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Edited Transcript of CLBS earnings conference call or presentation 6-Nov-19 9:30pm GMT

Q3 2019 Caladrius Biosciences Inc Earnings Call

New York Nov 19, 2019 (Thomson StreetEvents) -- Edited Transcript of Caladrius Biosciences Inc earnings conference call or presentation Wednesday, November 6, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* David J. Mazzo

Caladrius Biosciences, Inc. - President, CEO & Director

* John D. Menditto

Caladrius Biosciences, Inc. - VP of IR & Corporate Communications

* Joseph Talamo

Caladrius Biosciences, Inc. - CFO & Senior VP

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Conference Call Participants

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* Joseph Pantginis

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Keay Thomas Nakae

Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics

* Peter Enderlin

MAZ Capital Advisors, LLC - Portfolio Manager

* Stephen Gilbertpaul Brozak

WBB Securities, LLC, Research Division - Senior Equity Analyst

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Presentation

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Operator [1]

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Welcome to the Caladrius Biosciences Third Quarter 2019 Financial Results and Business Update Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded, today, Wednesday, November 6, 2019.

I will now turn the call over to John Menditto, Vice President of Investor Relations and Corporate Communications at Caladrius.

Please go ahead, sir.

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John D. Menditto, Caladrius Biosciences, Inc. - VP of IR & Corporate Communications [2]

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Good afternoon, and thank you all for participating in today's call. Joining me today from our management team are Dr. David Mazzo, President and Chief Executive Officer; and Joseph Talamo, Chief Financial Officer.

Earlier today, we issued a news release announcing our 2019 third quarter financial results. If you've not received this news release or if you would like to be added to the company's e-mail distribution list, please e-mail me at jmenditto@caladrius.com.

Before we begin, I will 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 Caladrius. I encourage you to review the company's filings with the Securities and Exchange Commission, including without limitations it's Forms 10-K, 10-Q and 8-K, which identify specific 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, November 6, 2019. Caladrius Biosciences undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

With that said, I'll turn the call over to Dr. Mazzo. Dave?

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [3]

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Thank you, John. Good afternoon, everyone, and thank you all for joining us on today's call. Since our last corporate update, we continue to advance our product candidates while carefully managing our finances. Our ongoing clinical studies, including the ESCaPE-CMD study of CLBS16 in coronary microvascular dysfunction, or CMD, and the study of CLBS12 in critical limb ischemia, CLI, in Japan, continue to progress as expected and we look forward to a number of key milestones around both in the coming months. I will discuss the details of each study and related milestones a bit further in a few moments.

Turning to our planned confirmatory Phase III clinical trial of CLBS14 in no-option refractory disabling angina, or NORDA. We substantially have completed the preparatory work for the initiation of this trial. However, we've decided that it's in the best interest of the company for us to forestall enrolling patients until sufficient capital resource are identified that will give us confidence that the study could be funded through completion.

As a result and after eliminating CLBS14 study cost from our 2020 operating budget, our projected cash runway will now extend into early 2021.

Before I provide more details on all of these topics, I'll turn the call over to Joe Talamo, our CFO, for his review and commentary on our financial results. Joe?

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Joseph Talamo, Caladrius Biosciences, Inc. - CFO & Senior VP [4]

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Thanks, Dave, and good afternoon, everyone. I'm pleased to provide an update on our 2019 third quarter financial results, highlighted by our 2 ongoing clinical studies: CLBS12 in critical limb ischemia, and the ESCaPE-CMD study of CLBS16 in coronary microvascular dysfunction as well as the financial implications of deferring the NORDA study, as Dave just alluded.

With regards to our financial results, our net losses were $4.9 million and $14.4 million for the 3 and 9 months ended September 30, 2019, compared with $3.5 million and $12.6 million for the 3 and 9 months ended September 30, 2018.

Moving to our operating expenses. R&D expenses, which are primarily focused on the advancing of our ischemic repair platform, were $3 million and $8 million for the 3 and 9 months ended September 30, 2019, compared with $1.7 million and $6.1 million for the 3 and 9 months ended September 30, 2018.

