BioCardia, Inc. Q2 FY2023 Earnings Call

Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the BioCardia 2023 Second Quarter Conference Call. At this time, all participants are in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Participants of today’s call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call through November 9, 2023. At this time, I would like to turn the conference over to Miranda Peto of BioCardia Investor Relations. Please go ahead, Miranda.

Thank you very much. Good afternoon, and thank you for participating in today's conference call. Joining me from BioCardia’s leadership team are Peter Altman, Ph.D., President and CEO; and David McClung, the Company’s Chief Financial Officer. During this call, management will be making forward-looking statements including statements that address BioCardia’s expectations for future performance and operational results, references to management’s intentions, beliefs, projections, outlook, analogies, and current expectations. Such factors include, among others, the inherent uncertainties associated with developing new products, technologies, and obtaining regulatory approvals. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from these statements. For more information about these risks, please refer to the risk factors and cautionary statements described in BioCardia’s reports on Form 10-K filed, March 29, 2023, and the company subsequently filed quarterly reports on Form 10-Q. The content of this call contains time-sensitive information that is accurate only as of today, August 09, 2023. Except as required by law, the company disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Peter Altman, Ph.D., BioCardia’s President and CEO. Peter, please go ahead.

Thank you, Miranda, and good afternoon to everyone on the call. BioCardia’s current efforts are focused on advancing its autologous and allogeneic cell therapy platforms to treat significant unmet cardiovascular and pulmonary diseases, specifically ischemic heart failure, chronic myocardial ischemia, and acute respiratory distress syndrome. All of our cell-based therapies involve local delivery of the therapeutic to the heart or lungs, where we intend them to act locally. This mission has not changed and all of these programs are still viable. We had a solid second quarter of 2023, and our team delivered on the milestones promised. For our CardiAMP Autologous Cell Therapy for Heart Failure or BCDA-01, we implemented the adaptive statistical analysis plan with the complete FDA review. We completed our submission in Japan towards approval based on existing data, and we are finally seeing a significant increase in enrollment, including a number of patients from Canada. For our Cardiac autologous cell therapy for chronic myocardial ischemia, we continue to make progress on enrolling in the rolling cohort in ways that we can enhance the trial. And for our cardio allogeneic cell therapy in heart failure, first patients are about to be enrolled. BioCardia also closed on a modest financing of $2.6 million in which insiders participated, had a publication with our partner, CellProthera, on the importance of therapeutic delivery, had three invited scientific presentations, and advanced business development discussions. Q2 was a good quarter. This third quarter, we were thrown a curveball when the Data Safety Monitoring Board for the CardiAMP heart failure trial or BCDA-01 recommended we pause enrollment in the study. We have detailed the recommendation in our July 24 press release, and I will read it for you here. "Based on an analysis of the trial data, the primary FS composite endpoint assessment, and a supplemental analysis presented on 7/19/23, unrelated to any emergent safety events, the DSMB recommends pausing new patient enrollment and any potential crossover patient procedures pending an outcomes analysis of patients currently completing the one-year follow-up as well as the patients completing their imminently scheduled treatment. The DSMB recommends notifying currently enrolled patients completing their treatment sequence that the trial will be paused following their scheduled treatment to assess intermediate study results. The DSMB recommends that the blind not be broken at this time to protect the integrity of the outcomes yet to be collected and to ensure that the study may be restarted without compromise after completion of the one-year data analysis." It is confusing to us, as there were no treatment emergent safety issues reported, patients in aggregate appear to be showing clinical improvement, and enrollment had accelerated