Earnings Call Transcript - BCDA Q1 2022

Operator, Operator

Ladies and gentlemen, thank you for standing by. Good day and welcome to the BioCardia 2022 First 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 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 August 11, 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, sir.

Jules Abraham, Investor Relations

Thank you, Roco. And good afternoon, everyone. Thank you for participating in today's conference call. Joining me today from BioCardia is the leadership team 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 as accurate only as of today, May 11, 2022, and 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, Ph.D., the company's President and CEO. Peter, please go ahead.

Peter Altman, CEO

Thanks, Jules, and good afternoon to everyone on the call. It has been only six weeks since our last call with the 2021 year-end results, and BioCardia continues to execute in its efforts to advance its meaningful pipeline of cell and cell-derived therapeutics to treat significant cardiovascular and pulmonary disease. The first quarter was significant for BioCardia with progress in the development of both our autologous and allogeneic cell therapy platforms. Our primary focus is the enrollment in our clinical programs, which will be a continuing effort as the healthcare research systems across the United States recover from COVID-19. 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 this quarter. We have already shared these in our last conference call, but it bears repeating that in this first quarter of 2022, our lead program in heart failure was granted FDA breakthrough designation, providing independent validation that our data to date is truly compelling. We had a successful data safety monitoring board review in our lead heart failure trial. We received Health Canada’s no Objection Letter to expand the heart failure trial in Canada. We received a new CMS reimbursement code to support both pivotal CardiAMP Cell Therapy clinical trials, and we received a favorable opinion from the Office of the Inspector General of Health and Human Services supporting our ability to cover patient co-payments in our heart failure trial. These were the results of efforts throughout 2021 and realized in the first quarter. For the first time, we have three cardiac heart failure trial procedures scheduled on the same day at three sites across the United States in the month ahead. We are working diligently to support our world-class clinical partners and complete enrollment in the CardiAMP trials as soon as possible. We are working with the goal of a 2023 completion of enrollment in the full 260-patient cardiac heart failure trial and enrollment of the 100th patient in the cardiac chronic myocardial ischemia trial to enable its interim readout. We have just had our first consultation with Japan's Pharmaceutical and Medical Device Agency regarding registration of CardiAMP Cell Therapy. This consultation is based on the quality of our clinical data and the regulatory approvals that exist around all of the elements of the Cardiac CardiAMP Cell Therapy system in Japan, the United States, and the European Union. The meeting with Japan's PMDA went well. We are still on this pathway aiming for approval of the Cell Therapy system in Japan based on our current data and planning for our second consultation, where we will provide information and data that have been requested by Japan’s Pharmaceutical and Medical Device Agency. Although, Japan's population is declining, there are many patients in Japan with heart failure that we believe CardiAMP Cell Therapy can benefit. What is not well appreciated is that Japanese scientists have been central to this field of development that has led to the CardiAMP Cell Therapy, just as Japanese scientists have been central to the development of induced pluripotent stem cells for which they were awarded the Nobel Prize in Medicine. Now I'd like to move to our two allogeneic cell therapy product candidates based on our allogeneic Neurokinin-1 Receptor Positive mesenchymal stem cell platform, which has progressed in the six weeks since our last call. Our program in heart failure, which we have designated as BCDA-03, targeted to the patients who have been excluded from our autologous program due to the nature of their cells, is completing what we believe is the last pharmacology and toxicology studies to enable IND submission targeted for acceptance by the FDA in 2022. Our program in patients recovering from Acute Respiratory Distress Syndrome, which we have designated BCDA-04, has been approved by the FDA this April to treat patients and we are targeting enrolling first patients as early as next quarter, Q3 2022. We have been invited to present our efforts at the second annual Acute Respiratory Distress Syndrome Drug Development Symposium being held in July in Boston, alongside leaders from peer companies developing MSCs for Acute Respiratory Distress Syndrome. In summary, we are advancing four therapeutic product candidates that address important unmet cardiac and pulmonary diseases based on our autologous and our allogeneic cell therapy platforms. From these therapeutic development efforts, we have three active business development initiatives. First is partnering our CardiAMP Cell Therapy platform internationally. Second is licensing our Catheter Based biotherapeutic delivery systems for cell, gene, and protein therapy candidates in the heart. And third, monetizing our AVANCE transseptal introducer sheath product. I will now pass the call to David McClung, our CFO, who will provide some financial perspectives. David?

