BiomX Inc. Q1 FY2023 Earnings Call

Good morning, and welcome to the BiomX First Quarter 2023 Financial Results and Corporate Update Conference Call. I would now like to turn the call over to Marina Wolfson, Chief Financial Officer of BiomX. Please proceed.

Thank you, and welcome to the BiomX First Quarter 2023 Financial Results and Corporate Update Conference Call. The news release became available just after 6:30 a.m. Eastern Time today and can be found on our website at biomx.com. A replay of this call will be available on the Investors section of our website. Before we begin, I'd like to review the safe harbor provision. All statements on this call that are not factual historic statements may be deemed forward-looking statements. For instance, we are using forward-looking statements when we discuss on the conference call potential market opportunities, the design, aims, expected timing and interim and final results of our preclinical and clinical trials, the sufficiency of our existing cash, cash equivalents and short-term deposits, and the potential benefits of our product candidates. In addition, past preclinical and clinical results as well as compassionate use are not indicative and do not guarantee future success of our clinical trials. Except as required by law, we do not undertake to update forward-looking statements. The full safe harbor provision, including risks that could cause actual results to differ from these forward-looking statements are outlined in today's press release, which, as noted earlier, is on our website. Joining me on the call this morning is Jonathan Solomon, Chief Executive Officer of BiomX. With that, I will turn the call over to Jonathan.

Thank you, Marina, and good morning, everyone. BiomX continues to make significant progress with the development of our lead product candidate, BX004, for the treatment of Pseudomonas Aeruginosa or PsA infections in patients with Cystic Fibrosis or CF. In February 2023, we announced positive results from Part 1 of our ongoing Phase Ib/IIa trial. These results were better than we had anticipated, particularly with respect to the notable reductions observed in PsA bacterial burden. Enrollment in Part 2 continues to progress well, and we expect to report results in the third quarter of 2023. As a reminder, in Part 2 of the study, we're dosing CF patients with BX004 twice a day, but over a longer 10-day treatment period compared to Part 1. Part 2 of the study is designed to find additional data on safety and reduction in PsA bacterial burden, along with other exploratory endpoints. As a reminder, PsA infections are highly pathogenic and represent a leading cause of loss of lung function in people with CF. After a CF patient has been infected with PsA in his or her lungs, it is exceptionally difficult to fully eradicate the infection even with multiple courses of antibiotic treatment. PsA infections often persist over a period of several years. Unfortunately, treatment with antibiotics begins to wane over time. BX004 is a therapy that's designed to directly address the significant and unmet medical need in CF. I'm pleased to note that we had the opportunity to strengthen our balance sheet during this quarter after announcing Part 1 results. On May 4, we closed the second part of a private placement, which altogether raised total gross proceeds of approximately $7.5 million. We would like to thank our existing shareholders, which include OrbiMed and the Cystic Fibrosis Foundation, who led this financing. As a result of this funding, together with our existing cash reserves, we expect that we'll remain well funded through this time period when we expect to announce Part 2 results. In addition to strengthening our balance sheet, we also had the opportunity to expand our Board of Directors. Last Friday, we announced the appointment of Jason M. Marks and Michael E. Dambach to the Board of Directors of BiomX. Jason most recently served as Executive VP, Chief Legal Compliance Officer and Corporate Secretary with Amarin Corporation; and Michael is Vice President and Treasurer of Biogen. Both of these highly accomplished individuals bring in-depth corporate experience to our Board and seasoned executive leaders within the life science industry. As BiomX continues its plans to grow and expand the BX004 clinical program, Jason and Michael will undoubtedly bring valuable perspectives to help guide our decision-making on a wide range of financial, regulatory, and legal issues. I'd now like to turn the call over to Marina to review our financial results for the first quarter of 2023.

