CELC - NASDAQ

Greetings and welcome to Celcuity First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Robert Uhl with ICR Westwicke. Please go ahead.

Thank you, operator and good afternoon to everyone on the call. Thank you for joining us to review Celcuity's first quarter 2023 financial results and business update. Earlier today, Celcuity released financial results for the first quarter ending March 31st, 2023. The press release can be found on the Investors section of the website. Joining me on the call today are Brian Sullivan, Celcuity's Chief Executive Officer and Co-Founder; Vicky Hahne, Chief Financial Officer; as well as Igor Gorbatchevsky, Chief Medical Officer, who will be available during Q&A. Before we begin, I would like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, which are outlined in today's press release and in our reports and filings with the SEC. Actual events or results may differ materially from those projected in the forward-looking statements. Such forward-looking statements and their implications involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to differ materially from those projected. On this call, we will also refer to non-GAAP financial measures. These non-GAAP measures are used by management to make strategic decisions, forecast future results, and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the company's ongoing core operations and prospects for the future. You can find the table reconciling the non-GAAP financial measures to GAAP measures in today's press release. And with that, I would now like to turn the call over to Brian Sullivan, CEO of Celcuity. Please go ahead sir.

Thank you, Robert and good afternoon everyone. Since we provided a corporate update just seven weeks ago during our full year 2022 financial call, I'll only make brief prepared remarks today. I'm very pleased with the execution to date of our VIKTORIA-1 Phase 3 clinical trial enrollment activities at our trial sites. As we've reported previously, VIKTORIA-1 is evaluating gedatolisib in combination with fulvestrant with and without palbociclib, in adults with HR+/HER2- advanced breast cancer, whose disease progressed while receiving a CDK4/6 inhibitor. Our team is relentlessly focused in keeping us on track to report the primary analysis for the PIK3CA non-mutated patient subgroup in the second half of 2024 and the primary analysis for the PIK3CA-mutated patient subgroup in the first half of 2025. This is consistent with our prior guidance. At the ESMO Breast Cancer Congress last week, we presented an updated median progression-free survival data for treatment-naive HR positive HER2 advanced breast cancer patients. We think the data is very encouraging. In our poster presentation, we provided updated efficacy and safety data in treatment-naive patients who are enrolled in escalation arm A and expansion arm A of our Phase 1b study. We have previously reported data for this group of patients at the San Antonio Breast Cancer Symposium last cutoff date of June 29th, 2022, but the median PFS and expansion RNA has not yet been reached. As of the March 16th, 2023 data cutoff date, with the benefit of the additional follow-up period, we were able to report final median progression-free survival and median duration of response data for these patients. For treatment-naive patients and escalation arm A, median progression-free survival was 45.8 months and for patients and expansion RNA, it was 48.6 months. When the results for treatment-naive patients from each of these arms are analyzed together, median progression-free survival was 48.6 months and median duration of response was 46.9 months. These results compare very favorably to the median PFS of 24.5 months reported in the PALOMA-3 study for palbociclib letrozole. We think these results demonstrate the intrinsic role the PI3K/mTOR pathway plays as a disease driver in advanced HR positive HER2-negative breast cancer. This data also highlight the potential opportunity to develop gedatolisib as a first-line treatment option. We continue to characterize gedatolisib activity in various tumor types and compare its activity to other drugs in the class. As we previously reported, the non-clinical studies we presented at ASCO GU in February for prostate cancer, and at AACR in April for gynecological cancers, highlighted gedatolisib's differentiation from other drugs in this class. In each of the studies we performed and all of the tumor types assessed, gedatolisib demonstrates superior therapeutic effect relative to the other PI3K, AKT, and mTOR inhibitors evaluated. Based on the results from these internal non-clinical studies, as well as published reports of prior clinical results with drugs in this class, we think there is a significant opportunity for us to develop gedatolisib in these tumor types. We'll provide an update on our clinical development priorities later this year. And finally, the FACT-1 and FACT-2 trials are continuing to enroll patients with early-stage HR positive HER2-negative breast cancer. These HER2 pathway is hyperactive as detected with our CELsignia test. We now expect to announce interim results from these studies in the first half of 2024. And with that, I'll now turn the call over to Vicky Hahne to review our financial results.

Thank you, Brian and good afternoon everyone. I'll provide a brief overview of our first quarter 2023 financial results. The first quarter net loss was $11.9 million or $0.55 loss per share compared to a net loss of $7.9 million or $0.53 loss per share for the first quarter of 2022. Because these quarterly net losses include significant non-cash items, including stock-based compensation and interest expense, we also include in our press release non-GAAP adjusted net loss for the quarter ending March 31st, 2023. Our non-GAAP adjusted net loss for the first quarter of 2023 was $10.2 million or $0.47 loss per share compared to non-GAAP adjusted net loss for the first quarter of 2022 of $7 million or $0.47 loss per share. Research and development expenses were $11.3 million for the first quarter of 2023 compared to $6.7 million for the first quarter of 2022. The approximately $4.6 million increase resulted primarily from cost supporting activities related to the VIKTORIA-1 pivotal trial. General and administrative expenses were $1.3 million for the first quarter of 2023, compared to $0.8 million for the first quarter of 2022. The approximately $0.5 million increase was a result of non-cash, stock-based compensation and professional fees associated with being a public company. Net cash used in operating activities for the first quarter of 2023 was $12.9 million compared to $5.9 million for the first quarter of 2022. This was a result of non-GAAP adjusted net loss of $10.2 million, working capital changes of approximately $1 million, and non-cash interest income of approximately $1.7 million. We ended the quarter with approximately $157.5 million of cash, cash equivalents and short-term investments compared to $168.6 million at December 31st, 2022. With that, I will now hand the call back to Brian.