David McClung, CFO

Thank you, Peter. The company ended the quarter with cash totaling $9.9 million, which together with the $1.5 million in proceeds from the ATM in April provide runway into the first quarter of 2023. Our research and development expenses increased by 22% to $2.2 million in the first quarter of 2022, due to increased spending in support of the cardiac heart failure trial. SG&A expenses of $1.2 million in the first quarter of 2022 were unchanged from Q1 2021. The company's net loss for the first quarter was $3.3 million compared to $3 million in the prior year. Net cash used in operations was $2.9 million in Q1 2021 compared to $1.9 million during the prior year's first quarter. The increase is due to the timing of payments from collaboration partners, coupled with the increased research and development expenses during the quarter. We're now ready to take questions. Operator?

Operator, Operator

Thank you. We will now begin the question-and-answer session. Today's first question comes from Kumaraguru Raja with Brookline Capital Markets. Please go ahead.

Kumaraguru Raja, Analyst

Thanks for taking my questions. So first, with regard to these four clinical sites in Canada, can you talk a little bit about where these are located? How much of the potential target population that you're going to enroll in the trial are there in these areas?

Peter Altman, CEO

Kumar, thank you for the question. I really appreciate you being on the call. We haven't yet identified the specific clinical sites we are active in Canada. We will announce likely as we've done in the past, the national principal investigator and the efforts at the first site once we dose the first patient. But there are four sites. They are all moving forward well. The activities for site onboarding began quite some time ago. If others on the call are experienced with onboarding or securing Health Canada approval, you actually have to have IRB approvals at clinical sites before you can actually get a Health Canada approval. And so it's an interactive process. But yeah, we expect all four sites to come on board in the not-too-distant future, and there are some great folks involved. As far as the potential for enrollment, that's one of our primary challenges. I think they’re all in major areas, and I think the advantage that they have is that they don’t have the burden associated with the billings that we have in the United States with the Medicare reimbursement. So that’s one thing that will free them up – the other is there's not as many competitive activities in Canada. And so that's another advantage that enrollment will have from those sites. But they're all world-class sites with very experienced folks and we're both delighted and honored to be able to work with them and we'll identify them ahead.

Kumaraguru Raja, Analyst

And in the US, what are you seeing in terms of the challenges from COVID-19, where do you guys stand there? You see more patients being screened here. Whatever you can share with regard to that?

Peter Altman, CEO

Yes, we hope the situation will improve. For example, at one of our Florida locations, patients are reluctant to join trials if it involves hospital visits. Despite the low mask usage in public spaces, the hospital has strict biosafety measures, and the investigator believes it is safer from COVID-19 and other infections there than outside. Another challenge is staffing; the pandemic disrupted clinical research at major institutions, leading to many people working from home or losing their jobs, and now everyone is in the process of restaffing. One center isn't currently enrolling patients because they need to fill a crucial position, and until they do, they can't move forward. Other organizations are trying to hire coordinators to tackle this issue. This may take time to resolve, but we are seeing improvements at several centers. As we consider enrollment strategies, we've implemented various initiatives this quarter that will help. The fears regarding COVID-19 are decreasing in many areas, and staffing levels are improving. Additionally, we are pursuing an innovative strategy that focuses on patients already accustomed to certain medical device therapies, making the requirement for an interventional procedure feel less intimidating. Essentially, this involves a one-time catheterization procedure where we use their own cells, leaving nothing behind but those cells. I believe this is a strong approach that we will focus on as we move forward with enrollment initiatives.

