Ladies and gentlemen, thank you for standing by and welcome to the quarter one 2021 Salarius Pharmaceuticals earnings webcast and conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. .

I would now like to turn the conference over to your host today, Mr. Jason Rando of Tiberend Strategic Advisors. Sir, please go ahead..

Good afternoon everyone and thank you for joining Salarius Pharmaceuticals 2021 first quarter financial and corporate results call. Earlier this afternoon, Salarius Pharmaceuticals issued a press release detailing its financial results for the three months ended March 31, 2021, which we encourage listeners to read.

The press release can be found in the News section of solarispharma.com. Salarius also filed a 10-K this afternoon, which is available on salariuspharma.com and sec.gov. Before beginning today's call, I would like to make the following statement.

Today, we will be making certain forward-looking statements about operating metrics, future expectations, plans, events and circumstances including statements about our strategy, future operations and the development and potential effectiveness of our lead investigational drug candidate, seclidemstat and our expectations regarding our capital allocation and cash resources.

These statements are based on current expectations and you should not place undue reliance on these statements. Actual results may differ materially due to our risks and uncertainties, including those detailed in the Risk Factors section of Salarius Pharmaceuticals' 10-K filed with the SEC and other filings we make with the SEC from time to time.

Salarius Pharmaceuticals disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise.

With us on today's call is David Arthur, CEO of Salarius Pharmaceuticals, who will provide an update on Salarius' corporate and clinical achievements during the first quarter and its vision for the future as well as Mark Rosenblum, CFO, who will review Salarius' first quarter financial results. David, please go ahead..

Thank you Jason and thank you to everyone joining our conference call, including all of you who are joining for the first time. This is an exciting time for Salarius.

The first quarter of 2021 and recent weeks have been a period of substantial activity as Salarius accomplished several key milestones, including expanding our clinical programs for our lead drug candidate, seclidemstat and strengthening our balance sheet.

Before we review our financial results and business highlights, I would like to take a moment to describe Salarius to individuals joining us for the first time. Salarius is a clinical stage biopharmaceutical company developing potential new medicines for patients with pediatric cancers, solid tumors and other cancers.

Salarius was founded with technology from the University of Utah Huntsman Cancer Institute and our lead drug candidate, seclidemstat, is a reversible inhibitor of the LSD1 enzyme, which is believed to play a key role in numerous cancers caused by dysregulated gene expression.

Now for those of us who are not scientists, dysregulated gene expression can be described as misreading a recipe..

Thank you David. For the three-month period ended March 31, 2021, Salarius reported a net loss of $1.9 million or $0.06 per basic and diluted share, compared to a net loss of $2.1 million or $0.22 per share in the first quarter of 2020.

The loss from operations before other income for the three-months ended March 31, 2021 decreased by $0.6 million compared to the loss from operations of $2.4 million for the same period last year, which was primarily due to lower general and administrative costs that more than offset an increase in research and development costs..

Thank you Mark. As I mentioned often, our ultimate goal is to maximize the potential of seclidemstat and by doing so, make a difference in the lives of patients and their families fighting cancers with limited treatment options.

Expanding seclidemstat into new and larger markets is the second prong of our two-pronged development strategy of speed to market and expand the market.

To that end, we hope by mid-2021 to have up to three total separate and active clinical trials underway evaluating seclidemstat in up to five distinct patient populations and we are planning for these trials to explore seclidemstat not only as single agent therapy but also as a component in up to three different combination therapies.

As discussed earlier, completing the dose escalation stage of our Ewing trial was a major accomplishment and we believe that the trial achieved all key endpoints established at its initiation, including demonstrating early evidence of seclidemstat antitumor activity.

Full findings will be disclosed next month during a poster session and poster discussion at the 2021 annual meeting of the American Society of Clinical Oncology, also known as ASCO..

. Your first question comes from the line of Aydin Huseynov from Benchmark. Your line is now open. You may ask your question..

Hi. Good afternoon. Thank you for taking my questions. I have a first question is on ASCO. So we are going to see abstracts in about one week from now. I just wanted to ask, what to expect from the ASCO presentations? I think the press release says, initial efficacy signals from relapsed Ewing sarcoma and preliminary efficacy from solid tumor trial.

So are we going to see the actual overall response numbers? Or this is going to be more like a case study?.

Wangzhi, this is David. Good to hear from you. Hope you are doing well. Thanks for the question. So the abstract, when it's released, as you know, is a short summary of the findings. What I will share with you is, we have submitted three posters along with two recorded presentations to ASCO.

And the posters for the Ewing sarcoma dose escalation trial and advanced solid tumor dose escalation trial contain all the information that I think you are looking for. It will have an update on safety and the most common adverse events. It will have swimmer plots of both trials identifying length of treatment and any adjustments to dosage.

