Can-Fite BioPharma Ltd. (CANF) Q1 2020 Earnings Report, Transcript and Summary

Greetings and welcome to the Can-Fite BioPharma First Quarter 2020 Business Update Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. It is now my pleasure to introduce your host, Mr. Bob Yedid of LifeSci Advisors. Thank you. You may begin.

Thank you, and thanks to everyone for joining us for the Can-Fite’s first quarter 2020 conference call. Today, the company will provide a financial update for the quarter ended March 31, 2020, as well as latest developments in Can-Fite's advanced stage clinical pipeline. On the call today are Can-Fite's CEO, Dr. Pnina Fishman; and the company's CFO, Motti Farbstein. At the end of the call, we will have a question-and-answer session. We'll start with a brief Safe Harbor statement. This conference call may contain forward-looking statements about Can-Fite's expectations, beliefs or intentions regarding, among other things, market risks and uncertainties, its product development efforts, business, financial condition, results of operations, strategies or prospects. Forward-looking statements can be identified by the use of forward-looking words such as believe, expect, intend, plan, may, should or anticipate or their negatives or other variations of these words or other comparable words or by the fact these statements do not relate strictly to historical or current matters. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that can cause Can-Fite's actual results to differ materially from any future results expressed or implied by the forward-looking statements. Now, it's my pleasure to turn the call over to Dr. Pnina Fishman, CEO. Pnina?

Thanks, Bob. Before I begin, I'd like to share on behalf of all our Can-Fite team members and their families our deepest sympathies for those who have been affected by the global COVID-19 pandemic. We also sincerely thank those who have been working to keep all of us safe throughout the crisis, particularly those healthcare workers on the frontline of COVID-19 fight. Their commitment and selfless act are an inspiration to all of us. And on behalf of our entire Can-Fite team, myself, thank you. We are excited and highly encouraged about the latest clinical development at Can-Fite for our advanced drug, Namodenoson and Piclidenoson. Namodenoson has shown very compelling Phase II data for the treatment of NASH. Piclidenoson is a candidate for treating COVID-19 and we have filed a pre-IND request with the U.S. FDA for this indication. Now, I will get into details about this and other clinical developments. We successfully concluded Phase II study on Namodenoson in NAFLD and NASH, which achieved its efficacy and safety endpoints. We are very pleased to report that Namodenoson resolved all cases of NASH, reduced liver fat -- reduced liver fibrosis, inducing anti-inflammatory effect while showing an excellent safety profile. The double-blind, placebo-controlled, dose finding efficacy and safety study enrolled 60 patients with NAFLD with or without NASH. Patients were randomized into 25 mg and 12.5 mg of Namodenoson or placebo. Following 12 weeks of treatment, the result of the study determined the optimal dosage to be 25 mg for both safety and efficacy. The percentage of liver fat and liver stiffness showed a trend of decrease in the 25 mg group throughout the study period, reflecting improvement in both parameters. Serum adiponectin levels increased in both Namodenoson groups. Adiponectin is a cytokine with robust anti-inflammatory, anti-fibrotic effect that is used as a biomarker in NAFLD/NASH trials. In the Namodenoson 25 mg treated group, the proportion of patients with high steatosis scores, in other words, liver fat declined from 37.5% to 13.3% of the population as compared to the placebo group, which decreased from 37.5% to 35.3% only of the population. Patients treated with 25 mg Namodenoson had statistically significant reduction in hepatic fibrosis, in other words, scar tissue in the liver as measured by the FIB-4 score as compared to placebo. FIB-4 change from baseline improved by minus 0.082 in patients dosed with 25 mg of Namodenoson as compared to the placebo group, which deteriorated from baseline by 0.042 points. Namodenoson also significantly reduced ALT and AST liver enzymes and reduced linear decrease in body weight in the 25 mg group. The A3AR, the A3 adenosine receptor biomarker, Can-Fite’s main target was stable, demonstrating the presence of the receptor after chronic treatment and reflecting the validity of the target. Additionally, a very important finding is that Namodenoson significantly resolved all cases of NASH. 25% of the patients treated with the high dose of Namodenoson had NASH at the beginning of the study and by the end of the study their NASH was significantly resolved as compared to an increase in new NASH cases in the placebo group from a baseline of zero to 5.9%. Namodenoson continued to be safe and very well tolerated with no drug emergent severe adverse effects and no reported hepatotoxicity. As a result of this study and in consultation with key opinion leaders in the field, Namodenoson determined to be a very strong candidate for continued clinical development in the treatment of NAFLD/NASH, particularly since no other treatment options are currently approved for this growing unmet need. Immediately following this Phase II data, we were very pleased to receive a Notice of Allowance for a patent from the U.S. Patent and Trademark Office for Namodenoson in the treatment of NASH. During the first quarter, we also exceeded this patent in Korea. The protection provided by this IP has enhanced value for us as we move forward into advanced stage clinical trials in this indication and as we evaluate distribution of partnerships for Namodenoson. Turning now to our planned pivotal Phase III liver cancer study of Namodenoson: Following the successful End-of-Phase II meeting with the FDA regarding Namodenoson in the treatment of hepatocellular carcinoma, the FDA agreed with our proposed pivotal Phase III trial design to support a New Drug Application submission and approval. The Phase III study protocol and registration plan have been already submitted to the European Medicine Agency, EMA. Our aim is to conduct one Phase III pivotal trial in U.S., Europe and Israel for regulatory approval in those markets, should the study achieves its endpoint. Namodenoson continues to be used in Israel under the compassionate use program. Now, I’ll return to developments with Piclidenoson. We are expecting the interim data in the fourth quarter from two Phase III studies of Piclidenoson: One in the treatment of rheumatoid arthritis and the other in the treatment of psoriasis. Over 50% of patient enrollment has been completed in both these studies. The data will be monitored by an independent data monitoring committee, IDMC, which will have un-blinded access to the data during the third quarter and we intend to announce this data in the fourth quarter. A new development with Piclidenoson, which we are hopeful about, is its potential to treat COVID-19. Piclidenoson’s anti-rheumatic and anti-viral effects, combined with its excellent safety profile, make it a potential candidate for the treatment of coronavirus. We recently filed a pre-Investigational New Drug meeting request with the FDA for Piclidenoson in the treatment of COVID-19 patients with moderate-to-severe symptoms. We anticipate guidelines from the FDA during submission. Based on this guidance, we plan to submit an IND application for Piclidenoson to be evaluated as a potential addition to the current standard-of-care treatment for COVID-19. We had previously announced that we were approved to commence a COVID-19 clinical study in Israel. While we did commence this trial, we have not enrolled patients due to the decreasing number of COVID-19 patients in Israel. We’re now focusing our COVID-19 clinical development in U.S. which currently has the largest number of cases in the world. During the first quarter, we also entered collaborative research agreement with the Lewis Katz School of Medicine at Temple University, Philadelphia to study the anti-viral activity of Piclidenoson on COVID-19 viral load. I will now turn the call over to Motti for a review of the financial results. Motti, please.

