Good day, everyone, and welcome to the Celcuity Release of First Quarter 2020 Financial Results. At this time, all participants are in a listen-only mode. Later, you'll have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call will be recorded. [Operator Instructions] ] I'll now turn the program over to the Chief Financial Officer, Vicky Hahne. Please go ahead. And it is now my pleasure to turn the program over to Celcuity's CEO, Brian Sullivan. Please go ahead.

Thank you, operator. Good afternoon, everyone. And thank you for joining us today for our discussion of Celcuity's First Quarter 2020 Financial Results and Business Highlights. We issued a press release announcing our financial results, for the first quarter ended March 31st 2020 a few minutes ago. Today's press release can be found on the Investors section of our website www.celcuity.com. Before we begin, I would like to remind listeners, that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, which are outlined in today's press release. And in our reports and filings with the SEC. Actual result or results, may differ materially from those projected in the forward-looking statements. Such forward-looking statements and their implications, involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. On this call, we will also refer to non-GAAP financial measures. These non-GAAP measures are used by management to make strategic decisions, forecast future results and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the company's ongoing core, operations and prospects for the future. You can find the table reconciling the non-GAAP financial measures to GAAP financial measures, in today's press release. And with that, I'd like to introduce Brian Sullivan our CEO.

Thank you, Vicky, and good afternoon everyone. I'm very pleased that you joined us today, for an update, on our progress this quarter. I'd like to comment on our first quarter results focusing in particular, on a few things. The status of our product development projects, our collaboration discussions and our FACT 1 and FACT 2 clinical trials. Vicky will follow me to discuss our financial results. And then, we'll open the line for questions. Today only a small proportion of cancer patients are benefiting from the advancements made over the past 20 years, in molecular-based medicine. And recent reports estimate, that roughly 80% of cancer patients, lack an actionable biomarker, typically a molecular mutation. And that an oncologist can use the guide, selection of a targeted therapy for their cancer patients. There's thus a huge unmet patient need, for new diagnostics with the 80% of cancer patients today who are not eligible for targeted therapies. We founded Celcuity to address this unmet need. Our CELsignia platform, diagnoses dysregulated oncogenic signaling which is the underlying, cellular activity driving many cancers. The patients we diagnose with a dysregulated signaling pathway have a disease mechanism that directly corresponds, to a matching targeted therapy's mechanism of action. Our strategy is to help pharmaceutical companies obtain new indications for their targeted therapies, to treat the patients our CELsignia tests identify. Since dysregulated signaling is too complex for molecular tests to characterize, we can leverage the capability of our CELsignia platform to create a proprietary business strategy. To execute our strategy, our R&D team is working hard to expand the applications for our platform. New tests expand the number of patients who may positively impact. And increase the number of potential pharmaceutical collaborations, we can pursue. So I'm excited to report, that we again made…

Thank you, Brian. Our first quarter net loss for 2020 was $2.25 million or $0.22 per share compared to a $1.85 million net loss or $0.18 per share for the first quarter of 2019. Because these quarterly net losses include a significant non-cash item, stock-based compensation, we also include in our press release non-GAAP adjusted net loss for the quarter. Our non-GAAP adjusted net loss was $1.78 million or $0.17 per share for the first quarter of 2020 compared to non-GAAP adjusted net loss of $1.66 million or $0.16 per share for the first quarter of 2019. R&D expenses increased approximately $0.26 million during the first quarter of 2020 compared to the first quarter of 2019. This was primarily due to a $0.25 million increase in compensation expense, which included a $0.19 million of non-cash stock-based compensation. In addition, other research and development expenses increased $0.01 million due to clinical validation and laboratory studies and operational and business development activities. The approximately $0.8 million increase in G&A during the first quarter of 2020 compared to the first quarter of 2019 was attributable to non-cash stock-based compensation. We ended the quarter with approximately $16.9 million of cash and cash equivalents. The net cash used in operating activities for the first quarter of 2020 was $1.83 million. This was a result of non-GAAP adjusted net loss of $1.78 million and $0.14 million of working capital changes in prepaid assets and accounts payable offset by depreciation expense of $0.1 million.

Thank you, Vicky. So in summary, we're excited about our continued advancement of new CELsignia tests and the progress towards closing important collaboration agreements. We're monitoring the COVID-19 situation closely and doing everything we can to mitigate any impact on our trials and collaboration discussion time lines. Operator, could you please open up the lines for questions.

[Operator Instructions] And we'll take our first question from Yi Chen with H.C. Wainwright. Please go ahead, your line is open.

Well, this is Marks speaking on behalf of Yi Chen from H.C. Wainright. Congrats on the progress and thanks for taking our question. So, just a clarification point. When do you anticipate the PI3K functional signaling test to enter a clinical trial following your great progress in the development of the test in the first quarter?

No, that's a good question. So, we started discussions as we found the timing of getting these discussions to fruition is quite extensive. And so we've begun discussions with different investigators and pharmaceutical companies. We haven't put a hard date on that. But if history is a guide, it typically would take -- we would expect 12 to 18 months to get a collaboration from the time we announce initial data.