Kumaraguru Raja, Analyst

And maybe finally, with regard to the PMDA in Japan, how many more consultations do you think you need before you are able to move forward and move forward with the filing there? And also the timeline.

Peter Altman, CEO

Yes, we are actively working on that. We expect to have at least two more consultations. There are several interesting aspects to consider. While we can only estimate the timeline for the next consultation, it is relatively soon. It's important to remember that our cell processing platform has already been approved in Japan for other uses. Our delivery systems are approved in Europe, and we've engaged in discussions and preclinical collaborations with two partners in Japan who are interested in these systems. This therapeutic strategy originated in Japan through Dr. Takayuki Asahara, who first isolated CD34 cells from blood, believing they could help with neovascularization in ischemic hind-limb disease. Concurrently, two physicians published on revascularization and ischemic heart disease using autologous bone marrow transplantation, marking some of the earliest work in our field. We are very excited about this, especially with follow-up breakthroughs from Dr. Asahara. Everything aligns in a way that may make this effort quite valuable. The breakthrough designation offers support, and the Medicare reimbursement code provides additional context. The approval of parts of our systems in Japan and Europe, coupled with these foundational discoveries in Japan, creates a favorable situation, especially with partners interested in using the delivery systems in clinical settings in Japan. All these factors should aid us as we continue these discussions. Ultimately, the PMDA is highly sophisticated, and we are collaborating with excellent co-national principal investigators there, although we haven’t publicly named them, which we believe gives us a strong chance of success in this initiative.

Kumaraguru Raja, Analyst

Thanks, Peter. We look forward to the progress.

Operator, Operator

And our next question today comes from Emanuela Branchetti with H.C. Wainwright. Please go ahead.

Emanuela Branchetti, Analyst

Good afternoon everyone and thank you for taking the question. So regarding BCDA-04 and the Phase I to III trial expected to begin in the third quarter of 2022. I was wondering if you can give us a sense of the opportunity in ARDS related to COVID with the pandemic evolving. But also, beyond that, should we expect the proof of concept in COVID to be expanded to other forms of ARDS? And also, when thinking about the mechanism of actions, what advantages does BCDA-04 provide over other strategies, perhaps other mesenchymal stem cell strategies or over, for example, NK-1 receptor inhibitors?

