Earnings Call Transcript - PSTV Q3 2020

Operator, Operator

Good afternoon, ladies and gentlemen. Welcome to the Plus Therapeutics Third Quarter 2020 Earnings Results Call. At this time, all participants have been placed in a listen-only mode and the floor will open for your questions following the presentation. And before we begin, we want to advise you that, over the course of this 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 risk and uncertainties, including the risk 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, CEO

Thank you, Catherine. Good afternoon, and thank you for taking the time to join us today, as we provide a business update and discuss our 2020 third quarter results. Joining me on the call today is Mr. Andrew Sims, our Chief Financial Officer. Before Andrew provides an update on our financial performance, I would like to offer an overview of the current status of RNL's development for recurrent glioblastoma and an update on additional potential target clinical indications. Recurrent glioblastoma is the most common and lethal form of brain cancer, affecting about 13,000 patients per year in the United States. Essentially all primary glioblastoma tumors recur after initial treatment. There are currently few approved treatments in the recurrent setting, which in aggregate provide only marginal survival benefits. RNL has a number of unique aspects that provide compelling scientific rationale that it may show improved outcomes over currently used therapies. First, compared to external beam radiation therapy, where high-energy radiation passes through and affects healthy tissue to reach the tumor, RNL is prepared in liquid form and injected directly into the tumor. This inside-out targeted approach with RNL may reduce unwanted radiation exposure to nearby healthy tissue. Furthermore, because Rhenium can be visualized in real-time during administration, RNL may allow doctors to better control the radiation dose and distribution to more effectively treat not only the bulk tumor but also the microscopic disease that arises in the surrounding healthy tissue and fuels recurrences. Also, it may be possible to deliver a radiation dose to the tumor that is up to 20 to 50 times higher with RNL than with external beam radiation therapy. We have yet to determine the maximum tolerated dose in our preclinical or clinical studies. In addition, with a long half-life of about 90 hours, liposomal encapsulation, and low clearance rate, RNL's pharmacokinetic profile allows the drug to stay for a long time where it's applied, maximizing the time on the tumor of the radiation and theoretically maximizing the cancer-killing effects. Finally, in terms of patient convenience, RNL is administered in a single treatment and requires a short hospital stay compared to external beam radiation therapy that may require 20 or more treatment visits for a full therapeutic course. One of the company's first priorities in advancing the development of RNL is to surround and support our efforts with a world-class expert group who possess the knowledge and experience in the fields of neurosurgical operations and neuro-oncology and have a clear understanding and appreciation for RNL's profile and potential. To that end, we were pleased to announce in October the formation of a Clinical Advisory Board to help successfully bring our investigational RNL drug through the clinical development process. These five experts are leaders in their fields and will be important to our efforts on behalf of the patients with glioblastoma. We are on track and making good progress on the important 2020 milestones for this program, including completion of the clinical trial enrollment, optimization of the regulatory plan, and bringing the manufacturing and supply chains forward to industry standards in anticipation of the next steps in clinical development. During the third quarter, the FDA granted both orphan designation and fast track designation for RNL for the treatment of patients with recurrent glioblastoma. Now, let me provide an update specifically on the ReSPECT safety and feasibility trials for RNL. The fifth dose escalation cohort is now complete, and 15 patients have been treated thus far with RNL. Single-treatment radiation dosing with RNL is now above 10 times the typical dose administered in the recurrent setting. The increased treatment volume and dose in the sixth cohort should accommodate tumors up to approximately four-and-a-half centimeters, which should include the majority of tumor recurrences. No treatment-related serious adverse events have been observed thus far, and as previously mentioned, there appear to be early signals of efficacy in patients with adequate dosing and tumor coverage even at the lower volume and dosage levels. We have also expanded enrollment to a second site and we intend to have a third site onboard soon. Finally, as recently announced by the company, our abstract on the clinical experience thus far with regard to RNL will be presented at the 25th Annual 2020 Society for Neuro-Oncology from November 19 to 22, and that's actually going to be a virtual meeting due to COVID-19, but it's being held in Austin, Texas. Regarding additional clinical development programs for RNL outside of recurrent glioblastoma, we intend to provide an update and discuss concrete next steps sometime in Q4. As previously mentioned, leptomeningeal carcinomatosis, peritoneal carcinomatosis, and recurrent head and neck cancer represent three promising potential indications based on existing preclinical data that we have generated thus far. Regarding our out-licensing activities, we are having discussions with potential partners regarding opportunities to help us expand RNL development internationally while the company focuses primarily on U.S. development for RNL. As for our two other clinical-stage assets, DocePLUS and DoxoPLUS, we continued global partnering discussions while remaining focused primarily on RNL and its development in the U.S.

