Acasti Pharma Inc. (ACST) on Q4 2022 Results - Earnings Call Transcript
Operator: Good day, and welcome to the Acasti Pharma Fourth Quarter and Fiscal Year 2022 Financial Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Robert Blum of Lytham Partners. Please go ahead.
Robert Blum: All right. Thank you very much MJ and welcome to Acasti Pharmaâs fiscal year and 2022 conference call. On the call with us this afternoon is, Jan D'Alvise, President and Chief Executive Officer; Brian Ford, Chief Financial Officer; and Monique Champagne, Vice President of Clinical Affairs. Following managementâs prepared remarks, there will a Q&A session. Should any questions remain after the call, please donât hesitate to contact me at 602-889-9700. I'd also like to remind everyone that statements on this conference call that are not statements of historical or current facts constitute forward-looking information within the meaning of the Canadian Securities Laws and forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the Securities and Exchange act 1934. Such forward-looking statements involve known and unknown risks and uncertainties that could cause the actual results to be materially different from those expressed or implied by such forward-looking statements. In addition to statements which explicitly describes such risks and uncertainties, listeners are urged to consider statements labeled with terms belief, expects, intends, anticipates, potential, should, may, will, plans, continue, targeted or other similar expressions to be uncertain and forward-looking. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Forward-looking statements during this conference call may include, but are not limited to the success and timing of regulatory submissions of the planned Phase 3 study for GTX104 and Acastiâs other pre-clinical and clinical trials, regulatory requirements or developments and the outcome of meetings with the FDA, changes to clinical trial designs and regulatory pathways, legislative, regulatory, political and economic developments and cost associated with Acastiâs clinical trials. The forward-looking statements made during this conference call are expressly qualified in their entirety by this cautionary statement, the cautionary note regarding forward-looking information section and the risk factors contained in Acastiâs annual report on Form10-K, which is available on EDGAR at www.sec.gov, on Sedar at www.sedar.com and on the Investors section of the Acasti's website at www.acastipharma.com. In addition, any forward-looking statements represent Acasti's views as of today and should not be relied upon as representing our views of any subsequent date. Acasti undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made except as required by applicable securities laws. I'd now like to turn the call over to Jan D'Alvise, President, Chief Executive Officer, Acasti Pharma. Jan, please proceed.
Jan D'Alvise: Thank you, Robert. Given that we conducted our last conference call only about a month ago when we announced the positive results of our PK bridging study for GTX104, we plan to keep today's prepared remarks covering our fiscal year 2022 rather brief, allowing for more time at the end for questions. Fiscal â22 was a truly transformative year for Acasti. We pivoted as a company and acquired Grace Therapeutics in late August of 2021. This acquisition gave us a new mission of reformulating and repurposing marketed medicines for indications in rare and orphan diseases where significant unmet medical needs exist. This strategy allows us to pursue the 505b2 regulatory pathway, which is potentially a faster lower cost and lower risk approach to getting drugs approved by the FDA. We now have three drug candidates advancing in clinical development, and all three have already received orphan drug designation by the FDA, which could grant a seven years of market exclusivity in the United States. We also expanded an already extensive portfolio of approved and pending patents that cover composition of matter and method of use, which can extend our market exclusivity to 2036 and beyond. So let me give you a quick update on the status of our lead drug candidate GTX104, which is a novel formulation of nimodipine for IV infusion designed specifically for patients with Subarachnoid Hemorrhage or SAH which is a condition caused by bleeding on the brain due to a ruptured aneurysm. SAH presents a life-threatening emergency for the patient and our new proprietary IV drug formulation addresses a vital need in the critical care market that has seen little innovation over the years. SAH patients are so critical, that 10% to 15% die before they ever reach the hospital and about one-third ultimately do not survive. Another third of these patients required depending care for the rest of their lives. SAH is estimated to affect about 50,000 patients per year in the United States alone and based on our market research we believe that GTX104 represents a total available market in the United States of more than $300 