significantly in recent months. We have followed the Data Safety Monitoring Board's recommendation. We continue to randomize and monitor patients enrolled in this clinical study, in which both patients and evaluating physicians are blinded to the treatment group. We need more information to decide on the next steps for this program, which could be to restart the trial to initiate a new trial protocol under the same regulatory submission or to abandon the program completely. Today, we don't feel that the DSMB proposal to wait for 14 months to potentially restart the trial makes any sense. If we initiated a new trial protocol, there are changes we would like to include to simplify the performance of the trial, and there are changes that the FDA has expressed interest in, including specifically a change to a different functional capacity measure for the third tier of the Finkelstein Schoenfeld composite endpoint. If there are interesting signals in the trial that support a new trial protocol with a different endpoint, our sense is we could implement this very quickly. A second trial, if it makes sense, would also address the FDA's desire to have two separate trials for an approval. One of our first actions on receiving the Data Safety Monitoring Board's recommendations was to confirm that the Data Safety Monitoring Board review materials were correct. The only data in the trial at this interim analysis that has been well monitored or cleaned is that for the primary composite endpoint, the survival data, the major adverse cardiac event data, and the functional capacity by six-minute walk data. We engaged independent experienced data analysis and clinical consultants to review the primary endpoint analysis and secondary outcome measures. They will be able to see the information that the DSMB reviewed as well and assess whether a follow-up meeting with the DSMB is warranted. We have been advised to stay blinded during this process to preserve options should the data set be better with respect to the primary endpoints. Soon thereafter, BioCardia may have a segregated team review the primary endpoint based on the monitored clean data and the secondary endpoints based on the available unmonitored data. Additional sub-analyses on this interim data set will also likely take place to inform next steps. New material information will be shared publicly as appropriate. On our June submission of the CardiAMP Cell Therapy system to Japan's Pharmaceutical and Medical Device Agency, or PMDA, for a first formal consultation towards approval for the indication of ischemic heart failure with reduced ejection fraction was based on existing safety and efficacy data. The submission was reviewed and accepted by the PMDA for formal consultation with some clarifying questions which have been addressed. The PMDA consultation could take up to four months to schedule for their normal review process, although dates in September have been requested. Subsequent interactions with PMDA are expected. To our knowledge, we have a great deal more safety and efficacy data than other cardiac cell therapies approved or reported to be seeking approval soon in Japan. We have 185 procedures performed to-date in the Cardiac Phase 1, 2, and 3 programs with good support for efficacy from the 63 patients where we have complete visibility into the data and apparently good safety from the additional 122 procedures to which we are still blinded. There are other compelling reasons for PMDA to support approval, given that elements of the system already have first world regulatory approvals in Japan, the EU, and/or the USA, and the procedure is minimally invasive where other CardiAMP Cell Therapy offerings in Japan require surgical open-chest access to the heart. If approved, the CardiAMP Cell Therapy system has potential to be the first minimally invasive catheter-based cell therapy available in Japan. PMDA has confirmed that should we be approved, other developers of cell therapies in Japan could also be unable to use our delivery systems if we authorize it ahead, such that an approval of CardiAMP Cell Therapy could lead the field as a whole. As we work through the process of gathering more information to decide next steps for the BCDA-01 program and consult with PMDA, we expect important milestones for our other clinical programs. The CardiAMP Cell Therapy trial for chronic myocardial ischemia or BCDA-02 is a Phase 3 multicenter randomized double-blinded controlled study intended to include up to 343 patients at up to 40 clinical sites. The company expects to complete enrollment in the rolling cohort