Earnings Call Transcript - BCDA Q4 2021

Operator, Operator

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the BioCardia 2021 Year-End 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 this 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 June 29, 2022. I would now like to turn the call over to Jules Abraham of CORE IR, the company's Investor Relations firm. Please go ahead.

Jules Abraham, Investor Relations

Thank you, Andrea. Good afternoon, everyone, and thank you for participating in today's conference call. Joining me today from BioCardia’s leadership team are Peter Altman Ph.D, President and Chief Executive Officer; 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 or operational results, references to management's intentions, beliefs, projections, outlook, analysis, or current expectations. Such factors include, among others, the inherent uncertainties associated with developing new products or technologies and obtaining regulatory approvals. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in BioCardia's most recently filed periodic reports on Form 10-K, Form 10-Q, and Form 8-K filed with the SEC, particularly the cautionary statements in them. The content of this call contains time-sensitive information and is accurate only as of today, March 29, 2022, except as required by law. BioCardia disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. With that, it's now my pleasure to turn the call over to Peter Altman Ph.D, the company's President and CEO. Peter, please go ahead.

Peter Altman, CEO

Thank you, Jules and good afternoon to everyone on the call. BioCardia continues to execute in its efforts to advance its meaningful pipeline of cell and cell-derived therapeutics to treat significant cardiovascular and pulmonary diseases. 2021 was a big year for BioCardia’s team. We have progressed significantly in the development of all four of our therapeutic candidates, based on our autologous and allogeneic cell therapy platforms. I'm going to touch on each of these core programs in turn. First, our efforts to complete the CardiAMP autologous cell therapy pivotal clinical trials for the indications of heart failure or BCDA-01 and chronic myocardial ischemia or BCDA-02 have had some nice milestones. These include the receipt of an FDA breakthrough designation, successful Data Safety Monitoring Board reviews, and Health Canada No Objection Letter and the issuance of the new CMS reimbursement code to support both pivotal CardiAMP Cell Therapy clinical trials. The FDA grant of breakthrough designation for the CardiAMP Cell Therapy System in heart failure is an enormous accomplishment that has been years in the making. This FDA breakthrough designation means that after the FDA performed an extensive review of all of the available patient-by-patient data, the agency made a formal assessment that the CardiAMP Cell Therapy has the potential to be better than standard of care for patients with ischemic heart failure. Physicians that care for these patients, and the patients themselves can benefit from this independent review by the FDA when they consider the CardiAMP Cell Therapy as an option. Although, we have said that signals of patient safety and benefit are compelling all along, it has greatly enhanced the credibility of the therapy for all involved that the FDA's granting of Breakthrough Designation aligns with this perspective. It also shows that the FDA recognizes the current therapies haven’t addressed the enormous need that exists for these patients. The Breakthrough Designation results are having significant advantages in our FDA interactions ahead, but most importantly, it is the FDA saying that the autologous cell therapy we are advancing for these patients is important. Although, the CardiAMP Cell Therapy Trials are covered by CMS, many private insurers don't follow CMS' lead. As a result, many patients with heart failure, who would qualify for our trial clinically, have been excluded from receiving this FDA designated breakthrough cell therapy because of insurance. Although, the Breakthrough Designation may increase the frequency with which private insurers support covering the CardiAMP Cell Therapy, we have set out to solve this in three ways. First, after significant sequential filings with both the biologics and device groups at Health Canada, the CardiAMP Cell Therapy in heart failure received a No Objection Letter. This letter allows the trials to advance in Canada where there are world-class sites we seek to bring into this trial. These clinical leaders are expected to help the program toward completion as BioCardia is paying for all patients enrolled without the logistical challenges with respect to private insurance reimbursement that exists in the United States. Second, as the sponsor, we are now providing sites with CMS approved coverage of standard clinical costs for patients whose private insurer has declined to cover our investigational FDA designated breakthrough cell therapy for patients with heart failure. This can allow all patients to receive therapy regardless of insurance, and is expected to double the number of eligible subjects in the trial in the United States. Third, we saw additional clarity from CMS in the form of a reimbursement code supporting both the treatment and control arms of the CardiAMP Cell Therapy procedures. CMS has issued a new procedure code C9782, which applies to the CardiAMP Cell Therapy clinical trials in both indications. We are thankful for the efforts of Health Canada, FDA, and CMS on these initiatives related to the CardiAMP Cell Therapy platform, which enhances the attractiveness of the trial and the therapy for centers, physicians, and patients. In 2021 and 2022, we have had three Data Safety Monitoring Board reviews of the blinded CardiAMP Heart Failure Trial results. In all instances, the Data Safety Monitoring Board has said the trial should continue as planned. These initiatives and continued good data coupled with the waning impact of COVID-19 at clinical sites throughout the country are operationally important for the completion of the CardiAMP Autologous Cell Therapy trials in the United States and in Canada. As a last item on the CardiAMP Cell Therapy, we have initiated a discussion with Japan's Pharmaceutical and Medical Device Agency regarding the registration of CardiAMP Cell Therapy based on the quality of our clinical data and the regulatory approvals that exist around all elements of the CardiAMP Cell Therapy System in Japan, the United States, and the European Union. Now, I'd like to move to our two allogeneic cell therapy product candidates both supported by our allogeneic Neurokinin-1 Receptor Positive culture expanded mesenchymal stem cell platform, which has progressed greatly over the last year. Our allogeneic Neurokinin-1 Receptor Positive culture expanded mesenchymal stem cell program in heart failure, which we have designated BCDA-03 is targeted to patients who have been excluded from our lead program due to the nature of their cells. This program has completed the Chemistry Manufacturing and Controls validation and is completing additional pharmacology and toxicology studies in animals. Our allogeneic program on the same allogeneic Neurokinin-1 Receptor Positive culture expanded mesenchymal stem cells in Acute Respiratory Distress Syndrome has also completed Chemistry Manufacturing and Controls validation, its pharmacology, and toxicology studies. In March of this year, we submitted an IND to the FDA. We expect news in April from the FDA that this therapy may proceed to treat patients or will be placed on clinical hold with additional items to work through. In summary, we are advancing four therapeutics cell therapy product candidates based on our autologous and allogeneic platforms. The therapeutic delivery systems we have created for our own programs are actively being used by partner programs and we believe that both patients and our shareholders will benefit from the success of our partners.