million. The current standard-of-care is an orally administered drug called nimodipine, which was approved by the FDA back in 1988. Nimodipine is a powerful calcium channel blocker and it works primarily on the brain to lower the patient's blood pressure by relaxing cerebral blood vessels, thereby increasing blood flow and oxygenation. Nimodipine is mandated by the Joint Commission that certifies U.S. Stroke Centers to be administered to all patients with SAH, as itâs been shown to reduce the incidence of delayed cerebral ischemia and to improve neurological outcomes. Nimodipine is available in the U.S. only as an orally administered capsule, which is problematic as many of these SAH patients are not conscious or if they are awake they have a hard time swallowing oral drugs. The nursing staff must pull apart the capsule, siphon off the drug to be delivered orally to the patient via a nasogastric tube that goes directly into the stomach. As nimodipine can stick to the side of the tube, it's very difficult to control how much drug is actually being delivered and ultimately absorbed. This leads to a lot of variability in dosing and the resulting blood pressure of the patient. We believe that GTX104 delivered intravenously could be a major improvement in the standard-of-care as a more convenient, efficient and precise way to deliver nimodipine directly into the patient's bloodstream. On May 18th, we held a conference call where we announced that our GTX104 PK bridging study successfully met all its endpoints. The primary objective of the PK study was to evaluate the relative bioavailability of GTX104 delivered intravenously, compared to oral nimodipine and healthy adult male and female subjects, while the secondary objective was to assess its safety and tolerability. The result showed statistically, no difference in maximum and total exposure between IV GTX104 and the oral formulation of nimodipine and no serious adverse events were observed. This means that GTX104 can be considered essentially bioequivalent to oral nimodipine. Additionally, the bioavailability of oral nimodipine capsules was observed to be only 8%, compared to GTX104, which when given intravenously is naturally 100% bio-available. Consequently, less than one-tenth the amount of nimodipine is administered with GTX104 to achieve the same blood levels as the oral capsules. One of the most important findings from this PK study is the plasma concentrations obtained following IV administration of nimodipine showed significantly less variability between subjects, as compared to oral administration, both the inter and intra subject variability was significantly lower for GTX104, as compared with oral nimodipine. This is important as we believe that because of its better absorption profile and more consistent blood levels GTX104 may provide physicians with a more reliable and effective treatment for patients with SAH. This is a key advantage as we believe GTX104 could help to reduce the incidence of hypertensive events and vasospasm, which require immediate and costly intervention and can lead to worse outcomes for the patient. Moreover, it could provide dosing flexibility and a more consistent and convenient route of administration for the significant percentage of patients, who present and remain unconscious during their ICU stay following SAH. Finally, despite the positive impact in nimodipine has on recovery and an improving neurological outcomes, physicians most often discontinue nimodipine treatment, primarily as a result of hypertensive episodes that are difficult to control with the oral administration of the drug. Such discontinuation of nimodipine could potentially be avoided by giving the patient GTX104, which because of its IV administration, the rate of infusion can be controlled and may also alleviate the need for careful attention to the timing of oral nimodipine administration at least one hour before or two hours after a meal. For all these reasons we believe IV administration of GTX104 could be a much better option for SAH patients than oral nimodipine. It represents a significant commercial opportunity and we believe GTX104 could be well positioned to rapidly capture market share if the FDA grants approval. We plan to submit our recent PK bridging study results to the FDA very soon. Along with our proposed design for the Phase 3 safety study, which we believe can start as planned in the second half of this year. The safety study is expected to be the final step required to seek regulatory approval under the 505b2 regulatory pathway before submitting our new drug application to the FDA. We believe the safety study should be relatively low risk based on the favorable safety profile observed. Now in more than a 130 patients combined from our Phase 1 PK studies. In addition to GTX104, we remain enthusiastic about the depth of our clinical pipeline, which includes GTX101 and GTX102 and we continue to make steady progress advancing these two drug candidates towards their next major milestones. Excuse me -- as a reminder GTX102 is a novel concentrated oral mucosal spray a betamethasone intended to improve the neurological symptoms of Ataxia-telangiectasia or A-T for short. A-T is a progressive neurodegenerative genetic disease that primarily affects children causing severe disability and for which no treatment currently exists. GTX102 is comprised of the active glucocorticoid steroid betamethasone and can be sprayed conveniently over the tongue of the A-T patient, we believe there is a significant market opportunity for GTX102, as it could be the first FDA approved therapy for the more than 4,080 patients diagnosed in the U.S. Based on third-party market research we estimate the A-T market for GTX102 to be about 150 million in the United States alone. We plan to initiate the PK bridging study of GTX102 in calendar Q3 of 2022 and we continue to expect to report out the results before the end of this year. The objective of this important PK study is to compare the bioavailability of three different doses of GTX102 to an oral solution of betamethasone, which is only available in Europe and to the injectable form a betamethasone, which is available in the U.S. Based on the FDA's guidance following the PK bridging study and assuming the PK bridging study meets its primary endpoint, we plan to conduct a Phase 3 safety and efficacy trial in A-T patients, which is expected to be initiated in the first half of 2023. If both the PK and Phase 3 studies meet their primary endpoints and NDA filing under Section 505b2 would follow. The final program that we have currently in the clinic is GTX101, which again is a non-narcotic topical bio adhesive bupivacaine spray that forms a thin film on contact with the skin in the targeted area of pain. We designed it to help relieve the painful symptoms of Postherpetic Neuralgia or PHN. PHN is the excruciating nerve pain that many older people experience after the visible manifestations of a shingles infection have subsided. We commissioned primary market research with more than 250 physicians that routinely treat PHN patients. And they indicated that a significant unmet need exists. Approximately 40% of patients that are prescribed the standard-of-care, which includes oral gabapentin and lidocaine patches experience insufficient pain relief. Gabapentin does not work well it can cause unpleasant side effects and was recently added to the controlled substance list due to a tenancy for abuse. The patches are difficult to use, they fall off and can cause skin sensitivity and irritation, especially in older individuals and depending on their placement, they're very inconvenient, uncomfortable and unattractive. Additionally, it can take up to two weeks for the patch to work and it can only be worn for a continuous 12 hours and then it must be removed for another 12 hours, so breakthrough pain is common. Given these issues with the oral and patch alternatives too many of these patients end up being prescribed opioids, which given the abuse potential physicians want to avoid at all costs. The potential benefits of GTX101 could include faster onset of action, which is inherent in our active ingredient bupivacaine versus lidocaine, as well as a longer duration of pain relief. GTX101 can be conveniently sprayed on the skin wherever the pain is located and based on the PK profile of bupivacaine we believe that GTX101 may be applied twice a day to the affected area for 24/7 pain relief, although this dosing schedule will need to be confirmed in our clinical trials. We believe GTX101 has the potential to be a game changer as a non-opioid analgesic for PHN patients, who suffer from this debilitating pain. We expect to report results of a mini pig skin sensitivity study in early calendar Q3, we're also planning to initiate a single dose study and a multiple ascending dose study in healthy human volunteers, both in calendar Q3 2022. These two important clinical studies are expected to report out before the end of this calendar year. Results from the multiple ascending dose study is required before we can initiate our Phase 2 program in PHN patients, which is expected to start early in 2023. So you can see that we currently have significant ongoing clinical and CMC activities underway for all three of our pipeline programs. You will also note that we had a total of almost $44 million in cash, cash equivalents and short-term investments on our year-end March 31 balance sheet. We continue to believe this cash position will allow us to complete Phase 3 for GTX104 and submit our NDA for the FDA to review, while also advancing GTX102 into Phase 3 and GTX101 into Phase 2 all important milestones and key value inflection points. We're very excited about the prospects ahead for the company and look forward to keeping you apprised of our progress towards our many milestones in this new fiscal year. I'd like to now turn the call over to Brian Ford, our CFO to review our fiscal â22 financial results. As a conclusion of Brian's remarks, we'll open the call for questions. Brian?