It will also have the response data that you would expect to see based on RECIST criteria and also other assessments of drug activity that we think are relevant. So I believe that the data that you are looking for is going to be in the poster sessions and you will be able to access that as it becomes available. And I apologize, Aydin.

I got my on my names confused. So anyway, it Aydin. It's good to hear from you. Thanks for the question and I think the information you are looking for is coming up shortly here at ASCO..

Okay. Sure. Yes. Thank you. Another question I have is about potential of seclidemstat in hematological malignancies. So as you probably know, Oryzon's iadademstat, their LSD1 inhibitor, showed 86% ORR in 16% complete responses with long-duration responses in AML.

But given this result of another LDS1 inhibitor, what does it tell us about the potential success of seclidemstat in MDS and CMML based on the clinical trials? Of course, these are that indications that you appear to be pursuing.

What would be the competitive advantage of seclidemstat in this hematologic malignancy? And would it make sense for seclidemstat to study to pursue AML as well, given that both Oryzon and Imago are going after AML?.

So Aydin, great question. And I am going to give a short answer and then turn it over to Daniela. The short answer is, yes, we have seen some of those results and we believe seclidemstat has real potential in pursuing hematologic cancers and we have plans to enter the clinic in the hematological cancer space..

What I would like to do is ask Daniela, Dr. Daniela Santiesteban, to comment on a little more detail and little bit about the science and why we believe we are going to be successful..

Yes. Thank you for the question, Aydin. So we are very excited to enter the hem space. As we said, it's been well validated by others that have LSD1 inhibitors, for instance Oryzon.

As you know, seclidemstat is differentiated from the other LSD1 inhibitors currently in clinical trials, being that it's a reversible inhibitor and it interacts within a different location of the LSD1 protein.

So we think that both of those factors will contribute to us having an advantage in terms of safety profile where other LSD1 inhibitors often run into hematological toxicity, when given in combination with azacitidine you have overlapping hem toxicities. We have not seen that with seclidemstat in our clinical trial to-date yet.

And we will be revealing more safety data, of course, during the ASCO conference. So we think that will give us an advantage. And mechanistically, the reason why LSD1 inclination is very attractive for these indications is because of the inhibitor's ability to disrupt LSD1 from associating with certain transcriptional repressors.

And we have seen that we are able to have that disruption effect with seclidemstat. So the rationale for efficacy is there and the advantage seclidemstat has in terms of not having significant hematological toxicity is also there. So those are the reasons we are excited to enter that space..

Okay. Thank you very much. I appreciate your answers. And the last question I have regarding seclidemstat's potential opportunity in CNS. So as you know probably that Oryzon published first-in-human data of their LSD1 inhibitor, vafidemstat, in personality disorder CNS indication.

So do you think seclidemstat has any potential in CNS? And if yes, would EPS you plan out-license a specific CNS syndication for seclidemstat?.

Aydin, that's a great question. We have currently, to this point, not pursued extensive exploration in the central nervous system or CNS area. So I don't think I can give you any additional information from my perspective.

Daniela or Nadeem, do you have any perspective? Daniela, would you like to go first?.

Sure. Yes. So it's a very interesting area and there has been good validation of LSD1 inhibition for that space, Aydin. But as you know, every molecule is a little bit different with some crossing the blood-brain barrier more effectively than others.

Seclidemstat doesn't cross the blood-brain barrier and even in cases of CNS tumors where it might be somewhat disruptive, we don't get as effective penetration. So that can be a good thing in some indications. But it means that we will likely target other indications outside of the CNS space..

Understood. Thank you very much for your answers..

Thank you. Your next question comes from the line of Wangzhi Li from Ladenburg. Your line is now open. You may ask your question..

Hi. Thanks for taking my question. Just a follow-up on the ASCO.

Since the abstract would be out next week, just want to see, do we expect to see a significant difference or new data to present at the actual presentation versus abstract next week? Or they will be quite similar?.

Wangzhi, this is David. Thanks for the questions. Hope you are doing well. The poster that we have submitted or the posters that we have submitted for ASCO that support the two abstracts that I think you are referring to, contain extensive information in detail about the two studies.

The abstract, as you know, are short and really only provides summary comments on the findings. The posters and I have mentioned and maybe previously, include significant detailed information on safety findings, on response criteria.

They include swimmers plots and they include assessment of not only the RECIST criteria but also other assessments that we feel demonstrate the drug activity that we see and we really believe is supporting the continued drug, the development of this drug in the clinic.

So I think the information you are looking for is really going to come out in the poster sessions..

Got it. That's helpful.

And then maybe for the question is, will the poster includes some of the historic benchmark information or the context to interpret especially the efficacy you are seeing now? If not, could you provide some color on how should we view the results on under that context or benchmark?.

So Wangzhi I am going to do a little bit of this from memory and then ask Nadeem and Daniela to comment. I believe in a few cases we have provided the reference for some historical or accepted benchmarks. And in some of the data that we present, we put it in the format of what some other companies have chosen to use as a way of presenting their data.

