Earnings Call Transcript - PHGE Q2 2024

Operator, Operator

Greetings, and welcome to the BiomX Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Marina Wolfson, Chief Financial Officer. Thank you, Ms. Wolfson, you may begin.

Marina Wolfson, CFO

Thank you, and welcome to the BiomX conference call to review the second quarter 2024 financial results and provide an update on our business and programs. Yesterday, we filed the quarterly report on Form 10-Q with the Securities and Exchange Commission. In addition, the press release became available at 6:30 a.m. Eastern Time today and can be found on our website at biomx.com. A replay of this call will also be available on the Investors section of our website. As 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 the efficiency of the company's cash, potential market opportunities, the ability to drive value for stockholders, the design, recruitment, aim, expected timing and interim and final results of our preclinical and clinical trial, the regulatory process and discussions with the FDA, the potential benefits and commercial opportunities of our product candidates and the potential safety or efficacy of BX004 and BX211. In addition, past and current preclinical and clinical results as well as compassionate use are not indicative and do not guarantee future success of our clinical trial. Except as required by law, we do not undertake to update forward-looking statements. The full safe harbor provisions, 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 our Chief Executive Officer, Jonathan Solomon, to whom I will now turn over the call.

Jonathan Solomon, CEO

Hi, everyone. Thank you for joining us on our earnings call. We're excited to discuss BiomX status with you this morning. Earlier this year, the company took a momentous step in merging with Adaptive Phage Therapeutics, or APT, and completing a concurrent $50 million financing. Last month, we were delighted to update that an important milestone with respect to this transaction was met when our stockholders overwhelmingly voted in favor of the conversion of up to 256,000 Series X non-voting convertible preferred stock issued upon the merger and concurrent financing to up to 256 million BiomX common stock. The Series X preferred stock was issued to certain APT shareholders and investors who participated in concurrent financing. As a result of the stockholder vote in favor, each share of Series X preferred stock issued converted into 1,000 shares of BiomX common stock, subject to certain beneficial ownership limitations set by certain investors. Subject to such beneficial ownership limitations to date, over 100,000 shares of Series X preferred stocks were converted to over 100 million shares of the company's common stock that were added to the company's outstanding share count. I'd like to now discuss why we are so excited about the clinical programs in our combined pipeline. As we previously announced, we expect to report important results for our two lead clinical assets in 2025. I’ll review these anticipated readouts in just a moment. By integrating the two companies' programs, we believe we now have the leading phage-related pipeline in advanced clinical testing. Key to the strength of our combined programs is the diversity of our complementary approaches. At BiomX, we are developing fixed phage cocktails, which can target a broad host range of various bacterial strains and address multiple resistant mechanisms, allowing treatment of patients with the same phage cocktail. We are also developing personalized phage treatment that can address bacterial diversity and potentially polymicrobial infection, tailoring a specific phage treatment to a given patient. BiomX's pipeline demonstrates the diversity of our approaches. BX004, the company's novel fixed phage cocktail, is advancing in development for the treatment of serious chronic lung infection in cystic fibrosis patients caused by Pseudomonas aeruginosa. During the second quarter, we presented positive safety and efficacy results from the Phase 1b/2a trial of BX004, including at the 47th European Cystic Fibrosis Conference and the ASM Microbe 2024, both of which took place in June. As a quick recap, after only 10 days of treatment, 14.3% of patients in the BX004 arm of the Phase 1b/2a study converted to sputum culture negative for Pseudomonas aeruginosa compared to 0% of the patients in the placebo arm. BX004 versus placebo also showed a signal of improved pulmonary function. We have entered into discussions with the US FDA regarding our next clinical trial for BX004 and are making progress in preparation for its initiation, including the completion of the remaining CMC work and finalizing the Phase 2b study protocol. We expect to release top-line results from this study in the third quarter of 2025. For our second advanced clinical candidate, BX211, we expect initial top-line results through week 13 for the current Phase 2 trial in the first quarter of 2025. As most of you know, BX211 is our asset acquired through the merger with APT. It is a personalized phage treatment currently being evaluated in a randomized double-blind placebo-controlled multicenter Phase 2 trial for subjects with diabetic foot osteomyelitis, or DFO, associated with Staphylococcus aureus infection. The design of our ongoing Phase 2 study was guided in part by reports in the scientific literature of compassionate use of phage therapy, which showed a positive outcome of wound healing and avoiding amputation in 11 of 12 patients. For both our lead programs, we have continued to see and are grateful for the growing excitement among the clinical community. We are also grateful to our stockholders, whose ongoing support has been vital for our efforts and has provided key validation for the phage-based therapeutic modalities we are advancing into the clinic. We believe that both BX004 and BX211 have the potential to significantly change how we address the substantial unmet needs of patients with intractable infections. Overall, we are thrilled with the promising data already reported and with the key readouts we are anticipating from both of our lead programs. As Marina will review, based on the proceeds from the financing concurrent with the merger with APT and existing capital, BiomX continues to expect to have sufficient funding to reach these multiple important clinical milestones, potentially driving significant value for our shareholders. Now, I will pass the call back to Marina, who will review BiomX financial results.