Andrew Sims, CFO

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 third quarter and nine months ended September 2020. As of September 30, 2020, cash and cash equivalents stood at $7.6 million, compared to $17.6 million as of December 31, 2019. The debt principal at September 30, 2020, was $4.3 million. In April 2020, we amended our debt with Oxford, providing additional flexibility by extending the interest-only period through May 2021, along with a paydown to $5 million of principal. Cash used in operations was approximately $5.2 million for the nine months ended September 30, 2020, compared to $6.9 million for the same period last year. There were no reported revenues in the third quarter of 2020, as compared to $4.8 million in the same period last year. The decrease in both periods was due to the closeout of the BARDA contracts we mentioned last quarter. Research and development expenses were $0.3 million in the third quarter of 2020, compared to $0.9 million in the third quarter last year. For the nine months ended September 2020, R&D expenses were $1.6 million compared to $3.6 million in the same period in 2019. The decrease was partly attributed to the completion of the BARDA contract in 2019. Approximately $0.8 million was incurred in Q2 2020 related to the in-license agreement with NanoTx. $0.4 million was paid in cash at close in early May, with the balance in stock. In addition, our grant from NCI covers the clinical costs for the ReSPECT clinical trial. Our sales and marketing expenses were approximately $0.1 million in the third quarter of 2020 and $0.3 million for the nine months ended September 30, 2020, essentially unchanged compared to the respective period last year. G&A expense was $1 million for the third quarter of 2020, unchanged from the same period last year. For the nine months ended September 30, 2020, G&A was $3.8 million, as compared to $3.3 million in the same period of 2019. The slight year-over-year increase reflects an increase in professional fees in Q2 2020 related to the recent in-licensing transaction. This increase was partially offset by a decrease in payroll and related expenses. Interest expense decreased in the nine months to September 30, 2020, to $0.9 million from $1.5 million in the nine months to September 30, 2019, reflecting the principal paydowns in 2019 and 2020. The net loss for the third quarter of 2020 was $1.7 million, as compared to a net income of $0.5 million in the third quarter last year. This change is primarily due to the approximately $7 million loss from discontinued operations in 2019, which relates to the Q2 2019 asset divestiture.

Marc Hedrick, CEO

Great, Andrew. Thank you. So just before we finish up and head into Q&A regarding previously announced forthcoming milestones, in short, we're on track. As to our primary year-end goal completion of enrollment in the ReSPECT trial, we currently believe that Cohort 6 will be the final dosing cohort, and we still intend to complete that by year-end. To that end, active patient screening is ongoing at site two, which is UT Southwestern in Dallas, Texas, and MD Anderson in Houston is on track to begin screening soon and that will be site three. As recently announced, we plan to report the up-to-date dataset enrollment progress on ReSPECT at the Society for Neuro-Oncology meeting in mid-November of this year. Informed by the data from the final cohort, which as I mentioned, we presume to be Cohort 6, we'll take that data, optimize the regulatory and clinical plan for RNL for recurrent glioblastoma, and then seek FDA guidance on next steps, which will likely occur sometime in the second half of 2021. So ongoing in the background, parallel to the current ReSPECT clinical trial and our regulatory efforts, as I mentioned before, our CMC team is now actively manufacturing the drug for ReSPECT. We have brought that in-house. Additionally, we are putting in place suitable manufacturing controls and capabilities appropriate to provide the drug for a late-stage clinical trial, which we anticipate will also be a second half 2021 event. In Q4 of this year, as I mentioned, we will discuss more publicly what we plan to move into the clinic regarding the RNL pipeline. We will also continue to push forward on the RNL, DocePLUS, and DoxoPLUS partnering discussions, and we will discuss that further when and if those discussions develop. So with that, Catherine, I'll turn the Q&A over to you, and be happy to answer, along with Andrew, any questions that anyone may have.

