Earnings Call Transcript - BCDA Q4 2022

Operator, Operator

Ladies and gentlemen, thank you for your patience. Good afternoon, and welcome to the BioCardia 2022 Yearend Conference Call. At this time, all participants are in a listen-only mode. I will now hand over the conference to Moranda from BioCardia Investor Relations. Please proceed, Moranda.

Moranda, Unidentified Company Representative

Good afternoon, and thank you for participating in today's conference call. Joining me from BioCardia's leadership team 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 and 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, 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 and cautionary statements described in BioCardia's reports on Form 10-K filed with the SEC this morning. The content of this call contains time-sensitive information that is accurate only as of today, March 29, 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, PhD, BioCardia's President and CEO. Peter, please go ahead.

Peter Altman, CEO

Thank you, Moranda, and good afternoon to everyone on the call. We had a great fiscal year in 2022, but, before we get into the details, I always like to take a few moments to review what we're doing and why we're 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 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. In the heart, our own proprietary Helix minimally invasive delivery system is used to deliver the cells to target regions of damage. For the lungs, we intend to use intravenous delivery, which will result in the investigational cells being localized 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 the target tissues. Heart failure is the first problem we're going after. Heart failure is an enormous unmet need that affects more than 26 million people worldwide. The latest blockbuster drugs in ischemic heart failure of reduced ejection fraction provide great benefits to patients but don't appear to 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 77% and an all-cause mortality of 10% per year regardless of whether they were treated or controlled patients. 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 heart damage with improvements in heart perfusion and contractile function. All known previous clinical studies similar to the approach we are taking in our two lead CardiAMP Cell Therapy programs have shown patient benefits on average. In some of these studies, including our own, the benefits have been remarkable. The FDA has supported this promise by granting breakthrough device designation to CardiAMP Cell Therapy in the indication of ischemic heart failure, reduced ejection fraction. Advancing this and our other three 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 BCDA-01 and chronic myocardial ischemia or BCDA-02 are furthest along clinically with an estimated combined 1.6 million patients in a reachable US 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. Clinical investigators at 22 active partner sites across the United States and Canada have enrolled 119 patients to date, with 10 additional controlled patients having crossed over to receive therapy. We currently have eight active consents and 15 additional patients in the pre-consent queue. There is clearly increased momentum here, potentially driven by the clinical data. Data published to date has shown improved functional capacity and quality of life in treated patients. Earlier this month, clinical investigators presented blinded echocardiography data from the Yale University core laboratory from the Open-Label rolling cohort of the CardiAMP Heart failure Trial at the Annual Meeting of the American College of Cardiology. Results presented showed a 35% improvement in left ventricular ejection fraction as compared to baseline, with a 100% survival at a two-year follow-up. These are remarkable results in this population, and the scientific poster presentation is available on our website if you are interested. The Independent Data Safety Monitoring Board completed both its fifth and sixth pre-specified data reviews in 2022, including a risk-benefit assessment with more than 100 patients past the primary clinical readout. Following the review, the Data Safety Monitoring Board indicated that it had no significant safety concerns and recommended the study continue as designed. The Data Safety Monitoring Board also supported the company implementing an adaptive statistical analysis plan, which could enable an early readout for study treatment efficacy. Working with distinguished consultants, including former FDA leaders and a respected statistical consulting group, we have developed and submitted a supplement with a proposed adaptive statistical analysis plan to the FDA in February 2023. We have a meeting scheduled to discuss the FDA's comments on March 31, 2023, which is this Friday. The next pre-specified formal data safety monitoring board review is anticipated in the second quarter of 2023, and we believe it is likely we will be able to have the Adaptive Statistical Analysis plan in place for the meeting. The specific details of any potential adaptive statistical analysis plan in combination with any modifications to the Data Safety Monitoring Board charter will dictate what happens at the next subsequent Data Safety Monitoring Board reviews. As the CardiAMP Cell Therapy trial in heart failure was over 90% powered for success with a range of 86 patients to 126 patients, there is potential that the trial could meet its primary efficacy endpoint on the patients that have been enrolled to date. However, when the Data Safety Monitoring Board next meets, they may also recommend that the trial continue as planned, be stopped for safety, or be stopped for futility if the data does not support achieving that primary endpoint. Our second