So I think you may have to read our poster and then go pull up a couple of references to get the comparative numbers. But I believe we have provided what you will need it in both posters. And I am looking at Nadeem and letting him see if I got the correct..

Yes. So David, you are correct. So absolutely, we have provided references so you can look at the reference for the comparator. And as David mentioned, we have shared some of the data or presenting some of the data which you can evaluate based on how others have been presenting.

And certainly, after this data is presented, we are happy to have a conversation with you and walk you through the comparator. Unfortunately, you cannot in a noncompetitive trial put the comparator data in the in the poster. But we are happy to have that discussion..

Got it. That's great. I think those were my questions. Thank you very much..

Thank you. Your next question comes from the line of Hunter Diamond from Diamond Equity Research. Your line is now open. You may ask your question..

Hi everyone. Congratulations on the continued progress. So I think we had a lot of questions on the scientific advancements of the company. I wanted to just go a different angle and this may be more for Mark. I just wanted to see the recent take on spending, expanding the headcount. I saw the burn was recently around $2.7 million.

And just how, I guess, you are thinking about at the same time advancing a lot of different trials but also managing the budget? And I know you may not be giving formal guidance.

But just any color around how you are looking to either expand a team, pay more salaries versus also watching the cash balance?.

Yes. Thanks Hunter. The number you see on cash used in operating activities of about $2.7 million, remember we probably, not probably, we did spend additional cash related to the capital raise which, just to give you an additional degree in accounting, would be charged to additional paid in capital and not hit the P&L.

So it would go to the balance sheet. That's one thing. We did receive the $900,000 from CPRIT which is in operating activity, also advanced accounting, as opposed to financing activity.

So if you would have added back the $900,000 and you would have put in a number and amount related to professional fees, related to the capital raise, you would have seen our number probably be in line with the guidance we have mentioned in the past, which is we spend about $1 million to $1.2 million per month.

And we provided that information publicly. As to the headcount or personnel additions, very normal. It's in our R&D section of the business. And also, it will replace consulting fees. So as a younger company, we used outside consultants for a number of scientific and administrative activities.

As we grow, we are bringing those activities in-house where we can get 100% dedication of people's time as opposed to a consultant's time. So we are really just going to be swapping out the numbers a little bit. Our overall forecast has really not changed dramatically from what we had and we probably would stick with those same number.

So we will update this from time to time. We are a growing company. On the admin side, as I mentioned, we basically were down based on professional fees being lower in the first quarter than they were at the end of 2019 and the first quarter of 2020, really related to, again, the transformation to a public company.

We haven't commented on general and administrative headcount, if you will, or personnel but we are comfortably staffed. We don't see a spike in anything in that direction. Our efforts are on the scientific side of the house. I hope that answered your question..

No. Absolutely, Mark. And I appreciate the additional color. So my last question and I am not sure if anyone has thought about this. The company appears to be trading in almost near its cash balance, right. And I have seen other small-cap companies have a buyback available. So the company now has a good amount of financing.

To have and I have seen other microcaps say, okay, we are going to allocate a few million if the shares dip below a level where it's undervalued, it's a reasonable use of our cash to purchase our own equity and reduce the outstanding shares.

Is that something the company has thought about or has it come on the radar?.

It's a good comment. This is Mark again. It's a good comment. Certainly, it's a Board decision. Frankly, we have not considered it. We think the best use of our everyday capital is to place it right, place our bet on the science and the marketplace for early stage biotech can always choppy waters, if you will.

And our best bet is to put our dollars into the R&D cost of the company..

Understood. Okay. Perfect. It was just something I figured I would bring out because I have seen other companies do that just because, as you know, biotech can be very volatile on a day-to-day and weekly movement. So okay, perfect. Thank you for taking my questions. And again, congratulations with the progress..

Yes. Thank you Hunter..

Thank you. I am showing no further questions at this time. I would now like to turn the conference back to Mr. David Arthur.

Sir?.

Thank you. So as you heard from today's discussion, Salarius had never been in a stronger position.

We entered this year firing on all cylinders and with positive momentum and we are now actively enrolling multiple patient populations for treatment with seclidemstat in combination with a common chemotherapy treatment and for treatment as a single agent.

We are planning to announce additional clinical trials in the near future and we closed the first quarter with $36.6 million in cash and cash equivalents, enough to fund our ongoing clinical trials through completion and beyond.

We look forward to maintaining and building upon this momentum as we continue to advance and expand the clinical development of seclidemstat. I would like to thank our employees for their dedication and loyalty and always thank our stakeholders for their continued support.

I appreciate your time and attention today and would like to extend my sincerest wishes and good health to all. Thank you and thank you for your time today. Be safe..

Thank you. Ladies and gentlemen, that concludes today's conference call. Thank you all for participating. You may now disconnect..