Earnings Call Transcript - PSTV Q2 2023

Operator, Operator

Good afternoon, ladies and gentlemen. Welcome to the Plus Therapeutics Second Quarter 2023 Results Conference Call. Before we begin, we want to advise you that over the course of the call and the question-and-answer session, forward-looking statements will be made regarding events, trends, business prospects and financial performance, which may affect Plus Therapeutics' future operating results and financial position. All such statements are subject to risks and uncertainties, including the risks and uncertainties described under the Risk Factors section included in Plus Therapeutics' annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission from time to time. Plus Therapeutics advises you to review these risk factors in considering such statements. Plus Therapeutics assumes no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made. It is now my pleasure to turn the floor over to Dr. Marc Hedrick, Plus Therapeutics' President and Chief Executive Officer. Sir, you may begin.

Marc Hedrick, President and CEO

Thank you, Abigail. Good afternoon, everyone, and thank you once again for taking the time to join us today as we provide an overview of recent business highlights to discuss our 2023 second quarter financial results. Joining me for the call today is Dr. Norman LaFrance, our Chief Medical Officer; and Mr. Andrew Sims, our Chief Financial Officer. I'll begin the call by reviewing our recent clinical and regulatory progress with a focus on the second quarter and then turn the call over to Andrew to review our financials, and Norman will then join us for Q&A. I'll begin with updates on our two lead CNS cancer programs. First, an update on our ReSPECT-LM trial for patients with leptomeningeal metastases or LM. In Q2, we completed enrollment in the Phase I Part A comprising cohorts 1 through 3. As called for in the protocol, we reviewed the safety data with the FDA, and they approved us to continue with Part B of the Phase I, specifically dose escalation from cohorts 4 and beyond until a dose-limiting toxicity (DLT) is observed. At the SNO/ASCO CNS Cancer Conference last week in San Francisco, we reported the results from our ReSPECT-LM Phase I Part A trial. Recall that we've treated 10 patients with a single administration, except for one patient who received a second treatment off trial under compassionate use. As mentioned, that was in 3 dose escalation cohorts. Thus far, we found that rhenium obisbemeda circulated fully in the cerebrospinal fluid (CSF) space within minutes of injection and remained concentrated in the CSF space for at least 7 days following administration. Critical organs outside the central nervous system, including blood, spleen, and liver, showed de minimis absorbed radiation doses well below critical safety levels. In contrast, target organs in the spinal CSF showed linear increases in absorbed dose that correlated with the administered dose. In Part A, we dosed from 6.6 millicuries up to 26.4 millicuries, achieving absorbed doses of up to 102 gray to the ventricles and cranial subarachnoid space. To summarize the dosing or dose imagery findings, the radiation is clearly getting to the target organs, and the off-target effects thus far are minimal through Cohort 3. In terms of safety, consistent with the low off-target absorbed doses, no dose-limiting toxicities have been observed. Furthermore, the overall safety profile was favorable; approximately 83% of adverse events were mild or moderate, and the majority were not related to treatment. The favorable safety profile provided a basis for moving forward into Part B of Phase I. However, we've also assessed whether there were disease target effects by measuring tumor cell counts, survival, and symptomatic improvement. Recently, a highly specific and sensitive CSF tumor cell enumeration technology called CNSide assay has been approved, and we are employing it in the ReSPECT-LM trial. In our view, this technology is a significant advance in CSF tumor assessment over standard of care. In Part A, we found that tumor cell counts trended lower immediately after treatment and were sustained through day 28 post-treatment. At 28 days, tumor cell counts were reduced on average by 53% and up to 91% over preoperative baseline. Generally, we noted a rebound in tumor cell counts at 56 days. Our view is that effective therapies in the management of LM, such as potentially rhenium obisbemeda, can disrupt the care of LM; however, the addition of a reliable tumor cell enumeration technology can magnify that therapeutic and commercial impact. The current means of LM diagnosis, specifically the triad of imaging, clinical symptomatology, and CSF analysis of cells, now utilize the old standards of protein, glucose, and cytology, both of which lack sensitivity and specificity. Specifically, tumor cell enumeration may allow for earlier diagnoses and support decisions on redosing patients throughout their treatment course. Finally, regarding survival, as of today, 5 of the 10 treated patients in the Phase I Part A are alive, and the median overall survival is at 10 months. This compares favorably with the published overall survival rates of approximately 3 to 9 months observed with standard of care. As a note, as part of the SNO/ASCO meeting in San Francisco, in which the Phase I data was presented, we co-hosted a KOL Roundtable with Dr. Justin Walt, which also included 2 ReSPECT-LM investigators, Dr. Andrew Brenner from the University of Texas Health Sciences at San Antonio, and Dr. Priya Kumthekar from the Neurology and Medicine Department at Northwestern University's Feinberg School of Medicine. This KOL Roundtable is available for replay on our website. During the KOL roundtable, Dr. Brenner and Kumthekar provided a comprehensive discussion about the ongoing ReSPECT-LM Phase I/IIa dose escalation clinical trial, with emphasis on epidemiology, diagnosis, safety, tolerability, dosing, and efficacy. We urge everyone interested to watch the webinar for a deeper look at LM and the ReSPECT clinical trial findings thus far. In terms of next steps for LM, our clinical development