Earnings Call Transcript - PSTV Q3 2021

Operator, Operator

Good afternoon, ladies and gentlemen, and welcome to the Plus Therapeutics Third 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, CEO

Thank you very much, Ashley. Good afternoon everyone. 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 third quarter financial results. Joining me on the call today is Mr. Andrew Sims, our Chief Financial Officer. 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. Big picture, in the third quarter we made good incremental progress toward our mission to become a global leader in developing and delivering precision targeted radiotherapeutics for cancer. Specifically, we received clearance from the FDA for Investigational New Drug application for the use of RNL 186 in patients with leptomeningeal metastases. We also entered into an agreement for the commercial production of our radiopharmaceutical RNL 186 and we continue to strengthen our leadership team with the appointment of a highly experienced Chief Medical Officer, Dr. Norman LaFrance. Finally, we presented data at the AANS meeting, as well as obtained acceptance to present data from the ReSPECT GBM trial at both ASTRO and SNO. I'll cover these achievements in more detail in a moment. But let me first provide a summary of Plus for those new to the company. Our lead investigational targeted radiotherapeutic is RNL or Rhenium NanoLiposome. This is a proprietary liposomal encapsulated radionuclide that is delivered regionally via targeted three-dimensional convection enhanced delivery. It is administered 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 very unique isotope, in part because of its energy profile. Its beta energy has a short path length, which provides delivery precision, a low dose rate, which provides a margin of safety, and a high energy density, which is particularly toxic for highly mitotic cells like cancer, which can overwhelm the DNA repair mechanisms that could otherwise contribute 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 radiation. Our initial indication for RNL is recurrent glioblastoma, which affects approximately 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 unmet medical challenge. Published studies indicate that external beam radiation provides the best incremental improvement in survival of all therapies currently used for glioblastoma, which is about five months and it remains an essential component of multimodal therapy for both glioblastoma and in fact many other cancers, but it is limited by the complications from higher dosages. RNL is currently under evaluation in our U.S. ReSPECT-GBM trial, which is a dual Phase 1 and Phase 2 multi-center, 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. We are now into an eighth dosing cohort following the data and safety monitoring board recommendation to proceed to the next incremental cohort and to date we have treated 22 total patients. We provided interim results during the recent Canaccord Genuity and Wainwright investor meetings and that data can be found on our website. Notably Cohort 8 represents a 40% increase in both dose and radiation compared to Cohort 7. Thus far in the ReSPECT trial, highly targeted and continuously infused or convected volumes of up to 12.3 milliliters containing 31.2 millicuries of radiation have been well tolerated. Up to four catheters can be successfully placed for delivery to best accommodate a variety of tumor sizes and geometries. RNL has been shown thus far to be safe and well tolerated despite delivering up to 740 gray of absorbed radiation to the tumor, which again by comparison is 20 times the radiation dose typically delivered by EBRT in the recurrent setting. Regarding safety, as of August 1, 2021, there have been no adverse events or AEs leading to death or discontinuations due to AEs. The majority of AEs reported were mild to moderate, grade 1 or 2 in intensity and non-serious. The adverse events or AEs with the highest incidence were fatigue, muscular weakness, headache, and gait disturbance. Most AEs were considered causally unrelated to RNL, except one case of scalp discomfort, which was considered related to the surgical procedure, and one case of cerebral edema. AEs with grade 3 were leukocytosis, hyperglycemia, muscular weakness, seizure, brain edema, worsening avascular necrosis of the shoulder, vasogenic cerebral edema, and pneumonia, all of which were considered unrelated to RNL by the investigator, with the exception of brain edema for one subject, which was considered possibly related to RNL. Serious adverse events or SAEs were reported for two subjects in Cohort 2, namely seizure and vasogenic cerebral edema. One subject each in Cohort 4 and 5 had seizures while two subjects in Cohort 6 had pneumonia and worsening avascular shoulder necrosis and cerebral edema. All these events were considered unrelated to RNL by the investigator except for cerebral edema for one subject, which was considered possibly related to RNL and/or tapering of oral corticosteroids. None led to study discontinuation. There were no meaningful differences or patterns in the incidence of related treatment. Emergent AEs reported across individual treatment groups of cohorts. Neither the incidence nor severity of AEs appeared to increase with increasing doses of RNL. Regarding the important issue of drug delivery feasibility, there have been no delivery failures thus far. We can safely deliver up to an average absorbed dose of 740 gray of radiation to tumors. The mean absorbed radiation dose to the tumor is 392 gray, and the mean percent tumor coverage with the radiation is 90%. Although the Phase 1 trial is not designed nor powered for efficacy, we see promising signals of biological effect and potential efficacy. As mentioned previously, imaging-based measures of progression are challenging as the substantial tissue effects of the treatment often show pseudo-progression. While we analyze the imaging results in an ongoing manner, we also closely assess the gold standard endpoint of survival. Three of 22 patients have survived up to 30 months or more where average survival for current GBM with Standard of Care is only about 8 to 10 months. Because many of those patients have been treated relatively