In our ongoing study of CLBS12 in critical limb ischemia in Japan, we continue to focus spending on patient enrollment to complete this study. As Dave will discuss shortly, however, we are now anticipating completion of enrollment in the first half of 2020 slightly longer than the previous guidance. However, we have maintained our expense forecast and currently expect to incur approximately $4 million of remaining spend to complete this study.

In our ESCaPE-CMD study, we completed enrollment in May and together with significant NIH grant supporting this program, we have funded substantially all study-related costs as we target study completion in early 2020.

Lastly, throughout 2019, we continued to focus on the preparation and initiation of the Phase III NORDA clinical trial for CLBS14. During the last quarter's conference call, we communicated that the protocol for this study was finalized with FDA, and that the projected -- and we projected that the trial will cost approximately $70 million in external expenses over the next several years to complete. We have now reached the point of readiness to commence the trial in early 2020, but given the capital needs of this program, along with the capital needs of our other programs, we will postpone the initiation of this study until we have sufficient confidence that we can acquire the capital to fund this study to completion. Dave will provide more information regarding this program momentarily.

G&A expenses were $2.1 million and $7 million for the 3 and 9 months ended September 30, 2019, compared with $2.1 million and $7.1 million for the 3 and 9 months ended September 30, 2018. General and administrative expenses remain generally consistent compared with the prior years.

Turning now to our balance sheet and cash flow. As of September 30, 2019, we had cash, cash equivalents and marketable securities of $29.2 million with a working capital of $24 million, and then operating activities cash burn of just under $15 million for the first 9 months of 2019.

With the postponement of the Phase III NORDA study, we believe our cash on hand is sufficient to fund our ongoing operations into early 2021, which includes the completion of the ESCaPE-CMD study as well as the planned completion of enrollment and the data readout for CLBS12 in CLI in Japan.

We will continue to seek additional capital from all possible sources in the near term to extend our cash runway and to fund our near-term operating plans even further.

With that, let me turn the call back to Dave.

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [5]

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Thanks, Joe. This quarter, I've decided to start my detailed comments a little differently. As I've done historically, I will provide a summary of our CD34+ technology platform effectively the general reason to believe, and then we'll follow that with specifics on each product development program.

At this time, I'm going to start with a simpler and more high-level description of what we're doing, and why it should be considered so relevant and attractive. As many of you are probably aware, most companies in the cell and gene therapies space are focused on treatment for cancers and/or rare diseases. While there is clearly a need for advances in these areas, it seems that they have been overlooked that heart disease, not only remains the leading cause of death in the U.S., but is in fact increasing. It goes without saying that the pharmacoeconomic burden of heart disease also remains large and growing. So one of the factors that makes Caladrius Biosciences different is that we are focused on developing therapies for the #1 disease killer, cardiovascular disease.

Also differentiating us from many autologous cell therapy companies working in any therapeutic category is the fact that we have late-stage clinical programs with a large database of human clinical data. In short, our therapies to date have been shown to be safe, effective, durable, economical, and pharmacoeconomically justified. And finally, we are working on products with the goal of providing patients with a curative therapy rather than one that just manages symptoms over their lifespan.

So with that said, now let me provide a summary of the basis for our CD34+ cell therapy platform. To repeat my comments from previous quarterly calls, our CD34+ cell technology has led to the development of therapeutic product candidates designed to address diseases and conditions caused by ischemia, a condition in which the supply of oxygenated blood to healthy tissue is restricted. Previously published animal and human studies have demonstrated that the administration of CD34+ cells induces angiogenesis of the microvasculature that is, that these cells prompt the development of new blood capillaries, thereby contributing to the prevention of tissue death by facilitating blood flow to the area of ischemic insult. We believe that several conditions caused by underlying ischemic injury can be improved through the application of our CD34+ cell technology, including, but not limited to, critical limb ischemia, coronary microvascular dysfunction and refractory angina.

