Virios Therapeutics, Inc. (VIRI) on Q1 2022 Results - Earnings Call Transcript
Operator: Good morning, and welcome to the Virios Therapeutics, Incorporated First Quarter 2022 Financial Results Conference Call. Please be advised that today's call is being recorded at the company's request. At this time, I'd like to turn the call over to Angela Walsh, Senior Vice President of Finance and Treasurer for Virios Therapeutics. Please proceed, Angela.
Angela Walsh: Thank you. Good morning, everyone, and thank you for joining us on today's conference call. We are pleased to be with you today to discuss Virios Therapeutics first quarter 2022 financial results, as well as to provide you with an update on the operational progress we have made during the past three months. Please note that our financial results press release is now available on our Web site. We'll start today's call with our CEO, Greg Duncan, providing you with a brief update on our corporate progress during the past quarter, and then I will return to review our first quarter financial results. In addition, Ralph Grosswald, our Senior Vice President of Operations, is with us for the question-and-answer portion of the call. Before we begin, I'd like to remind everyone that statements made during this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially from the information expressed or implied by these forward-looking statements. For more information regarding such risks and uncertainties, please see the risk factors outlined in the company's filings with the SEC. Any forward-looking statements are made only as of today, and we disclaim any obligation to update these forward-looking statements other than as required by law. Please see the forward-looking statements section in our financial results release issued this morning for more information. It is now my pleasure to turn the call over to our CEO, Greg Duncan. Greg?
Greg Duncan: Thank you, Angela, and good morning, everyone. The team and I are very pleased to provide you with an update on the substantial operational progress Virios Therapeutics, Inc. has made over the past few months. First off, I'm pleased to report that under the expert leadership of our Chief Medical Officer, Dr. Mike Gendreau, our research team has now recruited 425 patients into our landmark Phase IIb fibromyalgia clinical study, also known as FORTRESS. This exemplary effort keeps us on track to report top line results from the FORTRESS study in September of this year, roughly four months from today's call. You may recall, the primary endpoint for this study will focus on the therapeutic effectiveness of our lead development candidate, IMC-1, a fixed dose combination of famciclovir and celecoxib to reduce systemic fibromyalgia-related pain. IMC-1 pain reduction effectiveness will be measured using the very same endpoint that was used in our successful Phase IIa fibromyalgia study. This pain endpoint was also used to approve the three treatments the FDA has approved to date to treat patients with fibromyalgia. We will also assess IMC-1's effects on a host of other key secondary outcomes measures related to both patient quality of care as well as safety. In parallel to our FORTRESS Phase IIb study, our chronic toxicology studies in two species are progressing as planned under the direction of our Senior Vice President of Operations, Ralph Grosswald. The results of these studies will be required by regulatory authorities before we are permitted to dose study participants with IMC-1 for intervals of one year or more, which we plan to do in our Phase III clinical study program. The chronic toxicology program is timed to complete concurrently with our FORTRESS trial. So, we anticipate being able to propose a final Phase III program to the FDA at the conclusion of our current study. As a complement to our ongoing fibromyalgia Phase IIb research program, this quarter, we also announced that we will be progressing our second development candidate, IMC-2, a combination of valacyclovir and celecoxib into clinical development. This exciting new exploratory trial will assess the potential of IMC-2 to reduce fatigue and other symptoms associated with Long COVID sequelae. This program is being supported through an unrestricted investigational grant to the Bateman Horne Center, a nonprofit interdisciplinary center of excellence advancing the diagnosis and treatment of chronic fatigue disorders, fibromyalgia, post-viral syndromes and related comorbidities. For context, long COVID can be very debilitating and is estimated to affect up to 30% of patients who were previously infected with the COVID virus. This prevalence translates to well over 100 million Long COVID patients on a global basis and more than 20 million cases right here in the United States. And finally, we want to convey that our current cash position is expected to provide the company with operational runway through the end of this year 2022. With that brief update on our operational progress, let me turn it back over to our Senior Vice President of Finance, Angela Walsh, to discuss our quarter one financial results. Angela?