Brian Ford: Thank you, Jan. And welcome everybody to the call. Please note that unless otherwise indicated, all financial numbers that we discussed are denominated in U.S. dollars and the financials are reported conforming to U.S. GAAP guidelines. You should also note that we are a clinical stage company. Thus, we do not yet generate revenues or have any cost of goods expenses. Research and development expenses, net of government assistance for the year ended 31st 2022 totaled $5.6 million, compared to $4.2 million for the year ended March 31st 2021. Our research and development during the year March -- ended 31st 2022 was focused primarily on advancing our three clinical development programs for our GTX104, 102, and 101 drug candidates. All three were acquired in the Grace merger, which was completed in August of 2021. Research and development expenses during the year ended March 31st 2021 related to the Phase 3 clinical program for CaPre, which was discontinued after September 2020. However, it did include some due diligence work and activities on various strategic options under review prior to the Grace merger announcement. General and administrative expenses before depreciation and stock-based compensation expenses for the year ended March 31st 2022 were $9.3 million, compared to $5.5 million for the year ended 31st 2021. The increase was a result of increased legal, tax, accounting, and other professional fees related to the Grace merger. And expenses related to the deal, we do all of our at the market program. Loss from operating activities for the year ended 31st 2022 was $15.6 million, compared to a loss of $16.4 million for the year ended 31st 2021. The company incurred net financial gains for the year ended 31st 2021 or â22 of $5.1 million, compared to a $3.3 million loss for the year ended 31st 2021. The change is primarily due to a change in the fair value of warrant liabilities on the balance sheet. Next year -- I'm sorry, net loss for the year ended 31st 2022 was $9.8 million or $0.27 per share compared to a net loss of $19.7 or $1.33 per share for the year ended 31st 2021. As Jan already noted our cash, cash equivalents and short-term investments totaled $43.7 million, as at 31st 2022, compared to $60.7 million as at March 31st 2021. Based on management's current projections, current cash is expected to fund our lead asset GTX104 through to NDA submission and GTX102 and 101 to additional key milestones. With that, Iâll now turn the call back over to Jan.
Jan D'Alvise: Thanks, Brian. Appreciate that. I'll now turn the call over to the operator. MJ can you open it up for questions?
Operator: Of course. Thank you, Jan. We will now begin the question-and-answer session. Our first question today comes from Leland Gershell of Oppenheimer. Please go ahead.
Leland Gershell: Thanks, Jan and Brian, and thanks for the update. Questions first, with respect to 104, I'm sorry if I missed it in the prepared remarks, but if you could remind us on the design and number of patients or subjects will need in that safety study? And when we might be able to see the results? And then also have a question with respect to the A-T, what -- do you -- I know you have a notice of allowances, do you know when those patents are expected to issue? Thank you.
Jan D'Alvise: Yes. Thanks, Leland and thanks so much for being on the call today. I'll briefly describe what we're thinking of here for the design of the safety trial. And also, turn it over to Monique Champagne, our VP of Clinical Affairs and she can add any additional comments. So we're in the final stages of designing the study right now and we'll be submitting the protocol -- the draft protocol along with the results of our PK study very soon, probably within the next month or two. So we'll submit that to the FDA and then we look for any comments from them on the design, so we are currently on track to initiate the safety study before the end of this year. And we still expect that it will be in roughly 100 to 125 patients, it will be two arms. So we'll be comparing the safety profile of GTX104 with the safety profile of the oral capsule. And so this is important, obviously nimodipine can be withheld from those patients. We don't think they will need more than a couple of dozen sites. We're working with some of the biggest centers in the country, biggest stroke centers. And we would expect pretty decent recruitment, so we're anticipating the study will take probably in the ballpark of 12-months to 18-months to complete. So we're thinking towards the end of 2023 early â24 the study should wrap up, and then it will take a quarter or so to compile all the results and submit our NDA, but we're still on track we believe to submit the NDA in early 2024. Monique, is there anything you'd like to add that I didn't cover there?
Monique Champagne: No, I think the information was complete. However, I believe you also ask some questions on the study design of the am I right?
Jan D'Alvise: Sorry, you broke up . Study design of what?
Monique Champagne: published results or
Jan D'Alvise: You're still breaking up. Can you repeat that.
Monique Champagne: Yes. were there other questions, you wanted to clarify on this line of the recently published key?
Jan D'Alvise: Okay. Got it. Yes, Leland any questions you have on the PK?