Thank you, Jonathan. As a reminder, the financial information is available in the press release we issued earlier today and also in more detail in our Form 10-Q, which we expect to file later today. I will walk you through some of our brief highlights. As of March 31, 2023, cash balance and short-term deposits were $30.3 million compared to $34.3 million as of December 31, 2022. The decrease was primarily due to net cash used in operating activities, partially offset by proceeds from the first closing of our PIPE's financing. Research and development expenses net were $4.6 million for the 3 months ended March 31, 2023, compared to $4.9 million for the same period in 2022. The decrease was primarily due to reduced salaries and related expenses and stock-based compensation expenses resulting from a reduction in workforce as part of the corporate restructuring we announced in May of 2022, as well as deprioritizing preclinical and clinical activities related to the atopic dermatitis product candidate, BX005, partially offset by expenses related to conducting the Phase Ib/IIa clinical trial of our CF product candidate, BX004. General and administrative expenses were $1.6 million for the 3 months ended March 31, 2023, compared to $2.5 million for the same period in 2022. The decrease was primarily due to reduced salaries and related expenses, stock-based compensation expenses due to a reduction in the workforce as part of the corporate restructuring, as well as a decrease in the company's directors and officers insurance premiums. Net loss was $6.4 million for the first quarter of 2023, compared to $8.2 million for the same period in 2022. Net cash used in operating activities was $5 million for the 3 months ended March 31, 2023, compared to $7.4 million for the same period in 2022. We estimate that existing cash, cash equivalents, and short-term deposits will be sufficient to fund the company's current operating plan into the third quarter of 2024. And now, I'll turn the call back over to Jonathan for his closing remarks. Jonathan?

Thank you, Marina. As we enter the second half of 2023, BiomX is well positioned to deliver on key clinical milestones in our BX004 program. We're obviously encouraged by the results from Part 1 of the trial, which we believe could serve as a positive indicator for the results we hope to achieve in Part 2 of the trial. While great strides have been made over the last 2 decades to significantly increase life expectancies of CF patients, we also know that chronic and life-threatening infections remain the #1 cause of morbidity and mortality in this patient population. Our BX004 program is squarely aimed at addressing the significant unmet medical need, and we look forward to expanding this program to help bring forward an important new treatment option for the CF community. With that, Marina and I would be happy to take your questions. Operator?

Our first questions come from the line of Joe Pantginis with H.C. Wainwright.

So a couple of questions, Jonathan. First, as we look towards the Part 2 data, it's longer dosing, patients are getting a lot more phage cocktail as well. So I guess, how can we possibly link the anticipated bacterial load reductions with potential impacts on FEV, and is it long enough for Part 2 treatment to be able to see an impact?

So I think you raised a really important question, right? The Part 1 was effectively only 4 days of twice-a-day dosing, right, and Part 2 is 10 days of twice-a-day dosing. So Part 2 is definitely longer. I think as you know, we kind of weren't expecting much of a signal in Part 1 and were quite pleasantly surprised. I think Part 2 was mostly designed actually to see that bacterial reduction. So I think in terms of our expectations, what we want to see is a replication of the significant effect that we've seen in Part 1 and kind of get a robust response of bacterial reduction. In terms of FEV1, it's still a relatively very short period of time and still very few patients, right? So I do think the expectations of improvement need to be moderated.

Of course, and that was a key thing I was hoping to ask about and you hit it. So my second part is certainly in the realm of the forward-looking statements. So I don't know if you would like to even take potential broad strokes with us today. So assuming Part 2 is positive, can you give us a sense of what you might be considering? I mean using my words carefully with regard to next steps, clinical trial designs, regulatory steps? Would this be a potential candidate for things like breakthrough designation based on the unmet medical need?

It is a forward-looking statement, but the key is the dialogue with regulatory agencies and our strategic partnership with the CF Foundation. These are the two essential parties. We expect that after we receive the data in Part 2, we will collaborate closely with the CF Foundation and communicate with the agency. There is certainly an unmet need here; patients on this treatment are already on chronic antibiotic therapy and have no remaining options. A breakthrough orphan indication and accelerated approval are considerations we should keep in mind. We look forward to working closely with the agency and the CF Foundation to pursue anything that helps us achieve faster approval.

No, completely fair. And then I guess, you could call it a logistical question because especially in this day and age everything still remains focused on resources, and you guys have been very cognizant of this. So with that said, is it still just resource-based when you might look to ramp up your pipeline assets such as atopic or beyond?

Yes, that's exactly right. We're noticing increased interest in phage therapy. It was encouraging to see articles about phage in publications like The Economist and Nature Biotech, along with insights from our colleagues. Interest is growing, and we are receiving inquiries from patients regarding additional indications. We aim to explore these new indications because of this heightened interest and the data we anticipate from compassionate use, but we also need to maintain discipline. As we progress with Part 2 and secure better funding, we are eager to expand our pipeline.

Our next questions come from the line of Michael Higgins with Ladenburg Thalmann.