David McClung, CFO

Thank you, Peter. Our financials show that we are disciplined and strategic in the use of capital. Revenue for the year ended December 31, 2021, totaled just over $1 million compared to $145,000 for the year ended December 31, 2020. The $870,000 increase was primarily due to collaborations with corporate partners. This financial contribution helps to reduce our operating burn at each of these collaborations as they have the potential to convert into significant collaboration for the company. The net loss for 2021 was $12.6 million compared to a net loss of $15 million in 2020. Net cash used in operating activities in 2021 was only $10.4 million compared to the cash used in 2020 of $12.4 million. This represents a decrease in overall spending for operations of approximately $2 million through the end of the year December 31, 2021, compared to December 31, 2020. We ended 2021 with just under $13 million in cash and equivalents, which we anticipate will be sufficient with our other planned activities to carry us through 2022. We have also completed the transition of our laboratories and manufacturing to our new Sunnyvale facility, which has been designed to accommodate our clinical, commercial manufacturing, and office needs for both our cell and cell-derived therapies and our device delivery systems. Most of this transition and construction expenses were incurred in 2021, and with our new Sunnyvale lease, we have reduced annual facility expense by roughly $500,000 going forward, while significantly enhancing our facilities and capabilities. The two deals we entered into in 2021 with other organizations, one of these has been extended, and the other is ongoing. We look forward to continuing to expand all of our collaborations as our partners advance in their strategies.

Peter Altman, CEO

Thank you, David. In closing, our team has worked hard in 2021. While in the middle of a pandemic, we advanced all of our programs. Year-over-year, we increased our modest revenues by seven-fold and decreased our operating cash burn by 16%. We delivered on strategic initiatives to enhance our manufacturing capabilities and reduce costs. We invested in our team, our technology, and our relationships. We intend to complete the clinical trials with scientific rigor, prioritizing patient safety and speed, as we believe there are enormous benefits these therapies can bring to patients and their families. Our goals for 2022 include significantly accelerating both autologous CardiAMP Cell Therapy clinical programs, treating the first patients with our allogeneic Neurokinin-1 Receptor Positive Mesenchymal Stem Cells Therapy, and growing our partnering and commercial product revenues. We are targeting 2023 to complete enrollment in the heart failure trial and to have the chronic myocardial ischemia trial reach enrollment to support planned adaptive readout. We are now ready to take questions. Operator?