therapeutic program with the same autologous cell 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 the 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 or CMS reimbursement for both treatment and control procedures at up to $20,000 for both trials. A sufficient number of patients to complete the open labeled rolling cohort have already been consented. It is anticipated this trial will report out the open label rolling results in 2023. Trial design modifications to enhance enrollment efficiency for the randomized cohort are being planned for submission to the FDA. As we have shared previously in July, we had our second consultation with Japan's pharmaceuticals and medical device agency regarding registration of CardiAMP cell therapy for ischemic heart failure. After working with distinguished physician leaders, BioCardia expects to complete its formal submission for Japanese approval in the second quarter of 2023. As I've mentioned in previous calls, Japanese researchers established the building blocks of this therapy many years ago. The therapeutic approach we are pursuing was first studied in a preclinical model by physician scientists in Oklahoma. This early work was performed in parallel to another Japanese vascular biology scientist 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 be able to provide this therapy to the many in Japan who could benefit from it. Now, I'd like to move to our two allogeneic cell therapy product candidates, based on our allogeneic Neurokinin-1 Receptor Positive mesenchymal stem cells platform. These are off-the-shelf cells from young healthy donors intended to be expanded to produce many doses for many patients. The Neurokinin-1 Receptor Positive mesenchymal stem cells are particularly interesting, as Neurokinin-1 is the primary receptor for Substance P, an important neuropeptide mediator of inflammation, which plays a central role in both heart failure and regenerative processes following myocardial injury. I encourage listeners to Google Substance P to understand why advancing the mesenchymal stem cells that bind to this neuropeptide is exciting. Our allogeneic mesenchymal stem cell program in ischemic etiology heart failure of reduced ejection fraction is designated as BCDA-03. This is a Phase I/II, multi-center, randomized, double-blinded, controlled study of up to 69 patients, designed to assess the safety and efficacy of this therapeutic candidate. The investigational new drug application was approved by the FDA in December 2022. The trial is designed for patients with New York Heart Association Class II and III ischemic heart failure of reduced ejection fraction, whose own cell composition makes them ineligible for the company's Phase III CardiAMP Heart Failure Trial studying autologous cell therapy or BCDA-01. Clinical-grade allogeneic cells for this program have been manufactured in our Sunnyvale facility and are ready for use. These cells will be delivered under the protocol with our proprietary minimally invasive biotherapeutic delivery system. We expect to begin enrolling patients in the second quarter of 2023. Our allogeneic mesenchymal stem cell program in patients recovering from acute respiratory distress syndrome secondary to COVID, which we have designated BCDA-04, was approved by the FDA in April 2022 to treat patients. The trial is a Phase I multi-center open-label study of up to nine patients. While the number of patients with COVID-induced ARDS has decreased, ARDS unrelated to COVID is still significantly impacting patients. The company intends to work with the FDA to modify the study eligibility criteria to include these patients. In this trial, increasing dosages of the cells will initially be evaluated, and then the optimal dose will be taken to Phase II in a randomized study in adult patients recovering from ARDS. This therapy is intended to address the enormous unmet need of sustained local and systemic inflammation after a patient is taken off respiratory support, with the goals of accelerating recovery, enhancing survival, and reducing both relapse and rehospitalization. Clinical-grade cells are also ready for use in this study. The ARDS trial is expected to commence following the initiation of BCDA-03, studying these allogeneic mesenchymal stem cells for heart failure reduced ejection fraction. In summary, we are advancing four clinical-stage 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 Neurokinin-1 Receptor Positive mesenchymal stem cells platform for other clinical indications, which has shown promise with other mesenchymal stem cell preparations. Third is licensing our catheter-based biotherapeutic delivery system for cell gene and protein therapy candidates to the heart, such as in the BlueRock relationship we began last year. And fourth, is monetizing our Avance transseptal introducer sheath product. Our steerable sheath assets were initially developed to help navigate our biotherapeutic delivery systems, and we use these products in every cardiac cell therapy procedure today. There have been recent acquisitions of established product offerings similar to our Avance product offering for between $70 million to $1.5 billion. Our Avance is our first FDA-approved offering for this transseptal indication and incorporates patented technology that may provide compelling benefits. Next week, we expect to announce the issuance of two additional new patents related to these steerable sheath assets. We are also looking forward to announcing an additional patent issuance related to our Neurokinin-1 Receptor Positive mesenchymal stem cells that has been allowed and a patent that we expect soon to be allowed related to our Helix Biotherapeutic delivery platform. I will now pass the call to David McClung, our CFO, who will review our 2022 financial results.