Jonathan, congrats again on the Part 1 results. As we're looking to Part 2 coming up here in Q3, you talked a bit on the call here about the longer duration of treatment. Can you walk us back through as to what we saw exactly in Part 1? Was there still an escalation part there? And how that dose relates to what patients are getting in Part 2? Is that the highest dose? Any more detail on that would be helpful for us.

Thank you for joining the call, Mike. In Part 1, the dosing was limited as it was a safety study. We had 9 patients, with 7 on treatment and 2 on placebo. All patients on treatment followed the same regime: on day 1, they received a placebo; on day 2, a low dose; on day 3, a high dose; and then 4 consecutive days of twice-a-day dosing. Based on previous compassionate use cases, we anticipated that a roughly 10-day treatment with twice-a-day dosing would result in bacterial reduction. This led us to have lower expectations for Part 1, considering it was only 4 days with few patients, making it unlikely to see significant effects. Part 2 involves 24 patients, randomized 2:1, who will receive 10 days of twice-a-day dosing, which aligns with our expectations based on prior cases, so we anticipate a stronger signal there. The results from Part 1 were unexpectedly encouraging; we observed an average reduction of 1.4 logs, translating to about 95% reduction from the baseline. One patient exhibited a 3.3 log reduction, representing about 99.96% reduction in material count, while two others showed a 2 log reduction, roughly 99%, and two displayed a 90% reduction compared to the placebo, which was around 0.3 log, an acceptable level considering assay noise can reach up to 0.5 log. The placebo behaved well while the treatment showed significant effects, which encourages us as we move to Part 2, where we expect to replicate these results with a more extended treatment duration and a stronger signal.

I guess part of the question too, and thanks for all the detail there, is what you are guiding investors to look for from Part 2, where as you said, it's BID for 10 days and you had a couple of days of increasing the dose for 4 days BID. So it's the same dose we're testing in 1 and 2 now. But how do we look for the efficacy of Part 2? More patients with 2 to 3 log reductions, less of those with 1 or 0.3? We don't want to get out of our skis, but it's hard not to get excited about this. We've seen what happens with a 4-day dose.

We are administering the treatment over a longer duration. While we don't fully understand the dynamics of the phage compared to antibiotics in effective treatments, we do recognize that achieving a reduction of 1.5 log to 2 log is generally our target. That’s what we are aiming for. We would be satisfied if we can replicate the results from Part 1 with a larger group of patients. We are already pleased with those findings. We are seeking that threshold, and we hope that a longer treatment duration can produce even better results.

Fair enough. We'll sit and wait. So that was kind of one long question. I apologize. So I'll put this...

No, no, but that's a big question, right? You're totally spot on. I think that's a big question. Again, we weren't expecting to see this kind of data in Part 1. I think we were all surprised. And I think we want to see that we can replicate the data if we can, right? It's extremely encouraging because, as we said again, these are patients who have been chronically on antibiotics, right? They're not really responding anymore. And the opportunity to tick back the clock and have such dramatic reductions opens up a lot of optionality and hope for these patients.

Yes. I'll just add in my color on this is with a proper stage identification and approach to the site of infection, which you've got here with this delivery system, it does happen pretty quickly. So I don't know if we're going to see that much of a difference here, but we'll see over time, obviously. But in February, you mentioned possible changes to Part 2. Are there any updates there? And then at what point during Part 2 are you collecting good samples?

Sure. So far, so good. I think we're proceeding as planned. Patient enrollment is going very well. I think there is broad appreciation in the community of the data that we had in Part 1 and in general, I think with the potential of phage therapy. So we're keeping our guidance as planned with data in the third quarter.

And what points during the Part 2 do you collect samples? Obviously, baseline, but then how often and what points after that?

We have a 10-day dosing schedule, which includes baseline measurements and follow-ups after treatment at one week and 28 days. Following that, there's a longer follow-up period, and we are required to have a phone call six months post-treatment.

Okay. So then during the 10 days, there's no additional sputum collected, just baseline and day-10, correct?

Correct. I believe we are also looking at day 4 for comparability, as a benchmark against Part 1.

There are no further questions at this time. I would now like to hand the call back over to Jonathan Solomon for any closing remarks.

Thank you. So I just wanted to thank you all for taking your time this morning, and wish you all a good day and good luck to us all. Thank you.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.