UC patients.

During the first quarter, we completed a discussion with our Clinical Advisory Board, which includes Dr. William Sandborn, Dr. Geert D’Haens, Dr. Bruce Sands and Dr. Séverine Vermeire, who are all leading experts in GI diseases and used their inputs to refine our clinical development programs.

We recently submitted our Type C meeting requested the FDA with our proposed clinical development plans. We hope to have FDA agreement and response by the end of this quarter. Following that response, we will be submitting an IND later this year for a Phase 1 study with PGN-600, which should keep us on track for our plan Phase 2 study next year.

It’s important to note that our plan Phase 1 clinical trial with PGN-600 will also evaluate both blood and colonic tissue levels of tofacitinib. Given the data we’ve already generated and presented on the correlation between tissue concentration of tofacitinib and improved patient outcomes, if the clinical data generated in our Phase 1 trial confirms that we can safely achieve high tissue concentrations just as we have seen with PGN-600 in preclinical studies, we believe the likelihood of improving remission rates and subsequent studies in UC patients is high. Because of the well known therapeutic profile of tofacitinib and standard oral formulations and the ability to utilize or reference these existing data, we believe our development risks from PGN-600 are reduced.

Soon after the Phase 1 trial is completed, we plan to initiate a disease interventional study, where we may learn more definitively about the benefits of solution can bring to UC patients. While we prepare for these critical drug device combination clinical studies, we also continue to progress with clinical studies demonstrating the function of the device. We have successfully completed a device function study in healthy volunteers and are currently actively enrolling two more clinical studies.

The first is a study to evaluate the effects of food on the function of the device. The second, aims to confirm device function in UC patients. Patient enrollment is ongoing and expected to be completed in the second quarter. Positive results from these studies should further confirm the robustness of our platform and demonstrate its utility for delivering a wide range of therapeutics to the site of disease in UC patients and other GI diseases.

Our overall clinical development path may have some advantages, because we’re using molecules that have well known safety and efficacy profiles. If we’re able to demonstrate that the device functions as desired, the next step to demonstrate that the combination works should have the higher likelihood of success compared to many other therapeutics in early development. Each development stage that we successfully achieve will increase the values the current program, and really the entire platform, thus strengthening our position to assess and discuss partnership opportunities and future commercialization. Achievement of development milestones will also inform our plans for future product expansion of our targeted therapeutics platform.

Next, I’ll cover our systemic biotherapeutics platform. The goal of this platform is to facilitate oral administration of drugs that would otherwise require injection or infusion. Our systemic therapeutics delivery solution is an oral capsule, which provides liquid jet delivery of large molecules. In order to maximize systemic uptake, we believe this platform can help improve disease management and associated patient outcomes, reduce intravenous infusion costs, help expand the market for drugs across a range of chronic use indications and help biotherapeutics, such as monoclonal become more competitive with small molecule substitutes.

Our platform with the protective capsule and jet means this system has a capability to deliver a range of approved large molecules, such as proteins, peptides, and nucleic acids without complex reformulation. As a reminder, we already have multiple R&D collaborators for this technology.

Since our last call, we’ve continued to make progress with device, design and manufacturing and making improvements that will increase device performance, reliability, and manufacturability. Although, we have data with several molecules on this platform, such as the monoclonal antibody adalimumab, our initial focus is on a high concentration formulation of the peptide liraglutide, a GLP-1 receptor agonist.

We believe that achieving 10% to 15% bioavailability through oral delivery would enable our platform to be commercially viable with a broad range of large molecules and we have already demonstrated the animal models that we can achieve up to 67% bioavailability for monoclonal antibody. We will be presenting preclinical data on the performance of this platform at the Controlled Release Society Annual Meeting, which will take place in July and we expect the share existing and future results at other upcoming conferences.

As with our other platform, here too, we’re initially using drugs with established safety and efficacy profiles, which should result in several advantages in the regulatory pathways and development plans for this platform. We expect to run additional preclinical studies in the coming months. These additional data could be sufficient to progress our collaborations into next stages and allow us to be ready for human clinical trials demonstrating effective delivery of therapeutics next year.

For now, we plan to take one systemic therapeutic program forward to these latest stages, which we expect will show the broad applicability of the platform for use with many other existing and in development therapeutics. Although, our targeted and systemic therapeutic platforms are the primary focus of the company in the near term, we continue to incubate our other platform technologies for the future.

At Digestive Disease Week in May, we will share proof-of-concept results from a clinical study, demonstrating the ability of our recoverable sampling system, our third platform technology, which uses an oral capsule to non-invasively collect and preserve a microbiome sample. We believe the ability to collect, preserve, recover, and analyze from specific regions of the intestine has numerous potential applications for diagnostics and for drug discovery and development.

To summarize, some of our upcoming milestones. We expect to complete our targeted therapeutics device function study in Fed state and in UC patients in Q3. We will review our clinical plan for PGN-600 with the FDA in the coming months ahead of launching our Phase 1 study during the fourth quarter. We expect to generate and share upcoming conferences bioavailability data from our systemic therapeutics program, which will enable our first clinical studies to begin next year.

With that, I’ll now turn the call over to Eric for a discussion of our financial results and capital market activities.

Eric d’Esparbes

Thanks, Adi, and good afternoon, everyone. As Adi mentioned earlier, we’ve now completed our company transformation into a therapeutics company with the goal of leading the oral delivery of biotherapeutics. We’re now a more focused organization with a much reduced cash burn profile with a spin-out of our single molecule detection platform, we’ve created the opportunity to generate a return on our past investment while eliminating the associated cash burn.

