Greetings. Welcome to the Aerpio Pharmaceuticals Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host Gina Marek, Vice President of Finance. You may begin. .

Good morning. Thank you for joining us for Aerpio's Third Quarter 2020 Earnings Call. Joining me on the call today from Aerpio is Joseph Gardner, President and Founder; and Kevin Peters, Chief Science and Medical Officer. This morning, Aerpio released financial results for the third quarter ended September 30, 2020.

If you have not received the news release, or if you would like to be added to the company's distribution list, you can do so on the Investor Relations page of our website at aerpio.com. I'd also like to remind you the remarks made on the call today, include forward-looking statements about Aerpio.

Such statements may include, but are not limited to those related to Aerpio and its business and its product candidates, including razuprotafib also called AKB-9778 and ARP-1536 and the bispecific antibody asset.

The clinical development plan therefore and therapeutic potential thereof, our plans and expectations with respect to razuprotafib, and the development therefore and therapeutic potential, thereof in addressing COVID-19 and the intended benefits from Aerpio's collaboration with Gossamer Bio Inc. for GB004.

Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement. A more complete description of these and other material risks can be found in Aerpio's reports filed from time-to-time with the SEC.

Aerpio does not undertake any obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. I will now turn the call over to our President and Founder, Joseph Gardner.

Joseph?.

Yes. Good morning. This is Joseph Gardner, President of Aerpio Pharmaceuticals. I am very pleased to share an update on our 2020 progress with our investors.

As announced previously, we have completed enrollment in our Phase II clinical trial of a topical ocular formulation of razuprotafib in glaucoma, for which we expect top line results by the end of year 2020. We now have 194 patients enrolled, all of whom have completed the 28-day washout period and completed the 28-day dosing period.

Having closed our trial to further patient enrollment, we are now in the process of final database cleaning activities and conducting all the appropriate quality control checks.

The company remains on track to report top line results from this study in December or possibly early in January 2021 to coincide with the seasonal health care industry conferences that you all are familiar with.

You may recall that we opted to progress into Phase II after a highly encouraging results in a small Phase I trial, where 43 glaucoma patients, who had baseline intraocular pressures or IOPs ranging from 17 to 27 millimeters of mercury had a 1.58 millimeter of mercury incremental reduction in diurnal IOP on day 7 when razuprotafib was added once daily on top of existing standard-of-care prostaglandin treatment.

Our product was associated with a statistically significant reduction in IOP on top of standard-of-care prostaglandin therapy, and these effects were not only clinically meaningful, but deemed to be potentially best-in-class for adjunctive therapies by our clinical advisers.

Equally important, the data suggested a favorable tolerability profile for a topical drug candidate, including a low incidence of hyperemia or red eye, and no systemic safety concerns. So the tolerability profile of razuprotafib is a clear differentiator in today's market versus all other adjunctive therapies for glaucoma.

On the COVID front, we are also making progress with our subcutaneous formulation of razuprotafib in two ongoing COVID-19 clinical trials. First is the I-SPY trial for the treatment of acute respiratory distress syndrome or ARDS in COVID-19 patients.

We are actively dosing patients and there have been no safety concerns or AEs associated with drug treatment. Therefore the trial is continuing. Our second COVID-19 trial is run in collaboration with MTEC, the Medical Technology Enterprise Consortium which is funded by the U.S. military.

The goal of this study is to assess razuprotafib's potential to prevent the ARDS in patients with moderate to severe COVID-19 infections. The MTEC trial is a standalone study managed by Aerpio that will evaluate earlier stage patients, i.e. moderate to severe COVID-19.

These are patients presenting prior to requiring high-flow oxygen or being on a ventilator. The trial is proceeding with active screening and enrollment of patients across multiple U.S. clinical sites.

The two trials are complementary as they will assess razuprotafib across a range of disease severity in COVID-19 patients, potentially demonstrating the ability to prevent the ARDS in moderate to severe patients and/or treat ongoing ARDS in critically ill patients.

The two-trial approach will optimize our ability to determine how best to utilize razuprotafib to potentially save lives in patients with COVID-19. We expect to be able to provide an update on our progress in the first half of 2021. Now, we have had significant scientific support from the scientific community on our COVID-19 program.

Our scientific advisory panel believes that razuprotafib's Tie2 activating mechanism may be broadly applicable across other disease indications where the disease produces a severe acute respiratory distress syndrome.

The broader application of razuprotafib may produce a life-threatening -- life-saving therapy for critically ill patients across a spectrum of ARDS producing infections, for example influenza and pneumonia.

