Earnings Call Transcript - BCDA Q3 2022

Operator, Operator

Good day, and welcome to the BioCardia 2022 Third Quarter Conference Call. I would now like to turn the conference over to Jules Abraham of CORE IR, the Company's Investor Relations firm. Please go ahead, sir.

Jules Abraham, Investor Relations

Thank you, Chuck. Good afternoon, everyone, and thank you for participating in today's conference call. Joining me from BioCardia's leadership team today are Peter Altman, PhD, 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, analogies 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 the Form 8-K filed with the SEC and particularly the cautionary statements within. The content of this call contains time-sensitive information that is accurate only as of today, November 9, 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. It's now my pleasure to turn the call over to Peter Altman, PhD, the company's President and CEO. Peter, please go ahead.

Peter Altman, CEO

Thanks, Jules, and good afternoon to everyone on the call. We have had a great quarter. But before I get into the details, let's take a few moments to review what we are doing and why we are doing it. BioCardia's efforts are focused on advancing two cell therapy platforms to treat significant unmet cardiovascular and pulmonary diseases. Specifically, ischemic heart failure, chronic myocardial ischemia, and acute respiratory distress. All of our cell-based therapies involve local delivery of the therapeutic cells to the heart or lungs, where we intend them to act locally. In the heart, our own proprietary Helix minimally invasive delivery system, a third platform, is used to deliver the cells to target regions of damage. For the lungs, we intend to use intravenous delivery that will localize the investigational cells in the small blood vessels of the lungs. Local delivery of therapeutics to the target location where their action is desired maximizes their effective dosage within the tissues where delivered and minimizes potential negative effects remote from target tissues. Heart failure is the first problem we are addressing. It is an enormous unmet need that affects more than 26 million people worldwide. The latest blockbuster drugs for similar indications do not have much of an impact on mortality. Patients in the published results of the pivotal trials for these new drugs have a cardiac mortality of roughly 7% and an all-cause mortality of 10% per year, regardless of whether they were treated or in control groups. This data makes clear that heart failure is still a problem in great need of new therapeutic solutions. Our autologous mononuclear cell therapy platform, which we call CardiAMP cell therapy, is being advanced in two cardiac clinical indications. In preclinical studies, cardiac mononuclear cell therapy has been shown to release proteins locally within the tissue to facilitate cardiac recovery after damage, with improvements in heart perfusion and contractile function. All known previous clinical studies similar to the approach we are taking have shown patient benefits on average. In some of these studies, including our own, the benefits have been remarkable. Our FDA breakthrough designation in ischemic heart failure validates this perspective. In granting this designation, the FDA reviewed all of our clinical results patient by patient and agreed that CardiAMP cell therapy data to date shows promise to provide a more effective treatment for ischemic heart failure. Advancing this and our other therapeutic candidates is what we are all about. Our efforts to complete the CardiAMP Autologous Cell Therapy pivotal clinical trials for the indications of heart failure, or BCA-01, and chronic myocardial ischemia or BCA-02, remain our primary focus, with an estimated combined 1.6 million patients in a reachable U.S. market. The CardiAMP Cell Therapy heart failure trial, or BCDA-01, is a Phase III 260-patient randomized controlled clinical study intended to provide the primary data to support safety and efficacy in pursuit of market clearance. We have enrolled 115 patients in this trial, with a number of additional crossover patients. In August of 2022, the independent Data Safety Monitoring Board completed a prespecified data review, including a risk-benefit assessment. Following this review, the Data Safety Monitoring Board indicated that it had no significant concerns and recommended the study continue as designed. As part of this review, we examined blinded results across more than 100 patients past the 1-year primary endpoint, including treated and controlled patients in the trial. We were impressed that the survival rate at the 1-year follow-up was greater than that observed in recent similar large pivotal trials in patients with heart failure with reduced ejection fraction. For study subjects followed through the key visit dates in this study, mean health outcomes across both treated and controlled patients improved across multiple endpoints at all time points, including the 6-minute walk distance, which contributes to the primary composite endpoint. The Data Safety Monitoring Board recommended that the company, as sponsor, consider implementing an adaptive statistical analysis plan, which could enable an early readout for study treatment efficacy. An adaptive statistical analysis plan is one that attempts to determine the appropriate number of patients needed in a clinical study based on the data within the trial itself, as opposed to from a previous trial. This has the significant advantage of derisking the trial from changes that may have occurred in the current trial relative to previous trials. In reviewing the data during a Data Safety Monitoring Board meeting under an adaptive statistical analysis plan, the data monitoring board may be able to assess at certain points in the clinical trial how many patients should be enrolled to meet the primary endpoint. If a trial has already enrolled the number of patients expected to be required to show efficacy, then there is potential that the Data Safety Monitoring Board would inform the sponsor that the trial enrollment might be stopped for expected success. Efforts are now underway to complete an adaptive statistical analysis plan for the CardiAMP heart failure trial, which the executive steering committee and the FDA will review and comment on. In parallel, our clinical operations team, under the leadership of Debby Holmes-Higgin, is working to ensure the clinical data that the Data Safety Monitoring Board will use in such an adaptive review of the study statistics is accurate, through extensive monitoring in collaboration with our clinical partners. This process is often referred to as cleaning the data, and it is a significant effort. The next prespecified formal data safety monitoring board review is anticipated in March 