plan is to continue to dose escalate to the maximum tolerated dose and in parallel expand the Phase I dose escalation trial to explore multiple dosing. This approach is critical to enhancing the potential for the clinical benefit of rhenium obisbemeda in these patients, which will require further FDA discussions. As mentioned, we treated one patient in Part A with a second dose of rhenium obisbemeda outside the trial under compassionate use, and that patient continues to do quite well and is over a year out from her initial treatment. Now with respect to our ReSPECT GBM for patients with recurrent glioblastoma or GBM, we continue to enroll both our active Phase I and Phase II trials. Our Phase I now has enrolled 4 patients in cohort 8, with tumor sizes being treated greater than 20 milliliters. They were treated with an administered radiation dose of 41.5 millicuries in a treatment volume of 16.4 milliliters. We have now successfully used up to 5 catheters per treatment in multiple patients, and no dose-limiting toxicities have thus far been observed. We plan to treat 6 total patients in this cohort. While this may be the last cohort, we will also assess whether to continue dose escalation or make other dosing changes with an eye toward any potential amendments we might deem necessary in the Phase II protocol. Our Phase II continues to enroll patients with tumor sizes of 20 cc or less, using an administered radiation dose of 22.3 millicuries in a treatment volume of 8.8 milliliters. We remain on track to complete Phase II enrollment by the end of 2024. To continue to meet our clinical trial enrollment goals, we have expanded our internal clinical team, which includes adding a VP of Clinical Operations and additional select CROs to support the trials. The impact of these decisions is already being felt and will become increasingly apparent as we close 2023 and move into 2024 and beyond. As the ReSPECT GBM trials are open-label trials, we are analyzing the data in an ongoing manner in our GBM data readouts going forward. First, we intend to publish the Phase I data with a total of 21 patients in peer-reviewed literature, and that is currently in process. Second, we continue to evaluate the feasibility, safety, and efficacy in the ongoing Phase I trial. The extended Phase I trial is evaluating the safety at these higher dosages and volumes, as mentioned, and the impact of these higher doses and volumes on RNL distribution and tumor coverage. Finally, we continue to periodically assess the actively enrolling Phase II trial both alone and in a pooled fashion with representative data from the Phase I; this data will also be presented at the Society for Neuro-Oncology Meeting in November. We have recently reported top-line data from a propensity-matched real-world data analysis of recurrent GBM patients receiving either bevacizumab or convection-enhanced delivery. This data will be used as a real-world control comparator arm for the Phase I and Phase II trials and also for regulatory purposes, including potential pivotal trial design. More detailed data will be presented on the real-world propensity MATCH trial at the SNO meeting in 2023 as well. I think we have 5 posters or presentations at SNO this year. In terms of the GBM program in general, we continue to demonstrate feasibility and safety without dose-limiting toxicities and promising efficacy signals as presented before. One thing I want to highlight beyond the safety profile is what we've observed relating to the dose-response data, specifically the correlation between overall survival and both increasing radiation absorbed dose to the tumor and increasing percent coverage of the tumor volume. In summary, we've learned that for each 100 gray increase in total dose and distribution volume, the risk of death decreases by 45.6%. For each 10% increase in the ratio of treated to total tumor volume, the risk of death decreases by 66.9%, with neither having a threshold. Both have very low p-values, providing us with confidence that there is indeed a meaningful treatment effect. Now regarding our planned pediatric brain cancer trial, we have formally responded to the FDA's request for additional safety data from adults. Assuming no new request arises, we anticipate IND approval and moving forward with our pediatric brain cancer trial in the second half of 2023. As mentioned in the past, management's practice is to rely heavily on grants or other third-party funding through Phase II for each active program. We currently have a number of grant submissions exceeding $1 million under review, including 2 specifically dedicated to the brain cancer program. Our second radiotherapeutic drug is making steady regulatory and development progress. We recently received feedback from the FDA on our pre-request for designation. The question pertains to whether that drug will be deemed a device, a drug, or a combination product. Specifically, the FDA notified us that the BAM radio embolic product will be regulated as a device, primarily by CDRH. This is consistent with the two Generation 1 products that are now on the market, which together share a market opportunity of about $1.3 billion. The benefits of this device-based approach are established regulatory reimbursement pathways, as well as the potential for speed to market. Regarding drug production and manufacturing, we continue to expand and shore up existing supply agreements, as well as work to build in supply chain redundancy, particularly regarding isotope availability. For example, we recently contracted with Piramal Pharma Solutions to produce additional CGMP liposome intermediate products to meet the forecasted increase in demand for Rhenium-186 obisbemeda for ongoing and planned clinical trials. We believe we are where we should be today in terms of our supply chain, and we are executing on a long-term plan to stay ahead of the curve as we move our radiotherapeutic products closer to market. With that summary on our clinical development programs and other important company updates, I'll turn the floor over to our Chief Financial Officer, Andrew Sims, who will review the financials. Andrew?

