Earnings Call Transcript - CELC Q2 2024

Operator, Operator

Good afternoon, ladies and gentlemen, and welcome to the Celcuity Second Quarter 2024 Financial Results Conference Call. At this time all lines are in listen-only mode. Following the presentation we will conduct a question-and-answer session. This call is being recorded today, August 14, 2024. I would now like to turn the conference over to Maria Yonkoski with ICR Westwick. Please go ahead.

Maria Yonkoski, IR Representative

Thank you and good afternoon to everyone on the call. Thank you for joining us to review Celcuity's Second Quarter 2024 Financial Results and Business update. Earlier today, Celcuity released financial results for the second quarter ending June 30, 2024. The press release can be found on the Investors section of the website. Joining me on the call today are Brian Sullivan, Celcuity's Chief Executive Officer and Co-Founder; Vicky Hahne, Chief Financial Officer; as well as Igor Gorbatchevsky, Chief Medical Officer, who will be available during Q&A. Before we begin, I’d like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, which are outlined in today's press release and in our reports and filings with the SEC. Actual events or results may differ materially from those projected in the forward-looking statements. Such forward-looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. On this call, we will also refer to non-GAAP financial measures. These non-GAAP measures are used by management to make strategic decisions, forecast future results and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the company's ongoing core operations and prospects for the future. You can find the table reconciling the non-GAAP financial measures to GAAP measures in today's press release. And with that, I would now like to turn the call over to Brian Sullivan, CEO of Celcuity. Please go ahead.

