Yahoo Finance Lisata Therapeutics, Inc. (NASDAQ:LSTA) Q1 2024 Earnings Call Transcript
Lisata Therapeutics, Inc. (NASDAQ:LSTA) Q1 2024 Earnings Call Transcript May 9, 2024
Lisata Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Welcome to the Lisata Therapeutics First Quarter 2024 Financial Results and Business Update Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions]. Please be advised that today’s conference is being recorded. I’d now like to hand the conference over to our first speaker today John Menditto, Vice President of Investor Relations, and Corporate Communications. Please go ahead.
John Menditto: Thank you, operator, and good afternoon, everyone. Welcome to Lisata’s first quarter 2024 conference call to discuss our financial results and provide a business update. Joining me today from our management team are Dr. David Mazzo, President, and Chief Executive Officer; Dr. Kristen Buck, Executive Vice President of Research and Development and Chief Medical Officer; and James Nisco, Chief Accounting Officer. Shortly before this call, we issued a press release announcing our first quarter 2024 financial results, which is available under the Investors and News section of the company website, along with the webcast replay of this call. If you have not received this news release or if you’d like to be added to the company’s email distribution list, please email me at jmenditto@lisata.com.
Before we begin, I remind you that comments made by management during this conference call will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Lisata. I encourage you to review the company’s filings with the Securities and Exchange Commission, including, without limitation, its Forms 10-Q, 8-K, and 10-K, which identify specific risk factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, Thursday, May 9, 2024. Lisata Therapeutics undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.
With that, I will now turn the call over to Dr. Mazzo. Dave?
David Mazzo: Thank you, John, and good afternoon everyone. I'm delighted to be with you today to provide an overview of recent business highlights, discuss our first quarter 2024 financial results, and give an update on the progress of our various development programs. Building on the momentum of 2023, Lisata is off to a very strong start in 2024. We continue to make notable progress developing our lead product candidate, certepetide, formerly known as LSTA1, in combination with a variety of anti-cancer agents of differing modalities as a treatment for multiple solid tumor cancers. As we have previously reported, encouraging preclinical data as well as early clinical data in humans continue to support our belief that certepetide has the potential to become an integral part of a revised standard of care treatment approach for many challenging solid tumors.
Dr. Kristen Buck, our Executive Vice President of Research and Development and Chief Medical Officer, will provide a detailed update of our ongoing and planned clinical programs following the financial results review. But before getting to the numbers, I want to mention the achievement of another important milestone for Lisata. Certepetide, spelled C-E-R-T-E-P-E-T-I-D-E, is the official International Nonproprietary Name or INN, United States Adopted Name, or USAN, and Australian Approved Name or AAN [ph], now formally assigned for LSTA1. INN, USAN and AAN names are also referred to as generic substance names for pharmaceutical products. Obtaining one of these names is part of the commercial development of a drug and represents an important step along the path to commercialization.
Going forward, we will systematically use the name certepetide when referring to our product rather than the internal code of LSTA1 to emphasize the progress being made toward product registration. With that, I now will turn the call over to James Nisco, our Senior Vice President of Finance and Treasury and Chief Accounting Officer. James?
James Nisco: Thanks, Dave. Good afternoon all. I'm pleased to join you today to present a summary of our first quarter 2024 financial results. Starting with operating expenses. For the three months ended March 31, 2024, operating expenses totaled $6.6 million, compared to $6.8 million for the three months ended March 31, 2023, representing a decrease of $0.2 million, or 3.6%. Research and development expenses were approximately $3.2 million for the three months ended March 31, 2024, compared to $3.2 million for the three months ended March 31, 2023, representing an essentially unchanged spend. The minor increase of $62,000 or 2% was primarily due to an increase in expenses associated with our enrollment activities in the current year for our certepetide Phase 2a proof-of-concept BOLSTER trial, partially offset by a reduction in expenses associated with the Phase 2b ASCEND trial which completed enrollment in the prior year.