Operator, Operator

Your first question comes from the line of Jason McCarthy with Maxim Group.

Jason McCarthy, Analyst

Hi, guys. Thanks for taking the questions. A couple of questions. First, as far as the data that we could expect to see at the Society for Neuro-Oncology in November, will we be seeing overall survival data? And if so, will that data be compared to some sort of historical control? And if so, would that historical control be matched in terms of the disease state of these patients?

Marc Hedrick, CEO

Hey, Jason. Yes, we'll provide overall survival data. The caveat there is that there will be patients who have been recently treated and are still alive, so we'll be able to draw meaningful conclusions on overall survival. However, we can only look at the patients who have both expired or are still alive. So it will be sort of a blend there. Regarding historical overall survival, we don't intend to have an age- or disease-matched control, but I think overall survival in the current setting is pretty well known to be in the six to nine-month range.

Jason McCarthy, Analyst

Great. As you start thinking about meeting with the FDA and planning for a Phase II or Phase III registration study, it seems that a lot has changed in this space just in the last 12 to 24 months. We are now seeing smaller trials with external controls or synthetic control arms that the FDA seems to be open to, along with the GCAR agile program for glioblastoma that's using a very large group control for all the drugs that they're testing. Are these different avenues that you're considering as you think about getting RNL towards a registration study and how to frame that study?

Marc Hedrick, CEO

Yes, they are indeed. As you know, there hasn't been anything approved in the recurrent setting for nearly a decade, so it's a tough problem. We have obtained orphan drug status, fast-track status, and breakthrough status is not out of the question depending on the clinical data that comes forth out of the ReSPECT trial. Using synthetic control or looking at other trial approaches will definitely be incorporated into our discussions with the FDA. There are many alternatives here based on the severity of this disease and the capacity for good therapies.

Jason McCarthy, Analyst

Got you. Lastly, regarding the pipeline for expanding RNL. I know you haven't specifically said which indications, but are there certain indications, like prostate cancer or ovarian cancer, that are on your shortlist as areas where radiation therapy and implants are more widely used, making it easier for physicians to adopt the use of an isotope like Rhenium?

Marc Hedrick, CEO

I would say those mentioned are probably the second year. Our first year focus will be on indications for which we have preclinical data suggesting potential clinical success, such as leptomeningeal carcinomatosis, for which there is currently nothing approved. The only approved treatment was taken off the market in the last couple of years. Peritoneal carcinomatosis is similar, with about 100,000 patients in the U.S. every year. Late-stage recurrent head and neck cancer is also an area where there is promising preclinical data and not many options for patients who have exhausted surgery, radiation, and chemotherapy. Expanding beyond these requires additional preclinical studies. However, the three I mentioned are what we primarily regard as the closest focus areas. There might also be other areas in the CNS or related structures that could be useful, which aren't specifically recurrent glioblastoma, but where we can leverage existing clinical data sets to expedite entry into the clinic.

Jason McCarthy, Analyst

Thank you, Marc, for answering all my questions. Good luck.

Marc Hedrick, CEO

Thank you, Jason. I appreciate your engagement on the call.

Operator, Operator

Your next question comes from the line of Ed Woo with Ascendiant Capital.

Ed Woo, Analyst

Yes. Thank you for taking my question. My question is on Cohort 6. Do you expect the timeline for that to be similar to the cohorts that you've completed before, or have there been either increases in speed or delays in speed, particularly with what's been going on with the pandemic?

