Q4 2023 Biora Therapeutics Inc Earnings Call
Participants
Chuck Padala; Managing Director; Biora Therapeutics Inc
Aditya Mohanty; Chief Executive Officer, Director; Biora Therapeutics Inc
Ariella Kelman; Chief Medical Officer; Biora Therapeutics Inc
Eric d'Esparbes; Chief Financial Officer; Biora Therapeutics Inc
John Vandermosten; Analyst; Zacks
Julian Harrison; Analyst; BTIG
Presentation
Operator
Welcome to the Biora Therapeutics fourth quarter 2023 financial results call. (Operator Instructions) As a reminder, this conference is being recorded. I will now turn the call over to Chuck Padala, our Managing Director with LifeSci Advisors, Biora's Investor Relations firm.
Chuck Padala
Thank you, operator. Good afternoon, and welcome to the Biora Therapeutics Fourth Quarter 2023 Corporate Update and Financial Results Conference Call. Joining me on the call are Adi Mohanty, Chief Executive Officer; Ariella Kelman, Chief Medical Officer; and Eric d'Esparbes, Chief Financial Officer.
Before I turn the call over to Mr. Mohanty, I'd like to remind you that today's call will include forward-looking statements within the meaning of the federal securities law, including, but not limited to the types of statements identified as forward-looking in our quarterly report on Form 10 K that we plan to file in the next few days at our subsequent reports filed with the SEC, which are available on our website in the Investors section. These forward-looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control. Please note that the actual results could differ materially from those expressed in the forward-looking statements. For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements as well as risks related to our business, please see the Company's periodic reports filed with the SEC.
With that, I'll now turn the call over to Adi Mohanty, CEO of Biora Therapeutics.
Aditya Mohanty
Right. Thanks, Jeff, and thank you, everyone, for joining us for the fourth quarter capped a transformational year for Biora. We made excellent progress with both our platform technologies as we continued our strong execution. The Nadcap platform continues to hit its milestones as forecasted. We achieved clearance of our IND by the FDA, and we initiated our BT. 600 clinical trial, which we believe to be the first clinical trial in the U.S. for an injectable drug device combination. I'm also pleased to see the progress with our larger platform to talk more about budget a bit later. But first, I'm joined today by our Chief Medical Officer, Ariella, who will share an update on our VT. 600 clinical trial. Ariella.
Ariella Kelman
Thank you, Adi, and happy to be here and to speak with you all patients with ulcerative colitis or UC continue to have significant unmet needs and research shows that the inability to achieve high enough level of drug in colon tissue with current treatments is a barrier to better efficacy. Our goals are to improve efficacy by precisely delivering drugs to the colon with our Nadcap device, thereby achieving increased drug concentration in colon tissue with potentially less systemic toxicity due to lower drug levels in the bloodstream. As you know, we previously conducted four separate device function studies in humans confirming that Navy CAP is able to bypass the upper gastrointestinal tract.
We attack the colon and precisely deliver payload into the colon. Our ongoing Phase one study as the first clinical trial of our Navy cap device platform in combination with active drug, which we initiated our VT. 600 clinical trial in January it is a randomized, double-blind, placebo-controlled, single and multiple ascending dose clinical study. Its objectives are to evaluate the safety and pharmacokinetics and pharmacodynamics, including effects on colon tissue of BT. 600 when administered orally in healthy adult volunteers. The study consists of two parts. First is a single ascending dose or SAD comprised of 24 participants receiving EG. 600, which is now the cap in combination with a proprietary liquid formulation of tofacitinib, five milligram or 10 milligram doses for placebo. This portion of the trial has now been completed and I'm happy to share those results with you today.
We intend to present the full data in future publications and scientific forum. We're excited about the single-dose data is consistent with what we expected in terms of pharmacokinetics and safety features 600 was well tolerated. The pharmacokinetic data show that BG. six hundreds function as intended and designed specifically devices opened in the colon and release drug at times that we predicted in human device function and animal studies, all administered devices containing active drug showed corresponding systemic absorption. It indicates that every Nadcap device released and deliver drug in every study. Participants is evidence of anatomically targeted delivery in the colon.