General and administrative expenses were approximately $3.4 million for the three months ended March 31, 2024, compared to $3.7 million for the three months ended March 31, 2023, representing a decrease of $0.3 million or 8.3%. This was primarily due to a decrease in staffing costs associated with the elimination of the Chief Business Officer position on May 1, 2023, a reduction in option assumption equity expense in connection with the CendR merger, a decrease in directors and officers insurance premiums, and a reduction in spend on consulting and legal fees partially offset by one-off settlement-related costs. Overall, net losses were $5.4 million for the three months ended March 31, 2024, compared to $6.2 million for the three months ended March 31, 2023.
Turning now to our balance sheet and cash flow. As of March 31, 2024, Lisata had cash, cash equivalents, and marketable securities of approximately $43.3 million. Based on our current business and development plans, the company believes that its available capital will fund operations into early 2026, encompassing anticipated data milestones from all its ongoing and currently planned clinical trials. This completes my financial overview, and I will now turn the call over to our Chief Medical Officer, Dr. Kristen Buck, for the review of our clinical development pipeline. Kristen?
Kristen Buck: Thanks, James, and good afternoon, everyone. Lisata’s development programs are based on sound scientific rationale from a vast body of published, preclinical and early clinical works. These works include those which led to Dr. Erkki Ruoslahti being awarded the Lasker Prize for the fundamental discoveries that spawned our CendR Platform Technology. A product of the CendR Platform certepetide is designed to address major impediments to the successful treatment of advanced solid tumors. This is especially relevant in an environment of increasing cancer prevalence and growing pharmacoeconomic pressures. Our clinical studies have been rigorously designed with the end in mind, that is, product registration, and they're optimized to generate clinically meaningful, unambiguous data.
As such, unlike many similarly phased studies, our studies are placebo-controlled, appropriately sized, and employ primary endpoints that are preferred by regulatory authorities in support of pivotal trials. Further, our trials evaluate certepetide in combination with current standards of care to allow for clear discernment of treatment effect and to fit with current treatment practices at clinical sites. These strategic design choices are not always the least expensive approach, but they do afford us the most scientifically rigorous methodology by which to generate clinically meaningful data as efficiently and rapidly as possible. This is in keeping with our development. Do the last experiment first, to avoid the time and capital consumption on work that could become unnecessary.
We have also devised and implemented a regulatory strategy that optimizes certepetide’s regulatory review and future commercialization. This strategy includes obtaining special regulatory designations, priority reviews, and accelerated approvals. I will speak more to the company's strategy in a moment, but as you can imagine, the aforementioned opportunities underpin why we are so excited about the initial top-line results that we'll report at the end of the year from our large Phase 2b ASCEND trial. However, before I get to the specifics of each of the clinical studies, allow me to provide some important background, especially for those who are listening to me for the first time. Despite advances in cancer therapy, including CAR T-cell therapy and immunotherapies, many solid tumors are still associated with poor outcomes for patients.
Cancers such as pancreatic cancer, gastric cancers, glioblastoma multiforme or brain cancer, and other solid tumors are surrounded by a dense fibrotic tissue known as the stroma, which actually limits access of most pharmacotherapies to the tumor. In addition, many solid tumors also present with a hostile tumor microenvironment, or TME, which suppresses a patient's immune system and makes it less effective in fighting cancer. The combination of a dense stroma and a hostile TME prevents many chemotherapies and immunotherapies from optimally being effective in treating these cancers. This, coupled with the fact that most anti-cancer therapies are not efficient in targeting only cancer tissue, defines the major challenge of maximizing effectiveness and safety in the treatment of solid tumors.
