Earnings Call Transcript - PSTV Q2 2021

Operator, Operator

Good afternoon, ladies and gentlemen. Welcome to the Plus Therapeutics Second Quarter 2021 Results Call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. Before we begin, we want to advise you that over the course of the call and 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 reports 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

Great. Thank you very much, Catherine. 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 and discuss our 2021 second quarter financial results. Joining me on the call today is Mr. Andrew Sims, our Chief Financial Officer. But before Andrew provides a summary of our financial performance, I would like to provide an update on the company's business activities since our last call. Last quarter, I provided a detailed overview of the company and I'll refer you back to that description. But in summary, for those new to the company, Plus Therapeutics is a clinical-stage pharmaceutical company developing innovative, targeted radio therapeutics for rare and difficult-to-treat cancers. Our lead drug is RNL, Rhenium NanoLiposome. This is a proprietary liposomal encapsulated radionuclide that is delivered locally via targeted three-dimensional convection-enhanced delivery directly to the tumor. The active agent is rhenium-186 isotope, which is a dual energy emitter releasing both cancer-killing beta particles, which are high-energy electrons and gamma particles, which are useful for imaging and dosimetry. Rhenium is a unique isotope, in part, because of its energy profile. Its beta energy has a short path length, which provides precision, a dose rate that provides a margin of safety, and a high energy density, which is particularly toxic for highly mitotic cells, making it difficult for the DNA repair mechanism to cope, contributing to radio resistance. Thus far, we've shown that we can successfully deliver 20 times the radiation dose one can deliver with traditional external beam irradiation. Our initial indication for RNL is recurrent glioblastoma, which affects approximately 12,000 to 13,000 patients annually in the U.S. and about the same number of patients in the EU. It is the most common and lethal form of brain cancer, and the treatment of this devastating disease remains a significant medical challenge. Published studies indicate that external beam radiation provides the best incremental improvement in survival of all therapies currently used for glioblastoma, and it remains an essential component of multimodal therapy for both glioblastoma and, in fact, many other cancers. In theory, glioblastoma and, frankly, any tumor can be fundamentally controlled if a sufficient dose of radiation can be delivered to it. RNL is currently under evaluation in the U.S. ReSPECT GBM trial, which is a dual Phase I and II multicenter sequential cohort, open label volume and dose escalation study of the safety, tolerability and distribution of 186 RNL. The trial is currently funded to a significant degree by the U.S. National Cancer Institute. In short, the trial is progressing nicely, and we have now moved into an eighth dosing cohort. As a reminder, in November 2020 at the Society for Neuro-Oncology Annual Meeting, we provided an interim analysis of the first five dosing cohorts in 15 patients. And in March of 2021 in our BioEurope corporate presentation, we updated those interim results to include Cohort 6, and that data can be found on our website. Following the successful completion of cohort 6 and without any dose-limiting toxicities, the Data Safety and Monitoring Board recommended enrolling an additional cohort of three patients or cohort 7 at the same volume and radiation dose, but with a higher maximum convection flow rate specifically of 20 microliters per minute. Then in June of this year, we announced that through cohort 7, no dose-limiting toxicities have been observed and the DSMB recommended proceeding to the next dosing cohort, representing a 40% increase in both volume and radiation dose. So specifically, where we are now, we're introducing a volume of 12.3 milliliters, a radiation dose of 31.2 millicuries, and we're maintaining the same maximum flow rate of 20 microliters per minute. As announced the same, the first patient in the additional cohort has been successfully treated. At this point in the product development cycle, I think it might be helpful to provide a summary of what we've learned thus far in the ReSPECT GBM trial and then consider next steps. Specifically, what we've learned is that hemispheric or one-sided super tentorial, which is in the upper part of the brain, highly targeted and continuously infused or conducted volumes of up to 12.3 milliliters and 31.2 millicuries of radiation have been well tolerated thus far. Up to four catheters can be successfully placed for delivery to best accommodate a variety of tumor sizes and geometries. Tumors of up to approximately 25cc with various morphologies can be treated. RNL seems thus far to be safe despite delivering up to 740 Gy of absorbed radiation to the tumor which, by the way, is 20 times the radiation typically delivered by external beam radiation therapy in the recurrent setting. Patients receiving prior bevacizumab did not respond as well as bev-naive patients, leading us to focus the current trial only on bev-naive patients. Furthermore, due to the very substantial doses of radiation administered when the tumor dies, we found that it induces local swelling or edema which we can observe on MRI scans, which is known as pseudoprogression and is very obvious in imaging. Therefore, traditional imaging analysis looking at response criteria is suboptimal and has lesser value in this particular clinical situation. Although the Phase I is not designed nor powered for efficacy, to date, eight of 22 treated patients are still alive, which is obviously a positive outcome. However, because many of those patients have been treated relatively recently at the higher dosing cohorts, making efficacy determinations today a challenging endeavor. As for the issue of overall survival, observations to date suggest that increases in both conducted volumes and radiation dosages seem to correlate with