Measurable total net in blood was first observed at approximately six hours with maximal concentration at approximately eight hours post ingestion business was intended with Nadcap and it's different than what is seen with conventional oral type of fitness, where maximal blood concentrations occur at 30 minutes to an hour after ingestion. This suggests that drug delivery and absorption occurred in the colon as opposed to the upper gastrointestinal tract. Further dose proportional pharmacokinetics were observed with consistently lower plasma drug concentrations with the five milligram dose than the 10 milligram dose. So the net plasma levels were approximately three to four times lower than are seen with conventional oral tofacitinib at the same doses and firming results from previous animal studies, BT. 600.
The pattern of plasma levels over time suggest passage of drug through the colonic tissue into systemic circulation indicated that we might expect to see elevated colon tissue levels. These data are what we hope to see with more drugs being delivered in the colon and a reduced amount in the blood. We are also pleased with the performance of the device with what appears to be all devices functioning as expected and adding to the growing body of data on Nadcap device performance. It is single-dose data, and we look forward to confirming and expanding on these findings with the multiple dose portion of the study and multiple-ascending dose or MAD cohort is comprised of 24 participants receiving BT. 600 at five milligram and 10 milligram doses of tofacitinib or placebo with one daily dosing for seven days. This is the daily dose for conventional tofacitinib, which is normally dosed twice daily.
In addition to regular blood samples, we will also be obtaining colon tissue biopsies at the end of the study dosing for the MAD portion of the study is currently underway, and I can confirm things are progressing well and we're pleased with the execution of the study so far, we anticipate having final study data, which includes both the SAD and MAD portions, including data on effects in colon tissue for the end of the second quarter. Adi, at this time, I'll turn it back over to you.
Aditya Mohanty
Thanks, Ariella. The data we're seeing so far are truly outstanding, which isn't a surprise to us, but it's very gratifying as we work to improve the navigation platform's potential to create a new treatment paradigm for IBD. As Aurelio mentioned, our navigate technology can potentially increase tissue concentration while reducing systemic exposure, which is what we're aiming to demonstrate at the conclusion of the current trial. We believe this will lead to better outcomes for patients suffering from ulcerative colitis. So far, our clinical trial has demonstrated that the medical devices functioned as intended by delivering drug precisely in the colon, illustrating the potential for our platform beyond the current tofacitinib payload delivery, the data suggests the potential to achieve greater concentration of drug in the colon tissue compared with conventional methods, we believe this will lead to improved patient outcomes. We also saw that blood concentration of tofacitinib absorbed through the colon was substantially lower than the conventional treatments. This could reduce toxicity for patients and open the door to combination therapy and UC.
In addition to the anticipated conclusion of our clinical trial while also looking ahead and actively planning a study in UC patients during the second half of 2024. The purpose of this study is to confirm plasma and tissue pharmacokinetics and pharmacodynamics in UC patients and to inform our plans for future trials. Although KOLs have confirmed that healthy volunteer data on blood and tissue are fairly representative for that in UC patients. We want to proceed to trials in UC patients quickly and maintain an accelerated pace of development. While we are focused on clinical execution for Navy CAP and the BT. 600 program. Our team also continues to increase the strength of our intellectual property portfolio for both our platforms. We believe we hold the most comprehensive IP portfolio for drug delivery using ingestible devices with over 100 granted patents and over 100 pending applications across our two platforms.
Recent wins included a patent addressing anatomically targeted delivery of Jack inhibitors to the GI tract. This patent directly supports our BT. 600 program, which involves delivery of a proprietary formulation of tofacitinib, a Jack inhibitor. We also received notice of an important new patent for a biologic platform, which broadly covers key parameters for liquid delivery of drug to the GI tract between this and our existing IP portfolio for the Badger platform I think we can say that we invented and we own liquid jet delivery to the GI tract. We continue to make excellent progress with the budget platform, liquid jet deliveries, the foundation of this platform is designed to achieve for delivery of large molecules using a small capsule that was swallowed delivers a stream of liquid drug into the wall of the small intense time where it can be absorbed into the systemic circulation. We believe the budget platform can provide an alternative to needle based delivery of complex molecules. It could also enable those molecules to more efficiently reach the liver, which is difficult with other oral delivery methods.