Thank you, Pnina. Revenue for the three months ended March 31, 2020 were $0.2 million compared to the revenues of $0.3 million during the three months ended March 31, 2019. The decrease in revenues for the first quarter of 2020 was mainly due to the recognition of a lower portion of advance payments received under distribution agreements from Gebro, Chong Kun Dung Pharmaceuticals and Cipher Pharmaceuticals. Research and development expenses for the three months ended March 31, 2020 were $3.77 million compared with $1.44 million for the same period in ‘19. Research and development expenses for the first quarter of 2020 comprised primarily of expenses associated with the Phase II studies for Namodenoson in the treatment of NASH and HCC, as well as expenses for ongoing Phase III studies of Piclidenoson in the treatment of rheumatoid arthritis and psoriasis. The increase is primarily due to increased costs associated with the accelerating rate of enrollment of patients for the Phase III clinical trial of Piclidenoson. General and administrative expenses were $0.7 million for the three months ended March 31, 2020 compared to the $0.57 million for the same period in ‘19. The increase is primarily due to an increase in professional services and insurance expenses which was partly offset by the decrease in travel expenses. Net loss for the three months ended March 31, 2020 was $4.34 million compared with a net loss of $1.83 million for the same period in ‘19. As of March 31, 2020, Can-Fite had cash and cash equivalents of $5.76 million as compared to $2.7 million at December 31, ‘19. The increase in cash during the three months ended March 31, 2020 is due to an aggregate of $8.4 million received through the exercise of certain outstanding warrants following their repricing in January 2020, a public offering in February 2020, and the partial exercise in March 2020 of warrants issued in the February 2020 public offering. I will now turn the call over to the operator for our Q&A session.

[Operator Instructions]. Our first question comes from the line of Jason Kolbert with Dawson James. Please proceed with your question.

Can we talk a little bit about how you move the NASH trial forward? Now it appears to me that you have definitive proof-of-concept data? And then what impact have you had in terms of the RA trial for staying on the timeline, given some of the things that have happened around the world and in the U.S. related to COVID?