Our near-term focus remains optimizing capital allocation to our pipeline with the goal of generating value through the achievement of key development milestones and clinical data generation. Operating expenses, excluding stock-based compensation expenses were $18 million in a first quarter of 2021 in line with our previous guidance, as we’ve now completed a transfer of our molecular testing assets. More specifically, G&A expenses in the first quarter were $13.5 million, including $1.7 million in stock-based compensation expense. While R&D expenses in the first quarter were $6.6 million, including $0.3 million in stock-based compensation expenses.

As we mentioned in our previous call, we expect G&A expenses to gradually reduce by Q4 this year, while our R&D expenses will mainly track our clinical activities workflow and expect to end the year with a monthly operating cash burn of less than $4 million. We had a cash balance of $67.2 million as of March 31, 2021, giving us runway well into 2023. Thanks to our reduced cash burn.

With the relaunch of the company as Biora Therapeutics, we have a very active IR plan ahead of us to engage with investors. Tell our story and make sure our important programs have adequate visibility with the investor community. We are seeing an increasing following from biotech analysts and invite investors to contact us, if you have any interest in our programs and development strategy.

With that, I will now turn the call back over to Adi.

Adi Mohanty

Thanks, Eric. So we’re making good progress with our pipeline and are excited about the large and Biora Therapeutics. I’d like to invite you to learn more about Biora by visiting our new website at bioratherapeutics.com, where you can also view our updated corporate presentation under the Investors section. You’ll also find links on our website to the new Biora Therapeutics social media accounts, where we invite you to follow along with us on our mission to reimagine therapeutics.

With that operator, we’re now ready for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And our first question is from the line of Julian Harrison with BTIG. Please go ahead.

Julian Harrison

Hi, thank you for taking my questions and congrats on all of the recent progress. First on PGN-600, I understand the initial patient population you want to focus on in the clinic, our biologic experience, UC patients. But just wondering at this point, if biologic naïve patients might be of interest in the future and by extension the potential for – excuse me, potential for first line positioning.

Adi Mohanty

Hi, Julian. Certainly, that question might be more appropriate in a few months, because you are right. We are starting with experienced folks. But given the preclinical data and our potential outcomes, we think absolutely there is a opportunity to move up the use of these kinds of drugs to first line. And so naïve might be something absolutely that we could do. But it’s a bit early to talk about that. We believe in the potential of doing that, but we’ll get to that soon.

Julian Harrison

Okay. Got it. And then regarding ongoing preclinical work for your systemic delivery platform, I’m wondering if you could talk a little more about what you want to further characterize or optimize before filing your first IND here before year-end?

Adi Mohanty

So on the systemic program, I think actually there’s a couple other really exciting interesting data points that might be coming out this month. So we’re doing a few more animal studies, I think in our talk earlier, we mentioned that we’ve gotten indication that a 10% to 15% bioavailability would be interesting. And this is not just from clearly our analysis. It’s also because we have these collaborators, which is great, we’re able to work with these companies that that could be potential users of this technology, who are saying, look that 10% to 15% is the interesting range in terms of being commercially viable.

So for us to be able to do a few more animal studies, which is where we would see a lot of this data have that available in the next few months would mean a lot in terms of how we proceed. One, our own program, how do we take that conversation to the FDA, but two, equally important is what our collaborators have to say and how we progress those relationships with the data in hand.

Julian Harrison

Okay, great. Thanks very much.

Operator

[Operator Instructions] And our next question comes from the line of Mayank Mamtani with B. Riley Securities. Please go ahead.

Sahil Kazmi

Hi, good afternoon team. This is Sahil Kazmi asking questions for Mayank. Congrats on all the progress throughout the quarter. Maybe just at a high level, could you provide a bit more qualitative color on really the clinical development and regulatory path forward for UC? And to the extent you’re able to disclose what that disease intervention study might look like. And then also in that same context, what are the FDA requirements in terms of the device? And if you could touch on the manufacturing improvements as well and scalability as you get to late-stage development, that’d be great. Thank you.

Adi Mohanty

Well, that was probably four or five or six questions. I’ll try to cover them. I think we’ve talked about we recently filed a Type C meeting. So in that Type C not sorry meeting, a Type C filing to the FDA, we have made our proposal for what we think a good development plan would be. We are being a little bit conservative and being very careful and thoughtful about how we go and take this program forward.

So we’re proposing to do a fairly typical Phase 1 study and we think that this is good as the first program in this platform that would be helpful for us to get some data that would be like a normal Phase 1 data. But given that there’s such a great correlation between concentration of drug in the tissue and potential disease outcomes.

We can learn that in Phase 1. We can learn how much we get. We can have a lot of really good information, not just on the tissue, but also on the systemic levels of the drugs. So we think this Phase 1 is probably more useful than just learning purely about safety. We believe there should be a lot less safety.

So we haven’t yet talked about the exact plan. We want to take a little more time to have some response from the FDA to be able to share it, but it is a pretty typical Phase 1. What we normally expect with a single dose, with a multiple ascending dose, but the potential doses are absolutely going to be lower than what is currently commercially on commercial label, because we know we can get more drug, so a smaller dose, typical Phase 1 study quickly moving to that disease intervention study.

We’re proposing that we think we can do a pretty robust serious Phase 2 study that would be potentially placebo-controlled with the disease state and moderate, severe disease. And then as we get initial data, we might be able to have, and so I don’t want to say exactly what the design would be, but we might be able to have data that helps us evolve that trial. That’s a little more than we have shared, but hopefully very soon we will have all the details be able to give you the entire study proposal.

Sahil Kazmi

That’s really helpful. Thank you.

Operator

And we have no other questions on the phone line at this time. I will now turn it back over for closing remarks.

Adi Mohanty

Okay. Well, thank you all for joining our first Biora Therapeutics earnings call. We look forward to keeping you updated on our progress. Have a good evening.

Operator

That does conclude your conference call for today. We thank you for your participation and please disconnect your lines.

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