David McClung, CFO

Thanks, Peter, and good afternoon, everyone. Today I'll review our financial results for the year ended December 31, 2022. Revenues for the fiscal year 2022 increased to $1.4 million from $1.0 million in fiscal year 2021, primarily due to the increased revenue from new and existing collaborative partners including the Bluerock relationship Peter just mentioned. Our revenues today contribute to reducing our burn rate and they have the potential to develop into meaningful licensing and royalty revenues if the underlying therapies prove to be effective and commercialized. The company continues to manage its financial resources carefully and economically. Total operating expenses were down approximately $300,000 year over year, $13.3 million in 2022 compared to $13.6 million in 2021. R&D expenses were modestly up to $8.8 million in 2022 compared to $8.6 million in 2021, primarily due to increased expenses in support of the CardiAMP cell therapy heart failure trial, particularly as our clinical sites continue to emerge from the effects of the pandemic. Selling, general, and administrative expenses decreased to $4.4 million in 2022 versus $5.1 million in 2021, even as we established and licensed our new cell therapy and device manufacturing facility. The decrease was primarily due to reduced professional service fees and lower stock compensation expenses. Our net loss in 2022 was $11.9 million compared to a net loss of $12.6 million in 2021, and cash used in operations totaled $10.6 million in 2022, comparable to the $10.6 million in 2021. While CardiAMP ended the year with cash and cash equivalents totaling $7.4 million, which provides runway into the third quarter without additional capital or funding from business development activities. This concludes management's remarks and we're happy to take questions.

Operator, Operator

And our first question here comes from Joe Pantginis with H.C. Wainwright. Please go ahead.

Joe Pantginis, Analyst

Hey guys, good afternoon. Thanks for taking the question. I have three questions, one of which hopefully will be based on getting some important perspective. So maybe I'll start with that one. So, Peter, when we look at the blinded echo data for the roll in at ACC, 35% overall improvement in LVF, maybe can you give the perspective of how that would compare to the inclusion criteria of the patient population and how that would relate to their natural history?

Peter Altman, CEO

Joe, thank you for the question. That's something that always makes it difficult to compare one trial to another, but in our population as we look at the data sets, we're looking at New York Heart Association Class II and III ischemic etiology heart failure with reduced ejection fraction patients. Ejection fraction is also 20% to 40% for these patients. So this lines up well with what has been done in some of the other larger trials, whereas the data I shared showed cardiac mortality of 7% to 8% with an all-cause mortality of 10% per year in these patients. Now there are things that we're doing that could actually wind up excluding patients who are sicker. So for example, the patients we're treating have to be eligible for cardiac catheterization, and that could conceivably tilt us towards a healthier population. In addition, our cell population analysis selects patients who have compelling potential for the autologous therapy, and there is potential that having superior autologous or patient's own cells could have an impact on their long-term prognosis. But it's a 100% survival in a patient population that should have seen a 10% mortality per year, and at the same time, we're seeing improvements in a population group that typically deteriorates. We recognize it's a small data set, but it's completely in line with what we saw in Phase I and Phase II where patients improved across many metrics. So the question you pose is, how does this compare to a true placebo-controlled population or a controlled population, and that's what we're going to find out in this trial.