2023. Based on conversations the company has had with the intended developers of the adaptive statistical analysis plan, our respected regulatory consultants, and our own efforts cleaning the data, the company believes it is likely to have the adaptive statistical analysis plan in place for the next Data Safety Monitoring Board meeting. The specific details of any potential adaptive statistical analysis plan, combined with any modifications to the data safety monitoring board charter, will dictate what occurs at this next and subsequent data safety monitoring board reviews. As the CardiAMP Cell Therapy trial in heart failure was over 90% powered for success based on previous Phase II data, there is potential that the trial could meet its primary efficacy endpoint on the patients already enrolled to date. However, when the Data Safety Monitoring Board next meets, they may recommend that the trial continue as planned, be stopped for safety, or be stopped for futility if the data does not support the possibility of achieving the primary endpoint. This October, additional data was presented at the Heart Failure Society of America Annual Meeting in the form of 2-year data on the 10-patient rolling cohort. The data demonstrated 100% survival and trends towards benefit across multiple endpoints, which further enhances our enthusiasm for this program. This October, we also updated our patient-facing website www.cardiamp.com. This includes an elegant animation that details the trial overview discussed in our last quarterly call. I encourage everyone to view this website and watch the trial overview and the patient testimonials there. If you have friends or relatives suffering from heart failure, please pass along the website to them for their chance to learn about CardiAMP Cell Therapy and opportunities to participate in the trial. Our second therapeutic program uses the same therapy for the treatment of chronic myocardial ischemia with refractory angina or BCDA-02. The CardiAMP chronic myocardial ischemia trial is a Phase III multicenter, randomized, double-blinded controlled study of up to 343 patients at up to 40 clinical sites. The Phase III pivotal trial is also designed to provide primary support for the safety and efficacy of the CardiAMP cell therapy system for this indication. It uses many of the same novel aspects of the CardiAMP heart failure trial and is expected to leverage our experience and investment in the heart failure trial. This program benefits from the 2022 Center for Medicaid and Medicare Services reimbursement of up to $20,000 for treatment and control patients. The trial has been activated at 2 centers, and the company is working to activate additional centers. Early clinical data from the rolling cohort is showing safety with remarkable benefits in the primary endpoint of exercise tolerance time, and we are working to deliver data on this cohort in advance of the randomized cohort. As we shared in July, we had our second consultation with the Japan Pharmaceutical and Medical Device Agency regarding the registration of CardiAMP Cell Therapy for ischemic heart failure. We are prepared to submit the dossier with all details as requested, but may choose to delay to obtain the support of one or more Japanese medical societies for CardiAMP Cell Therapy in order to support its approval and reimbursement. This is under active discussion with our regulatory and scientific advisers as well as one of our potential distribution partners. Japanese researchers established the foundations for this therapy many years ago. The therapeutic approach we are pursuing was first studied in a preclinical model by physician scientists in Yokohama. This early work was performed parallel to one of several Japanese vascular biology researchers who identified important aspects of bone marrow-derived mononuclear cells and tissue repair. Their early efforts underlie our CardiAMP Cell Therapy, and we hope to provide this therapy to the many in Japan who could benefit from it. Now I'd like to move on to our two allogeneic cell therapy product candidates based on our allogeneic neurokinin-1 receptor-positive mesenchymal stem cell platform, which has also progressed over the past quarters. Our allogeneic MSC program in heart failure, designated BCDA-03, is intended to include patients who have been excluded from our autologous program due to the nature of their cells. We have completed the manufacturing validation runs and stability testing for the chemistry manufacturing and control section of the IND. We have completed preclinical pharmacology and toxicology animal testing with no safety issues and trends towards therapeutic benefit. I am pleased to share that the IND application for this program was filed with the FDA SBR in early November 2022. The company anticipates FDA approval of the IND in December. Our allogeneic MSC program for patients recovering from acute respiratory distress syndrome, designated BCDA-04, was approved by the FDA in April 2022 to treat patients. The initial clinical study manufacturing run from our Sunnyvale facility has been completed. Cells are cryopreserved, awaiting final longer lead time test data for lot release hopefully this month, after which they may be shipped to centers for patients in the clinical study. This run has the potential to have sufficient cells to complete the entire Phase I portion of the Phase I/II trial, as we achieved multiple doses with each batch. We are in late-stage onboarding of world-class clinical centers to perform the trial ahead. We are optimistic due to the long-standing promise of mesenchymal stem cells in lung repair and the unique clinical indication we have defined. We aim to address the need to reduce local and systemic inflammation after a patient is taken off respiratory support, with goals of accelerating recovery, enhancing survival, and reducing both relapse and rehospitalization. In summary, we are advancing four therapeutic product candidates that address important unmet cardiac and pulmonary diseases based on our autologous and allogeneic cell therapy platforms. From these therapeutic development efforts, we now have four active business development initiatives. First is partnering our CardiAMP Cell Therapy platform internationally. Second is licensing out our clinical stage NK1R-positive mesenchymal stem cell program for other clinical indications which have shown promise with other mesenchymal stem cell preparations. Third is licensing our catheter-based biotherapeutic delivery systems for cell, gene, and protein therapy candidates to the heart, such as in the relationship with Bluerock we initiated last quarter. And fourth is monetizing our Avance transseptal introducer sheath product. I will now pass the call to David McClung, our CFO, who will provide some financial perspective. David?