And now to the specifics of our 3 CD34 development programs, beginning with our CD34+ cell therapy product nearest to commercialization, CLBS12 in Japan. Among others, our CD34+ cell technology has spawned the development of CLBS12, our product candidate for the treatment of critical limb ischemia, which is currently in an ongoing registration eligible clinical study in Japan. CLI is a severe obstruction of the arteries that significantly reduces blood flow to the lower extremities, principally the feet and legs and represents the end stage of peripheral arterial disease. CLI patients often experience severe chest pain, limited mobility, nonhealing skin ulcers, and if not successfully treated, eventual amputation.

Please note that it is a well-documented, but not well-known fact that CLI patients have a higher mortality rate than patients with most cancers. As a reminder, CLBS12 was previously awarded a SAKIGAKE designation from the Japan Ministry of Health, Labor and Welfare for the treatment of CLI. Importantly, the SAKIGAKE designation is a kin to an RMAT designation in the United States and affords a recipient prioritized regulatory consultation, a dedicated review system to support the development and review process as well as reduced review time of 6 months for the CLBS12 registration application once filed.

Additionally, CLBS12 is eligible for early conditional approval and possibly full approval based on the compelling nature of the complete data set from our ongoing prospective, randomized controlled, open label, multicenter study in CLI patients in Japan.

The ongoing study comprises subjects divided into 2 cohorts: A 30-subject group with traditional arterial sclerotic CLI; and a 6-subject group with Buerger's disease, a type of CLI often associated or exacerbated by heavy smoking. Those subjects who are randomized to treatment are dosed with CLBS12 through intramuscular injection in addition to receiving standard of care pharmacotherapy. Subjects randomized at the control arm only receive standard of care with drugs approved in Japan, including antiplatelet agents, anticoagulants and vasodilators, the choice of which is made by the investigators according to the protocol. The study allows for the rescue of subjects in the control arm by indicating the crossover to treatment if their CLI is deemed to be progressing. The primary objective of this study is to show that CLBS12 can prevent the serious consequences of CLI by reverting the patients to a CLI-free condition through improved blood flow in the affected limb.

CLI-free status is defined as 2 consecutive monthly visits, in which rest pain is absent and previous nonhealing skin ulcers are completely healed as determined by an independent adjudication committee. As previously reported and you can review in our corporate presentation on our company website, the responses observed to date in the fully enrolled Buerger's disease cohort are very positive and consistent with the beneficial therapeutic effect and safety profile as reported by previously published clinical trials in Japan and in the U.S. In Buerger's disease where amputation and often death are likely outcomes, and where no available pharmacotherapies prevent the amputation, we are thus far observing a 50% remission rate with 2 patients still in follow up. It is worth emphasizing that the natural history of Buerger's disease patients is continued disease progression, leading to likely amputation. So our data are extraordinary. We are very encouraged by these results, and believe that they suggest a positive outcome for the overall trial recognizing, however, that the final conclusions of the trial will be dependent on all data from all subjects.

We expect to report data from the completed study in late 2020 or very early in 2021. Regarding commercialization, our strategy remains to license or partner CLBS12 in Japan. And to that end, our conversations continue with prospective partners, and we continue to seek consummated deals in concert with the completion of the study, if not before.

As I highlighted on our second quarter call, the European Medicines Agency recently granted the advanced therapy medicinal product classification to CLBS12 for the treatment of CLI. Advanced therapy medicinal products are defined as medical treatments that are based on genes or cells and are intended as long-term or permanent therapeutic solutions to acute or chronic human diseases at a genetic cellular or tissue level. This regulatory achievement sets the stage for us to work closely with European regulators to define the most expeditious development and regulatory plan for registration of CLBS12 in the EU.

And finally, we recently received a notice that FDA did not award CLBS12 an RMAT designation. However, the agency did indicate that we should consider reapplying in the future once more clinical data is available to support the application.

Turning now to our CD34 product candidate as a treatment for coronary microvascular dysfunction. Like all of our CD34+ cell therapy development candidates, CLBS16 is a proprietary and patented formulation of CD34+ cells, specifically designed for an injection at or near the site of ischemia insult, which indicates that CMD is an infusion into the coronary artery.