Brian Sullivan, CEO

Thank you, Maria, and good afternoon everyone. We appreciate your interest in Celcuity. We made significant strides advancing the clinical development of gedatolisib this quarter. Overall enrollment in VIKTORIA-1, our Phase III study evaluating gedatolisib plus fulvestrant with and without palbociclib as second-line treatment for patients with HR+/HER2- advanced breast cancer remains robust and on track. Our Phase Ib/II trial evaluating patients with metastatic castration resistant prostate cancer is also enrolling on schedule. And we further expanded the patient population eligible for gedatolisib, when we initiated efforts to launch VIKTORIA-2, a Phase III study designed to evaluate gedatolisib as a first-line treatment option for patients with HR+/HER2- advanced breast cancer. In our view, each of these three programs has the potential to generate blockbuster levels of revenue. If these three programs ultimately result in regulatory approvals, we estimate that nearly 200,000 late-stage cancer patients globally would be eligible to be treated with gedatolisib. We first announced our plans to conduct the VIKTORIA-1 study over two years ago in May 2022. At that time, we estimated that 65% of the patients enrolled would lack detectable PIK3CA mutations and were being assigned to the study's PIK3CA wild-type cohort. And this assumption was used to estimate enrollment by cohort and in turn, the timing of events for primary analysis. We estimated that the threshold number of events required to trigger the primary analysis for this PIK3CA wild-type cohort of patients would be reached in the second half of 2024. And while the study's overall enrollment remains on track and robust relative to the estimate we made over two years ago, the total proportion of patients enrolled who have PIK3CA wild-type tumors has recently shifted lower. We now project that 60% of the patients enrolled in the study will be enrolled in the PIK3CA wild-type cohort rather than the 65% originally estimated. And this proportion while lower than our original estimate is within the range reported in other studies. And thus we don't believe this shift is study related but simply a result of normal sample variation within a population. Despite the lower proportion of PIK3CA wild-type patients completed, enrollment for the PIK3CA wild-type cohort is over 80% complete. We expect to reach the enrollment target for the PIK3CA wild-type cohort during the fourth quarter rather than the end of the third quarter as we originally forecast. We now expect the primary analysis event threshold trigger for the PIK3CA wild-type cohort will be reached sometime between late Q4 '24 and the end of Q1 2025. Our guidance regarding the PIK3CA mutant patient subgroup remains unchanged, and we expect primary analysis for this cohort to be triggered during the first half of 2025. Turning now to our VIKTORIA-2 study. We announced our plans to initiate this Phase III clinical trial this past May. The study will evaluate gedatolisib plus a CDK4/6 inhibitor in fulvestrant as first-line treatment for patients with HR+/HER2- advanced breast cancer, whose disease recurs while receiving or within 12 months of completing adjuvant endocrine therapy. Now these patients are considered to have endocrine therapy resistant disease. They have a significantly poor prognosis than endocrine therapy sensitive patients whose disease recurs more than 12 months after completing their adjuvant endocrine therapy. Current standard of care first-line treatment for endocrine therapy resistant patients includes any of the three approved CDK4/6 inhibitors combined with fulvestrant. The limited efficacy of these regimens offered to endocrine therapy-resistant patients, though, was not well understood until the INAVO-120 study, which evaluated the PI3K alpha inhibitor, inavolisib, reported results last December. As part of this trial, the efficacy of standard of care palbociclib and fulvestrant was evaluated as first-line treatment in patients who were resistant to endocrine therapy. And for these patients, median PFS was only 7.3 months. And for those patients whose disease relapsed within the first two years of their adjuvant endocrine therapy, the median PFS was only 3.7 months. And these results compare poorly to the median PFS of 27 months reported for patients who are sensitive to endocrine therapy and receive the same regimen, highlighting a significant need for more effective therapies for patients with advanced breast cancer that are resistant to endocrine therapy. We reported last year the preliminary clinical data from our Phase Ib trial for gedatolisib as first-line treatment in patients with advanced breast cancer. As you may recall, the median progression-free survival in endocrine-sensitive patients who are treatment naive and were treated with gedatolisib in combination with palbociclib and letrozole was 48.6 months and the objective response rate was 79%. These results compare very favorably to the results reported for palbociclib plus letrozole in this population. Additionally, the INAVO-120 study that evaluated inavolisib combined with palbociclib and fulvestrant in the endocrine-resistant patients reported positive data. Now these patients had tumors with PIK3CA mutations and the patients were not prediabetic or diabetic. So the subgroup only represents about 20% of the total endocrine-resistant patient population. However, the results reported were positive relative to the control, providing further evidence of the critical role the PIK3CA pathway plays as a driver of disease in treatment-naive patients. In the VIKTORIA-2 study for the CDK4/6 inhibitor, investigators may choose either ribociclib or palbociclib. The safety profile of gedatolisib combined with fulvestrant and palbociclib is well described, but the investigational combination of gedatolisib with ribociclib has not yet been clinically tested. Therefore, a safety run-in of approximately 12 to 36 patients will evaluate the safety profile of gedatolisib combined with ribociclib and fulvestrant. The safety run-in will be completed and the gedatolisib Phase III dose with ribociclib confirmed before enrolling patients in the Phase III portion of the study. For this study, approximately 638 subjects will be assigned to a cohort based on the PIK3CA mutation status. After the investigator selects the CDK4/6 inhibitor for a subject, the subject will then be randomly assigned on a one-to-one basis to either be treated with gedatolisib, fulvestrant and either ribociclib or palbociclib, or be assigned to an arm that treats patients with fulvestrant and either ribo or palbo. The clinical trial primary endpoints are progression-free survival, per RECIST 1.1 criteria as assessed by Blinded Independent Central Review. The primary PFS endpoint for each of the two cohorts will be evaluated independently. The study design was reviewed and discussed with the US FDA during a type meeting in the first quarter, and we have also just recently received feedback from the FDA on the study protocol. As part of a Type D meeting, we can now focus on our feasibility and site-selection activities. We expect to activate roughly 200 clinical sites across North America, Europe, Latin America, and Asia, and we expect to enroll the first patient in the second quarter of 2025. We estimate that 15,000 to 20,000 patients with endocrine therapy resistant advanced breast cancer are diagnosed each year in the United States alone. Since this population does not overlap with the patient population we're evaluating in our VIKTORIA-1 study, an approval to treat these patients would increase the size of the addressable US market potential for gedatolisib by up to $3 billion. Given the importance of developing a more efficacious therapeutic regimen for these patients and the scale of the financial opportunity, we decided that it was important to proceed as quickly as possible to initiate a Phase III study for this patient population. To accomplish this, we needed to strengthen our balance sheet, which we did this quarter when we raised $129 million in gross proceeds from equity and debt offerings. By initiating this trial now, 12 months earlier than we would have been able to do so without this financing, we estimate we have added over $1 billion to the net present value of the potential revenue stream from this indication. I would like to turn now to our Phase Ib/II trial that's evaluating the safety and efficacy of gedatolisib in combination with darolutamide, an androgen receptor inhibitor in patients with metastatic castration-resistant prostate cancer. The study dosed its first patient in February of this year and enrollment is on track. We continue to expect to report preliminary data in the first half of 2025. We are also pleased that our non-clinical research describing gedatolisib's activity in different tumor types was recently published in two leading journals. In June, Nature Breast Cancer published results from various in vitro and in vivo studies we conducted that compared gedatolisib's activity in several approved single-node PI3K, AKT, mTOR, or PAM inhibitors in various breast cancer models. In August, Molecular Oncology published results of similar studies in prostate cancer models. Both sets of studies demonstrated that gedatolisib exhibited more potent and cytotoxic effects compared to the single-node PAM inhibitors, regardless of the PAM pathway mutational status of the cell lines. These results indicate that inhibition of multiple PAM pathway nodes by a PAM/PI3K/mTOR inhibitor like gedatolisib is more effective at inducing antitumor activity than single-node PAM inhibitors in vitro and in animal models. Overall, it was a very busy and productive quarter. I'm very pleased with the progress we made. I'd like now to turn the call over to Vicky, who will review our finances.