However, to combat this, Lisata’s approach is to exploit the C-end Rule to activate the CendR active transport system, it’s a naturally occurring active transport system to selectively deliver anti-cancer drugs through the stroma and into the tumor. Certepetide is a nine amino acid cyclic peptide with high binding affinity and specificity for alpha-V, beta-3, and beta-5 integrin receptors, which are significantly upregulated on tumor vascular, endothelial cells and tumor cells, but not healthy tissue. Once bound to these integrins, certepetide is cleaved by proteases naturally occurring in the tumor microenvironment. The proteases convert certepetide from a cyclic peptide into two linear peptides, one of which is a five amino acid CendR linear peptide fragment.
Upon dissociation of the CendR fragment from the integrin receptor, it binds to another receptor, called neuropilin-1 on the same or nearby cell. Once neuropilin-1 is activated, it actuates the CendR active transport mechanism, which is manifested by the formation of microvesicles at the surface of the cells. These microvesicles encapsulate moieties in the circulatory system, including any co-administered anticancer drugs. Unbound certepetide and CendR fragments and essentially ferries them through the stroma and vasculature into the tumor. Certepetide’s mechanism of action is agnostic to the modality of the companion anti-cancer drug with which it's administered, and it can be combined with a wide range of existing or emerging anticancer therapies, including chemotherapies, immunotherapies, and RNA-based therapies.
Additionally, as previously reported, certepetide has been shown in a range of preclinical models to modify the tumor microenvironment, making it less hostile to immune cells, reducing tumor resistance to anticancer medications, and actually impeding mTOR, preventing the metastatic cascade. These results come from Lisata sponsored studies and from collaborators and research groups around the world, and has been the subject of more than 350 scientific publications relevant to certepetide’s mechanism of action. Along with our collaborators, we have also amassed significant non-clinical data demonstrating enhanced delivery of a range of anti-cancer therapy modalities, including chemotherapies, immunotherapies, RNA-based therapeutics and even cell therapies.
And to date, certepetide has demonstrated favorable clinical safety, tolerability, and activity to enhance delivery of standard of care chemotherapy for patients with metastatic pancreatic cancer. As mentioned earlier, Lisata has worked diligently to optimize our regulatory strategy. The fruits of our labor can be seen in the number of special regulatory designations awarded to our product. For example, certepetide is the recipient of a fast track designation by the FDA, which affords us more frequent interactions with the FDA and the ability to submit NDA components early for a rolling review. Certepetide will also be eligible for an accelerated approval and priority review if the relevant criteria are met. Further, certepetide has received multiple orphan designations, including one for pancreatic cancer in both the U.S. and Europe, as well as one for malignant glioma in the United States.
Orphan designation affords Lisata exemption from user fees and provides extended market exclusivity. And since the start of 2024, certepetide has also received an orphan designation and a rare pediatric disease designation for osteosarcoma in the United States. Just for background, the FDA defines rare pediatric diseases as diseases with fewer than 200,000 cases in the United States that are serious or life threatening and primarily affect individuals under 18 years of age. A substantial benefit of a rare pediatric disease designation is receipt of a priority review voucher, often referred to as the golden ticket. Once the FDA approves the new drug application, or NDA, for the product and indication having received the designation. Vouchers are especially valuable as they can be used to compel a priority review of an additional NDA or biologic license application for another product or indication, reducing the standard review time of approximately 10 months to six months.
The voucher may be used by a sponsor or sold to another sponsor for their use. Priority review vouchers have sold for as much as $350 million historically and more recently have sold for between $75 million and $100 million. Overall, our development strategy includes the pursuit of a rapid certepetide registration for the treatment of metastatic, pancreatic ductal adenocarcinoma alongside studies which further exploit certepetide’s ability to enhance a variety of anti-cancer treatments in a range of solid tumors. To this end, certepetide is currently the subject of nearly a dozen planned or active clinical trials globally for the treatment of various solid tumors. For example, the ASCEND trial is a 158-patient, double-blind, placebo-controlled randomized clinical trial evaluating certepetide in combination with standard of care gemcitabine and nab-paclitaxel chemotherapy in patients with metastatic pancreatic ductal adenocarcinoma, also known as mPDAC.