Peter Altman, CEO

Wow, that's a big question. So I'll try and detail some of it. Emanuela, thank you for being on the call. I really appreciate it. We're pretty excited about having the IND accepted. It’s said that the markets don't appreciate what this is. Our sense is we've just bolted on the value proposition of any of the other large leading mesenchymal cell companies that have not yet been successful in getting to market. We have peers that are going after acute respiratory distress with intravenous administration of their culture-expanded mesenchymal stem cells. In fact, the NIH has a program that's actively enrolling and will soon complete enrollment in a 120-patient trial. So I don't know all the nuances with respect to the chemistry manufacturing controls and nature of the competitive mesenchymal stem cell programs. All of them, to my understanding, are allogeneic. There is potential for them to be approved in Japan, based on the HELIOS data with Athersys in the not-too-distant future. So we're watching and following the data of our peers, and we're wishing them every success. On our end, you asked what is the opportunity. We are going after this slightly differently. We are going after patients recovering from COVID-19, not necessarily those who are in the middle of severe ARDS and on a respirator. We're not sharing a lot of details on that today, but I think the key takeaway is we're coming at it slightly differently initially. Our trial design is a Phase 1/2 trial. Regarding your question on whether or not we will have proof-of-concept, from an efficacy perspective, I think right now, we're focused on the Phase 1 portion, which has a dose escalation element. We're pretty confident that we'll get through that without any issues. On the other side of that, we'll be learning where COVID is at, at that point in time, and what the case rate profile is of Acute Respiratory Distress Syndrome secondary to COVID-19. Currently, your point, which is sort of implied, is correct that the number of hospitalizations due to COVID-19 has drastically reduced. Even though that might erode the enrollment rate of the BCDA-04 program, that same fact is going to drive enrollment in BCDA-01 and BCDA-02. So we're actually hopeful that that is the case and that continues. We're going after this indication because this is really where we started. There are other things going on with these COVID patients. Again, we're going after patients recovering from Acute Respiratory Distress Syndrome. There is a lot of information in the media these days around long COVID. I wouldn't say we're going on that head-on today, but there is potential for us to expand this to other indications. I note that an intravenous safety package with our Neurokinin-1 Receptor Positive mesenchymal cells has potential to go in many different directions. Some of the large programs with these cells are focused on other clinical indications that are not respiratory in nature, and that provides other partnering opportunities for BioCardia once we complete our safety package. But that said, the mechanism of action, the last part of your question, these cells are well documented as being anti-inflammatory in nature. This is basic mesenchymal stem cell biology, and there are many articles on their impact in this fashion. Our other three programs, BCDA-01, 2, and 3 are all local delivery of cells to the heart using our delivery technologies. We are big believers that cells should be locally delivered to target sites where one seeks to have a therapeutic benefit. In this indication, we're delivering them intravenously; they migrate through the venous system to the lungs. Essentially, these are large cells. Think of them as 20 microns in diameter, and they get trapped in the first capillary they hit, which is in the lungs. They have their Neurokinin-1 Receptor positive. What’s important about that is that is the receptor that binds to substance P. In our slide deck, I love to show a picture from the New England Journal of Medicine, which shows substance P as the primary mediator of inflammation in the lungs. Will that result in our having differential benefit over other mesenchymal stem cell therapies that are being advanced? We don't know. One would expect that it likely would, but again, I think head-to-head trials will probably not be performed until such time as there's a product on the market and the second one comes along trying to either unseat it or show non-inferiority. As we’re initially going after a different indication from others, that may, in fact, be ours that gets to market first. But time will tell. So did I answer most of your questions?

Emanuela Branchetti, Analyst

Yeah. Sure, you did. And I promise the next one is a shorter question. So with regard to the strategy for potential partnership and deals you mentioned, could you provide a color around the overall strategy and perhaps how mature are the conversations you're having with potential partners?

Peter Altman, CEO

Our primary focus for CardiAMP internationally is Japan, as there is a potential path to market there and our discussions are progressing well. We are pursuing partnerships, which means the level of involvement from our partners will significantly influence the economics. As a small company, BioCardia will not establish a distribution network in other regions unless it becomes a top priority for us. Currently, it's crucial that we concentrate on enrolling patients in our lead program. CardiAMP has the potential to be a global cell therapy, and its economics, particularly in volume and procedure kits, are likely more appealing than any other cell therapy available. We've refined our approach effectively from this standpoint. Regarding our strategy for biotherapeutic delivery partnerships, we are leaning towards only forming substantial relationships since these partnerships require considerable support and involvement from our senior staff. We perceive these as collaborative efforts, functioning similarly to standard licensing agreements where we gain upfront milestones and a share of the ultimate therapy value. These significant deals take time to finalize and can be complex, especially as we are currently in Phase 3 clinical trials across 26 sites in the U.S. and expanding in Canada. Few others are in clinical trials in the U.S., and while some are performing surgical deliveries, it remains difficult for newcomers to build significant licensing agreements. However, some emerging companies possess considerable resources, which we may explore further. As I've mentioned before, partnering ultimately benefits patients by providing them with greater access to therapeutic options. If CardiAMP isn't successful but one of our partners succeeds, it remains advantageous for patients and our shareholders. They would benefit from a diverse portfolio of pathways to success, regardless of whether our cardiac-related programs succeed. Last year, in 2021, we engaged in several preclinical collaborations aimed at showcasing our capabilities, helping partners feel secure enough to incorporate our solutions into their therapeutic development. We deeply respect our partners and understand the sensitivity around confidential information. We can bring significant experience that can accelerate their development timelines and help avoid pitfalls that could derail their projects. We are excited as many discussions are ongoing and we'll monitor how they unfold. Another aspect of our strategy involves our AVANCE transseptal sheath, which has FDA clearance. We created this product while enhancing our biotherapeutic delivery system and have developed a navigation platform specifically for the transseptal market. This is a legitimate market, with recent deals like Boston Scientific acquiring Baylis for $1.5 billion and Medtronic buying Afib assets for $50 million. While Baylis has projected revenues of $200 million, I am uncertain about Afib’s figures. Our revenue from the AVANCE platform is currently minimal, although it is commercially available. Expanding our market reach is one route for monetization, but I anticipate that a partner will incorporate it as a valuable asset to enhance existing products. The AVANCE technology has a wide application, not just for transseptal access but also for all robotic catheter guidance systems. The patent application covers many interventional procedures that could benefit from this design, which addresses issues related to maintaining stability during delivery through anatomical curves. Our cell therapies require navigating the aorta and performing a 180-degree turn through the aortic valve, and this technology enhances our control during these procedures. We currently have a strong safety profile and are consistently working on improving our therapy elements. I apologize for the lengthy response.