recently and at the higher dosing and volume cohorts, it understandably makes definitive efficacy determinations on overall survival challenging. However, regarding overall survival, we have observed that increases in both convective volumes and radiation dosage seem to correlate with better tumor coverage and higher tumor absorbed doses, which in turn seems to correlate with overall survival. As of August 1, 2021, eight of the 22 patients remained alive. In the early cohort of 13 patients enrolled between 2015 and 2019, only five of 13 had absorbed tumor radiation doses greater than 100 gray and tumor coverage greater than 75%, which we view as key biological thresholds. The average overall survival in these five patients was 769 days or about 25 months, with two still alive. In the more recent cohort, since we took over the trial, of the nine patients treated since 2020, seven of nine had both absorbed tumor radiation doses greater than 100 gray and a tumor coverage percentage of greater than 75%, a significantly better delivery success percentage due to the higher volumes and radiation doses we're administering. The average overall survival in these seven patients is 173 days, but six of these patients are still alive. We will provide a full update at the November Society for Neuro-Oncology meeting in Boston later this year. Furthermore, our team continues to make excellent progress in our drug scale-up manufacturing activities and is simultaneously putting in place essentials for commercial readiness. Specifically, during the third quarter of 2021, the company entered into an agreement with RadioMedix Incorporated for the commercial production and logistical support of the company's investigational radiopharmaceuticals. Thus far in 2021, the company has entered into five collaboration agreements to support its process development and analytical chemistry activities, as well as to strengthen its supply chain in compliance with good manufacturing practices for the manufacture of the 186 RNL investigational drug. The company remains on track to deliver GMP 186 RNL by mid-2022. Looking forward, the company will present interim data from its ReSPECT GBM clinical trial at the 2021 ASTRO Annual Meeting scheduled for October 24 to 27 this year and at the 2021 Society for Neuro-Oncology Annual Meeting and Education Day scheduled for November 18 to 21 of this year. In addition, at 4 pm eastern standard time on November 18 this year at SNO in Boston, the company will sponsor an in-person and virtual scientific roundtable discussion and Q&A period with ReSPECT trial principal investigators. At that time, we will provide a substantial clinical update on the safety and potential efficacy data as of that time point including a discussion of potential next steps. In parallel, we expect to continue to enroll patients in Cohort 8 this year, ideally completing this cohort in Q4. Based on that timeline, we intend to present the clinical data set to the FDA in the first half of next year. Regarding additional indications, RNL is also being developed for other diseases including leptomeningeal metastases and pediatric brain cancer. Leptomeningeal metastases or LM is a secondary cancer complication from other cancers. Based on their increasing overall survival rates we're seeing with better therapies for primary solid and hematologic tumors, LM affects over 100,000 patients per year in the U.S., with patients presenting a broad range of signs and symptoms due to simultaneous involvement in multiple areas of the craniospinal axis. Earlier this week, we announced clearance of our IND application from the FDA for 186 RNL for the treatment of LM. We expect to initiate patient accrual in a Phase 1 dose escalation trial in the fourth quarter of 2021. The trial, called ReSPECT LM, will be a multi-center, sequential cohort, open label, single dose, dose escalation Phase 1 study assessing safety, tolerability, biodistribution, dosimetry, and any tumor activity of 186 RNL given intraventricularly via the standard Ommaya reservoir to subjects over 18 years of age with LM. The primary endpoints of the study are the incidence and severity of adverse events and SAEs and the incidence of dose-limiting toxicities. The secondary endpoints are the overall response rate, duration of response, progression-free survival, and overall survival. In the forthcoming trial, we plan to administer RNL via a common indwelling catheter as mentioned, a reservoir called the Ommaya Reservoir, that sits under the skin on the head and communicates directly with the ventricle in the leptomeningeal or cerebrospinal fluid space. This makes the delivery a very straightforward issue. Furthermore, the reservoir allows periodic CSF sampling to occur, facilitating the use of tumor-related biomarkers to follow patient response and enables the potential use of related surrogate outcome measures. Additionally, we believe there's an opportunity to help patients with pediatric brain cancer using RNL. Based on our pre-IND meeting feedback received earlier this year, we intend to submit an IND in early 2022 to investigate the use of RNL in children with brain cancer. Finally, as mentioned in September, the board and I are pleased to welcome Dr. Norman Lafrance to the board as the Company's Chief Medical Officer. Dr. Lafrance will join Andrew and me on our forthcoming earnings calls. Dr. Lafrance brings decades of unique and highly relevant clinical regulatory and commercial expertise to the Plus Therapeutics management team. He's a nuclear engineer, a board-certified internist, and a nuclear medicine physician. He joined the industry after leaving his clinical practice at Johns Hopkins in Baltimore. He has a proven track record in radiotherapeutics, drug development, regulatory affairs, drug life cycle management, and related commercial experience. He has successfully brought numerous radiotherapeutics to market, and his background will be crucial to our success as we expand our pipeline, move key programs to late-stage clinical development, and position the company for long-term regulatory and commercial success. At this point, I'll stop and turn the call over to my colleague, Andrew, for a brief review of the third quarter financial results.