Marina Wolfson, CFO

Thank you, Jonathan. As a reminder, the financial information for the company's second quarter 2024 is available in the press release that we issued earlier today, as well as in more detail in our Form 10-Q, which we filed yesterday after market close. I will take you through some of the highlights of our second quarter financial results. As of June 30, 2024, cash balance, short-term deposits, and restricted cash were $32.7 million compared to $30.7 million as of June 30, 2023. The increase was primarily due to our private placement financing of $50 million in March 2024, which was partially offset by net cash used in operating activities and the full repayment of a debt facility. We estimate that our cash, cash equivalents, and short-term deposits are sufficient to fund our operations through the fourth quarter of 2025. Research and development expenses net totaled $6.9 million for the second quarter of 2024 compared to $3.8 million for the same period in 2023. The increase was primarily due to preparations for Phase 2b in the clinical trial of our CF product candidate, BX004, and expenses related to our clinical trial of the DFO product candidate, BX211. In addition, the second quarter of 2024 represents the first full quarter following the merger with APT, incorporating the combined workforce. The increase was partially offset by higher grants received. In the second quarter of 2024, general and administrative expenses were $2.8 million compared to $2.3 million during the same period in 2023. This increase primarily reflects the full consolidation of expenses following the APT merger, reflecting the combined workforce, professional services, and subcontractor costs. Net income was $4.5 million for the second quarter of 2024 compared to a net loss of $6.4 million for the same period in 2023. The increase was mainly due to the change in the fair value of the warrants issued as part of the $50 million PIPE financing in March 2024, partially offset by our expenses in operating activities. Net cash used in operating activities for the six months ended June 30, 2024, was $22.6 million compared to $9.1 million for the same period in 2023. I should add here that we announced today a reverse stock split of 1 for 10 of the company's common stock approved by the company's stockholders and the Board of Directors. The split is intended to become effective when the market opens on August 26, 2024. And now I'll turn the call back over to Jonathan for his closing remarks.

Jonathan Solomon, CEO

Thanks, Marina. To sum up, we are excited to see our momentum in 2024 has continued through the second quarter and through the present. We have made great progress in integrating our programs following the merger with APT. And for BX004, we've had the opportunity to present our promising clinical data at additional key meetings during the second quarter. We are also continuing on track for our first major Phase 2 readout with the expectation of reporting initial top-line results for BX211 in the first quarter of next year. The recent stockholder vote that enabled the conversion of preferred common stock is also part of this progress. We believe the company can reach our important clinical milestones on the current cash runway with the potential to build further value for our stockholders. We are dedicated to demonstrating the advantages of our diversified stage pipeline in addressing serious chronic infections. We'll continue to keep you updated on our further progress. Thank you for joining us this morning. Operator, would you open the call for questions?

Operator, Operator

The first question comes from Yale Jen with Laidlaw & Company. Please go ahead.

Yale Jen, Analyst

Good morning, and thanks for taking the questions and congrats on all the progress. And then maybe I'll just start a bit with housekeeping questions that you have reported this today that in terms of the earnings per share as well as both of the fully diluted and basic share count. I just want to get a little bit of color in terms of how was that calculated, was that use the net income of $4.4 million as the basis or some other figures to calculate these numbers? And then I have a follow-up question.