Vicky Hahne, CFO

Thank you, Brian and good afternoon, everyone. I'll provide a brief overview of our financial results for the second quarter 2024. Our second quarter net loss was $23.7 million or $0.62 per share compared to a $14.6 million net loss or $0.66 per share for the second quarter of 2023. Because these quarterly net losses include significant non-cash items, including stock-based compensation and interest, we also included in our press release a non-GAAP adjusted net loss for the quarter ending June 30, 2024. Our non-GAAP adjusted net loss was $22.2 million or $0.58 per share for the second quarter of 2024 compared to a non-GAAP adjusted net loss of $11.1 million or $0.51 per share for the second quarter of 2023. Research and development expenses were $22.5 million for the second quarter of 2024 compared to $13.8 million for the same period in 2023. Of the approximately $8.7 million increase in R&D expenses, $6.6 million primarily related to activities supporting the VIKTORIA-1 Phase III trial and the initiation of the Phase Ib/II prostate trial, and $2.1 million was related to increased employee and consulting expenses. General and administrative expenses were $1.8 million for the second quarter of 2024 compared to $1.3 million for the second quarter of '23. Employee and consulting-related expenses accounted for $0.3 million of the increase. Professional fees and other administrative expenses accounted for the remaining increase of approximately $0.2 million. Net cash used in operating activities for the second quarter of '24 was $18.1 million compared to $9.7 million for the second quarter of '23. We ended the quarter with approximately $283.1 million in cash, cash equivalents and short-term investments compared to $180.6 million at December 31, 2023. The increase of approximately $102 million in cash and cash equivalents and short-term investments was the result of several financing activities that occurred in the first half of 2024, yielding net proceeds of $137.5 million. We closed on two financing activities in May, resulting in gross proceeds of $122 million and net proceeds of $115.5 million. The first activity was an equity financing, resulting in $60 million of gross proceeds with net proceeds of $56.3 million. The second activity was a debt offering, resulting in gross proceeds of $61.7 million with net proceeds of $59.2 million. Additional financing activities in the first half of the year resulted from exercises of $14.2 million, accessing our aftermarket offering of $7.3 million, and stock option exercises and employee stock purchases of $0.5 million. The $137.5 million was offset by year-to-date operating cash used of $35.1 million. I will now hand the call back to Brian.

Brian Sullivan, CEO

Thank you, Vicky. Operator, could you please open the call for questions?

Operator, Operator

Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Maury Raycroft from Jefferies. Your line is now open.

Maury Raycroft, Analyst

Hi, thanks for taking my question. Just checking on the enrollment, I appreciate that the timeline is moving a little bit. Based on the shift in the proportion of wild-type and mutant populations, is it possible that the wild-type and mutant readouts could happen at the same time? Or are you confident that the wild-type and mutant readouts will be staggered? And secondly, is it fair to assume you'll do another update on enrollment in the fourth quarter and provide more specifics on the plan for the readout at that point?