Andrew Sims, Chief Financial Officer

Thank you, Marc. Good afternoon, everyone. Please refer to our press release issued earlier today for a summary of our financial results for the 2023 second quarter ended June 30, 2023. First, regarding the balance sheet. As of June 30, 2023, cash and cash equivalents were $10.9 million compared to $18.1 million as of December 31, 2022. In addition, this month, we were notified that CPRIT released approximately $1.9 million in additional cash anticipated to flow to the company's balance sheet in August. As a reminder, the company benefits from both a $3 million NIH award for the ReSPECT-GBM clinical trial through Phase II and a $17.6 million award from CPRIT for the ReSPECT-LM trial through Phase II. Going forward in years 2 and 3, grant funding is forecasted to be $6.7 million and $7.1 million, respectively, likely split into two or more advanced payments each year. Furthermore, the company has discretionary or stockholder-approved access to capital from its ATM and equity line of credit of at least $49 million. Now on the income statement, the company recognized $1.9 million of grant revenue in the second quarter of 2023, which represents CPRIT's share of costs incurred to fund a portion of our LM clinical program. Total operating expenses for the second quarter of 2023 were $3.3 million, compared to total operating expenses of $5.1 million for the same period the prior year. The decrease is primarily due to the company completing one-off investments in the GMP development of the company's lead drug rhenium 186 obisbemeda in Q3 2022. Additionally, we incurred lower legal and professional fees in 2023 compared to the prior year. Interest expense decreased from $181,000 for the second quarter of 2022 to $112,000 for the second quarter of 2023. This decrease reflects the continued principal paydown on the company's Oxford debt. The net loss for the quarter of 2023 was $1.5 million or $0.59 per share, compared to a net loss of $5.3 million or $3.56 per share for the same period of the prior year. And now I'll turn it back to you, Marc.