Jonathan Solomon, CEO

Sure. So, good morning, Yale. That's a pleasure. I'll let Marina handle the tough questions first. So let her do the responsibility.

Marina Wolfson, CFO

Thank you, and good morning. Thank you for your question. So, yeah, we're going to release the full calculations obviously, and they are included in the note in our 10-Q, but yes, we took the full net income from the financial statements. And please note that we do have net income this quarter for the calculation of the earnings per share.

Yale Jen, Analyst

Okay. That's helpful. Just one thing regarding the housekeeping, which is the R&D expenses for this quarter. They are significantly higher, but since you have projected that the runway will extend until the end of next year, should we expect R&D expenses to trend downward over the next few quarters, at least for the rest of this year? Will you be able to meet the goal in terms of the cash runway?

Jonathan Solomon, CEO

Yale, that's an excellent question, and you're very keen to observe it. That's very true. This is the first time that we're operating. We're still implementing all the redundancies and obviously, we do give guidance and we stand behind it, but the cash runway is until the end of next year. So accordingly, you'll see kind of the budget trying to reduce in terms of burn.

Yale Jen, Analyst

Okay. Great. And then I just have a question on the pipeline. In terms of 004, you just indicated that the Phase 2b trial will start in the third quarter of next year. So two things here. First of all, are you guys expecting to have an FDA meeting later this year or has this meeting already been conducted? And secondly, was there any strategic reason, as this one seems to be pushed out a little bit in comparison to prior sort of costs or estimates from our side?

Jonathan Solomon, CEO

Yeah. So, Yale, another excellent question. So CF is on track; BX004 expects to report in the third quarter of 2025. We did have the FDA meeting. It was a successful meeting, and I think we are moving ahead without seeing any limitation to the original plan. So that's on track.

Yale Jen, Analyst

Okay, great. Maybe the last question here. Regarding 211, you mentioned the top line for the first quarter of next year, which includes 13-week data concerning the change in ulcerative size. Assuming you receive positive results, what would be the next step? Would you wait for the 52-week outcome before considering the next step, or will there be something in between after the 13-week data readout?

Jonathan Solomon, CEO

So, our view is that the 13-week data is the more important data because the study is powered to look at a shrinkage of the ulcerative size at that point. I think the follow-up is more descriptive as we're looking at amputations, right? You require a lot more patients. But if we see a good signal in week 13, obviously, we will have to talk to the agency and our partners and supporters, both investors as well as in the government, and we will want to kind of move forward. For us, that is the gating item, right? What happens in week 13. I think we can learn more from what happens in the 26 and 52 weeks, right? But for us, if you see something in week 13, it's as much as we can, it's pedal to the metal.

Yale Jen, Analyst

Okay, great. That's very helpful, and I'll get back to the queue.

Jonathan Solomon, CEO

Sure. Great questions. Thank you, Yale.

Operator, Operator

Thank you. Next question comes from the line of Joseph Pantginis with H.C. Wainwright. Please go ahead.

Unidentified Analyst, Analyst

Hi, this is Sarah on for Joe. Thanks for taking the question. I just had a question regarding BX211 enrollment. If you can provide any update on the status of enrollment in the study? Have you seen any challenges or is it progressing as expected now? Thank you.

Jonathan Solomon, CEO

Thank you, Sarah, and good morning. Best to Joe. So as we said, the study will be complete in the first quarter. Obviously, overall, this has been a challenging study to recruit, right, spanning over more than two years. We didn't give specific guidance on the status of enrollment. I mean we've kind of passed the majority of patients and kind of look forward to getting the study on time.

Unidentified Analyst, Analyst

Thank you very much.

Jonathan Solomon, CEO

Thank you.

Operator, Operator

Thank you. Next question comes from the line of Michael Higgins with Ladenburg Thalmann. Please go ahead.

Farhana Sakloth, Analyst

Good morning. This is Farhana on behalf of Michael. I just wanted to follow up on your comment on BX004's FDA meeting. Any feedback that you can share with us? Thank you.

Jonathan Solomon, CEO

Thank you and good morning. Obviously, it's sensitive, so we can be very careful about what we can provide. But all I can say is that it was a successful meeting and our plans remain unchanged moving forward.

Farhana Sakloth, Analyst

Thank you.