CLBS16 is currently being studied in the ESCaPE-CMD trial. The 20-patient proof-of-concept clinical trial, evaluating CLBS16 as a treatment for coronary microvascular dysfunction, a plaqueless heart disease, involving damage to the inner lining of the tiny arterial blood vessels in the heart with no discernible large vessel blockages. Despite the absence of large vessel disease, CMD patients have an equally poor prognosis related to major adverse cardiac events and death as to patients who have identifiable large vessel blockages. But because obvious large artery blockages aren't seen, CMD is often underdiagnosed, misdiagnosed or untreated. It should also be noted that CMD is more frequently encountered in females, making this an important emerging women's health care issue. CLBS16 is designed to address the symptoms and physiology of CMD by employing the CD34+ cell innate ability to increase microcirculation.

Similar to the results of our CLI study in Japan, the initial data of observed in this ESCaPE-CMD, open-label study's comprising those subjects who have reached the 6-month follow-up are extremely encouraging. We previously released the results from about 1/3 of the patients and indicated that we are observing a highly statistically significant improvement in coronary flow reserve, a direct measure of cardiac muscle perfusion, along with the corresponding improvement in clinical symptoms. In the near future, we will augment those results with the results of the 6-month follow-up on 17 of the 20 patients, as they will be presented by Dr. Noel Bairey Merz, Director of the Barbra Streisand Women's Heart Center at the Cedars-Sinai Smidt Heart Institute in Los Angeles, during the American Heart Association, 2019, scientific sessions on November 16, 2019.

The results of the ESCaPE-CMD trial are not only important for defining the next development step for CLBS16, but they provide the first direct quantitative evidence in humans, corroborating the mechanism of action of CD34+ cells, something which is supportive of all of our programs, especially CLBS14. We're looking forward to reporting top line data from the full complement of patients at the end of 2019 or in early 2020. Assuming that the full data set corroborates the previously reported results, we are planning to advance the program to its next clinical development step as expeditiously as possible.

And now, moving to our CD34+ cell therapy product candidate in the U.S., CLBS14. CLBS14 is being developed to address no-option refractory disabling angina by stimulating the growth of new microvasculature in an oxygen-deprived heart in those patients who have had large vessel disease treated with all available therapies, but still have debilitating angina likely due to a microvasculature deficiency. Our confidence in this program is based on a series of published Phase I, II, and III study results that indicate a consistency of therapeutic effect of CD34+ cells to increase exercise tolerance, improve heart function, and decrease long-term mortality associated with the condition.

As previously reported, we finalized the protocol design for a confirmatory Phase III trial to support the registration of CLBS14 for NORDA in the U.S. However, due to the projected study costs, we've decided to defer initiation of the Phase III study in the U.S. at this time. We will proceed with the study once we have acquired sufficient capital to give us confidence that we will be able to fund the study to completion. And among the possible sources of capital that are being investigated, our nondilutive grants and/or partnerships, both of which are being pursued vigorously.

So in closing, once again, Caladrius continues to make notable progress against our operating plan, and we are pleased to have accomplished the goals we established for the past quarter. Our experienced and expert team remains committed to be efficient and effective advancement of our programs as we work to bring innovative treatment options to patients in need and to restore human health.

And with that overview, operator, we are ready to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Jason Kolbert with Dawson James.

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Unidentified Analyst, [2]

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This is actually Ken, Jason's associate. Jason just wanted me to dig in to what Japanese authorities are going to need to see, even with the SAKIGAKE designation? How good is the data going to have to be?