better tumor coverage and higher tumor absorbed doses, which in turn seems to correlate with overall survival. As I mentioned, eight of 22 patients remain alive and three of 22 patients have survived for 30 months or more, whereas average survival for current GBM with standard of care is only about 8 to 10 months. This present cohort should complete enrollment this year, and later this year, we intend to provide a comprehensive update with safety and efficacy data at that time, including our proposed next steps for the clinical investigation of RNL in recurrent GBM. As mentioned last quarter, the go-forward clinical development plan depends in part on the observed safety outcomes in the current dosing cohort and evolving efficacy data readout of the data set as a whole. There is potential to further dose escalate following the current dosing cohort, as the protocol provides for another 33% increase in volume and radiation dose after the current cohort 8. Besides dose escalation or perhaps in conjunction with dose escalation, we may also implement further changes to the delivery parameters as we have done previously. It's also possible that the company may deem the present dose and delivery parameters acceptable to move forward, and we could expand enrollment at this present dose to collect further efficacy data to better inform and power a follow-on Phase II registrational trial. As previously mentioned, CMC activities and the availability of cGMP investigational drug product is the primary gating item for a Phase II registrational trial. Therefore, CMC activities are a top priority. Our team continues to make excellent progress towards submission and is simultaneously laying the groundwork for commercial readiness. The team has been focused on cGMP drug product development, test method validation, material characterization, and supply chain planning. To that end, we have formally engaged with key suppliers for both critical materials and contract development work. Longer term, manufacturing relationships will be key to commercial success and our team continues to make good progress in developing those strategic partnerships. For example, Pure Mall, Invicro, and Eurofins are just a few names, and others are forthcoming. We remain on track without delay to complete the key CMC activities by year-end and stability testing thereafter such that we should be ready with cGMP product by mid-2022. Switching gears a bit, last quarter we noted that two pre-IND meetings have been requested from the FDA to discuss expanding the clinical indications for RNL. Both are complete and based on the positive FDA feedback, we intend to move forward in filing INDs for both indications. The first is for leptomingeal metastasis, an increasingly common secondary cancer complication occurring as a result of increasing overall survival rates that we are seeing for a variety of primary solid and hematologic tumors. Leptomingeal metastasis affects over about 100,000 patients per year in the U.S., and patients can present with a broad range of signs and symptoms due to simultaneous involvement in multiple areas of the craniospinal axis. The most common tumors giving rise to leptomingeal metastasis are breast cancer, lung cancer, melanoma, gastrointestinal malignancies, and cancers of unknown primary. There are no strong current treatment options available and the goals of treatment in these patients have been limited primarily to stabilizing or improving neurologic function, alleviating symptoms, and improving quality of life. Median survival in this patient population is approximately four to six months if treated. In the planned forthcoming trial, we intend to treat with RNL via an indwelling subcutaneous reservoir called an Ommaya reservoir that sits under the skin and communicates directly with the ventricle in the leptomeningeal or cerebrospinal fluid space. This is commonly placed in these patients. It makes delivery a much more straightforward issue than we have in our current GBM trial. The trial will be an open-label, multisite dose escalation study evaluating feasibility, safety, and potential efficacy. We plan to submit the IND for the ReSPECT LM trial by Q3, perhaps as late as Q4 2021, and commence enrollment as soon as possible thereafter. The principal investigator will be Dr. Andrew Brenner, who's Professor of Research at the Division of Hematology and Medical Oncology and a clinical investigator at the Institute for Drug Development at the Mays Cancer Center at the University of Texas, San Antonio and MD Cancer Center. He's also the co-leader of the experimental and developmental therapeutics program there. Additionally, we believe there is an opportunity to help patients with pediatric brain cancer using RNL. Based on our pre-IND meeting feedback, we intend to submit an IND later this year or in early 2022 to investigate the use of RNL in children with brain cancer. The details of that trial will be finalized later in 2021. The principal investigator for that trial will be Dr. Ashley Plant, the Co-Car Research Scholar and attending Physician in Neuro-Oncology and Assistant Professor of Pediatrics at the LEAD trial site, which is Lurie Children's Hospital of Chicago at the Northwestern University School of Medicine. Finally, I'd like to point out that we have been working diligently for several months to take our corporate communications to a new level, including public relations, investor relations, and scientific and clinical communications. You'll see the fruit of that work over the remainder of the year. For now, you can find the first part of that work, which is our clinical trial microsite for the ReSPECT trials that can be found at respecttrials.com. The front end is intended to educate and illuminate potential patients and family members with GBM. On the back end that you won’t see is a sophisticated compliance patient referral network to help match our clinical trials with patients that may be good candidates and facilitate that process of connecting them with a clinical trial site and much more is to come in that regard. At this point, I'll stop and turn the call over to my colleague, Andrew, for a brief review of the first quarter financial results.