This trial is being conducted at 25 sites in Australia and New Zealand, led by the Australasian Gastro-Intestinal Cancer Trials Group, or AGITG, in collaboration with the NHMRC Clinical Trial Center at the University of Sydney. The study consists of two cohorts. Cohort A received a single dose of 3.2 milligram per kilogram certepetide, essentially simultaneously with standard of care therapy, while cohort B is identical to cohort A, but with a second dose of 3.2 milligram per kilogram of certepetide given four hours after the first. As previously reported, a positive outcome from the planned interim futility analysis in 2023 was announced by the study’s Independent Data Safety Monitoring Committee, which recommended continuation of the study without modification.
With trial enrollment completed in the fourth quarter of 2023, we expect top-line data from 95 patients assigned to cohort A of the study to be reported in the fourth quarter of this year and the complete data set of all 158 patients from the study to be available by mid-2025. The prospect of positive data is encouraging, and we have begun planning the subsequent development steps. For example, we've already received an opinion from the Therapeutic Goods Administration, or TGA, which is the Medicine and Therapeutic Goods Regulatory Agency of the Australian government that they believe positive data from cohort A of ASCEND warrants submission of an application for provisional determination the Australian version of a conditional approval. We expect similar discussions with FDA and EMA once the data are in hand.
We have already anticipated and designed the required Phase 3 study that will be necessary to maintain a conditional approval and support a full registration once completed. The ASCEND data anticipated this year will further inform and optimize our proposed Phase 3 clinical program in mPDAC. Next the BOLSTER trial. The BOLSTER trial is our Phase 2a double-blind, placebo-controlled, multicenter, randomized trial in United States evaluating certepetide in combination with standard of care in first-line cholangiocarcinoma. The BOLSTER trial was originally designed as a Phase 2/3 arm basket trial evaluating certepetide in combination with standards of care in second-line head and neck squamous cell carcinoma, second-line esophageal squamous cell carcinoma, and first-line cholangiocarcinoma.
During months of study planning and initiation activities for the head and neck and esophageal cohorts, however, we deemed that these two arms were not feasible to recruit, given challenges with country specific access to consistent standard of care drugs and delays in adding these standard of care drugs to national formularies. Given these obstacles, the two arms were going to take much longer to complete and be significantly more costly than originally projected. As a result, we took the fiscally responsible, but nevertheless difficult decision to terminate these arms. Following that action, we strategically refocused the trial on the first-line cholangiocarcinoma arm. As it relates to this, I'm actually delighted to report that Lisata’s internal team has made significant enrollment progress to date that is far exceeded expectations.
We expect to easily complete enrollment in first-line cholangiocarcinoma by the end of year, if not substantially sooner. Also, the effectiveness of the sites involved in the first-line cholangiocarcinoma arm, along with the enthusiasm and efficiency of the corresponding investigators, has prompted us to consider initiating a BOLSTER study amendment for patients requiring second-line treatment for their cholangiocarcinoma. To achieve this, we are in active discussions with the FDA and our investigator network and will provide more news on this in the coming weeks and months. Next is the CENDIFOX study. It's a Phase 1b/2a open-label trial in the United States of certepetide in combination with neoadjuvant FOLFIRINOX based therapies in pancreatic colon, and appendiceal cancers and continues to make steady progress, with enrollment completion for all three arms expected by the end of this year 2024.
This trial will provide us with pre- and post-treatment biopsy immuno-profiling data, as well as long-term hard outcome data. Qilu Pharmaceutical, the license of certepetide in the greater China territory, is also currently evaluating certepetide in combination with gemcitabine and nab-paclitaxel as a treatment for mPDAC. During the 2023 ASCO Annual Meeting, Qilu Pharmaceutical presented an abstract sharing preliminary data from the trial, which corroborated previously reported findings from the Phase 1b/2a trial of certepetide plus gemcitabine and nab-paclitaxel conducted in Australia in patients with metastatic pancreatic cancer. As recently announced, Qilu has begun treating patients in their Phase 2 placebo controlled trial in mPDAC. The studies plan to take approximately 18 months to complete enrollment accrual and another 13 months for patient follow up and data analysis and reporting.