To further explain the scientific rationale, we will be featuring two ARDS experts as we are hosting a webcast with two thought leaders at 11:00 A.M. Eastern Standard Time this Thursday on November 12th. Information about this event is found in the Investors section of our website. We have two highly renowned physicians presenting on our behalf.

The first is Dr. Wesley Self; he is Vice President of Clinical Research Networks and Strategy at Vanderbilt University Medical Center. Over the past decade Dr.

Self has led numerous trials in ARDS, sepsis, and pneumonia and has been at the forefront of COVID-19 trials including the ORCHID trial which demonstrated that hydroxychloroquine was not effective.

And he's now on the steering committees for multiple ongoing NIH-funded trials and a member of the scientific advisory unit for the NHLBI ARDS network on development of COVID-19 trials. The second physician will be Dr. Samir Parikh.

He is Professor of Medicine and Director of the Center for Vascular Biology at Beth Israel Deaconess Hospital, Harvard Medical School. Dr. Parikh has made seminal discoveries regarding the potential vascular protective effects of the Tie2 pathway in ARDS which are particularly relevant to COVID-19. Dr.

Parikh is also intimately involved in COVID-19 clinical trials as he currently chairs the Data Safety Monitoring Board for the NIDDK's COVID studies.

On our call doctors, Parikh and Self will provide an overview of the vascular pathology in acute respiratory distress syndrome associated with the COVID-19 and the potential of its stabilization with our drug razuprotafib. We encourage everybody to attend that call as I believe it will be of interest to anybody in the COVID space.

Behind razuprotafib, we have several other value drivers for the company. Aerpio's second asset ARP-1536 is a humanized monoclonal antibody observed to activate Tie2 receptors in a dose-dependent manner in preclinical models.

Aerpio believes ARP-1536 holds potential as a monthly or biweekly systemic therapy to treat diabetic complications including diabetic nephropathy. We also have a bispecific antibody that binds both VEGF and the phosphatase enzyme VE-PTP and this antibody inhibits VEGF activation and activates Tie2.

This bispecific antibody has the potential to be an improved project for the treatment of wet age related macular degeneration and diabetic macular edema. These antibodies would be dosed intravitreally into the eye in the same fashion as current Anti-VEGF drugs like EYLEA and LUCENTIS.

Lastly, but very importantly, the company has a fourth partnered asset GB004, which is not related to Tie2 activation.

The drug candidate is a hypoxia inducible factor activator that is being developed for ulcerative colitis by our partner Gossamer Bio who recently indicated that they have already started their 12-week Phase 2 trial in patients with mild to moderate ulcerative colitis.

Gossamer also presented new Phase 1b data updates on this molecule at the United European Gastroenterology Virtual week conference just this past October. We thank you for your attention during this call.

We are very excited about the prospects for Aerpio and we believe that both our glaucoma program and our COVID-19 program could be transformative for the company. I'll now turn the call back over to Gina to review the financials for the quarter.

Gina?.

Thank you Joseph. The earnings release details our financial results for the third quarter 2020, for those interested you can find additional details on our operations, results and financial condition beyond what is presented in our press release and our 10-Q filed this morning. I would now like to walk you through a key -- a few key items.

Let me start with the income statement. For the three months ended September 30 2020, net loss -- our net loss was $5 million. In the third quarter of 2019, we reported a net loss of $4.6 million. Operating expenses for the third quarter of 2020 were $5.9 million, compared to $5 million for the same period in 2019.

Research and development expenses for the quarter ended September 30 2020 increased by approximately $1.1 million or 40.1% to $4 million from approximately $2.9 million for the same period in 2019. This was the result of increased spending on our lead candidate razuprotafib primarily for the glaucoma and ARDS for COVID-19 development programs.

General and administrative expenses for the quarter ended September 30, 2020 decreased by approximately $300,000 or 13.2% to $1.9 million from $2.2 million in 2019. This decrease was primarily attributable to decreased employee related expenses and stock compensation. One quick note on the balance sheet.

Our cash position at September 30th was $47.3 million and we have no debt. We have sufficient cash to get us to top-line data for our current clinical trials and through the fourth quarter of 2022. This concludes our presentation on the financial statements. At this time, I will turn it back over to Joseph for final comments.

Joseph?.

Yes. Thank you, Gina, and thanks everyone for participating in this morning's call. We appreciate your interest and your support. And we will now take your questions and provide answers..

And at this time, we will be conducting a question-and-answer session. [Operator Instructions] And our first question is from Yi Chen with H.C. Wainwright. Please proceed with your question..

This is Boobalan dialing in for Yi Chen.

Can you hear me okay?.

Yes..