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [3]

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So what we've been told in multiple conversations with our SAKIGAKE concierge. So yes, we actually have a concierge assigned to us who facilitates regular interactions with the regulatory authorities. What we've been told is that in order to qualify for a conditional or perhaps, even a full approval, the study has to demonstrate a trend towards therapeutic effect as well as adequate safety. So essentially, no adverse events on the safety side, and a strong trend toward therapeutic effect. The reason they use the word trend and not efficacy is because they clearly understand that the study was not powered to show efficacy. And it's got -- so simply that. It's not powered to show efficacy. So far, as we've reported previously, we are trending not only in that direction, but so far, we've had a statistically significant indication that we will in fact demonstrate a therapeutic effect in the overall cohort of CLI. Of course, we'll wait to see when all patients have completed their follow up, but we're moving in the direction that should allow us to get conditional improvement and quite possibly, a full approval based upon the data to date.

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Operator [4]

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Your next question is from Steve Brozak with WBB.

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Stephen Gilbertpaul Brozak, WBB Securities, LLC, Research Division - Senior Equity Analyst [5]

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I've got one question on NORDA and one on CMD, and I'll hop back in the queue. On the NORDA side, obviously, you started to talk about partnering and development. One of the questions that I wanted to talk about because you do have a history of being able to go out there and complete transactions like with Hitachi and being able to sell an asset for more than your market cap. Can you describe what you would look at in the partnering and development going forward for NORDA? Because obviously, that's something that you're looking to continue this, based on the fact that you've seen clinical benefits, clinical outcomes that you would want. But obviously, there are other considerations. So could you be as detailed as possible on that? And then I want to go back into CMD, please.

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [6]

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Okay. Well, thanks for that question, Steve. So I think you hit the nail on the head here in the sense that we believe that we have a reasonable opportunity to identify other sources of capital to augment the traditional equity raises that a company like ours would do. We do have a history of collecting nondilutive capital from a variety of sources in the past, quite a bit of that came from the California Institute for Regenerative Medicine. And we have a number of other grant opportunities that we are pursuing at the moment, anyone of which could contribute substantially to our overall cash balance. So we'll continue to do that as we continue to push the discussions with the likely potential partners for the product. And so our focus is on, I would call it, big pharma that have a strong interest in cardiovascular medicine or specialty pharma that focuses on cardiovascular medicine, including those companies that have a strong presence in the catheter lab which is where our product is delivered. Our conversations have advanced. We've seen a number of companies express interest and are really looking forward to developing relationships with many of those companies where we could either collect enough of a licensing fee upfront that would allow us to fund the product substantially to completion or enter into some sort of codevelopment opportunity that would also reduce the amount of capital that we need to contribute to something that's much more manageable, based upon our size. And those conversations will continue. We're also investigating the opportunity that might present itself from, I'll use the term, special purpose vehicle. That's a little bit of an outdated term, but from a number of large health care specific funds who are now looking at -- to specifically put capital to work on a specific product in the specific late-stage study and then work on some sort of royalty or other arrangement. And so we're exploring all those possibilities as well. And we thought that it would be in our company and therefore, our shareholders best interest, to exhaust all of those opportunities first before we then went out and raised the money necessary to complete this trial because if we can reduce that amount significantly, it would help us go faster and certainly, would make it a much more attractive opportunity for our shareholders. So that's the approach we're taking at the moment.

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Stephen Gilbertpaul Brozak, WBB Securities, LLC, Research Division - Senior Equity Analyst [7]

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Okay, very much appreciate the clarity there. On CMD, in a few days, we're going to see American Heart over in Philly. And at that time, are we going to start to see more color, more data from you and Caladrius on your CLBS16 information? What can we -- and I know you don't want to pre-state what you're going to be talking about there, but what can we expect? And I'll hop back in the queue.

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [8]

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Okay. So thanks again, and you're right. We're under embargo with the AHA. We can't divulge the results of what's going to be presented. But I can tell you, you should expect to see detailed data on coronary flow reserve and on a variety of other CMD markers of frequency and severity of angina and a couple of other things. For 17 of the 20 patients, that's the number that we'll have completed there, 6 months follow-up by the time the abstract is being presented. And I should point out that this abstract was accepted as a rapid-fire oral presentation, which is under the umbrella of the late breakers at AHA. And it's -- those are the kinds of things that are accepted when the -- even though the study is not complete, when the results are expected to be interesting enough (inaudible) and perhaps even lead to either new treatment paradigms or breakthroughs in the way a disease is characterized or treated. And so that's the kind of impact that you should expect from the results that are going to be presented by Dr. Bairey Merz at AHA. And we're very excited about that, and we'll be, obviously, in a position to speak about all of that in much greater detail after those announcements are made and clearly on the next conference call, but sooner that as well.

