Greetings, and welcome to Panbela Therapeutics' Second Quarter 2021 Earnings Call. . As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, James Carbonara with Investor Relations. Thank you. You may begin..

Thank you. And once again, welcome to Panbela's Second Quarter 2021 Earnings Call. With me on the call are Jennifer Simpson, Chief Executive Officer; and Sue Horvath, Chief Financial Officer. Before I turn the call over to Dr. Simpson, please note that statements made on this call that are not historical facts may be forward-looking statements.

Significant risks and uncertainties that could cause actual results to differ from those expressed or implied in the forward-looking statements are detailed in the company's annual report on Form 10-K and supplemented by subsequently filed reports on Form 10-Q as well as in other reports that the company has filed with the SEC.

Any forward-looking statements made on this call are made only as of today's date, and the company does not undertake any obligation to update or supplement any such statements to reflect subsequent developments. Now I would like to turn the call over to Dr. Jennifer Simpson, CEO of Panbela. Jennifer, please proceed..

Thanks, James, and thank you, everyone, for joining. I'll begin the call by touching on the second quarter and recent significant accomplishments. Sue will then follow with a review of the financial results, and then we will open it up for Q&A. Starting with Q2 and recent highlights.

I am pleased to share that in April, the FDA lifted its partial clinical hold on our Phase Ib trial of SBP-101 when used in combination with standard of care agents, gemcitabine and nab-paclitaxel or ABRAXANE for the first-line treatment of patients with metastatic pancreatic adenocarcinoma.

Enrollment in the Phase Ib trial had completed in December of 2020. The hold had been temporarily applied pending further review of visual disturbance adverse events that were noted in early 2021.

We have agreed to include in the design of future studies the exclusion of patients with a history of retinopathy or at risk of retinal detachment, periodic ophthalmologic monitoring for all patients and in future dose-finding studies, screening for retinal toxicity will be included.

With the partial clinical hold lifted, we were excited to continue advancing the pancreatic cancer program. In June, we presented that poster at ASCO sharing interim clinical data from Cohort 4 and the expansion.

The signals of efficacy reported support continued development of SBP-101 as an addition to the first-line treatment for advanced pancreatic ductal adenocarcinoma and as neoadjuvant treatment for patients with potentially resectable disease.

The conclusion of the poster is that SBP-101 may enhance first-line treatment with gemcitabine and nab-paclitaxel for patients with metastatic pancreatic cancer. We are encouraged by this conclusion, even under suboptimal conditions, including dose interruptions, which confounded results.

Cohorts 2 and 3 did not have the dose interruptions that occurred with Cohort 4. In Cohort 2, which utilized the same dose as Cohort 4 in the expansion, we had an objective response rate of 71%.

Of note, 1 subject converted from a partial response to complete response post the ASCO poster presentation, and 1 patient had no evidence of disease but cannot be classified by RECIST as a complete response as the initial diagnosis of metastasis was made during surgery.

Although the numbers are small, with 2 patients having no evidence of disease and a strong overall response rate, we look forward to initiating a randomized trial in metastatic pancreatic cancer as well as a neoadjuvant pancreatic program by year-end. Additionally, we remain focused on expanding our clinical development program.

As a reminder, with the increased level of polyamine and the relationship with mutation-driven cancers, the possibilities across tumor types such as lung, glioblastoma, colon, breast, gastric, ovarian and others are being explored.

Published research also suggests a relationship between the tumor microenvironment, immune cell response and polyamine metabolism. To understand more about how to optimally expand our clinical development program, we have an ongoing research agreement with Johns Hopkins University School of Medicine.

The partnership is designed to center around the broadened development of SBP-101, including activity in cell lines in addition to pancreatic cancer, biomarkers informing diagnostics with therapeutic implications and potential combinations with checkpoint inhibitors.

We anticipate these efforts will yield preclinical data in the second half of this year, which is expected to inform additional development programs. Shifting gears to Panbela updates for the corporate level. During the second quarter, company founder Dr. Michael Cullen retired as an employee of the company. Dr.