Andrew Sims, Chief Financial Officer

Thank you, Marc, and good afternoon, everyone. Please refer to our press release issued earlier today for a summary of our financial results for the second quarter ended June 30, 2021. As of June 30, 2021, cash and cash equivalents were $17.2 million compared to $8.3 million as of December 31, 2020. Cash used in operations for the six months of 2021 was approximately $5.4 million compared to $2.9 million in 2020. This difference is mainly due to timing differences in when certain accounts payable and accrued expenses were paid in 2020, particularly relating to the legacy government contract, together with increased R&D spending. There were no revenues in the six months of 2021 as compared to approximately $303,000 in the same period last year. This decrease was due to the closeout of the legacy government contract, as previously disclosed. Research and development expenses were $2.2 million for the first six months of 2021 as compared to $1.3 million for 2020. The increase was anticipated and reflects additional RNL CMC development costs to obtain cGMP drug product. G&A expense was $2.8 million for the first six months of 2021 compared to $3 million for 2020. The decrease was primarily driven by tight management of professional and other fees. Interest expense decreased for the six months of 2021 to approximately $476,000 from approximately $601,000 for the same period in 2020, reflecting the paydown of debt principal to $4.3 million in 2020. The net loss for the six months to June 2021 was $5.5 million as compared to a net loss of $2.9 million for the equivalent period in 2020. The net loss was consistent year-on-year when excluding the book gains on the warrants reported in the first quarter of 2020. As noted in our quarterly filing, this required transaction was eliminated in the second quarter of 2020 when the Series E warrants were amended. And now I'll turn it back to you, Marc.

Marc Hedrick, President and CEO

Great, Andrew. Thanks a lot. So before we go into Q&A, let me just summarize the milestones we anticipate over the next few quarters. First of all, with respect to the ReSPECT GBM trial, we intend to complete the current cohorts and present a comprehensive trial update in Q4 of this year. It's our intention to notify everyone regarding the timing of that as soon as we are able. Also at that time, we intend to provide an update on next steps and the clinical development of RNL for GBM based on the evolving dataset. Upon completion of the current trial and data analysis, a Phase I and II meeting with the FDA is likely to help finalize the pivotal trial plan. Regarding the CMC activities for RNL, we plan to complete cGMP manufacturing activities, and we remain on track to begin stability testing later this year, with the investigational drug products anticipated to be available around mid-2022. At the end of the year 2021, we anticipate possibly requesting a friendly FDA meeting to clarify and resolve any open CMC issues that may exist at that time. Regarding the ReSPECT LM trial, IND submission is planned for Q3 and Q4 2021, and enrollment is expected to begin following approval. We will provide a formal update on that trial once we hear back from the FDA, perhaps at our next quarterly earnings call. Regarding pediatric brain tumor therapy, an IND submission is planned for later in 2021, to follow the LM-IND submission, which could be as late as early 2022. As mentioned, we will provide a formal update on that trial once we hear back from the FDA. In terms of our development activities, we continue to be quite active, both in CMC and assessing in-licensing and out-licensing opportunities, and we'll provide ongoing updates if and when we have news to report on that front. So Catherine, with that, I think let's move to Q&A.

Operator, Operator

Thank you. Our first question is from Jason McCarthy with Maxim Group. Please go ahead.