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 ended September 30, 2021. As of September 30, 2021, cash and cash equivalents were $21.3 million compared to $8.3 million as of December 31, 2020. Cash used in operations for the first nine months of 2021 was approximately $7.6 million compared to $5.2 million in the same period in 2020. The key components of the cash used in operations and main changes between 2020 and 2021 are as follows: there was no revenue in the first nine 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 $3.7 million for the first nine months of 2021 as compared to $1.6 million in the same period of 2020. The increase of $2.1 million was anticipated and reflects additional RNL CMC development costs to obtain cGMP drug product for the pivotal registration trial. General and administrative expenses were $4.8 million for the first nine months of 2021 as compared to $4.1 million for the same period in 2020. This increase is mainly due to an increase in legal and other professional fees. Interest expense decreased for the first nine months of 2021 to approximately $708,000 from approximately $854,000 for the same period in 2020, reflecting the paid down debt principle to $4.3 million in 2020. Net loss for the nine months to September 30, 2021, was $9.2 million compared to a net loss of $4.6 million for the equivalent period in 2020. Excluding the book gains on the warrants of $2.3 million reported in the first quarter of 2020, the change in net loss reflects the incremental R&D and G&A spending as I mentioned earlier. And now, I'll turn it back to you Marc.

Marc Hedrick, CEO

Thank you, Andrew. Before we move on to Q&A, let me just summarize the milestones we anticipate over the next few quarters. I've mentioned many of these already, but I'll summarize them here. First of all, with respect to the ReSPECT-GBM trial, we intend to complete the current cohort and present a comprehensive trial update at SNO as mentioned. Upon completion of the current trial and data analysis, we plan a clinical meeting with the FDA in the first half of 2022 to finalize the ongoing clinical trial plan. Regarding the CMC activities for RNL, we are working toward completing key GMP manufacturing activities and remain on track to begin stability testing this year, with GMP investigational drug products anticipated to be available by mid-2022. We currently plan a CMC-focused FDA meeting for the first quarter of 2022 to clarify and resolve any open CMC issues that may exist at that time. Regarding the ReSPECT LM trial for leptomeningeal disease, with the IND approval, we plan to begin accrual as soon as this quarter, 2021. Regarding pediatric brain tumor therapy, an IND submission is planned for early 2022. In terms of our business development activities, we continue to assess in-licensing and out-licensing opportunities and will provide ongoing updates if and when we have news to report in that front. So Ashley, I think at this point, we'll move on to Q&A.

Operator, Operator

And at this time, the floor is now open for your questions. And we'll take our first question from Jason Mccarthy with Maximum Group. Please go ahead.

Jason Mccarthy, Analyst

Hi, Marc. Thanks for taking the questions. Just a brief question on Norman Lafrance. He looks like he's a very experienced guy in nuclear medicine. Can you talk to us a little bit about what that recruitment process is like? What Dr. Lafrance sees in the RNL platform and why he's excited to join?