Angela Walsh: Thank you, Greg. As of March 31, 2022, we had $11.4 million in cash as compared to $14 million in cash as of December 31, 2021. As Greg just mentioned, we expect our current cash to be sufficient to fund the company's operations through the end of 2022. With respect to our income statement, as a development stage company, we did not generate revenue during the three months ended March 31, 2022, or during the three months ended March 31, 2021. We reported research and development expenses of $2.8 million for the first quarter of 2022 as compared to $1.7 million for the first quarter of 2021. The increase in research and development expenses quarter-over-quarter was primarily due to an increase in clinical trial expenses for our FORTRESS study of $1.4 million and an increase in salary and related costs of $0.1 million. This was offset by a decrease of $0.4 million for expenses related to our chronic toxicology program and drug development and manufacturing costs. We reported general and administrative expenses of $1.2 million for the first quarter of 2022 as compared to $1.4 million for the first quarter of 2021. The decrease quarter-over-quarter was primarily related to a decrease in accounting and legal fees. And finally, we reported a net loss of $4 million for the first quarter of 2022 as compared to a net loss of $3.1 million for the first quarter of 2021. The higher net loss was primarily due to the higher research and development costs I just mentioned. I'll now turn the call back over to Greg to moderate the question-and-answer portion of today's call. Greg?
Greg Duncan: Thank you, once again, Angela. In closing, we believe the role of activated herpes virus as a potential catalyst in triggering diseases like fibromyalgia as well as fatigue-related disorders and chronic GI disorders represents an exciting new innovation paradigm. We believe that the various therapeutics combination antiviral development programs are supported by both mechanistic and clinical data. The novelty of our approach is further illustrated by the Fast Track review designation granted by FDA to IMC-1 for the treatment of fibromyalgia, which is to the best of our knowledge the first time a new drug candidate has been granted this designation for fibromyalgia. If the forthcoming IMC-1 fibromyalgia Phase IIb data due this September are consistent with the data that emerged from our previously successful Phase IIa study, we believe our novel antiviral combination could be a true game-changer for the millions of patients in the fibromyalgia community. I hope you'll agree that it's shaping up to be an exciting year at Virios Therapeutics. As always, we remain committed to frequent and proactive outreach to the investment community, as well as the medical community as we progress our journey to improve treatment standards for the millions and millions of fibromyalgia patients across the globe. Operator, we are now ready for questions.
Operator: Your first question for today is coming from David Bautz with Zacks Research. David, your line is live.
David Bautz: Hey, good morning everyone. Thanks for the overview this morning, Greg. So, I'm curious if we assume positive results from the fibromyalgia trial that's currently ongoing, is the Phase III program something that you think Virios can handle on their own, or do you think that's something that's going to require a partnership to invest forward?
Greg Duncan: Good morning, David, and thank you for an excellent question. So, as you know, for context, the Phase IIb trial has really been designed as a de facto of Phase III. It's consistent with virtually all of the requirements for a Phase III program. The size, the scope, the endpoint, the secondary endpoints are all quite material to FDA's consideration of approving a drug for this particular diagnosis of fibromyalgia. So, we hope to make the case that the Phase III program will be one additional Phase III program. We can never guarantee that. But we hope given the quality of the trial, the length, the duration and the importance and concordance of the endpoints with the three previously approved drugs that we have a pretty cogent case to make to FDA that one Phase III program is required. Whether it's one or two, we feel very comfortable in the space. As you well know, our Chief Medical Officer, Dr. Mike Gendreau, actually ran the Phase IIa trial, which was successful a few years ago. He is championing the Phase IIb. And so the idea of progressing one or two Phase III programs doesn't scare us. We think it's an excellent opportunity. That said, we would never close the door to the right partnership if that provided Virios' shareholders with the best chance for success and ultimately continued valuation increases. So, we will look at our options when we get there. And we have capital, as Angela mentioned, to get us through the end of this year. Our hope would be to clean and scrub the data and to get down to the Food and Drug Administration by quarter four of this year and then choose what's the best path forward, go alone or in some form of partnership. We think all of those options will be on the table, presuming success with the ongoing Phase IIb.
David Bautz: Okay, great. And then lastly, can you provide an update on the IBS program? And if anything has changed in terms of how you're thinking about running the study or time lines or anything along those lines?