Operator, Operator

At this time, we will open the call to questions. And our first question comes from Kumar Raja of Brookline Capital Markets. Please go ahead.

Kumar Raja, Analyst

Thanks for taking my questions and also congratulations on all the progress, including the Breakthrough Device Designation. So first, with regard to the four sites in Canada, how soon do you think you will be able to start recruiting patients there? And in the U.S., what are you seeing in terms of the impact on enrollment, and how soon do you think we will get back to the pace we had before the COVID pandemic started?

Peter Altman, CEO

Thank you, Kumar. I appreciate you joining the call and I appreciate the question. So first, on sites in Canada, I think it will not be very long for us to bring on all four sites in Canada. It will take some time after the approval for it to roll through administratively, but we're talking a matter of a handful of weeks. With respect to the impact on enrollment in the United States, almost everything we're doing is lined up to really try and reduce barriers for enrollment. The Breakthrough Designation that you noted addresses some of the concerns regarding cell therapy. There has been criticism over cell therapies because of other programs that have gone before, and having the FDA evaluate our data and say, yes, this is a breakthrough therapy, means a lot. We expect it to come online rapidly with some acceleration. The initial process for enrollment begins with patient consent, and after that, they go through a series of tests. We have this potency assay to identify the patients who are most likely to respond to the therapy. Unfortunately, that inclusion criteria results in us having 30% of those patients eliminated from the potential to be enrolled in the trial. The process for enrollment takes time to move through the inclusion-exclusion criteria, but I can share with you that COVID does appear to be waning across the nation. All these regulatory elements that have come to us from the FDA, CMS, and Health Canada make this trial easier to perform, enroll, and enhance physician and patient comfort. The DSMB reviews further enhance that comfort. So all of these pieces are coming together to really push these trials forward.

Kumar Raja, Analyst

Thank you. And maybe you can talk a little bit about the next DSMB review and its expectations, and I'll get back in the line. Thank you.

Peter Altman, CEO

Thank you, Kumar. The next DSMB review is scheduled for the cusp of August-September. The DSMB review looks at all the data of the treatment and all of the follow-up data as well. We're working towards that review and are hopeful it will include increased enrollment and significant follow-up on these patients. We also have crossover patients now and we will be able to share data with folks on our crossover patients as they reach the endpoints. Next question.

Emanuela Branchetti, Analyst

Good afternoon, guys and thank you for taking my questions. I was wondering, Peter, can you give us a sense of how many patients did not access the trial because of the lack of insurance coverage you were mentioning?

Peter Altman, CEO

Our expectation is, in this patient demographic, approximately 50% of the patients are Medicare patients. Additionally, the reimbursement that Medicare has put forth for us is typically followed by United and Aetna, covering about 150 million lives in the United States. The concern is, when you have to go and pre-qualify a patient for therapy, it becomes frustrating if they're not with United or Aetna, and the insurer denies them. We are pointing out that this therapy is available in Canada, and with the reimbursement approach, we're enabling sponsors to cover the declined costs of insurers. With the reimbursement code, we are making it clear that both the control arm and treatment arm are covered. These three pieces came together to address concerns at any site. We hope to see contributions to enrollment, but we will still see many Medicare patients and hope to bring in those with United, Aetna, and other insurers who will follow this because of the breakthrough in part.

Emanuela Branchetti, Analyst

Got it. Thank you. Maybe staying on this subject, you're getting feedback from investigators from the site. Are there any other elements you're working on to optimize enrollment other than the ones you just mentioned?

Peter Altman, CEO

We have a policy in place emanating from a recent opinion by the Office of the Inspector General at Health and Human Services regarding our ability to cover the co-pays of patients. We've hit this with a full court press to address every single issue we think acts as a barrier to enrollment in this trial. Most, if not all, barriers have been addressed, including the significant one of the waning of COVID.

Emanuela Branchetti, Analyst

Yeah. No. Absolutely, and in fact, my other question was around the COVID situation. If you can give us a sense of what you're seeing in different centers and geographies, if you could provide more color on how the COVID situation is waning?