Unidentified Analyst, Analyst

It’s Dave on the line for Jason. Just out of curiosity, are you currently or do you intend to hold any meetings with international regulators to discuss potential approval outside of the U.S., or do you plan on initiating any clinical trials in any international territories?

Marc Hedrick, President and CEO

I appreciate the question. Right now, we don't have any plans for that, but it doesn't mean it won't change. I think we want to focus on U.S. approval and our CMC activities for the remainder of the year. I think after we get through 2021 and the pivotal plan starts coming together, we may begin exploring in earnest the possibility of broadening that trial to include international sites or separate clinical trials.

Unidentified Analyst, Analyst

Okay, that makes sense. And earlier in the call, you mentioned that regarding the patient population being evaluated in the ReSPECT trial. You stated that patients who had previously received bevacizumab conducted differently than the bev-naive patients. So, am I correct in saying that you are now currently focusing on GBM patients who are bevacizumab naive? That is the target patient population.

Marc Hedrick, President and CEO

Yes, that's true. We excluded them about nine months ago, but that doesn't mean we can't treat them. What that means is that we likely have to change the delivery parameters, perhaps the volume and the rates, to improve the coverage of the tumor, and that's something we can address downstream. But in terms of moving into the market as quickly as we can, we will be excluding those patients.

Unidentified Analyst, Analyst

Okay, that makes sense. And then you mentioned something about a potential Phase I/II meeting with the FDA regarding a potential Phase I/II trial. Would that possibly be happening in 2021?

Marc Hedrick, President and CEO

I think that’s likely going to be a 2022 event. We’ll have to wait and see what Cohort 8 looks like and consider the evolving efficacy and safety data before making a determination about whether we continue to dose escalate. I think that's probably unlikely, but possible. Right now, we are delivering significant volumes and radiation doses such that theoretically, we think we can create a radiation cloud covering the tumor and the microscopic disease of a sphere of about seven centimeters in diameter. So I think we're getting close to the maximum, but once we look at the data and evaluate efficacy and safety, we'll make a determination about whether to escalate or not or whether to move into the next phase, which might include an expansion cohort or moving on to the next trial.

Operator, Operator

Our next question comes from Sean Lee with H.C. Wainwright. Your line is open.

Sean Lee, Analyst

So my first question is on the current cohort. Like Cohort 8, you mentioned that with the increased volume and dosing, you're able to treat tumors about 7 centimeters. So what percentage of GBM patients do you think that's sufficient to cover? And do you feel that you'll need to go to a higher dose cohort later on?

Marc Hedrick, President and CEO

Yes. That's a great question and really gets into the therapeutic strategy for these patients. As you know, GBM usually doesn't metastasize; it kills patients through local growth. If left untreated, it grows aggressively. One can surgically remove these tumors, but about 90% of recurrences occur within a 2-centimeter rim around the tumor. So we have microscopic disease that isn't visible, but instinctively we know it's there and it's likely the catalyst for recurrence. Our strategy is to treat tumors that are roughly around 3 centimeters and cover a 2-centimeter rim around that, which accounts for a sphere in an idealized geometry. These tumors often don't occur as spheres, but treating a tumor around that size is what we consider optimal. We're developing the ability not only to ablate the tumor reliably but capture that microscopic disease. In our view, that's where we can see improvements in efficacy, and theoretically, if patients do recur, we might be able to consider the concept of early retreatment.

Sean Lee, Analyst

Regarding the mixed study, you mentioned you're likely looking to pursue a Phase II pivotal study. Would you be considering something like a special protocol assessment with the FDA, or pursuing breakthrough therapy designation? What are your plans on the regulatory side?

Marc Hedrick, President and CEO

Yes. I think all those options are possible and they are in our planning, which will depend on the data we collect. We should know more around Q3 or likely Q4 of this year, assuming we continue at the same enrollment pace through cohort 8. Additionally, we have a number of patients that we've treated recently who are still alive, so we’ll be able to gather more data regarding the evolving efficacy signal.

Sean Lee, Analyst

My final question is on the upcoming LM and pediatric brain cancer studies. What is still left to do before you can initiate these studies? Also, would you wait until you have the new GMP manufactured drug before initiating the studies, or would you proceed with your current stock?