Marc Hedrick, CEO

Hey Ed, it's Marc. We will enroll the first patient in Cohort 6 and will announce that. We'll have a 30-day review period where we will increase both the dose and volume of the drug. We are obligated to wait 30 days and revert to the DSMB before we can complete that cohort. I expect that cohort to total six patients. I would say the enrollment pace is accelerating, given the corporate resources we have behind the trial, as opposed to it being purely academic. Having NCI involved has also sped things up in 2020. All these factors allow us to move more quickly. Adding additional sites is crucial; UT Southwestern is now onboard and we hope to have MD Anderson as a third site soon. So we remain cautiously optimistic that we can complete enrollment by the end of the year, although it will be a push. We think we can manage it though. Once the last patient in the trial is enrolled, it will be six months before we are ready to proceed to the next step, but I believe we are on track to meet that timeline.

Ed Woo, Analyst

Great. Has there been any update on funding from the state Cancer Fund? How would that funding affect your decision to move onto other cancer indications?

Marc Hedrick, CEO

COVID hasn't really hurt our efforts in a meaningful way with respect to enrollment. However, it has impacted the availability of grant funding. We were recently alerted that there is likely a request for proposal coming that we might be able to pursue for either RNL in recurrent glioblastoma or for additional indications. We're awaiting specifics, but it seems like the funding opportunities are reopening. Historically, there have been two funding periods, one in December to February and another in August to September. Our plan is to submit for each cycle and we hope they are returning to a normal schedule, which would give us two grant submission opportunities annually. We aim to utilize this funding for new indications or potentially follow-on trials with RNL, such as diffuse intrinsic pontine glioma and non-operable glioblastoma, addressing other areas we are not currently treating.

Ed Woo, Analyst

Thank you, and I wish you all the luck.

Marc Hedrick, CEO

Thanks, Ed.

Operator, Operator

Your next question comes from the line of Sean Lee with H.C. Wainwright.

Sean Lee, Analyst

Hi, guys. Thanks for taking my question. Most of my questions have been answered already, but I just have a quick one. In the prepared remarks, you've mentioned that CMC's work has been completed and they are preparing the GMP batch for the pivotal study. I was wondering if there is any additional work left to be done at the manufacturing site. Do you intend to produce all the drugs yourself going forward for at least for the study needs? When do you expect the GMP batch will be ready? Thanks.

Marc Hedrick, CEO

Thanks, Sean. Right now, we are manufacturing the drug along with our radionucleotide manufacturing partner in San Antonio for the Phase I trial. We make the liposomal product and work with them to load the radionucleotide before making it available to the preclinical trial sites. In the background, we are working on the validation and verification studies related to drug readiness to move it from Phase I to potential pivotal trial. This will require not only the VNB work I mentioned earlier but also scaling up to about 10% of commercial scale. All of this is being done in the background and will largely be outsourced. Even though we have a fully capitalized clinical stage and commercial stage manufacturing facility in San Antonio, our plan is to outsource a significant amount of that CMO work due to the unique nature of this drug, and the fact that the liposomes need to be loaded with the radionucleotide. Once we receive approval, we will evaluate whether to fully outsource that or bring it in-house. We have the capability to bring it in-house, but due to supply chain and logistics, it is too early to tell if that will make sense at this point. Thank you, Sean. I appreciate it.

Operator, Operator

And there are no further questions at this time. I'd like to turn the call back over to Dr. Hedrick.

Marc Hedrick, CEO

Great. Thank you, Catherine. I appreciate everyone who joined in and participated in the call. To close, I'd like to thank the employees of the company, the patients involved in trials, and the physicians who are increasingly excited about the opportunity to potentially collaborate with us and help bring this through the approval process. Have a good evening, and again, I appreciate your participation in the call.

Operator, Operator

Ladies and gentlemen, this concludes today's conference call. Please disconnect your lines at this time, and have a wonderful day.