All right. Thank you for the update.

You're welcome.

We'll take our next question from Per Ostlund with Craig-Hallum. Please go ahead, your line is open.

Thank you. Good afternoon Brian and Vicky.

Hi Per.

I'm going to follow-up on the previous question. Hi Brian. You mentioned the RAS signaling test that you're working to develop and you cited PI3K as one of the underlying pathways within RAS signaling and dysregulation I guess that you're targeting. And it sounds like a nicely sized patient population that can help you uncover if you're successful in that regard. Given that -- it sounds like PI3K is a subset of RAS. Would you expect a stand-alone PI3K trial collaboration, or would you expect that you might find more success when for lack of a better word a unified RAS CELsignia test is available?

No, that's a great question. And kind of there's a bit of biology involved in that. So, the RAS signaling network is comprised of two important pathways MAPK and PI3K. And within those pathways are different nodes that includes PI3K, AKT, and then RAF and MEK and ERK. So these are all potential drug targets. They're all involved in either supporting proliferation of cells or how long they can survive. And the work we completed when we were developing our PI3K tests, it, kind of, revealed to us how we could go about untangling other nodes that are part of this RAS signaling network. And so what I think we will ultimately end up with are several you might call them subtests within the RAS that identify subsets of patients within the RAS-involved cancer. And we refer to the RAS signaling network because it will invariably in these other tests involve or require multiple drugs to treat the disease mechanism and because these pathways cooperate. And the situation is somewhat akin to the one we discovered when we found c-MET involvement in cooperation with HER family pathway. In this case, we are working with intracellular targets as opposed to extracellular receptor targets which adds another layer of complexity. But overall, then I would say that PI3K will ultimately probably be as we would consider a subset of a family of RAS-related signaling tests.

Okay. That makes sense. And your answer actually kind of captured a follow-up there because I was sensing a parallel to the c-MET test that you had developed as well. So, thank you for preemptively answering my next question. On c-MET you mentioned the 12 to 18-month sort of time line on a collaboration for PI3K. We're kind of sitting out around that level with c-MET at this point. Do you -- would you expect that that's sort of the nearest in collaboration we would expect at this point?

I would say that it's among -- I think it's like my children. They're call -- in this case we have several that are at similar stages. And amongst those at these similar stages are ones that would include c-MET drug.

Okay, all right. That makes sense. And then one last question for me. And you addressed it in the press release and in your comments. I had kind of come into today expecting that COVID-19 probably had put a little bit of chill on clinical trial activities and at potential collaborations as people are thinking about what to do during this pandemic. As it pertains to clinical events like AACR, do you sense any different level of engagement from potential research partners or pharma on collaborations when there isn't that face-to-face at some of these bigger industry events and where a lot of things have gotten virtual, are you still seeing or sensing that there's going to be that same engagement level, or is there a bigger hurdle to overcome having to do it kind of more remotely like that?

That's a good question. Yes. I think it can actually work the opposite. I think people have quickly adapted to having Zoom calls and to reviewing presentations on a shared screen and they're efficient and it allows for easy back and forth. So we've been pretty successful in kind of engaging folks in this environment. We obviously haven't been traveling and visiting folks. And so we're hopeful that even though AACR won't give us a chance to run into people, which I think is one of the benefits of those conferences is that you meet people who wouldn't otherwise maybe meet. But we're pretty deliberate about the centers that we're targeting and we're pretty focused on how to network within the groups that we have relationships with. And we have a pretty focused target in terms of number of sites we'd like to collaborate with and how they'd line up with other sites that we might be having discussions with. So sure it's -- all things being equal, it's better to meet people live at a conference like that, but we're still plugging away and able to advance the collaboration. I think the biggest effect of COVID-19 though is that many of the doctors that we're working with are senior leaders in the institutions where they're survey. And so they are involved in developing COVID-19 protocols and kind of larger issues around their health care systems. And so that just takes time away from what we're trying to do and -- which is understandable. But it doesn't make them go away either. So it's just everything is kind of burdened with the backdrop of COVID-19. I guess vis-à-vis the trials I mean the thing that was surprising to us was the impact on treatment of cancer patients. We knew and you probably read about a lot of other trials that are evaluating cancer drugs that have been impacted delayed slowed down and we're no different than them. But what was surprising at least to us was the fact that for many cancer patients, procedures surgeries to remove, let's say a lesion are being delayed and it has as much to do with risk of infection for these patients as it does potentially for whether they would be considered elective surgery. But regardless, I mean the health care system in general has been impacted and that has not spared the cancer world. As I probably would have thought, if you had asked me the question in early March, but it's clearly affecting pretty much every corner of the health care market.

It definitely has. Definitely a fluid situation. That’s all I had. Thank you, Brian. Appreciate it.

Okay. Thank you, Per.

[Operator Instructions]

Well I think in the absence of further questions, we'll release everybody. We really appreciate your listening into our call and look forward to communicating with you in three months from now. Goodbye.

This does conclude today's program. Thank you for your participation and you may now disconnect.