Marc Hedrick, President and CEO

Regarding the latter question, we can proceed with those studies today based on our current manufacturing protocol, which is sufficient for a Phase I trial. As to timing, I would consider those studies sequentially, with LM being the priority. What remains is to finalize the IND, which, as mentioned, is planned for Q3, maybe Q4, and then submit it. We have already identified a couple of sites with a number of others under evaluation. Our principal investigator is at a site we're already working with, so that should be straightforward. As for pediatric brain cancer, we have also identified the PI and lead trial site, and we're collaborating with them to develop the protocol, but our bandwidth is constrained, and therefore that filing won't happen until after LM, which is likely going to be at the end of the year. So we won’t be definitive about start timing until early next year.

Operator, Operator

We'll go now to Ed Woo with Ascendiant Capital. Your line is open.

Ed Woo, Analyst

Thank you for providing us the latest update. My question is on funding. You've been able to fund most of your studies so far with various grants. Do you know what the funding plan will be if you move to a pivotal study?

Marc Hedrick, President and CEO

I appreciate the question. We're in a good cash position today and are fortunate that the majority of our clinical trial costs are covered by the NCI, which alleviates the pressure to raise capital. Our management philosophy is to maintain at least 24 months of cash on hand, which we are close to achieving. We want to stay in this position to remain opportunistic in raising capital at the right time. Our plan is to sustain approximately 18 to 24 months of cash, and then when we are close to a pivotal trial, raise additional funds to ensure we can reach a conclusive endpoint without needing to return to the capital markets or seek partnerships. So that’s our plan.

Ed Woo, Analyst

I was actually wondering if the NCI would fund the pivotal study, and one of the reasons you moved to Texas was to access state cancer funding. Is there an option for that as well?

Marc Hedrick, President and CEO

No, that won't apply here. The NCI grant covers us through Phase I and II, and we are currently funded for that. We have up to 55 patients allowed in this grant, and we're at 22 now, meaning there is some runway remaining. It’s possible to secure grant funding for the pivotal trial, but the trade-offs can be significant. There’s often a loss of control associated with grant funding, which can be a concern. Therefore, I expect we'll likely want to fund that trial ourselves for practical reasons.

Operator, Operator

We'll now hear from Emad Samad with Octavian. Your line is open.

Emad Samad, Analyst

Marc, you mentioned towards the end of your update about the BBD licensing activities. Could you provide guidance on the types of opportunities the company is pursuing and what the strategic goals and approach are regarding the current pipeline? Specifically, what should we be expecting from the company and how are you focused on that aspect of corporate strategy?

Marc Hedrick, President and CEO

Emad, I appreciate the question. Obviously, I must caveat my response by saying that nothing is definite until it is finalized. However, I can share our current strategy. Our deal team is actively focused on three areas. As you've seen in the news over the last quarter or so, we’re very focused on the CMC front. We’re partnering with leading suppliers and providers, and we are publicly reporting on major progress in that area. It's also important to consider things like barriers to entry, exclusivity in supply chain interactions, and broader considerations like reimbursement and margins. That’s one key area of focus. Secondly, we are active in evaluating new technologies to expand our platform. We are really keen on the radio therapeutic space and wish to broaden the pipeline. We are particularly focused on becoming more targeted in our delivery methods. Our existing RNL for GBM is a prime example of targeted delivery through convection-enhanced delivery, but we are also looking beyond this with vascular access and molecular targeting techniques. We have a core expertise in delivering formulations and therapeutics, and are committed to expanding our targeted delivery capabilities while evaluating potential opportunities. Lastly, we’re assessing potential out-licensing opportunities for our two legacy drugs. While there is ongoing interest, the timing and quality of offers will dictate our capacity to progress on this front. We are actively pursuing all three levels, and we'll keep you updated as we make progress.

Operator, Operator

We have no further questions at this time. I would like to turn the floor back over to Dr. Hedrick for any additional or closing remarks.

Marc Hedrick, President and CEO

Awesome. Thank you, Catherine. I just want to express my gratitude to everyone who joined us on the call. On behalf of the board, I'd like to take a moment, as I do every quarter, to thank our employees, our extended team members, and our numerous academic collaborators for their dedication in finding solutions for GBM and other challenging cancers. I'd also like to thank the patients and doctors and hospital staff with whom we work closely, as they significantly contribute to making these clinical trials possible. Thank you again, and have a good evening.

Operator, Operator

Thank you. This does conclude today's conference call. Please disconnect your line at this time, and have a wonderful day.