of five patients in the fourth quarter of 2023 and begin the randomized phase of the trial. A number of leading investigators, including both principal investigators in this trial, believe this to be the most compelling indication for this therapy. Planning for the randomization phase is already underway based on promising experience in the patients treated to date; strategies of using the cell population analysis as a means to set patient dosing as opposed to excluding patients and means to include more patients based on modifying baseline exclusion criteria are under consideration to enable more rapid enrollment. Six additional centers are actively being onboarded. The company's CardiALLO allogeneic cell therapy for ischemic heart failure or BCDA-03 program is a Phase I/II clinical trial encompassing 69 patients. Clinical-grade cells have been manufactured at BioCardia and are ready for use with the company's proprietary delivery system, also manufactured at BioCardia. The first clinical center has finalized its clinical study agreement and received conditional IRB approval. Cellular preparation test runs at the clinical site and the site activation vision are scheduled for this month. Patient enrollment is expected to begin in the third quarter. This study builds on three previous trials of mesenchymal stem cells in ischemic heart failure using the company's proprietary Helix Delivery System, which encompassed 93 patients treated with no treatment-emergent serious adverse events. Previous trial results showed compelling early signals for benefit. The company's allogeneic cell therapy trial for acute respiratory distress syndrome or BCDA-04 has been deprioritized to focus current financial resources on the other programs. This decision was based on the greatly reduced population of patients with acute respiratory distress secondary to COVID. When resources permit, BioCardia intends to expand the current indication to a broader population beyond COVID-induced ARDS and to other pulmonary indications. BioCardia's Helix Biotherapeutic Delivery System or Helix delivers therapeutics into the heart muscle with a penetrating helical needle from within the heart. It enables local delivery of cell- and gene-based therapies, including BioCardia's own cell therapies. It remains the safest, easiest to use, and most efficient means for the delivery of cells, genes, and proteins to the heart muscle. The delivery platform includes proprietary approved steerable guide systems, approved delivery catheters, and investigational imaging navigation. Business development is active around our Helix Biotherapeutic Delivery System and in other areas, and we are working to close meaningful deals by the end of the year. These deals have the potential to enable us to avoid financing. Underlying our programs is extensive intellectual property. In June, the company announced that the Japan Patent Office granted a patent titled Radial and endocardial delivery catheter, with a patent term that will expire in 2034. The patent describes interventional biotherapeutic delivery catheters to deliver biologics to specific target sites within the heart chamber. The allowed claims covered by BioCardia’s helical needle tip catheter technology platform in existing products and in future products in active development with enhanced features. Also in June, the European Patent Office issued an intention to grant for a patent titled Site Selection Entry and Update with Automatic Remote Image Annotation. The patent application describes techniques to bring previously obtained high-resolution, three-dimensional images of patients' hearts, such as from a magnetic resonance image or MRI, into the cardiac catheterization procedure suite and to merge this image with the X-ray images that the physician uses to navigate during the procedure. This approach has been compelling in preclinical studies and is expected to further enhance targeting ease of procedures and data collection compared to our current procedures. In summary, we have four significant compelling clinical programs and strategic assets around our three platforms of great value. We recognize that the market share price does not reflect this. We recognize that there's disappointment and confusion from the DSMB response, but there is a wealth of data and active programs generating more data, and products are built on data. We have significant near-term catalysts ahead from each of our three cardiac programs, as well as our business development activities. I will now pass the call to David McClung, our CFO, who will review our Q2 2023 results.