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Stephen Gilbertpaul Brozak, WBB Securities, LLC, Research Division - Senior Equity Analyst [9]

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And I'm looking for 16 November data, and obviously, everything that you are able to execute on NORDA.

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Operator [10]

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And your next question is from Joe Pantginis with H.C. Wainwright.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [11]

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I'm curious. It's a nice feather in the cap to have the regulatory visibility around the NORDA study for the pivotal program. So assuming you get the adequate funding through whatever mechanism, just curious what's the punch list to be able to get that study up and running as quickly as possible?

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [12]

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Thanks, Joe, for that question. And actually, as Joe mentioned in his remarks, we've substantially completed that punch list. That punch list includes everything from, of course, starting with a finalized protocol, then having a qualified manufacturing facility, and we've already talked about that in previous calls. We've enlisted Cognate BioServices as our manufacturer. Cognate was chosen not only because they can supply, they have the technical capability and the capacity to supply us for Phase III, but they're also a qualified commercial facility for cell therapy. So they could be the launch facility going forward. We've undergone technology transfer. We're doing validation, batch record preparation. So from a CMC and manufacturing perspective, we're essentially ready. And then on the clinical operations side, we have engaged a CRO. We have consent forms sorted out. We've got site identification underway and really the last step before actually enrolling patients will be to get the final site IRB approvals and then move into enrollment.

So from an operational perspective, we've done just about everything that one should do in order to be ready to initiate patient enrollment. And as we said now several times, we're just going to make sure that we have the financial aspects of this well stabilized, and then we'll be ready to move forward.

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Operator [13]

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And your next question is from Pete Enderlin with MAZ Partners.

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Peter Enderlin, MAZ Capital Advisors, LLC - Portfolio Manager [14]

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Seems like a prudent decision to wait until you have the funding more or less lined up on NORDA. But I just wonder is there any likely change in the projected cost of the trial as a result of that? Or can you refine the specifics of how much will it cost a little more clearly at this point?

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [15]

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No. I mean the external costs of the trial are essentially defined by the protocol, the number of patients, the follow-up tests that are done, and the frequency of those tests, and that's not going to change. So that $70 million external remains our accurate projection at this point in time. When we speak about roughly a $100 million total over the course of 3 to 4 years that includes some allocation to the operating of the company. And that number will also remain consistent because it really doesn't start until you start the study. So overall, the study costs are essentially fixed. We don't expect that there will be any changes based upon what we have organized with the FDA at this point in time.

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Peter Enderlin, MAZ Capital Advisors, LLC - Portfolio Manager [16]

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Okay. And then getting back to CLBS12. What were the factors? I mean I know it's just a difficult process, but anything specific on why it took quite a bit longer to enroll the patients than you originally thought?

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [17]

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Yes. I think there are 2 factors that we have identified that have had a major contributing influence on prolonging enrollment a little longer than we expected. And I'll mention those in a minute, but I do want to emphasize that what's important is that the goal post, which is earliest likely approval in Japan remains unchanged. And that's largely due to the 6-month review time afforded by SAKIGAKE designation, and we've been saying all along that, that would be a second half of 2021 earliest possible approval and that remains intact. But the 2 -- back to your question, there are 2 things. One of which I may have mentioned previously, but -- and one which is a little bit newer. The major influence on this was the fact that the practice of medicine in Japan was something that was determined ultimately to be different than what we expected as it relates to CLI patients. And by that, I mean the patient flow. So here in the United States, patients who have CLI usually end up -- well, usually start with a primary physician when the symptoms begin to appear. And then as the disease progresses, they are sent to a specialist, which in the United States, is a vascular -- usually a vascular surgeon. And it's those vascular surgeons who would be the call point for CLBS12 here. Those are the folks who really treat the advanced CLI patients and would be the ones administering CLBS12.