Emanuela Branchetti, Analyst

Got it. That's very helpful. Thank you. And I guess a follow-up to the like should we expect a possible monetization for the in 2022?

Peter Altman, CEO

At this point, making predictions about partnerships and the market is quite challenging. However, I believe we will surpass our revenue from last year, which was our best performance as a public company. We expect to exceed that in the coming year, potentially by a significant margin. For now, we are confident that we will beat last year's revenue. Our main focus will be getting the enrollment finalized for these trials, which is a major effort for us.

Emanuela Branchetti, Analyst

Great. Thank you very much.

Peter Altman, CEO

Thank you, Emanuela.

Operator, Operator

And our next question today comes from Jim Molloy with Alliance Global Partners. Please go ahead.

Jim Molloy, Analyst

Thank you for taking my question. I would like to clarify regarding the ’01 third quarter; the interim look is on track, which is wonderful to see this year. If I understood correctly, you're planning to complete enrollment in '23 for that, so we expect final data on '01 and for '02, you also clarified the interim role in safe in 2022, which is excellent. Relative to '01, how closely aligned in timing are those two trials to completion?

Peter Altman, CEO

We are working to align the timelines for both trials so they occur almost simultaneously. The trial for '02 has a six-month follow-up for the primary endpoint, while '01 has a one-year follow-up. We aim to enroll over 100 patients in each trial by the end of next year, which would allow us to report results from both in 2024. The '02 trial is based on an adaptive readout of 100 patients, rather than top-line data for the full trial. It's important to note that in our lead program during Phase II with 30 patients, we had a strong p-value. The Phase III pivotal trial for our lead program is significantly powered at over 95%, which is recognized by the FDA's breakthrough designation. The data looks promising, and we anticipate good results for '02 as well, but the adaptive readout will help determine the necessary trial size. It’s possible that the Data Safety Monitoring Board may recommend stopping the trial if we observe a favorable p-value, but we won't know until we reach that stage. If the DSMB advises us to increase enrollment to 350 patients at the 100-patient adaptive readout, that would still indicate success, as it reflects the trial's ability to self-power across multiple centers amidst variability. Ideally, the best outcome would be for results at 100 patients to indicate that we should halt the trial due to demonstrated efficacy, but we cannot make any guarantees.

Jim Molloy, Analyst

That was good, indeed. Looking at the bigger picture, the stock has been under pressure, like many companies recently. There’s certainly nothing notable about BioCardia in this regard. How would you characterize the current partnering environment given the depressed stock prices or potential acquisitions? Has there been any change in activity that might influence valuations for biotech?

Peter Altman, CEO

I don't think it's rolled through quite yet. I think it's starting to happen. There are parties that have reeling from some of the impact in the non-profitable biotech space. Yeah, that throws a monkey wrench into everything. At the same time, suddenly, their cash becomes significantly more precious because nobody wants to go to market in this environment. Nobody wants their equity to become an element of a deal either. It does make things significantly more challenging in the non-profitable biotech space, the larger players, it's a real opportunity for them. If they have a stabilized stock price and they can do some things in today's climate, it's going to be great for them. I'm envious. We won't benefit from that other than if we are party to a relationship or a partnership with one of those entities.