David McClung, CFO

Thank you, Peter. In the first three quarters of 2022, we had revenues of approximately $1.2 million on a net loss of $8.9 million, which compares favorably to the first three quarters of 2021, where we had revenues of $0.9 million with a net loss of $9.2 million. This increase in revenues and decrease in net loss is primarily due to increased collaboration revenues. I'd like to reiterate that the potential value of collaboration revenues is far greater than the dollars we receive when we enter into them. Partnering programs provide additional pathways for BioCardia to participate in the upside of partner development programs. The value, if we can help them be successful, should be significant for shareholders. Research and development expenses increased modestly, with $6.6 million reported in the nine-month period ending September 30, 2022, compared to $6.4 million in the nine months ended September 30, 2021. SG&A expenses of $3.5 million for the nine months decreased from $3.7 million in the same period in 2021. The company ended the second quarter with cash totaling $6.7 million, which provides runway into the second quarter of 2023. To extend our runway, we are working on business development activities with a focus on non-dilutive financing. We're now ready to take questions. Operator?

Operator, Operator

The first question will come from Joe Pantginis with H.C. Wainwright.

Joe Pantginis, Analyst

Peter, my first question is multi-faceted and relates to housekeeping, specifically about the adaptive design plan you are currently developing. Can you provide more details on the current stage of discussions with the FDA regarding any outstanding issues? Additionally, how should we view the spending on the adaptive components, particularly if enrollment is lower? Also, in connection with any outstanding topics with the FDA, what else would you like to accomplish to finalize this with them?

Peter Altman, CEO

So I can share with you that we are in the process. So Joe, first off, thank you for the question. But to jump straight to the answer, the discussions with the FDA are still early. We have not yet had a Q-sub meeting with them. We are in the process of preparing the submission with the appropriate detail that's needed for them to understand it and wrap their heads around it. This is recommended by the Data Safety Monitoring Board. My sense is the agency will undoubtedly raise concerns about a smaller number of patients enrolled in the trial. One of the advantages we have is the breakthrough designation from the FDA that allows us the ability, if we need additional safety data for such a significant indication, to potentially capture that in a post-marketing scenario. We are working with two very prestigious groups who have actually recommended each other. One is a world-class group in developing adaptive statistical analysis plans, and the other is a very high-profile regulatory consulting group that includes several former senior FDA directors. So we're bringing this team together and having regular meetings. The first step is dialing in the adaptive statistical analysis plan to understand what the cost of alpha may be. My sense is it won't be significant because our expectation is that we're asking how large the trial should be, not querying the results from the trial. That changes the equation and limits the alpha cost. So that's where we are. This is a very active effort today. Additionally, we have a significant ongoing effort to ensure all of the data is cleaned so that at the next Data Safety Monitoring Board meeting, they're looking at very clean data to rely upon their input. So it's pretty exciting. That said, as I shared in our comments, there are no guarantees here. Fundamentally, this trial may just continue. We are diligently working to enhance enrollment in the trial and improve the experience of the physicians participating in the trial.