Peter Altman, CEO

There are two impacts of COVID on clinical trials from our perspective. The first is that we can only conduct elective procedures for certain periods. Patients have been reluctant to go to centers due to potential interactions around COVID. The second is related to staffing; many centers have been affected. We are now seeing centers that have been quiet for a long time starting to approve trials, indicating that the situation is resolving. Staffing remains a challenge but it is evolving in our favor as well.

Emanuela Branchetti, Analyst

Makes sense. Thank you. My last question is regarding the potency assay, which has taken center stage recently. How much dialogue have you had with the FDA regarding your potency assay?

Peter Altman, CEO

This is a cell selection assay, which identifies a number of biomarkers that support the patients who would have a high probability of benefiting. We have called it a cell potency assay, which relates to it, but it’s different from a cell potency assay per the agency's criteria. Our efforts that are tied to this selection assay are foundational to what we believe will improve patient outcomes. Additionally, for our allogenic programs, we absolutely will have a cell potency assay based on our knowledge from our lead programs.

Michael Okunewitch, Analyst

Hey. Thanks for taking my question. First, I'd like to ask something regarding the discussions with regulators regarding cell therapy in heart failure. Can this be viewed as validating your approach targeting ischemic heart failure patients with BCDA-01?

Peter Altman, CEO

First, I want to acknowledge that the data at three-year follow-up for other trials have been shared and is strong. However, it uses a different delivery platform. The patients benefiting from those trials align with our target patient demographic. We're leaning into patients who are less sick compared to other trials, believing that the CardiAMP Cell Therapy is not event-driven and is optimized for signal to noise. In these patients, we think we are targeting the right population for our therapy.

Michael Okunewitch, Analyst

Thank you. Can you remind us of what the biomarkers in your cell potency assay are selecting for on a mechanistic level?

Peter Altman, CEO

We have a number of biomarkers we're looking at, with CD34 being the only one we've detailed publicly. We've achieved a dosage in our pivotal trial that significantly outperforms other cell therapy trials based on CD34 cells. The focus is on angiogenesis and the microvascular elements for these patients. However, we emphasize that our target group for treatment does not require them to be actively ischemic. Regarding the additional Canadian trial sites, we’re unsure if the different reimbursement environment will make enrollment easier compared to the U.S. We aimed to test the process in Canada without sacrificing the value proposition for reimbursement in the United States. We anticipate that the impact of these different elements will unfold as we proceed, but at the end of the day, our goal is to listen to our clinical sites and address their issues for optimizing the trial.

Michael Okunewitch, Analyst

Thank you very much. I appreciate you taking the time to answer my question.

Peter Altman, CEO

Thank you, Michael. I appreciate it.

James Molloy, Analyst

Thank you for taking my questions. On BCDA-01, you guys gave guidance for expectations for another DSMB review in the fourth quarter. Any thoughts on the ramp-up for the trial given how enrollment is improving and COVID is waning?

Peter Altman, CEO

We’re targeting the third quarter for the DSMB review in BCDA-01. Our goal is to complete enrollment in 2023 for both the ischemic heart failure and chronic myocardial ischemia indications. 2023 will be a very big year for us, and we’re budgeting for success, pushing hard on the enrollment activities.

James Molloy, Analyst

Has the environment for potential acquisitions or partnerships changed, given the challenges in biotech recently?

Peter Altman, CEO

One of our ongoing efforts is identifying a partner for CardiAMP outside the United States, specifically in Japan. There is interest due to the efforts tied to our recent progress. We’re also actively exploring corporate partnerships around our biotherapeutic delivery platform. Lastly, we’re monetizing other assets that don't fit our core initiatives, like our AVANCE transseptal sheet. While international partnerships and monetization activities are limited to one partner, we can engage multiple partners in biotherapeutic delivery.

Jason Kolbert, Analyst

Hi, Peter. Can you help me understand the critical measures associated with your trial endpoints?

Peter Altman, CEO

The Finkelstein-Schoenfeld 3-tier composite endpoint we’re using in the trial includes mortality, major adverse cardiac events, and functional capacity as measured by the 6-minute walk test. This endpoint has been recommended by the FDA. Our results thus far indicate improvements in exercise tolerance, heart function, and quality of life. We believe that if we replicate the results we had in Phase 2, we could have a new therapy for these patients. Thank you, Andrea. I want to thank all of you for participating in today's call and for your interest in BioCardia. We look forward to sharing our continued progress. Stay healthy, be kind, and have a wonderful day.

Operator, Operator

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