Thank you, Vicky. Operator, could you please open the call for questions?

Sure. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Maury Raycroft with Jefferies. Please go ahead.

Hi. Congrats on the progress and thanks for taking my questions. I was wondering, as it relates to the preclinical data that you presented at ASCO GU and the AACR data and the positive ESMO breast cancer frontline PFS data, can you talk more about what gating factors are to inform your next steps with development later this year. I guess, what would go into those decisions? And would it be based on the Phase 3 progress?

So, we've been somewhat independently evaluating the landscape of opportunities to consider for development of gedatolisib. And so in parallel, R&D group has done a great job of reporting, developing the data, conducting the studies for the data that we presented at ASCO and AACR, and that helps inform our decisions. Simultaneously, we've been doing a review of prior published data for clinical trials evaluating indicator -- or inhibitors in this class. And then we've also evaluated the market opportunity, standard-of-care treatment, the unmet need, essentially doing a holistic analysis of gedatolisib both differentiation, its characteristics as well as the unmet needs and prior results in other areas. And all of that has led us to develop some conclusions about how we would prioritize. We expect to announce the next step for us in development in the next few months, I would say, essentially by no later than Q3. And at that point, we'll make clear what went into our decision and why we prioritize that. With respect to our first-line breast cancer, that would obviously be a very long study, a very significant study. And it's one that we would probably say we'd have to essentially hold off for practical purposes until we get through our second line study. We think the data is still very, kind of, interesting and compelling and certainly important for investors to consider if they're trying to evaluate what the long-term potential for the company is. I think for most drug developers; the goal is ultimately to have a drug that's capable of providing benefit for patients as early as possible. And the data that we updated and presented at ESMO suggest that we could potentially, where the data certainly points us in this direction, enhance significantly the progression-free survival period for patients who are treatment-naive newly diagnosed with metastatic breast cancer. So long-term, we think that would represent a significant opportunity to help a bigger group of patients for longer periods of time.

Got it. All makes sense. And maybe one other question just on the Phase 3. In the past, you've mentioned how powering and the statistical analyses are conventional for the Phase 3. Are you providing any more specifics on powering assumptions for the three primary endpoint statistical analyses, and how those factor into the regulatory path forward? Or would that be something that we could learn more about at a later point before the second half 2024 readout?

Well, the fiscal analysis plan has been reviewed by the FDA. That was part of the process we went through last year and as we described to folks. So, we've added essentially our approach, the primary analysis that we proposed use, and that's all been accessed by the FDA. When -- you talk about conventional powering, I mean, typically for primary analysis, I think the expectation is that you have certainly north of 85%. We think 90% is probably more typical. And we would I would say, err on the side of being more conservative and have a higher power used for determining the sample size and effects numbers to do the primary analysis. And then certainly, the alpha is fairly standard, typically 0.025 for -- on one side of analysis. And so we're not breaking trail on any of that. And I think investors shouldn't be a consideration. But those types of details typically, we think, are more appropriate to present when they're presenting the data.

Got it. Okay, that’s helpful. Thanks for taking my questions. I'll hop back in queue.

You're welcome. Thank you.

Next question comes from Boris Peaker with Cowen & Company. Please go ahead.

Hey, thanks for taking our question. This is Nick on for Boris. So, just a quick question on CELsignia. So, I note that it was delayed in that you anticipate having the data in the first half of 2024. I was wondering if this is the same for the other FACT trials, if they've been -- if the potential date for them has also been pushed back slightly because of some of these delays?

Yes, I would say just in general, the ability to get the samples -- biopsy samples, essentially requires additional screening and it results in a longer or a greater pool of patients we have to prescreen and screen to be able to get patients to enroll. And with the stop-start we had with the pandemic, we used certain assumptions to project enrollment and I think those projections were slightly off. And again, the conditions that CELsignia trials face are wholly different from VIKTORIA-1, for instance. VIKTORIA-1 is enrolling equivalent of all comers. We're essentially women who progressed on a prior CDK4/6 and meet other eligibility criteria who are able to enroll. There's no significant screening out required, which is the case with CELsignia where only patients, roughly 20%, 25% of patients who have a research biopsy and then a sound to have hyperactive HER2 signaling are eligible. So, that two-step process just is harder to project the activity and also results in a slower rate of overall activity than you would have for a more conventional trial like VIKTORIA-1.