Joe Pantginis, Analyst

Got it. No, those are all fair comments. I appreciate it. And then moving to David's comments and even your list about business development goals, I guess I would ask it this way, and I would never ask you to predict timing. That's always a bad thing. But how would you describe the level of maturities of the list of those four different components of ongoing business developments?

Peter Altman, CEO

I would say that we've had significant discussions on all four of them. Our focus right now is really on the first and the third, that is the OUS CardiAMP and the partnering on biotherapeutic delivery with others. In the last quarter, we entered into an arrangement with Bluerock Therapeutics. That is a time-limited option that we may see some progress on in the year ahead. So this is sort of the nuances of what we've historically done. And remember, previous to David's comments, the value of these partnerships, we have several partners with significant data sets with our delivery system. In developing these efforts, those are value propositions that could quickly grow into larger opportunities ahead.

Joe Pantginis, Analyst

Got it. Got it. And then my last question, if I just skip to the end of the pipeline for 04 and use of the allogeneic cells in our platform in ARDS, I guess, maybe the broader concept of look, the COVID landscape is dramatically changing. It will still be sticking around based on the broad consensus. So I guess at this status of COVID, if you will, just the rationale of why doing this study at this standpoint and also while finances are important.

Peter Altman, CEO

So the indication we're going after is patients essentially recovering from COVID. There is a significant gap there. Currently, no therapies target patients when they come off respirator support. There is something known as chronic inflammation, often referred to as long COVID. That is not our specific indication, but there are sustained inflammatory impacts of COVID-induced ARDS. In other causes of acute respiratory distress syndrome, there's also a gap in what happens when a patient is at the tail end of being on a respirator. So we're addressing a space where there are no existing solutions. What we're doing is a relatively routine therapy. On the economic side, these trials typically start with a dose escalation cohort, with great care taken to protect the patient. Therefore, there's not a significant number of centers to be added to either of these trials. So think of it as cleaning out all the safety issues and optimizing the maximum tolerated dose for BCDA-03 and BCDA-04, with minimal impact on our burn rate for the Phase I portion. As we move into the later Stage II portion, yes, the burn rate would increase significantly, but that’s a future decision.

Operator, Operator

The next question will come from Michael Okunewitch with Maxim.

Michael Okunewitch, Analyst

Peter. I wanted to see if you could provide a bit more color and walk me through how you conducted the analyses on the blinded data? And then if you could just give us a bit more on how we should be interpreting that.

Peter Altman, CEO

Yes. The blinded data is a normal process for a data safety monitoring board review. You receive an open session package that examines all of the data on all of the patients. It’s aggregate data, so we are blinded to it. We don’t know whether one group is different from another. However, when reviewing the data, it’s clear that the patients are indeed improving. We are addressing heart failure, which is a chronic condition. In our Phase II trial, treated patients improved, while the control patients deteriorated over time, which is expected. This became evident as we analyzed the data. I mentioned the animation of the trial at cardiamp.com, where we note that patients generally perform better in clinical trials. So we may just be observing all of the patients together performing better in the clinical trial. That said, the mortality rate is also significantly lower than we would expect based on the literature. However, due to being blinded to the data, we can't ascertain how this impacts group comparisons. This was the status of the data at the last DSMB. The DSMB recommended the adaptive statistical analysis plan, partially because of slow enrollment during COVID. Typically, adaptive designs are used in trials that are enrolling slowly or have a short endpoint. Coupled with our breakthrough designation, there is a strong concern that we should ensure we've treated enough patients to maintain comfort on safety.

Michael Okunewitch, Analyst

Yes, you did. I'd like to drill down a little deeper on one point in particular. When you're saying that you saw a greater survival rate compared to other large pivotal trials, that’s comparing aggregate data to the aggregate data from other similar pivotal trials? Is that the idea?

Peter Altman, CEO

That would be a fair assessment, Michael, as the trials conducted do not really show a reduction in mortality. This is a significant issue frequently discussed at conferences such as the Heart Failure Society of America—mortality remains a challenge. For our comparison, we are aligning our trial with positive arm results from recently published studies, notably the retrospective analyses in the New England Journal of Medicine. Again, this isn’t an apples-to-apples comparison as these trials feature different patients and different therapies. But the stark reduction in mortality in our aggregate population is noteworthy. We are left uncertain, though, if this benefit is equally distributed across our treatment and control groups.