Over the past few quarters, we've made strong progress in assessing both our own as well as collaborative molecules with the Badger device. We have optimized benchtop systems that enable rapid iteration with our animal studies, enabling faster assessment of molecules and formulations, which has made us more efficient in our development. We successfully performed animal studies with peptides, antibodies and oligonucleotides and achieved bio availability in excess of 20% compared to IV infusion with our first-generation device as a reminder, the performance target that is considered commercially viable by us, and our pharma collaborators is around 15% compared to IV. In December, we announced a new research collaboration with a large pharmaceutical company with recently completed animal studies with their molecule, and we expect to receive the data from that study in coming weeks.
While we execute on collaborative molecules, we also continue to enhance our core budget platform. We have completed further animal studies over the past few months that demonstrate even better bioavailability in the 30% to 40% range for our peptide candidate, semaglutide, as well as with Adlea new mAb, our antibody candidates. We'll be sharing more details of the data at an upcoming conference in June. We believe we're in excellent position with the budget technology, which has a number of competitive advantages, its ability to achieve category-leading bio availability of complex molecules, its ability to deliver existing liquid formulation without complex reformulation it's ability to deliver large payload in the multi milligram range and this potential to enable liver targeted delivery of large molecules. With the broad applicability of this technology, we continue to see interest from potential pharma partners. Our goal in the near term remains to get a more enhanced partnership this year with either our current collaborators or others. We're making good progress on that front and continue to see even more interest from potential partner companies.
To summarize our anticipated milestones for our Navigator platform, we await the conclusion of our BT. 600 clinical trial in the U.S., and we expect the execution of the MAD portion to be completed during Q2. We anticipate receiving final SAD/MAD data during Q2, and we plan to share top line data from the study as quickly as possible, but we also plan to initiate a clinical study in UC patients during the second half of 2024 for our budget platform. We anticipate data from the recent animal study with our large pharma three collaborator during Q2, and we expect to share an update on some of our recent animal studies at an upcoming conference, we continue to progress toward our goal of an enhanced partnership in 2024.
With that, I'll now turn the call over to Eric for a review of our financial results and capital market activities.
Eric d'Esparbes
Thanks, Eddie, and good afternoon, everyone. We had a number of important capital market activities since our last call. I'll first cover our financial results and then provide a more background on the positive evolution of our balance sheet.
Operating expenses during the fourth quarter were $13.3 million, which was more aligned with our normal expected run rate compared to the prior quarter when we had a one-time stock-based compensation non-cash charge related to vesting of employees, restricted stock units, excluding stock-based compensation expenses, operating expenses were $11.8 million during the fourth quarter with continued investment in device development, preclinical and clinical activities. To break this down further, G&A expenses in the fourth quarter were $6.3 million, excluding stock-based compensation expenses, while R&D expenses in the fourth quarter were $5.5 million. Also excluding stock-based compensation expenses, our core OpEx spend remains focused on our R&D programs. Execution of our clinical development with Navy cap and preclinical work done biojet with our pharma calibrators net loss was $15.4 million for the three months ended December 31st, 2023, also more in line with our expected run rate compared to the third quarter, which included non-cash charges for stock-based compensation expense and large non-cash charges attributable to the convertible note exchange we implemented in September 2023. We also made substantial progress during the fourth quarter in our ongoing efforts to eliminate activities and spend associated with legacy matters, which still represented more than 30% of our G&A cash spend in Q4. Those efforts culminated recently with the monetization of our investment in new Maryland molecular generating $3 million in non-dilutive capital. We also reached an agreement in principle to resolve one of the company's legacy securities litigation matters, and we are confident about the potential of any remaining legacy issues having minimal impact on buyer going forward.