Marc Hedrick, CEO

Hey, Jason. Thanks for the question. This is a pivotal hire for us as you might imagine. I've been functioning in the role as CMO and CEO for a number of months, and we knew that finding somebody with the right qualifications would be difficult. Physician CMOs with an oncology background are much more common, but having someone with relevant nuclear medicine experience and a track record of bringing multiple products to market is a very small universe of individuals. So I think we went through a recruiter, who did a great job identifying a number of good candidates. Dr. Lafrance, who spends a lot of his time at his previous employer, doing business development and due diligence on various assets, took about two to three months to look at the data. I think he was impressed with the technology and motivated by the resurgence of this field in targeted radiotherapeutics. We're very fortunate to have him on board, and I believe he will prove invaluable to us from day one.

Jason Mccarthy, Analyst

Great. And going back to the ReSPECT-GBM study, can you talk a little bit about how high the absorbed dose could be pushed? Because here at 740, when you change the flow rate and the concentration and the volume, you're getting to a significantly high number, well over traditional external beam radiation. What are regulators and physicians comfortable with? Because you've had no dose-limiting toxicities. Can you just continue to go higher, or do you just stop and then go to the FDA and see where things are at?

Marc Hedrick, CEO

Yes, it's a good question. The way we currently analyze our average absorbed dose while a good approximation of what's delivered to the tumor and surrounding brain is based on further breakdown and detailed assessments. This is critical moving forward. We've gone beyond the initial dosage concerns, and the safety profile looks promising. Alpha absorbed doses of around 100 gray seem to be effective, although we should focus more on volume and the overall delivery to maximize tumor coverage. It's likely we're at the peak of what's feasible, but we'll evaluate our findings to confirm that.

Jason Mccarthy, Analyst

And then just last question on the LM program. Are there any different sets of circumstances or challenges in terms of catheter placement? LM is quite different from GBM; can have some spinal cord involvement or are they different areas of the brain that are harder to reach?

Marc Hedrick, CEO

Yes, it's a good question. The delivery for LM is entirely different than for GBM. A significant benefit for this study is that almost all LM patients are fitted with an Ommaya reservoir, allowing real-time access and a straightforward delivery system. It allows for outpatient treatment in a very incremental setting. This also enables us to sample CSF and utilize tumor-related biomarkers for continuous monitoring of response and outcomes. Overall, the delivery sophistication and challenges are much lower for LM patients than for GBM.

Jason Mccarthy, Analyst

Great Marc. Thanks for taking the questions.

Marc Hedrick, CEO

Thanks, Jason.

Operator, Operator

And we'll take our next question from Ed Woo with Ascendiant Capital. Please go ahead.

Ed Woo, Analyst

Yes. Thanks for taking my question. You mentioned this is probably the last cohort you guys have. Would you be able to know when you release data in November if you'll go for a ninth cohort or not?

Marc Hedrick, CEO

Yes, Marc speaking. That really just depends on how quickly we enroll the last patient if it's feasible, but I can’t predict if we will encounter dose-limiting toxicity or any safety issues at the current levels. We have treated one person in this cohort who did well, but it remains uncertain. However, we will certainly discuss this during the call at the time of the data release.

Ed Woo, Analyst

Great. And congratulations on getting the recent IND for RNL for another indication pretty soon. It looks like you'll have three indications. Are you planning to focus solely on those three or will you work on other indications simultaneously?

Marc Hedrick, CEO

We’re focused on building out the targeted radiotherapeutics platform. We believe that RNL has great potential for these CNS indications. While we are currently focused on those three, we continue to explore potential new technologies that could complement our portfolio. However, we also want to ensure we can appropriately finance these initiatives in a shareholder-friendly manner. While we're very happy with our current prospects, we still want to look towards future opportunities for growth.

Ed Woo, Analyst

Great. Well thanks for answering my question. Good luck.

Marc Hedrick, CEO

Thanks Ed.

Operator, Operator

There are no further questions. I will turn the call back over to Dr. Hedrick for any additional or closing remarks.

Marc Hedrick, CEO

Thank you so much, Ashley. I want to express my gratitude to everyone who joined us on the call or is listening to the recorded version. On behalf of the board, I’d like to thank our employees, team members, and the physicians we work with, as well as the patients who trust us in these trials. Thank you for your participation 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.