We assumed, and it turned out wrongly that, that was the same patient flow in Japan, but it turns out that the -- what is the Japanese equivalent of the primary physician really very infrequently turns that patient over to a vascular surgeon. They hold onto those patients for a very long time until effectively the patient progresses to Rutherford 6, and then turns them over to the orthopedic surgeons for amputations. And so the vascular surgeons, who are our initial target to enroll patients, really don't get to see as many CLI patients as we thought they would. And so we had to refocus our enrollment criteria and our site identification to those patients who are more high-volume primary physicians. And so that took a little while to identify and then to refocus and now to catch up. The -- another thing that had a big impact on our enrollment was that initially the Japanese regulatory authorities excluded patients who were on dialysis or hemodialysis. And about half of the CLI patients have an accompanying kidney issue and put -- and they're on hemodialysis for that reason. And so that cut out a large portion of the typical CLI population.

About 3 or 4 months ago, we demonstrated by showing some data to the Japanese regulatory authorities that patients on hemodialysis react exactly the same as patients who are not on hemodialysis to CLBS12, and there was really no good reason to exclude them. And they agreed, and we had to -- and we were allowed to modify the protocol. And for the last several months now, we've been enrolling patients who are on hemodialysis as well and that has increased the available population by about a factor of 2. So those are the 2 main reasons why our projections were slightly off, and we expect now to finish early next year. But as I said earlier, the goal post of an earliest possible approval remain in 2021.

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Operator [18]

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Your next question is from Keay Nakae with Chardan.

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Keay Thomas Nakae, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics [19]

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With respect to CMD, can you give us your latest estimate of the market opportunity? And given that, what would be your view of the ability to partner that maybe on the basis of data that would be sufficient for you to advance it into a pivotal study?

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [20]

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Sure, thank you. So CMD is -- as I tried to describe during my prepared comments, is a very unusual disease in that until fairly recently, it was underdiagnosed or misdiagnosed because there wasn't a quantitative measurement for cardiologist to look at. And so when these patients came in to see an invertentionalist, and they complained of this debilitating angina, they get a stress test. They showed immediate signs of blockages. And so they took them to the cath lab with the expectation that they were going to find large vessel lesion and stent them or bypass them. And when they don't find anything, they were kind of at a loss. Now by measuring coronary flow reserve, they can actually identify these patients, specifically if they have a CFR below 2, then they have CMD.

Now it turns out that based upon data that we've taken out of some large databases that have been provided by the WISE study and a number of others that the prevalence of CMD in the United States is going to be in the millions. Somewhere between 5 million and 10 million patients likely have CMD or a component of coronary arterial disease that's associated with microvascular deficiency. So in fact, from a patient prevalence perspective, CMD is a much, much, much larger commercial opportunity than, say, NORDA or CLI would be. What's also interesting about CMD is that CLBS16 is administered within an intracoronary injection. Where CLBS14 in NORDA is done with an intramyocardial injection. So CLBS16 and CMD treatment is much simpler, much less restrictive, much less intrusive and much less costly than the NORDA treatment will be. And so that will make it, I think, much easier to test more widely and probably much more attractive to prospective partners. So in the end, whether this data that we'll be presenting will be sufficient for partnering or not, will remain to be seen. But I think that whether this data, plus perhaps the next follow-on Phase II trial moving on to Phase III should all be compelling enough to increase interest in CLBS16 in a manner that is probably greater than comparable interest would've been shown at this stage with CLBS14. I hope that answers your question.

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Operator [21]

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And your next question is from Pete Enderlin with MAZ Partners.

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Peter Enderlin, MAZ Capital Advisors, LLC - Portfolio Manager [22]

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Well, this question is sort of conceptual and actually 2 parts. The first part of the question is, I'll give you -- what I think the answer is, which is no. But theoretically, does the FDA take into account the potential cost of a treatment when they -- when you're doing a clinical trial, and they're overseeing that process?