Moving on to our capital structure. As a reminder, we have made substantial a substantial step forward during the third quarter by reducing our convertible note balance by $50 million through note exchange rates, I had provided guidance during our last call that we were making progress in further reducing our remaining notes balance. We executed well on this front, and we're very happy to announce in December a convertible note exchange, which also brought $17 million in new capital to borrow. In total, we reduced outstanding notes by more than $80 million in 2023, a 75% reduction of the Company's net debt in 2023 alone in accordance with GAAP, we will be reflecting in our balance sheet other items beyond the actual outstanding balance of the notes, including derivative and warrant liabilities and future interest payables. So we invite investors to read notes six and seven to our financials when we file our 10 K to highlight the actual reduced notes principal balance at the end of 2023 which went down from $132 million to approximately 51 million during that period.
The substantial reduction in notes outstanding and new capital investment from large institutional investors demonstrates continued support for our programs. In fact, we announced earlier in March a third note exchange, combined with new capital investment, bringing total new institutional investment in Tobira through these exchanges to $19.8 million over the last four months. We truly appreciate this commitment from our investors, and we want to highlight the significant equity component of these transactions which shows their acute focus on the potential value of our stock. We believe this series of transactions sets us up nicely for success ahead of important clinical data and a development of future potential partnerships with pharma.
With that, I will now turn the call back over to Adi.
Aditya Mohanty
Thanks, Ed. We're excited to start the year with a great early data from our BT. 600 trial and are focused on continuing our strong clinical execution to complete this trial from the budget platform or focus on progressing towards partnerships this year, we look forward to providing further updates as we continue to achieve our milestones. Operator, we're now ready for questions.
Question and Answer Session
Operator
(Operator Instructions) John Vandermosten, Zacks.
John Vandermosten
Thank you, and good afternoon, everyone. Wanted to first say congratulations for the huge reduction in debt. That's that's a great change. And wanted to pose the first question about just the next steps for the IBT. 600. Now that you've shown good PK and PD numbers and understanding that the underlying drug tofacitinib is already approved. What kind of what do you expect to see, you know, to get this in front of the FDA for approval and following the filing of the second half first study in you see patients?
Aditya Mohanty
Thanks for the question, John. Before we get to what we want to put in front of the FDA, what we should say, we're really excited about what's coming up very, very near future that we talked about in this coming second quarter. So I'll let Ari, I want to talk to you a little bit about the MAD portion of our data, and then we'll come back to what's next. Go ahead, RERA.
Ariella Kelman
Okay. Thanks very much, Andy. And so we're looking forward to the results from the MAD portion of the Phase one study, and we expect to have those by the early summer. So end of Q2 and what we expect to see there. He's on, again, pharmacokinetic data, but this time on over a multi-dose course. So daily dosing for one week, and we hope to confirm a same or similar pharmacokinetic profile, which confirms that the Nadcap is functioning as designed and delivering in the colon. And we also are expecting to receive data on colon tissue, including a colon tissue concentration from biopsies as well as histology data for safety and pharmaco dynamic data from the colon tissue. So we're looking forward to that.
Aditya Mohanty
Thanks, Arielle. So sorry, John, I think, you know, once we get this, we will know a lot more, of course, were keen to move this as fast as possible, but to really great to get the data we do have now, right? I mean, this is what we've been looking and you get more drug in the colon and less in the blood. So it's fantastic. We're getting that people know, tofacitinib, you know, it's been used so many patients and work. So yes, we have approaches we're going to look at. But let's look at this data that's coming up now.
John Vandermosten
Sounds good. And I just wanted to look at just the larger environment of getting biologics or large molecule drugs delivered orally. We've done some research on our side is showing about 300, $400 billion in revenues from biologics. And then, of course, there's the 100 billion number that I think Goldman put out there about the potential for GLP-1 agonist. So there's a lot there's a lot of products that could potentially be used this way. And there's a lot of benefits of that, which we all know about what is keeping sponsors back from really jumping on board with this and moving it forward as fast as possible? What do they want to see before executing, I guess something that has money behind it, in fact.