Okay, hi. So I have a few questions, but they all could be summed up under the umbrella of resurging COVID-19 pandemic.

So to start off with the glaucoma, did you see any negative impact on the progress of the Phase 2 trials due to the rise in COVID cases?.

Yes. Joseph here and I will answer that call or that question. Interestingly, we were able to recruit the trial ahead of schedule even during the COVID pandemic. And we were able to get essentially all our patients completing the trial on time. So we saw minimal to no impact on the -- based on the COVID pandemic.

I think our timing was fortunate, because we started in June and we ended in October. And I believe we have pretty much finished enrollment prior to the uptick in the COVID cases here in the United States. So again, our timing was fortuitous, but we saw a minimal to no impact..

Great. Assuming the glaucoma trial is positive. The results from the trial are positive.

So what would be the company's plan to advance into a pivotal program?.

Sure. Joseph, again, I'll take that. Yeah, our plans would be to take the drug into a Phase 3 program. So we would do the typical steps of having a Phase 3 readiness meeting with the FDA. And we would also explore multiple options for financing Phase 3.

Those could include dilutive approaches by raising capital or non-dilutive approaches based on partnering. So we will be exploring all those options in the first quarter of 2021..

Understood. Switching gears a little bit and to talk about your COVID program.

So has the resurge in COVID pandemic had any positive impact on your I-SPY and MTEC trial?.

Yeah. Again, Joseph will answer that question. The -- unfortunately, the case numbers are going up and that is unfortunate for society. We are seeing an uptick in recruitment in our trials, and we have located sites and hotspots to facilitate that.

And we're pleased that we are able to recruit the trial and hopefully next year we will be able to demonstrate that we can actually save lives in these patients, but that data is yet to come. The other element of recruitment is that many other drugs have been failing in clinical trials.

So we think there's going to be open space in these clinics for us to be able to recruit many patients. So we are on track with recruiting and moving forward nicely. Unfortunately, the uptick in case numbers is actually helping us in that regard..

All right. That's it for me. Thank you so much..

Thank you..

Our next question is from Julian Harrison from BTIG. Please proceed with your question..

Hi. Good morning. Congrats on all the recent progress. And thank you for taking my questions. On the glaucoma program specifically the safety requirement for filing a possible NDA down the road.

I'm just curious how much you can lean on prior work here and what likely still needs to be done? And then on your COVID programs, I'm wondering how much value Ang-2 levels have in terms of prognostic value and predicting responses to Tie2 agonism? And how applicable this is to ARDS more broadly? Thank you..

Yes. Good questions. I'll take the glaucoma one first. Yes, we do have an extensive safety database on razuprotafib, especially from systemic dosing based on our previous Phase 2 trials of one-year duration in treating diabetes. We are still in the process of completing the topical drop safety formulation work.

And we do have to complete a three-month animal study with topical drops and we expect to complete that in 2021 so that we would be in a position to start Phase 3 late in the year. So those studies are ongoing and we expect to move them forward expeditiously as we always do. On the COVID front, you asked the question regarding angiopoietin-2 levels.

For those on the call who are not aware angiopoietin-2 is the inhibitory ligand for Tie2 and it is often up-regulated in disease states where there's vascular instability, for example, in ARDS. As I mentioned earlier, I would encourage people to listen in on the call on Thursday. As Dr.

Samir Parikh will be discussing the role of Tie2 in different vasculopathies, particularly different acute respiratory distress syndrome. And his work and other collaborators have demonstrated that high ang-2 is correlated with bad outcomes in patients with acute respiratory distress syndrome from a variety of different diseases.

So we do think it's possible that it could be a prognostic indicator for the disease and it could be useful potentially for identifying patients that would benefit from razuprotafib therapy our Tie2 activator. So that is all quite possible and the science supporting that is clearly out there and published by Dr. Samir Parikh and by others..

Great. Thank you. That’s helpful..

And we have reached the end of our question-and-answer session. And I will now turn the call over to Joseph Gardner for closing remarks..

Well, again I want to thank everyone for participating in the call this morning. It's always important for us to update investors broadly and we welcome your questions.

We continue to be very excited about our programs to be able to have a meaningful impact on vision in glaucoma patients and potentially to have a meaningful impact on the – lethality of the COVID-19 disease would be transformative for the company, as I said, but it's also incredibly personally gratifying for our team.

This has been a very exciting time for us and we look forward to progressing these programs forward and benefiting our investors as well as benefiting mankind. So thank you all for your attention this morning and we look forward to reporting future progress..

And this concludes today's conference and you may disconnect your lines at this time. Thank you for your participation..