Cullen has continued to serve as a member of the Board of Directors and as its Chair. Dr. Cullen's commitment and leadership has been an enormous asset for Panbela from founding the company to advancing through the clinic and becoming CEO to his most recent role as Executive Chairman.

His move from day-to-day active management as executive chairman, while retaining his role as presiding member of the Board as its chair, is a positive all around and speaks to the strength of his executive team building and continued dedication. Dr. Cullen's guidance and his role as Chair will be critical as we continue to advance SBP-101.

We announced on Monday that we received an issue notification for patent US 11,098,005.

This patent developed in collaboration with Syngene International Limited, an integrated research, development and manufacturing services company, claims a novel process for the production of our lead investigational product, SBP-101, reduces the number of synthetic steps for its production from 17 to 6 and provides patent coverage to 2039.

This is a landmark event for the company.

This patent covering a shorter synthesis of SBP-101 provides many benefits, including the ability to manufacture the product with a reduced lead time; two, a quicker access to drug supply, facilitating expansion into additional indications; and lastly, enables a scalable, efficient and cost-effective manufacturing process for future commercialization.

The company expects to continue innovation and patent portfolio building as it develops its clinical programs. Also in the second quarter, Panbela was added to the Russell Microcap Index. Membership in the Russell Microcap Index means automatic inclusion in the appropriate growth and value style indexes.

FTSE Russell annually determines membership for its Russell Indexes primarily by objective, market capitalization rankings and style attributes. We are excited to be able to communicate our strategy and accomplishments with a broader investor audience that inclusion in the Microcap index will provide.

After quarter end, in July, we closed on a $10 million bought-deal offering of our common stock, which provides important resources to keep us on the path of further developing and expanding the application of SBP-101 and drive shareholder value. At this point, I would like to finish by reiterating our milestones.

In pancreatic cancer, we plan to initiate a randomized trial by year-end as well as a new adjuvant study in pancreatic cancer by year-end. Lastly, the preclinical investigation of additional tumor types may create other potential milestones.

We anticipate our partnership with Johns Hopkins University School of Medicine and other preclinical work that is ongoing will produce preclinical data to drive new development pathways across tumors in addition to pancreatic cancer in the second half of this year. In conclusion, we've taken significant steps in the second quarter and year-to-date.

We have progressed our lead indication in metastatic pancreatic cancer. Additionally, we are advancing research to further increase our addressable market of pancreatic cancer, and we expect to deliver updates as we reach our milestones and distribute this news through public announcements in parallel.

We're eager to increase shareholder value by further developing our lead indication and revealing and developing additional indications. I will stop here and turn it over to Sue to review the financials..

Thank you, Jennifer. General and administrative expenses were $1.2 million in the second quarter of 2021 compared to $0.7 million in the second quarter of 2020. The increase is due primarily to higher employee compensation and other increased costs associated with our NASDAQ listing, including higher D&O insurance premiums.

Research and development expenses were $1.0 million in the second quarter of 2021 compared to $0.4 million in the second quarter of 2020. This increase is due to incremental manufacturing costs as we produce investigational product for our next clinical trial as well as spending on preclinical research.

Net loss in the second quarter of 2021 was $2.2 million or $0.22 per diluted share compared to a net loss of $0.4 million or $0.06 per diluted share in the second quarter of 2020. A foreign currency gain of $0.6 million reduced the operating loss for the second quarter of 2020.

Total cash and cash equivalents was $6.4 million as of June 30, 2021, not including the $9 million of net proceeds from our bought-deal offering, which closed on July 2, for 3,333,334 shares of common stock of the company at a price to the public of $3 per share before underwriting discounts and commissions.

Total current assets were $7.2 million and current liabilities were $1.4 million, and there was no debt on the balance sheet as of June 30, 2021. Looking at the cap table as of June 30, 2021. We had 10.1 million of common shares outstanding. And on a fully diluted basis, we were at 17.8 million shares.

The fully diluted number includes all outstanding equity awards, including stock options, which are held by insiders and warrants to purchase common stock held by investors. During the quarter, the outstanding warrants decreased by approximately 0.6 million expiring warrants.