Marc Hedrick, President and CEO

Thank you, Andrew. Before we move on to Q&A, let me provide some guidance on anticipated milestones through the remainder of the year. We are on track to initiate the Phase I Part B of the ReSPECT-LM trial in the second half of this year, and we plan to expand dosing to multiple doses for each patient. More to come on that. We also plan to publish the ReSPECT GBM Phase I data and provide a comprehensive trial update at the Society for Neuro-Oncology Meeting in November 2023. We are on track to initiate the Phase I ReSPECT pediatric brain cancer trial for pediatric patients with ependymoma and high-grade glioma in the second half of 2023. We intend to finalize the device designation for our BAM product and expand our activities accordingly. Finally, in general, management has internal targets around portfolio and business development opportunities and additional non-dilutive grant funding, both are progressing, and we will update on those when appropriate. At this point, Abigail, I will now turn the call back over to you for Q&A.

Operator, Operator

Our first question comes from Justin Walsh with Jones Trading.

Justin Walsh, Analyst

Congrats on the progress. My first question, I'm wondering about your current thoughts about potentially approvable endpoints for LM in the context of the data you presented. Overall survival obviously could make sense, particularly given the 10-month median overall survival you saw in the first 10 patients, but wondering if there are others you're thinking about. In particular, I'm kind of just thinking about the potential for using symptomatic changes, given that we know some of the earlier radiopharmaceuticals were approved for bone pain palliation and prostate cancer.

Marc Hedrick, President and CEO

Hey, Justin, it's Marc. I think at this point, it's a bit too early to say definitively, as you hinted in your question. Beyond the gold standard of overall survival, I do think quality of life or symptomatic improvement are potentially approvable endpoints. We'll be implementing and expanding a KOL metric in the trial, and there are some that are out there that would be appropriate. Relative response rates are difficult because imaging can be complex. However, I think there might be an opportunity in terms of reducing CNS tumor cell count, as I mentioned before. So I think that's less likely, but I do think that, as you mentioned, KOL or symptomatic improvement are also possible endpoints. They certainly would not be primary endpoints but could be secondary endpoints.

Justin Walsh, Analyst

Got it. And then one more question. I'm just sort of wondering if you can comment on just some broader thoughts on why LM is so underdiagnosed. And I guess, how much of that comes from the challenges of having effective diagnostics for it? And how many come from maybe the fact that there may not be a lot out there that can currently be used to specifically treat LM? So just some thoughts on that. Maybe a little bit of a chicken and egg thing that hopefully is being resolved with your work and some of the diagnostic stuff that's going on. But just curious for your perspectives on that.

Marc Hedrick, President and CEO

Yes, it's a good question. The mortality is high. Patients that are untreated live 4 to 6 weeks, and with treatment, they may live just a few months longer. So with better treatment, it's likely the incidence will be higher and patients will live longer. The 2x to 4x increased incidence is based on an autopsy study. So I think there are many subclinical infections that are out there. Patients may die of their primary disease, but they may die with CNS meds. Oftentimes, the imaging is poor, and the CSF analysis can be indeterminate, and the symptomatic pattern is not clearly defined. Patients may actually be symptomatic but finding a diagnosis can be very difficult. So that's why I think we are unlikely to have a near-term significant improvement in our ability to sort out symptoms. Probably not. Are we likely to see a near-term improvement in our ability to image these patients? Not so sure, doubtful. But I do think there's a real possibility with a highly sensitive and specific CSF assay to evaluate patients that may be asymptomatic but are at risk, such as triple-negative breast cancer patients with normal imaging and so forth. This could help us pick it up early, and if we have a treatment on the market, we can treat them early and potentially substantiate their survival.

Justin Walsh, Analyst

Got it. And maybe just a follow-up on that. That assay does require a lumbar puncture, right? Just wondering how much of a concern there is that this might limit patients wanting to get on board with that? Or do you think that by the time they reach the point where they have symptomatic LM, it won't be unreasonable to expect outpatient compliance?