Thank you, Dr. Kolbert. Actually regarding the NASH, we have now -- just now concluded the final -- or are going to conclude the final data of the clinical study. And we started to fit with all our key opinion leaders who are helping us with the design of the next clinical study and we’ll come up with the results of these discussions very shortly and share with the public. As of the rheumatoid arthritis, yes, it creates a delay of couple of months but we think it's worthwhile. And we even are thinking, if the data will come positive, maybe to jump right away to the next Phase III and then it means that we are not creating any delay. Thank you.

And can I just ask you a follow-up question regarding the development of Piclidenoson in COVID. Just help me understand kind of the sequence of events, given it seems almost like -- what you're expecting in terms of the development timeline and the window, and kind of the studying that you're supporting down in Pennsylvania or Philadelphia?

Yes, actually, we are currently looking for the response of the FDA to our pre-IND and hopefully that will come back very shortly. And then we have already allocated a site which we will be able to enroll patients to be treated with Piclidenoson. The timelines are not so much in our hands. We rely on the response of the FDA. But we feel that it will be very shortly and then we will be able to submit the protocol for the IRB at this site.

And Pnina just my last question is regarding business development. I mean one of the things you've done a great job on is talking a little bit about the business developments around the globe. Help me understand the interest level on Namodenoson in order to get a partner on board to bring that into a pivotal trial? Thanks.

Thank you. Actually, the company now is summarizing all the data and we are participating in the next couple of months in couple of partnering meetings. Yes, we are actively looking at partners and partners -- potential partners are looking at us. And we do hope to partner with this very important clinical indication and be able to accelerate the development. Thank you.

Our next question comes from the line of Vernon Bernardino with H.C. Wainwright. Please proceed with your question.

Hi, Pnina and Motti, good afternoon. Thanks for taking my question. Just have a few follow-ups on your Piclidenoson study in COVID-19 patients. Now, the next plan is to submit this as an addition to current therapies, and you filed the pre-IND. But what kind of drugs do you think Piclidenoson will be studied alongside or that has yet to be determined as far as these patients? What kind of drugs are you seeing so far, other treatments being used in these patients? Are you planning to evaluate? Or is it just like all comers -- or in effect you're just going to add Piclidenoson and perhaps direct a little bit more as far as the kind of COVID patients, like severity or not as severe patients?

Yes. Actually, it will be moderate to severe and we tend to treat on top of standard-of-care. As standard-of-care today in couple of -- in most of the sites will be there in this view. So we will do it on top of it. On top of every other standard-of-care treatment, it will be given in the site that we will treat the patients.

So, standard-of-care can be a lot of things. So do you plan -- or do you expect that some of these patients could be on clinical trials for other investigational drugs. For example, would you expect some of these patients to be treated at the same time, such that the clinical trial design -- protocol design is open to patients being treated with Remdesivir, even though that patient was not being treated with Remdesivir from the start?

As all of us know today, it mostly can be Remdesivir or just standard-of-care which is just supporting the patient. Mostly nothing else, it will not be added to another drug, which is on clinical study. So, we assume based on our talk with the investigators that this will be the situation.

Okay. And so, what are the -- you said that soon. When do you expect and what is required, if anything -- in these days, so many things can be different with the FDA. When do you expect and what kind of response do you expect, is that a letter, is it further correspondence with a conference call for the pre-IND?

Actually, I'm really not the FDA and I cannot tell you if it will be a call or a letter or another type of notice. But I fully rely on the FDA that they will come back with instructions how to go forward. And we will of course share with the public right away.

Okay. And then regarding NASH, any further plans, for example, with guidance of FDA for additional data?

We are now in the last stage of getting into the data. It seems that we came up with a good data till now. If there will be more? So again, I am saying, we will share it. And actually summarizing all the data is a very good guidance for us in how to go forward and design the next study protocol. And we will be very happy to share these as well.

Thank you. There are no further questions at this time. I'd like to turn the call back over to Pnina for any closing remarks.

Thank you. So, Namodenoson Phase II results showing efficacy in NASH/NAFLD is not only a very significant milestone for Can-Fite, it is also important for the medical community that is seeking a safe and effective treatment for the rapidly growing number of patients diagnosed with fatty liver diseases. The number of cases is increasing dramatically due to threat in demographics combined with rising rate in obesity and diabetes. In fact, Namodenoson was able to not only reverse but also resolve NASH in the Phase II patients treated with 25 mg of Namodenoson is very compelling. We look forward for a response from the FDA about our pre-IND for Piclidenoson in the treatment of COVID-19. Looking to the rest of 2020, we expect to have several key additional milestones including interim Phase III results in rheumatoid arthritis and psoriasis in the fourth quarter. Thank you, everyone, for joining the call and have a good day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thanks for your participation. And have a wonderful day.