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [23]

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No. No.

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Peter Enderlin, MAZ Capital Advisors, LLC - Portfolio Manager [24]

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I mean that's another factor.

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [25]

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Another factor.

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Peter Enderlin, MAZ Capital Advisors, LLC - Portfolio Manager [26]

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Okay. However, I mean there is so much focus on the cost of drugs and treatment and all that sort of thing. There is an outfit up in Boston, called, I think, it is the Institute for Clinical and Economic Review, ICER. And they're looking at something called quality of life years. And so this seems to be -- it's not a part of what the FDA looks at, certainly was a part of the payers and the insurance companies would look at and potential partners would look at. So I guess the second part of the question is, you're talking about treatments that are really quite expensive, although not like really high-end cancer treatments. But tens, hundreds, thousand more and so are you guys looking at any considerations of how you can reduce the cost of these things? I mean, I know it's somewhat early, but you mentioned that you're talking to some companies that have capabilities in the cath lab area and all that. So I guess the question is basically how much of a role does the cost of all these things play into your future planning?

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [27]

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So that's a multilayered question. So I'll try to address it in a coherent order. So first and foremost, the eventual price of a product, to the best of our ability to project it, and its ability to be reimbursed based upon a pharmacoeconomic argument that is that we deliver treatment effect at a value price in competition with whatever else is out there and in the context of what the healthcare system can afford. That's the baseline from which we start when we conceive of a product candidate concept. So you start there. There is no point in developing something that nobody can pay for, or that nobody is going to buy, or is that going to just simply be too expensive for it to make its money back on the research investment. So you have to start there. And we do that consistently. So all of our products have been started with that concept that we can make a pharmacoeconomic case for the product based upon our best guess of what our cost of goods will be with a reasonable markup in the market that will be sustainable? What will be our reimbursed? What the patient penetration will be in all those things? And that's just part of the process. So we've done that for all of our products. Now -- so that's -- yes, our products will be more expensive as a onetime treatment than, let's say, a year's worth of pills for a particular treatment. But the difference between our product and a year's worth of pills, we'll use statins as an example. You take statins for the rest of your life. Every day for the rest of your life. Our treatments are designed to be given one time, and they are designed to be curative, which means that the impact is expected to last a very long time with the ultimate goal of being indefinite. So there is -- so the pharmacoeconomics around those things have to take that into account. Now to your specifics about, are we looking for ways to reduce cost? Always. And you do that because clinical manufacturing costs, clinical distribution costs, clinical delivery costs are always much, much, much higher than the commercial product. And so as you move through development, you accumulate process improvements, economies of scale and other things that ultimately reduce the cost. And at the end of the day, they get those reduced costs get factored into what ultimately becomes the launch price of a product. So, yes, we're always looking at ways to reduce cost. And frankly, one of the ways to reduce costs would be to convert from a more complicated delivery system like intramyocardial injection to something that's more simple like intracoronary or eventually even retrograde injection. Now those changes just can't be made to reduce costs because the delivery mechanism in cell therapy is part of the product definition. So we can't just say NORDA CLBS14, and at this stage of development, switch to a different mechanism, it would be effectively starting over. But with CLBS16, we've been able to do the work early on to show that an intracoronary injection works well. And so that is how we are following through. So I guess the simple answer to your question is yes, we're always working on ways to reduce costs.

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Operator [28]

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This concludes the question-and-answer portion of the presentation. And I'll now turn the call back over to Dr. Mazzo for closing remarks.

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David J. Mazzo, Caladrius Biosciences, Inc. - President, CEO & Director [29]

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Okay. Well, again, I'd like to thank everyone for part participating on today's call, and thank you for the folks who asked the insightful questions. We look forward to speaking with you all again during our next conference call in a few months, and to continuing to bring you news of our achievements and progress. We remain grateful for your continued interest in and support of Caladrius Biosciences. And we wish you a good evening. Thank you.

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Operator [30]

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