Aditya Mohanty
So you're talking about our biologics platform, which absolutely is designed to be able to deliver these biologics. So I wouldn't say it's not our difficulty has been we are already engaged with several large pharma companies. Can't tell you a lot of details and talk about this in the past because they want to stay quiet until they get to a certain, but whether they're willing to share what discussions end up resulting in. So we are absolutely fully engaged in several conversations, I think and partnerships are hard to predict in terms of timing, but we feel pretty good about the way these engagements and conversations have gone that we could likely do something this year. So we keep saying yes, this year, we're going to get to a partnership with somebody. And I know that's kind of hard to say because we don't publish the relationship and what they're looking for and we're not allowed to. But what we can say is the engagement's great fully involved. We're doing a lot of work. It's progressing and hopefully we'll be able to share more fairly soon.
John Vandermosten
Right, great. Thank you, Adi. I appreciate it.
Operator
Julian Harrison, BTIG
Julian Harrison
Good afternoon. This is Ray on for Karen. Congrats on the progress and data center. Hi, and thank you for taking our questions and a couple on BT. 600. And the first is if adequate PK is confirmed in this final SAD MAD data expected in 2Q, would you be open to studying or developing any other payloads for IBD where optimized PK in the gut could lead to more efficacy?
Aditya Mohanty
Have a fantastic question. So you do know or maybe you don't we keep talking about. We have our own version of our Lima mAb. We've done some work with it. Certainly we know that there are certain other molecules we could use this approach with and we could quickly turn to that. Now we don't want to jump ahead. We do have internal know-how on availability of molecule and ability to expand fairly quickly, but we're not going to jump. We're going to get this data and have the ability to do all those things either by ourselves or with somebody. So yes, opportunities will start to really grow very quickly in the next few months as we get this data.
Julian Harrison
Great, thanks. And we had another one on potential use. I know you touched on potential used in combination therapies earlier, but could you elaborate on potential potential positioning in the current UC landscape given PP. 600 preliminary safety profile and how this might influence target population for enrollment in future Phase 1b.
Aditya Mohanty
Okay. So it's a little tougher to talk about the and combination therapy landscape. There are, as you know, some trials already happening where people are starting to tried multiple molecules in these in this patient population because issues the core issue, right? You know, like almost all of these drugs end up working for 20 or 25% of the population and the remainder like two thirds don't have anything. And so people are trying these combinations. The biggest issue often holding people back is toxicity and toxicity with each individual drug and then when you compound it with multiple drugs. So clearly, having a potentially lower toxic toxicity or low level provides the opportunity to drive multiple things along with BT. 600.
So we have had some preliminary conversations, but it's a bit early to start telling you exactly what kind of combinations we can use. We do see the potential for PT. 600 to move much sooner than where currently tofacitinib is in terms of where to use in second third-line therapy. And so the opportunity is going to be much larger as we go forward, we will know more so a little early to tell you that in terms of being affecting the selection of the patients, how let Oriola tell you a little bit about about our current thinking of potentially what kind of patients we're thinking about with Phase Ib. So that will evolve as we learn more from our MAD data at our asset.
Ariella Kelman
Thanks, Manouch. Adding how we are planning on a study in UC patients during the second half of 2024 and on and we should be able to provide more details in the coming months. But I'm considering our goals for BT. 600, which are higher colon tissue concentrations, which we know from data across multiple treatments can lead to greater inhibition of the jack that pathway at the site of disease and are associated with better efficacy in patients with UC. We think that the first population that should be studied are patients with moderate to severe ulcerative colitis. And that's what we're targeting for on for UC, Todd.
Julian Harrison
Got it. Thank you very much.
Operator
Thank you. There are no further questions at this time. I'd like to hand the call back over to Adi Mohanty for any closing comments.
Aditya Mohanty
Thank you all for joining us. We're really excited with our progress and look forward to coming back and keeping everybody updated. Thank you.
Chuck Padala
Thank you all once again for joining us for the fourth quarter 2023 financial results call. We are excited about the progress and have a good evening, everyone. It's completed.