Thank you, Peter, and good afternoon, everyone. Revenues were approximately $43,000 for the three months ended June 2023, comparable to approximately $975,000 for the first three months ended March 31, 2022, primarily due to the timing of collaboration agreement revenues. Expenses quarter-over-quarter were remarkably similar. Research and development expenses were approximately $2.3 million for the three months ended June 2023 and for the three months ended June 2022. Selling, general, and administrative expenses remained at approximately $1.2 million in the second quarter of 2023, comparable to the same amount in the second quarter of 2022. Our net loss was approximately $3.4 million in Q2 2023, as compared to $2.5 million in Q2 2022, primarily due to the fluctuation in collaboration revenues. Net cash used in operations during the quarter was approximately $3.2 million, as compared to approximately $2.6 million in the second quarter of 2022. In BioCardia ended the quarter with approximately $4.3 million in cash and cash equivalents, which provides runway into November without additional capital or funding from the business development and other activities that Peter mentioned earlier. This concludes management's prepared comments, and we're happy to now take questions.

Thank you. At this time, we will open up the call to questions. Today's first question comes from Joe Pantginis with H.C. Wainwright. Please proceed.

Hi, everybody. Good afternoon and thanks for taking the question. So, Peter, I want to focus on the DSMB review, because obviously, like you said, I mean, this is somewhat of a really unique situation. And I guess I want to reconcile something even though you don't have the answers yet and then look forward a little bit. So if the DSMB comes out and says that unblinded data are not likely to meet the primary endpoint, usually, you would be in trial wind-down activities right now and the study would be essentially done. But it's not, and that's the very unique aspect. So I guess, from that standpoint, how do you reconcile that comment with the study still ongoing and that you've seen blinded improvements in patients? And then the second aspect of that question is, which I think is important for listeners is then for patients that will be followed in a blinded fashion to the one-year benchmark. You know what are the benchmarks that we and investors should be looking for with regard to deltas and treatment effects?

Thank you, Joe, for your question regarding the DSM review and its complexities. On the first part, I don’t have complete clarity, so I can only speculate. As mentioned in our prepared remarks, we share some confusion about this, but we have gathered a strong Data Safety Monitoring Board. As we analyze the situation, there could be a few considerations. To summarize for those who might not be fully aware, we have a significantly low mortality rate in the trial compared to recent clinical trials for the latest guideline-directed therapy reported in the New England Journal of Medicine, and we also see a low rate of major adverse cardiac events. These two factors are part of the primary Finkelstein-Schoenfeld three-tiered endpoint. The third factor is the six-minute walk, and I can speculate there might be an issue with how that distance measure is being used as the primary endpoint. Given the low levels of mortality and MACE events, the six-minute walk might have a more considerable impact on this trial than we had anticipated. The way it is factored into the Finkelstein-Schoenfeld endpoint could also have ramifications. We are analyzing that data, which has already been reviewed by an external group, and we are confirming that the conclusions drawn by the DSMB are based on a sound data analysis. Additionally, we have engaged an independent clinical advisor who will review all materials and determine whether a follow-up conversation with the DSMB is warranted to potentially adjust their recommendations. Currently, we feel that a restart in 14 months does not seem sensible for management. However, we have been advised to remain blind to the data to maximize our potential moving forward. We expect this will change after we take the next steps. That explains our current position. Now, regarding your second question about the trial wind down.

No, more of benchmarking – sorry. Forgive me that margin one year, yeah.

Yes. Regarding the trial wind down, the information we receive will influence our data. We are still randomizing patients today, and since all the data confirms safety and efficacy, we remain optimistic about our direction. We expect to randomize all outstanding patients within the next six to eight weeks, followed by a year of follow-up before the final data readout. The interim readout, if data is available, will face challenges as many endpoints have not yet been monitored. I will be particularly focused on the primary endpoint; the mortality data is crucial. If we encounter unexpected losses in that area, it would be surprising. The next important measure will be the MACE data, and any losses there would also be noteworthy. However, given the low rates in this treated population, I do not anticipate any significant signals from those endpoints. I am not privy to the data, so this is my best guesswork. My expectation is that if any problems arise, it might be with the six-minute walk. When examining other pre-specified endpoints, such as quality of life and extensive echo data from our core laboratory at Yale, we might find interesting insights that boost our confidence. We have not thoroughly assessed the two-year follow-up data yet, but understanding the long-term outcomes for these patients will be crucial. I will continue to monitor survival data, MACE data, and functional endpoints like the six-minute walk, quality of life, and all echocardiography data, including LV ejection fraction and dimensions. These are important and objective endpoints, and we'll see how things progress from here. Currently, we do not understand why there would be a pause in the trial. If they believe we won't meet the primary endpoint, it is possible they might stop and restart the trial with a different variable besides the six-minute walk, but I cannot say for sure. It's all speculative. We are being cautious as we move forward, acting in the best interests of our shareholders and patients. We are taking the necessary steps in a thoughtful order, working with experts to ensure we reach the right conclusions as quickly as possible.

Peter, thanks a lot. I appreciate the color and the speculation for this pretty unique situation and looking forward to the outcomes. Thanks a lot.

Yeah, appreciate the question, Joe.

At this time, we are showing no further questions in the queue, and this does conclude our question-and-answer session. I would now like to turn the conference back over to Peter Altman for any closing remarks.

I want to thank all of you for participating in today's call and for your interest in BioCardia and our primary mission to treat heart disease. We look forward to sharing our continued progress, and as I always say, stay healthy, be kind and have a wonderful day. Thank you.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.