Brian Sullivan, CEO

Thanks, Maury and thanks for your question. As far as the timing of announcement of results for mutated patients, we are maintaining our guidance that we would expect to have those results available sometime in the first half. We're enrolling the same number of patients in each cohort of the studies, wild-type versus mutant and 40% of the patients are mutated. So that enrollment period will take longer to complete, albeit a little bit sooner than we originally planned because of the higher proportion of mutated patients. But we are not changing our guidance at this time. And as far as updating enrollment, we will continue to update guidance as we have every quarter on when we expect to report top-line results.

Maury Raycroft, Analyst

Okay. Makes sense. And then for VIKTORIA-2 in the frontline setting, can you talk more about the safety run-in with the 12 to 36 patients? Why is there a range of patients that you could enroll? And are you assessing any variations with dosing strategy? And how long will you have to treat these patients?

Brian Sullivan, CEO

I'll give you an initial high-level summary and then Igor could maybe fill in the blanks. Essentially, the study is designed to evaluate, if needed, various dose levels of gedatolisib to find the Phase III dose. If we don't need to reduce the dose of gedatolisib in the first cohort of patients that we are evaluating, then we'll be able to proceed with the data from that group of 12 patients. And then subsequently, if we find that we need to dose reduce gedatolisib, we would enroll another 12 patients and do the same thing again if we had to and enroll another 12 patients. Essentially, depending on what results and the outcome of that cohort or one cohort will or may or may not lead you to enroll additional patients. As far as the thresholds, I mean it's a standard safety run-in design. Igor, maybe you could provide a little bit more color on that question.

Igor Gorbatchevsky, CMO

Thank you, Brian. As Brian pointed out, it's a very straightforward safety run-in. Three dose levels will be tested, 12 subjects per each dose level. DLT will be assessed after one cycle of treatment is completed. It's a very safe and straightforward event that has been discussed with the regulators and agreed upon. And to Brian's point, a decision about the initiation of the randomized Phase III study could be done as early as the completion of the initial cohort's 12 subjects.

Maury Raycroft, Analyst

Got it. Okay. Thanks for taking my questions.

Operator, Operator

Your next question comes from the line of Tara Bancroft from TD Cowen. Your line is now open.

Tara Bancroft, Analyst

Hi, good afternoon. I was hoping you could tell us exactly what you are seeing now for the percentage split of wild-type versus mutant that you think you're observing now versus what your previous expectations were? And also just a point of clarification. By target enrollment, you mean completion, right?

Brian Sullivan, CEO

Right, right. There is always variation. You may have patients in screening at the end of a period and enroll additional patients just because you can't not enroll patients that you've potentially already approved to screen once you hit that target, but completed enrollment is correct. So we were at 65% at the end of '23. And so over the course of '23, you would see fluctuations month-to-month, which is expected. Fluctuations are normal. So again, we were cautious in interpreting the variation but because we ended the year at the target number we had set in May '22, nearly 18 months prior, we thought that estimate was solid and what we would continue. Once we hit 80% enrollment, which we did recently, the wild-type cohort is at 60%. We just decided that we should update our forecast to the current cumulative ratio, which is 60%.

Tara Bancroft, Analyst

Okay. Great. So I guess late Q4 could potentially align with the event timeline, which might coincide with the San Antonio conference schedule. Is this still your main focus? I know the abstract deadline was in early to mid-July. Did you submit an abstract or plan on presenting there?

Brian Sullivan, CEO

We are not going to provide details about the venue for reporting the data until we have an announcement. It will depend on the timing and relevance to the next significant meeting. Once the data is available, we will share the top line as soon as we can, and then we will offer guidance on when we can discuss more details at a meeting or include information in the announcement press release.

Tara Bancroft, Analyst

Okay, great. Thanks so much for taking the questions.

Brian Sullivan, CEO

You’re welcome.

Operator, Operator

There are no further questions at this time. I would now like to turn the call over to Brian Sullivan, CEO of Celcuity for closing remarks.

Brian Sullivan, CEO

Thank you very much for attending our call. We appreciate your interest in our company, and I look forward to reporting to you next quarter. Good evening.

Operator, Operator

Ladies and gentlemen, this concludes today's conference. Thank you very much for your participation. You may now disconnect.