Greg Duncan: Sure, sure, an excellent question. So, as you may recall from our last update, we pivoted actually to the Long COVID program, which we're quite excited about because we can actually handle that through the proceeds we have today. And as a consequence, as you know, we kicked that program off last quarter. We hope to enroll patients sometime in this quarter or certainly by summertime. And the goal in the Long COVID program will be to recruit that program ideally by the end of the year. And hopefully, we'll have some top line results in the first-half of 2023. I hasten to add that this is supportive to an unrestricted investigational grant for the Bateman Horne Center so we don't completely control timing. But that's the rough time frame that the Bateman Horne Center has communicated to us. This is really exciting because as we mentioned in the prepared remarks, the University of Michigan study recently estimated there's 100 million people suffering from post-COVID or Long COVID sequelae, which you can see in the lay press and the medical press, et cetera. So, this is a very significant opportunity, and we were able to fund it through our current proceeds. The focus is also to complete the fibromyalgia Phase IIb program, which, as we stated, we expect results from in September of this year. Once we have those data in hand and have both the efficacy and the safety data in hand, we think that's the opportune time to get down to FDA, not just to talk to the analgesic division about a Phase III program for fibromyalgia, but also would be the opportune time of both efficacy and safety data in hand at the doses used in the Phase IIb trial to engage with FDA about requirements for a Phase IIb or Phase III program for IBS. So, post data for the fibromyalgia program is the right time to do that. Those could run concurrently with the fibro program starting sometime middle of next year ideally. And that's the rough time frame we would guide to.
David Bautz: All right, sounds good. Thanks for taking the questions.
Greg Duncan: Thank you very much. David, we appreciate you attending today's call.
Operator: There are no further questions in queue. I would like to turn the floor over to Greg for any closing remarks.
Greg Duncan: Thank you very much, Holly. I think for those of you who are participating on the call or on the webcast know this is a very exciting time for Virios Therapeutics. We are focused on two very significant commercial opportunities. As we outlined today, the very large dissatisfied fibromyalgia marketplace which epidemiologic estimates suggests impact somewhere between 2% and 8% of the population. Even using the low end of that range, you're talking about 150 million to roughly 200 million patients worldwide. The market is established, but unfortunately dissatisfied. Dissatisfaction is existing with both patients as well as prescribers. And all market research suggests that only 15% of the doctors who treat these patients are satisfied with their current therapeutic options. So, there's more to be done there. And we hope to do more with IMC-1 presuming continued development success. We're also focused on the Long COVID program, which I hope you will agree is certainly, in our view, a rapidly emerging unmet medical need. As I mentioned, the University of Michigan study presented this year suggest there's 100 million patients who suffer from Long COVID sequelae worldwide, which makes the market roughly on par with that, but slightly less of the fibromyalgia marketplace, so a very significant opportunity here. And our thesis is much as it is with fibromyalgia and that is, we believe it is secondary herpes viruses that are getting activated when there's co-infection between the SARS virus and these herpes viruses that are leading to the breakthrough symptoms, things like fatigue, pain, et cetera. And we hope to demonstrate that correlation through our ongoing investigational program. As you are well aware, our lead candidate IMC-1 has already demonstrated significant pain reduction and tolerability better than placebo on our completed Phase IIa trial. The patients that are in our Phase IIb trial are very consistent with the patients in the IIa. And the endpoint is exactly the same endpoint we used in the IIa. And as you guys know, if you are investing in biotech, the two things you want to keep consistent are your endpoint and your patient population. And we're doing that and we expect results from this landmark program in September of this year. The novelty of the approach is certainly supported by our Fast Track review designation. And we have a team and Board of Directors who have led development and commercialization of many category-leading drugs, including two of the three FDA-approved medicines to date. We strongly believe this experience has enabled us to stay on schedule to deliver top line results from our fully recruited Phase IIb program in quarter three of this year, September, more specifically. This is clearly important to Virios stockholders, but it's also quite important to the millions of patients who are suffering from this particular disease, the pain, fatigue, the mental health complications that are concordant or commensurate with the fibromyalgia diagnosis. In short, if the results from our Phase IIb program are consistent with the results we've already demonstrated in our Phase IIa study, we hope to change the standard of care for fibromyalgia patients worldwide. And that's a very exciting thing to be able to do. And the results -- our next pivot, if you will, from the value inflection point is only four months away from today's call. So, I want to thank you for your interest in Virios Therapeutics, for your support and also for attending today's call, and we look forward to continued updates. Thank you all for attending today.
Operator: Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.