Joe Pantginis, Analyst

Great. No, that's helpful. Thank you. And then, I guess, especially when you talk about cost management right now, expense management and you have multiple ongoing studies, I want to focus on manufacturing with regard to your ability to serve your larger studies right now and any immediate term or nearer term needs regarding manufacturing capacity?

Peter Altman, CEO

So right now, I actually think that our current manufacturing capabilities will be fine for all four clinical trials for both the autologous BCDA-01 and BCDA-02, and the allogeneic BCDA-03 and BCDA-04. We made the decision to own it and control it. So in our new facility that David mentioned, we are certified for drug manufacturing as well as medical device manufacturing for those delivery drugs with our systems. Our partnering with others could result in greater need, but most of the folks we're partnering with are not as far advanced as we are in the clinic. So, they're aspiring to do a 10-patient trial, while we're working towards a 343-patient trial in BCDA-02. I also note that as BCDA-02 enrollment accelerates, we can handle the manufacturing here at our facility. We're currently only one shift in both of our capabilities, and we have room, for example, for cell manufacturing. We can add incubators as we can expand out our capabilities.

Joe Pantginis, Analyst

Got it. No, very helpful. And then my last question with regard to the 01 study in heart failure, obviously right now, based on your comments, a lot of moving parts. So, a lot depends on what's coming up from your discussions with the FDA. So I guess I'd ask right now what we could know or would already be in place. The upcoming interim analysis will essentially look at everything - futility, safety, efficacy - is there, or what is the alpha spend around that, or how would it impact the current statistical analysis plan ahead of any changes from an adaptive design?

Peter Altman, CEO

Yeah, that's a great question, and that's one of the challenges of these adaptive statistical analyses. I think the alpha spend is going to be very low, and for folks that don't have a PhD on the call like you do, the alpha spend is what level of the p-value are you going to lose in order to have statistical significance? So right now, as we're regulated as a device system for this autologous therapy, we're expecting to achieve a p-value of less than 0.05 in one large well-controlled study. Again, the agency will look at the totality of data. We won't know what the alpha spend is until we get the adaptive statistical analysis plan reviewed and approved by the agency. That is imminent; we have a call scheduled with the agency for this Friday. But as I'm sure you can appreciate, it’s typically a back and forth process. We want to minimize the amount of alpha that we spend, and I'd much rather be facing a p-value of 0.05 than one of 0.001 because we spent all the alpha. But I think we're going to wind up in a good place. There's a lot of experienced folks working with us on the design, the adaptive statistical analysis plan, and we've brought in some very high-profile regulatory consultants to help the agency understand this. In this trial, we now have breakthrough designation for this lead program, and breakthrough designation can enable us to collect additional safety data after presenting results that meet the primary endpoint in the trial. Our job is to get cardiac cell therapy approved and available for patients. We want to be thoughtful in this process to maximize our probability of technical success, but also near-term commercial success.

Joe Pantginis, Analyst

Understand. Thanks a lot for the color.

Peter Altman, CEO

Great questions, Joe. I really appreciate them.

Operator, Operator

And our next question will come from Kumaraguru Raja with Roth Capital. Please go ahead.

Kumaraguru Raja, Analyst

Thanks for taking my questions. Again, regarding the left ventricular ejection fraction, do you know what was the range at baseline and also the range at the one-year and two-year time point?

Peter Altman, CEO

Actually, I think all of the data is presented in the poster that’s available on our website. I appreciate the question. I think the inclusion criteria is that the patient is 20% to 40%. In addition, the follow-up is the 35% would be on top of that. So, in my mind, I estimate it’s probably in the high 20% at baseline and probably wound up being high 30% at follow-up, but I don’t have the data right here before me. I can send you that poster if you would like after this call.