On July 2, 2021, the company completed the sale of 3.3 million shares of common stock, increasing our common shares outstanding to 13.4 million and the fully diluted shares to 21.1 million.

Following that offering, we believe that our available cash will allow us to wrap up the current clinical trial, initiate a random trial -- randomized trial later in 2021 and invest preclinical dollars in other cancer indications, taking us into 2023. That concludes our prepared remarks.

Operator, can you please open the phone lines for Q&A and poll for questions?.

. Our first question comes from Robin Garner with Craig-Hallum..

I have a number of questions, if that's okay. The first is around your manufacturing process and how much those changes significantly changed your yield for SBP-101.

And should that change our COGS assumptions going forward?.

Jennifer, were you going to take that or shall I?.

Sorry about that. Robin, thank you so much. Yes, so the -- we have seen a reduction in the -- or an improvement in the yield, I should say. But I think at this point, it's still too early to quantify how that will translate into COGS. It will be a positive benefit for sure, and we look forward to finalizing those numbers as we scale up the operations..

Okay.

Can you talk a little bit about the neoadjuvant study that's starting later this year? What are your goals for this study? And can you share certain ideas about the design?.

Yes. So we are finalizing that right now. But the -- essentially, we are looking at the combination with gem/ABRAXANE, since that's what we have -- where we have our experience at the moment. So patients will receive a couple of cycles of gem/ABRAXANE, SBP-101. They will then move into surgery. We are looking at the different endpoints.

One certainly of interest would be pathologic complete response. We'll probably look for more of those immediate endpoints. Obviously, things like survival would be quite long, and hopefully, that's what we see as well. So I think that it's pretty traditional in terms of what you would expect for a trial in the neoadjuvant setting.

And as we look to finalize that in the coming months, we will certainly get that trial designed out in the public domain..

Okay.

And can you share your thoughts on enrollment for the randomized space too? Will that be a little bit faster than the Phase I study just given your history of efficacy for metastatic patients now?.

Yes. So the answer to that is yes. And I think it's a number of components actually. Whenever you start a Phase I, sometimes you tend to keep the site small and contained. But now that we have the efficacy signal, we feel comfortable going to many additional sites. We're going to look to have the enrollment in a, I would say, a reasonably fast pace.

And so that becomes a function of sites. And we will look to make sure we have the requisite sites so that we can get that enrollment done in a, what I consider a reasonable time frame..

Okay. And my last question, if there's still time.

Is there any background history or more information in general that you could share with us on that 1 patient with a complete response or actually either patients that had no evidence of disease?.

Right. Yes. It's interesting, Robin. We've looked at -- there's nothing obvious that pops out for either of those patients. Again, we are dealing with a small number of patients in total, so I'm not sure that we would have seen something.

But it's something that we're certainly looking to see if there is anything, whether they had less tumor burden, et cetera. Nothing is popping out at the moment. But we're very excited that out of 29 patients, we had 2 patients with no evidence of disease. That's pretty good in pancreatic cancer that's metastatic, for sure..

Yes, really impressive results and a very rare finding indeed. So thank you so much and best of luck in Q3..

Thank you so much..

Our next question comes from Jason McCarthy with Maxim Group..

It's Dave on the line for Jason. So regarding additional tumor types that are currently being assessed.

Can you shed some color on other potential indications that you're currently looking into? And perhaps this is kind of further ahead in the future, but can you provide some indication as to when we can expect additional diseases in clinical studies?.

Sure. Thank you, Dave. Yes. So one of the things we're very excited with our collaboration with Johns Hopkins University School of Medicine. Dr. Casero is very well known in the polyamine field. And for us, knowing that polyamines are involved in so many of these cancers and especially those cancers that are driven by oncogene.

So if you think about K-RAS and MIC, right, they -- you're looking at a large percentage of many of these tumor types have one or the other. And so for what we're doing is we're actually looking across all of the different tumor cell lines and identifying where we have activity. Then it becomes a question of which ones make the most sense to pursue.

And so we'll take a look at where we see the efficacy from SBP-101, I should say, within the cell lines, obviously. We'll look at what's going on in the clinical space in terms of current clinical trials. We'll look at it from a commercial perspective. And then we'll make the decision on which ones to move forward with.