In collaboration with our funding partner, WARPNINE, the iLSTA trial is Phase 1b/2a randomized, placebo controlled, single-blind, single center safety, early efficacy and pharmacodynamic trial in Australia. This three cohort study is evaluating certepetide in combination with the checkpoint inhibitor durvalumab plus standard of care gemcitabine and nab-paclitaxel chemotherapy versus certepetide in combination with standard of care alone versus standard of care alone in patients with locally advanced, non-resectable PDAC. Enrollment completion is expected in the second half of 2024. iGoLSTA, a Phase 1b/2a proof of concept safety and early efficacy study evaluating certepetide in combination with nivolumab and FOLFIRINOX as a first-line treatment in locally advanced non-resectable gastroesophageal adenocarcinoma is pending initiation as a function of availability of funding by our partner, WARPNINE.
The inspiration for this study comes from the findings recently published in Oncology and Cancer Case Reports Journal, which details a patient with metastatic gastroesophageal adenocarcinoma who achieved a complete response when given certepetide in combination with standard of care FOLFIRINOX and pembrolizumab. The subject initially underwent months of standard of care treatments and only achieved a partial response. Upon the subsequent addition of certepetide to the existing standard of care therapeutic regimen, the subject achieved a complete response, confirmed both radiographically and surgically. Remarkably, and thankfully, the subject remains healthy since achieving the complete response in February of 2023. We hope to provide an update on timing related to the execution of the iGoLSTA study in the coming quarters.
A study of certepetide in combination with temozolomide in glioblastoma multiform, or GBM, has been initiated with several patients already enrolled and treated. This study is designed as a Phase 2a, double-blind, placebo-controlled, randomized, proof-of-concept study evaluating certepetide when added to standard of care temozolomide versus temozolomide alone, and matching certepetide placebo in patients with newly diagnosed glioblastoma multiform. This actively enrolling study is being conducted across multiple sites in Estonia and Latvia and is targeted to enroll 30 patients with a randomization of 2:1 certepetide plus standard of care versus placebo plus standard of care. On top of the previously described studies, we're exploring additional trials supporting our general development strategy.
However, we remain steadfast in only starting trials that can be funded through to data and trials that can be executed within a reasonable period of time. Finally, I would be remiss if I didn't remind you that several of the studies I mentioned are investigator initiated trials, and although we have great confidence in our investigators running these studies, Lisata has limited control and thus timelines and expectations may be subject to change. That said, we are extremely grateful to the investigators and especially to the patients participating in certepetide clinical trials around the world. For those who are more interested, a more comprehensive description of each trial is available in the appendix section of the corporate presentation on our website.
Additionally, in the body of the presentation, there are two slides that depict the anticipated timing and execution of key milestones and data readouts from our trials. As you will see, there are numerous execution and data milestones projected from our portfolio of clinical trials over the next year and beyond. With that, I will now turn the call back to Dave. Dave?
David Mazzo: Hello? Can you hear me?
Kristen Buck: Yes.
David Mazzo: Okay, I was having some technical difficulties. I apologize. Thank you, Kristen. We appreciate that comprehensive overview. Even with multiple data readouts over the next 18 months as outlined by Kristen, we see the ASCEND initial top line data as being seminal to the certepetide development program and to our company. These results will be instrumental in allowing us to consummate business transactions associated with the product and in defining our future capital needs. That said, we remain committed to advancing all of our certiptide development programs across a variety of solid tumor indications in order to fully exploit both the medical and commercial promise of certepetide. Now that we have entered the six month window to data, our excitement and the attention we are receiving from prospective partners, licensors and investors are increasing daily, and we look forward to sharing further details on our progress throughout the year.
And with that overview operator, we are ready to take questions.
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