Michael Okunewitch, Analyst

All right. And then just one more follow-up. I'd like to see if you could touch on how the biotherapeutic delivery platform benefits Bluerock's cell therapy candidate. What attracted them to your platform? And what sorts of other therapeutics or indications could benefit from the device?

Peter Altman, CEO

I can't comment on anything related to Bluerock. However, our Helix transendocardial biotherapeutic delivery system has several advantages. First, it is the only intramyocardial delivery system I am aware of that is currently in clinical use. It is approved in Europe, but we only partner it, not sell it. Importantly, its safety profile is superior to that of previous competitors who have exited this space, specifically small companies like Johnson & Johnson and Boston Scientific. Moreover, our delivery's efficiency stems from the stability of the Helix in myocardial tissue and its control over drug delivery, enhancing retention after administration. Multiple data sets indicate we have roughly threefold the retention or dosing with our delivery system compared to others using standard needle approaches. Finally, the ease of use is a key factor; there is no capital equipment needed. Previously, larger entities wanted to work with us due to this aspect speeding up their sales cycles. Our primary focus remains on heart failure and chronic myocardial ischemia. We have a European partner going after acute myocardial infarction, and heart failure with preserved ejection fraction is another indication we’re watching closely.

Operator, Operator

The next question will come from James Molloy with Alliance Global Partners.

James Molloy, Analyst

I had a question about the interim results for O2. Are we expecting to enroll 100 patients in the first quarter of 2023, or is that part of a larger group? Also, when will the 100-patient cohort be fully enrolled out of the total of 343?

Peter Altman, CEO

We are working to complete enrollment in that next year. We are currently in the process of enrolling patients. So James, first off, thank you for the question. We are indeed working on a rolling cohort; we've got patients enrolled. The results from that rolling cohort will likely not be available until Q1 next year. However, the results are looking promising for the patients treated, and we still aim to reach the full 100 patients by next year.

James Molloy, Analyst

In the rolling cohort. How many patients are in the rolling cohort? You just stated you're reporting the first year in '23.

Peter Altman, CEO

Right, the rolling cohort protocol is 10 patients.

James Molloy, Analyst

Okay. When do you expect to have data from the initial 100 patients and possibly from the final patient in this trial?

Peter Altman, CEO

We have long mentioned this is a thoughtful process you're engaging in, Jim. We expect that the 6-month follow-up, which the agency has approved, will not yield data for efficacy until longer than that following enrollment completion. So expect at least another year after the completion of enrollment to see that data.

James Molloy, Analyst

Then on the BCDA-03, the IND filing here hopefully approved in December. The 04 IND was approved on April 12 with the expectation the trial would start in the third quarter '22; that's now first quarter of '23. Should we expect a similar 3-quarter delay between the IND approval for 03 and the Phase I/II trial for the BCDA-03?

Peter Altman, CEO

Actually, no. We do not expect such a delay. For BCDA-04, the steps involved the clinical manufacturing of cells and the cells were manufactured in Q3, but lengthy processes have caused delays in ensuring the safety of the cells. However, all of the work on cells we’ve produced will assist the BCDA-03 efforts. Additional patients we’ve identified in the BCDA-01 program will also help. The decision process for BioCardia will be crucial because we could treat numerous patients in BCDA-03, yet we significantly prioritize BCDA-01 and other objectives.

James Molloy, Analyst

Last question for David real quick. What's with reporting the 9-month data and not having the numbers for the quarter in the press release?

David McClung, CFO

Could you please rephrase that, Jim?

James Molloy, Analyst

Why didn’t you guys include your numbers for the third quarter in your press release instead of just focusing on the nine-month reporting? It's not very typical.

David McClung, CFO

We included the nine-month numbers to present a clearer trend as we move towards year-end, rather than focusing on the fluctuations of quarter-to-quarter results. Those numbers could have been shown together and are presented in the tables.

Peter Altman, CEO

Yes, all the data is in the tables. Our revenues are variable due to the nature of partnerships. This has been a historically strong year for our revenues.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Peter Altman for any closing remarks. Please go ahead, sir.

Peter Altman, CEO

Thank you, Chuck. 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. Thanks, stay healthy, be kind, and have a wonderful day.

Operator, Operator

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