Jim Molloy, Analyst

Got it. Thank you for taking the questions.

Peter Altman, CEO

Appreciate the questions, Jim. Really appreciate you being on the call.

Operator, Operator

Your next question comes from Carolyn Kenner, a shareholder. Please go ahead.

Carolyn Kenner, Shareholder

Hello.

Peter Altman, CEO

Yes. Is it Carolyn Kenner?

Carolyn Kenner, Shareholder

It's Carolyn Kenner, yes.

Peter Altman, CEO

So Carolyn, this is Peter Altman, the CEO of BioCardia. Do you have a question?

Carolyn Kenner, Shareholder

Oh, yes. Let me turn this other phone off. I wasn't prepared for how this works, but I have several questions. One, can you give some idea of the benefits from your catheter and all the program going on there over the short term, medium term, long term? And secondly, I was wondering is the factory that you are – or I'm sorry, the new clinic set-up in California. Is that near completion? I don't think it would be because it's been up for such a short period of time. When do you consider that to be finished? And when will you start manufacturing these products and developing the market? I'll tell you one thing. I'm also a patient of yours Dr. Roman. I was in the phase 3 study in Tampa, Florida, with Dr. Leslie Miller, who is such a fine man. I had three heart attacks before somehow I got – I lost like 30% of my heart to this kind of stuff. I was unable to walk two blocks hardly without sitting down. I got involved somehow, luckily, in your program – and I am totally changed. After six months, I knew what was happening, and I have been buying your stock, and I will continue to buy it forever.

Peter Altman, CEO

Mr. Kenner. I would like to remind everyone that this call is being recorded and broadcast publicly, so please be cautious about what you disclose. Our top priority at BioCardia is the well-being of our patients, and it's wonderful to hear that you are feeling better. I’ll do my best to address your questions. Regarding our Catheter Platform, we have several catheters in development. Our most notable products are the Helix transendocardial delivery catheter and the Morph DNA deflectable catheter, which utilizes a robotics platform. Helix is approved in Europe while Morph DNA is approved in the United States. We employ this system in our first three clinical programs for cardiac use, and we have partnered it out. Concerning the AVANCE platform for transseptal procedures, we have FDA-cleared clinical-grade products available at BioCardia. We are actively working to sell these products to electrophysiologists and interventional cardiologists conducting structural heart procedures, which can benefit from them immediately. Although the market is quite competitive, we have decided not to heavily invest in sales expenses at this time. However, we have engaged a number of commission-only sales representatives to handle any incoming inquiries. As for our new facility, I’m currently at our new site where we have our manufacturing operations for devices and allogeneic cells up and running. We may offer a video tour for investors on future calls. The facility is brand new, and while we’ve retained some equipment from our previous location, most of the work was completed last year along with the associated costs. We anticipate that this will lower our operating expenses, allowing us to allocate funds elsewhere. The transition to this facility was significant, but we are optimistic about our new environment. It’s much improved; instead of a recycling facility, we now have beautiful California redwoods outside. The new location is better suited for manufacturing staff, as our previous site was more focused on tech workers. This should aid us in expanding and increasing production. The cell manufacturing is primarily for supporting our trials through Phase I and Phase II, and possibly Phase III. We still have some time before making decisions about expansion. If we pursue commercial cell manufacturing, we might duplicate this facility and relocate it to a more central area near a FedEx hub, but no decisions have been made yet. Thank you for your questions. I want to emphasize that Les Miller is an outstanding physician, and it’s a privilege to work with him. I appreciate everyone’s participation in today’s call and your interest in BioCardia. We look forward to updating you on our progress. Thank you, take care, and have a great day.

Operator, Operator

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.