Jonathan Solomon, CEO

Sure thing.

Operator, Operator

Thank you. Next question comes from the line of Yale Jen with Laidlaw & Company. Please go ahead.

Yale Jen, Analyst

Thanks for taking these questions. I'd just like to get a little bit more color in terms of 004, when you may be enrolling the first patient for the Phase 2b study, would you announce that when that happens?

Jonathan Solomon, CEO

Yes, we typically haven't made announcements unless there was something significant to report. However, we can consider it as we continue to progress according to our plans. We usually don't announce the enrollment of the first patient, but it's something to think about.

Yale Jen, Analyst

Okay. And maybe just a little bit of follow-up in terms of 211 again for the 13 weeks data. What do you consider as a good outcome in terms of the reduction of ulcer size, and that will propel you guys to think more aggressively to move the program forward? Thanks.

Jonathan Solomon, CEO

So in general, I think as we talk to the KOLs and the analysts, you're looking for something like a 40% reduction of the placebo arm, right, because they are on top of standard of care antibiotics, and something around 70% on the phage arm on top of antibiotics will be exciting in our view, right? So again, this is still a small study; we're not looking at stack significance, and I think we'll be interested in trends. But if you see something like that, then I think that could be something that we'll be excited about. These patients don't usually improve that much, so you see something along that pushes a like by 30%. That's quite a dramatic move.

Yale Jen, Analyst

Given the 13 weeks of data and looking ahead to 52 weeks, which is about a year, do you expect the effect to grow, or could we potentially reach a different level of effectiveness by that time?

Jonathan Solomon, CEO

I believe the 26-week and 52-week data primarily focus on amputations. While patients aim for the ulcer to heal, our main concern is the rate of amputations, which we'll be tracking at week 52. The challenge is that to detect a significant effect on amputations, we need a larger patient population. We'll be monitoring general trends to see if anything noteworthy occurs. The initial data from the compassionate use cases was very promising, showing that phage treatment prevented amputations in 11 out of 12 instances. However, we want to remain cautious with our guidance. Amputations will be our main focus at week 13, as that is where the relevant data lies. Additionally, we will consider ulcer healing as an exploratory measure at week 13 because healing usually indicates that the underlying infection in the bone has been resolved. Nevertheless, the study is primarily designed to assess ulcer shrinkage, and any additional findings will be considered a bonus.

Yale Jen, Analyst

And maybe just to tag on that a little bit more, do you anticipate or have you spoken with the consultants, whether amputation will be the kind of endpoint that ultimately for potential approval, or just simply the ulcer reduction as well as some other metrics will be potentially sufficient for the approval in this indication, which is obviously tough to treat and very few drugs has been simply available for this.

Jonathan Solomon, CEO

Yeah. So I think in a pivotal study, the most conservative estimate is amputations, right? That's what you need, like a 300-patient study, and do it properly. There is talk about looking at more imaging modalities, etc., and trying to be a bit more sophisticated. But conservatively, it's amputation; but potentially, I think we'll work with all the experts to explore some other endpoints as well, of course.

Yale Jen, Analyst

Okay. Great. Again, thanks for taking the follow-up questions and congrats on the progress. Maybe last one question here. This is probably for Marina. In terms of the reverse split in the press release, you indicated from 178 million shares back to about 17.8 million shares, are these total shares outstanding of the basic or that's the fully diluted?

Marina Wolfson, CFO

So thank you for the question. Actually, I'm happy to clarify. So first of all, please note that the reverse split is not reflected in the numbers of the Q. It was only following the Q that we announced it. It will be effective August 26. And the number of shares, the 178 million is just the outstanding. So that's not the fully diluted.

Yale Jen, Analyst

Okay, great. That's very helpful. And again, congrats on the other programs, and thanks.

Marina Wolfson, CFO

Thank you.

Operator, Operator

Thank you. As there are no further questions at this time, ladies and gentlemen, we have reached the end of the question-and-answer session. I would now like to turn the floor over to Jonathan Solomon for closing comments.

Jonathan Solomon, CEO

So I wanted to thank all of you again for joining us this morning and the great questions. We look forward to providing you with additional updates as we make progress. Thank you, and have a good day.

Operator, Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.