Understood. Thanks for that detail. Just another quick one. I know what you guys ended up with cash, I was just wondering if you have had any guidance as to the cash runway or cash burn or anything like that?

We've previously provided guidance that this cash would take us through the end of 2025, and we are sticking with our guidance.

Great. Thank you very much.

You're welcome.

Next question comes from Rohit Bhasin with Needham & Company. Please go ahead.

Hi, this is Rohit on for Gil. Thanks for taking my questions. Can you tell us how many patients have been enrolled in the FACT-1 and FACT-2 studies? And then secondly, is there anything you can tell us about your ex-US plans? Thanks.

So, we haven't provided updates on enrollment activities in those studies. And basically, we're providing guidance on when we expect that interim analysis to be done. And as far as ex-US, I guess, are you referring to commercial activities, development activities, could you maybe provide a little more detail on that question?

Yes, if you can just talk about your commercial preparation and activities, that would be great? Thanks.

Sure. Well, our primary focus now is conducting the study and making sure our efforts are getting the data as soon as practically possible. As far as the commercial efforts, I mean, there's certainly a well-understood path to be able to commercialize that you prepare somewhat in parallel to preparation of your NDA. The activities in the US are -- those early activities are in process. I would say we're on track with what you would expect for a company expecting to commercialize when we would. As far as ex-US, we haven't really described in any detail publicly what our plans are. But I would say for most biotechs in our position, they would look to some form of partnering to commercialize the drug ex-US. And we haven't made any commitments to that area. I think it's premature for us to finalize anything in that area. But I doubt it will be breaking trail, I think, taking the path that others have taken, finding partners to take on different markets. Or entire ex-US is certainly a very plausible path for us to take.

Great. Thank you.

Next question comes from Alex Nowak with Craig-Hallum Capital Group. Please go ahead.

Hey great. Good afternoon everyone. In the final cut or the latest part of the ESMO data, were there any previously unreported toxicities or any higher rates of adverse events that popped up, maybe that are due to the study or just kind of the data versus the prior cuts?

No, that's a great question. As it turns out, no. So, the data has been updated relative to -- and we presented that data in December. So, there really wasn't any change in that data as presented at ESMO -- rather as presented at San Antonio. But I think what's very encouraging about the data is that we had patients that were on this drug for over four years, or more, five years and the toxicity profile for patients receiving this drug on a continuous basis for such an extended period of time is, we think, very encouraging. They stayed on the drug. The discontinuation rate was less than 10% with this group of patients due to treatment-related adverse events. And that can typically -- or that would only be the case if the side effect profile of the adverse events these patients were experiencing were tolerable and allow them to maintain a good quality of life. So, I think the data, the longer the follow-up period, the more encouraged we are because the safety data doesn't change.

No, that's certainly good. With the ESMO data and also the San Antonio data in hand here, I mean progression-free survival, almost double what the standard-of-care would potentially represent. How can you utilize this with -- to help with VICTORIA recruitment, whether it be sites or patients within those sites?

Well, we're just at ESMO last week and I would say we presented this data in a number of our investigators from Europe who attended as well, some from the US. And I would say the importance of the data is that it highlights the role that data could potentially play long-term as a drug treating breast cancer patients. And the data is really, I would just say remarkable and I think that's the perspective that the investigators who are participating in our study has, which is, wow, this is great data. We want to investigate this drug. This drug seems very active and it sounds very exciting, and we want to make sure we get our patients enrolled, and we want to see this drug get evaluated and it certainly looks very promising. So, a big part of what helps with any clinical study is being able to stay in front of investigators have a reason to talk to them beyond just details of the trial. And any time you can provide additional data that further supports the hypothesis that the trial is evaluating, is very helpful, just to help establish our credibility, the drug's credibility and their overall interest because they can conclude that the likelihood of this drug being available to patients and playing a big role is -- increases in probability when they see more data like that in their mind.

Yes, absolutely. No, that's good to hear. And just last question. Can you just remind us on the IP position with the data within breast? And then certainly it seems like you're building this to be a bit more of a platform going to other cancers. Just how do you take that IP and transition it from breast into the other indications that you're potentially--?

Sure. So, any drug has multiple kind of layers of patents or different approaches it takes to build out a patent estate. Everybody will get patents for its pharmaceutical ingredient, the API, the actual molecule itself and then they'll get additional patents typically for different formulations. And we think the exclusivity for the drug that we're evaluating in breast cancer and other cancers would provide an exclusivity period through the end of 2039. So, we think we have a long runway. And then with an IV drug, there's opportunities to think about how to optimize the formulation for different applications, and those present different opportunities to further extend the runway of IP protection.

Okay, great. Appreciate the output. Thanks.

You're welcome.

There are no further questions at this time. I would like to turn the floor back over to Brian Sullivan for closing comments.

Thank you, everyone for participating in the call today and for your ongoing support. We look forward to seeing you at the Craig-Hallum conference at the end of this month or at the Jefferies Healthcare Conference in June. I hope everyone has a great evening. Good bye.