Kumaraguru Raja, Analyst

Okay. And also the range fits in with the expected range of like 25% to 45% that is seen with other treatments for heart failure, I guess.

Peter Altman, CEO

Generally speaking, the one therapy in heart failure that can really enhance your heart function is biventricular pacing in some patients with a left bundle branch block. But in truth, most of the heart failure therapies where you still have the native part do not significantly improve LV ejection fraction. Typically, these patients are slowly deteriorating, and most other therapies in this space show that they're better than a controlled group that doesn't have that therapy. Here in this rolling cohort, we show that the patients are actually better themselves than they were two years ago. That's not been done in heart failure. Now this is a very small data set, and I don't want to over-interpret it, but it was a blinded data set, and the Yale Echo core lab was blinded as to the time of treatment, and these are the results they came out with.

Kumaraguru Raja, Analyst

Okay. And with regard to the statistical analysis plan, you mentioned that it would require about 86 patients to 126 patients and in that context you have eight patients under active consent and 15 patients under pre-consent. What would be the number of patients that would be analyzed at the next DSMB?

Peter Altman, CEO

I don’t have the exact answer there, Kumar, but that’s a great question. So here's the way I would suggest folks to think about it. Having a heart failure trial this early would be very exciting, but at the same time, success is getting the DSMB number of patients to assess while we gather additional follow-up data. There’s a brass ring if they stop the trial early for efficacy. At our last DSMB review, they looked at over 100 patients past the primary endpoint and saw improvements in clinically meaningful levels without patients lost to follow-up. The implementation of the adaptive statistical analysis plan will right-size the trial and if we are already there, we will pivot to completing the trial and seeking approval and commercialization. If not, we will continue the trial. Enrollment seems to be taking up well, but it’s not done until it’s done. I also want to share that all clean data will be analyzed going into the adaptive statistical analysis plan, making the next DSMB review particularly meaningful.

Kumaraguru Raja, Analyst

That's very helpful. Thanks so much.

Peter Altman, CEO

Appreciate you being on the call.

Operator, Operator

Our next question will come from James Molloy with Alliance Global Partners. Please go ahead.

James Molloy, Analyst

Hey guys, thanks for taking my questions. I know we talked you through it a little bit, but can you sort of outline the expectations for Friday's call or is that something you wouldn't want to do in advance of the call, any more detail? And then on O2, you mentioned you get the 10 patients consented for the roll in. What do you expect next steps on that, and are we still anticipating the first 100 in O2 trial potentially in 2025?

Peter Altman, CEO

So, James, thank you for being on the call and for great questions. We’re all wondering what we will discuss on Friday's call as well. We have clarity on the design before us. I will provide a little bit more color. We are expecting written comments from the agency today. Those comments have not yet come to us. We have a series of meetings with high-profile folks to review those comments and prepare for the conversation with the agency, as well as calls scheduled for after the call to digest the feedback and address any outstanding issues. Implementing an adaptive statistical analysis plan has no safety ramifications; it’s a trial design issue. We fully expect that the agency will express concern about the trial being smaller for approval, preferring to see a higher patient data level with respect to safety. One of the advantages we have is that we have the breakthrough designation that enables us to collect additional safety data after the trial ends. I will minimize the specifics until we implement it, and I expect we’ll have it in place in Q2 for the next DSMB, but it may be dated based on implementing this plan. If we don’t get it in place, we will still have a DSMB meeting, and I expect it in Q2.

James Molloy, Analyst

Great. Thank you for taking the questions.

Peter Altman, CEO

Appreciate it, James. Have a great day.

Operator, Operator

And this concludes our question-and-answer session. I would now like to turn the call back over to Dr. Peter Altman for any closing remarks.

Peter Altman, CEO

Thank you, Joe. 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 very much for attending today's presentation. You may now disconnect your lines.