Leland Gershell: No, no. The PK looked terrific, so no questions here.
Jan D'Alvise: Yes. I think the other question on the IP, right? The status of the IP and when it would be issued?
Leland Gershell: Yes. Close to the NOAâs, we'll see those patents an issue later this year.
Jan D'Alvise: Monique, can you comment on that.
Monique Champagne: is really bad. Can you please repeat the question?
Leland Gershell: I'm sorry just asking about the patents following the NOAâs when those patents might issue presumably in the coming months?
Monique Champagne: I was informed that everything was on track for patents. So I don't foresee any issue with that.
Jan D'Alvise: Yes. I think that's right. Leland, I think we would expect issuance very, very soon.
Leland Gershell: Thanks so much for taking the question.
Jan D'Alvise: Thanks. Did you have any other questions, Leland?
Leland Gershell: No, that's all from me. Thanks.
Jan D'Alvise: Okay, thank you. And operator, I don't know for some reason the line seems to be breaking up. I don't know if it's just my line.
Operator: You're coming in loud and clear.
Jan D'Alvise: Okay. I had difficulty hearing Leland as well.
Operator: I apologize for that.
Jan D'Alvise: And we have any other questions?
Robert Blum: MJ, do you want to -- MJ maybe while we wait to see if there are additional questions, I'll jump in here with just a couple, Jan, if that's okay here with you. Leland touched a little bit on GTX104 maybe transitioning to GTX102 has the 102 PK bridging study protocol been developed or approved.
Jan D'Alvise: Yes. That's a great question. So yes, the study has been designed, it's going to be fully randomized open label five-arm crossover study and of course it's going to evaluate the comparative bioavailability and pharmacokinetics of GTX102, which again is a concentrated oral mucosal spray and will be comparing it to betamethazone administered as an oral solution, which is only available in Europe. So we'll be doing that comparison that arm for future filing purposes in Europe. As well as in IM arm, so it will be an injectable form of betamethasone for filing purposes in the U.S. and in Canada. So that study -- that protocol has been finished, we are -- this will be conducted in healthy male and female volunteers and is set to start within the next month or so. So we're fully on track with that program.
Robert Blum: Okay, perfect. And then just I guess on the cash burn of Jan or Brian wants to talk through this, but from a monthly, sort of, burn perspective now versus when some of these trials begin, is there any update that you can provide to us there?
Jan D'Alvise: Sure. Brian, do you want to take that one?
Brian Ford: Sure. As we've been ramping up the research and development activities for these three products our monthly burn has been roughly 800 to 1 million over the last nine months. Going forward, we expect that to increase to upwards of $2 million a month, as we get heavier into the clinical trials, which are administered by contract research organizations and that sort of thing. So that was a fully planned scale up and that's where we expect things to land over the next several months.
Robert Blum: Okay, perfect. Thank you for that. That's what I had. MJ if you want to provide instructions on how to queue up if there are any questions -- any further questions.
Operator: Of course. If there are no further questions, I would like to turn the conference back over to the management team for any closing remarks. Please go ahead.
Jan D'Alvise: Okay. Thank you, MJ. I want to thank everyone for taking the time to be with us today on this call. I also want to reiterate our enthusiasm for our thre clinical development programs and our excitement about the prospects for the new fiscal year. We believe fiscal â23 can be a truly transformative year for the company as there are numerous important potential value inflection points in the coming 12-months. With important trial results expected to be reported for GTX102 and 101 before the end of this calendar year. By the end of this fiscal year, which again as a reminder is on March 31st 2023, we intend to have two Phase 3 programs underway for GTX104 and 102 and the Phase 2 program underway for GTX101. As a reminder, each of these drug candidates are being developed to address important unmet medical needs in the respective rare and orphan disease indications. And we hope that our efforts will result in better treatment options for these patients, their families and the physicians, who treat them. In the drug development world this is what makes it so exciting for us to come to work each and every day. As always we thank you all for your continued support of Acasti and I wish you a great rest of your day. MJ, I'll turn it back over to you.
Operator: Thank you, Jan. This concludes our conference today. Thank you for attending. You may now disconnect.