Marc Hedrick, President and CEO

Yes. Good point. For patients suspected or diagnosed with LM, almost all of them have what's called an Ommaya reservoir, which is a small subcutaneous port with a little pigtail coming off of it that goes into the ventricle, allowing the physician real-time access, which is how our LM treatment is infused into patients. Any point in time during the patient's course, the CSF could be sampled and tumor cell enumeration performed. So once they have that in, it's really a nonissue. In patients that are at risk but haven't received a diagnosis, a lumbar puncture will generally be required because there's no other way to extract CSF. It's a common part of the workup. But CSF analysis, including lumbar puncture, is part of working up children with fevers or patients with neck stiffness and photophobia. For these oncology patients at risk of LM, a lumbar puncture is a very reasonable and well-tolerated procedure.

Operator, Operator

Our next question comes from Sean Lee with H.C. Wainwright.

Sean Lee, Analyst

My first question is on the recent LM results. I was wondering because you guys saw a linear trend with the administered dose to the absorbed dose. I was wondering if there are any relationships you've seen so far between the absorbed dose and the decreases in tumor cell counts or relative survival.

Marc Hedrick, President and CEO

No, we haven't seen any relationships yet. It's still early. That's something we'll assess as we progress to the later cohorts, but I believe we may see it due to the nice linear relationship already established between administered and absorbed dose. So that is something we'll be looking for.

Sean Lee, Analyst

My second question is also on that study. You mentioned that you're going to be looking at repeat dosing for some of these patients. Would that be done in a different study context, or would you be looking to expand this study protocol to include a separate repeat dosing cohort?

Marc Hedrick, President and CEO

I think that will be a pending decision based on discussions with the FDA. Our preference would be to incorporate it into the current protocol as it’s simpler and more straightforward. Given what we're seeing now with a single administration and the positive overall survival signal, even at low doses, and considering the safety profile and reduction of tumor cell counts we've observed, it completely makes sense to continue to dose escalate, reaching the maximum tolerated dose, and then add additional doses. We're working on that now, so my guess is it will be part of the current trial, not a separate protocol.

Sean Lee, Analyst

I see. Thanks. Then moving on to the GBM side. In the prepared remarks, you mentioned that the FDA alluded to regulate it as a device and not a drug. So would you be looking at the 510(k) de novo pathway for regulatory approval? Or would this be a PMA?

Marc Hedrick, President and CEO

Yes, that's a great question. Right now, it's hard to say. A 510(k) pathway is possible, but I can't conclude that it's likely. This is new information, so we need more time to evaluate it with our regulatory team. Of course, a 510(k) would be a quicker path to market, while a PMA would take longer. However, either way, it is expected to be a faster path than a drug-related pathway. We're currently in parallel paths: processing with the FDA for a pre-RFD evaluation and the final RFD submission, which we're undertaking, and exploring device-based regulatory opportunities, including 510(k) and PMA concurrently. After we have the final designation, we'll be ready to proceed.

Operator, Operator

We have a question from Edward Woo with Ascendiant Capital.

Edward Woo, Analyst

My question is about the grants that you guys are working on. Is it only with CPRIT? Or are you guys also working with NIH? Additionally, because you guys have already secured a major contract from CPRIT, does it make it easier for you to obtain future grants?

Marc Hedrick, President and CEO

Thanks for the question. There's no restriction preventing us from going back to CPRIT for additional grants. We know one company that has three CPRIT awards. So now that we understand the process, we see some economies of scale in formulating these grants. It’s going to be both; we are returning to CPRIT for additional grant opportunities, but we’re also reaching out to the NIH and other funding sources in the U.S. We are taking a broad approach, but we adhere to our internal mantra of securing funding to cover costs through Phase II for each new program before initiating. There are opportunities for every new advancement we bring forward, whether it's the BAM program. We plan to put funding in place so that once we have an asset, we're ready to invest in it clinically or in some cases, preclinically.

Operator, Operator

Thank you. That concludes the question-and-answer session. At this time, I would like to turn it back to Dr. Marc Hedrick for closing remarks.

Marc Hedrick, President and CEO

Thank you, Abigail. Thank you to everyone that joined us, and we appreciate your interest in the company, and thank you for the questions. Please be sure to refer to our website, take a look at our KOL webinar that has been uploaded, and feel free to reach out to management if you have any questions. In the meantime, have a nice evening. Thank you.

Operator, Operator

Thank you all for your participation in today's conference. This does conclude the program. You may now disconnect.