Because obviously, what we want to do is find tumors where there are a few options for patients so we can provide a benefit for the patient. But also from a company perspective, move into a space where there is indeed a need and not a space that's so crowded it doesn't make sense.

And the why now -- I would say, Dave, sorry, the why now is that we have seen in the pancreatic cancer program that we have had a nice signal, and we do feel that this will translate into other cancers as well..

Great. And then just another quick question, if I could just circle back to pancreatic ductal adenocarcinoma.

I was just wondering if, to your knowledge, is there anything unique to that indication that increases the likelihood of the onset of retinopathy just given the issues that you had with the visual disturbances with the asset?.

Right. Nothing specific to pancreatic cancer. I think it's more on the patient side. And so there are so many drugs out in the -- out there being prescribed both within oncology and outside of oncology that actually have visual adverse events -- more plentiful, I think, than most people will realize.

One of the things that by just incorporating some of the inclusion/exclusion criteria, we feel very comfortable that this will be controlled and mitigated. Many drugs have vision screening programs. So we'll be very similar in that regard. But nothing unique to pancreatic cancer, it's more patient history..

Thank you, ladies and gentlemen. At this time, there are no further questions in queue, and we would like to thank you for your participation in today's program and you may disconnect your lines at this time. Wait, we do have a question that just came in from Tony Butler with ROTH Capital..

I have three questions, I'm sorry, and I'm just going to list them. They're very simple. And one is, do you have a forum that you're considering for providing the data with Dr. Casero's findings, for example, SITIUM? I'm just making things up here. Or will you just create an announcement? That's number one.

Number 2 is in the trials that you'll start -- and I'm respectful that those are still in development, and they may change.

But in your mind, are you thinking size-wise, is this -- I'm going to make up a number, 50, 30 to 60, something like that? Is that the size, or is it larger? And then the third question is at what point do you interchange your current -- your new manufactured product with your currently manufactured product for clinical trials? And then I'm sorry, I need to squeeze a fourth in.

Because it's clear from the literature and you've made the statement certainly to us when we've had conversations, the checkpoint inhibitors are -- there's added -- there's synergistic activity with a polyamine inhibitor.

When do you start to consider doing a trial with that combination? Is that, I'm making an assumption here, a next year event? Because, certainly, it's very important..

Okay. Thank you, Tony. So I will take them in order. So the first, in terms of forums for providing data that comes out of Johns Hopkins, we will be looking at the best forum. Obviously, the gold standard is if we can get this into some type of abstract for a medical meeting or a peer-reviewed publication.

But based on when the timing of those, it may actually be more important for us to put out a company announcement. So we'll look at kind of the timing of that based on when that information comes in, because it is going to be important, it will be driving development programs forward.

So we do want to make sure that, that information is conveyed to the public as well. So stay tuned for that one. In terms of the second question, the trial to start. You are correct. We have not finalized it, but it is fair to say it's going to be definitely larger than 30 or 60. It's going to be more of a proper randomized trial.

We want to make sure that given the signal that we've seen -- we did have some starts and stops, right? We want to make sure that we have a very clean, controlled trial that delivers what we believe ultimately will be the data needed to continue this program forward ultimately for registration.

So we want to make sure it's a proper randomized trial and that will be larger than 30 or 60 for sure. The next one, we are going to use the new products for all clinical trials moving forward. So that switch is going to happen right out of the gate. And the last question on checkpoint inhibitors.

That is actually part of the preclinical work that is being conducted right now by the team at Johns Hopkins University School of Medicine. So we are looking at kind of, if you call it, 2 preclinical tracks. So one is just looking at the standard across the different cell lines, where do we have activity and what makes sense to move forward.

And the other is to look at the tumor microenvironment impact when we use immunotherapy and SBP-101 in some type of combination. So we're evaluating both at the same time. Certainly, if we see something that validates what the literature has shown, that will translate into a trial.

Pretty much anything that will come out of that research with Johns Hopkins, we look to be able to announce by year-end, but it would be a start that would happen early next year..

We thank you for joining today's teleconference. You may disconnect your lines at this time and have a great day..