Matinas BioPharma Holdings, Inc. (MTNB) Q4 2016 Earnings Report, Transcript and Summary

Greetings and welcome to Matinas BioPharma Quarterly Update Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief questions-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Jenine Thomas with Investor Relations. Please go ahead, Ms. Thomas.

Good morning, everyone, and thank you for joining Matinas BioPharma's quarterly business update conference call and webcast. I would like to remind you that today's webcast will be accompanied by a slide presentation that can be found under the investors section of the Company's website matinasbiopharma.com under events and presentations. At this time, I would like to remind our listeners that remarks made during this call may state management's intentions, hopes, beliefs, expectations or predictions of the future. These are forward-looking statements that involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the federal securities laws. These forward-looking statements are based on Matinas BioPharma's current expectations and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are discussed in the periodic reports Matinas BioPharma files with the Securities and Exchange Commission. These documents are available in the investors section of the Company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully. Following the Company's prepared remarks, the call will be opened up for a question-and-answer session. Joining me on the call today are Jerry Jabour, the Company's Co-Founder and President; and Roelof Rongen, Co-Founder and CEO. It is now my pleasure to turn the call over to Jerry Jabbour.

Thank you, Jenene. Good morning to everyone and thank you for joining us today. This morning's call is an appropriate time for us to briefly look back at our progress over the last 12 months and highlight certain notable accomplishments during the period and then discuss upcoming milestones and how Matinas is positioned for 2017 and beyond. There is no question that 2016 was a year of tremendous growth for Matinas as our focus on operational excellence and building a foundation for our disruptive and proprietary technology has placed us in a strong position to make 2017 a potential transformational year for our Company. 2016 was filled with notable achievements such as QIDP and Orphan designations for our product candidates, establishing a relationship with and receiving grant support from the Cystic Fibrosis Foundation for a portion of our MAT2501 development program as well as our Chief Scientific Officer, Dr. Raphael Mannino, receiving the 2016 Edison Patent Award in the drug delivery category as the inventor of our cochleate technology. Most importantly, however, in 2016 we successfully advanced our lead anti-infective product candidate MAT2203 into two separate Phase 2 clinical studies and launched our Phase 1 development program for our second anti-infective product candidate MAT2501. In fact just last week, we announced positive data from our first Phase 1 study of MAT2501 and as discussed in our press release this morning, we expect to announce interim and top line results from our two ongoing Phase 2 studies of MAT2203 in June of this year. Our CEO Roelof Rongen will go into more detail on both the results of Phase 1 study of MAT2501 and our expectations for our Phase 2 date announcements for MAT2203 in a few minutes. It is also worth mentioning that on top of our clinical progress, we have also continued to move Matinas forward on the corporate and financial fronts as we look to build a strong and sustainable Company for the long term on the back of our platform delivery technology. In addition to receiving key patent allowances covering our technology during 2016, we were able to secure a state-of-the-art GLP/GMP lab space, which puts us in position to be able to make all necessary quantities of product to support our clinical programs through early commercialization while also providing an appropriate space for us to continue to explore uses for our technology beyond our own clinical stage candidates. Aside from demonstrating our confidence in our technology and its potentially broad applicability across a variety of therapeutic areas, this investment allowed us to consolidate three existing sites into one which we believe will create significant efficiencies throughout our organization. Furthermore, Matinas has also made significant progress on the financial front during 2016 which has continued into 2017. Our strategic warrant tenders successfully allowed us to strengthen our balance sheet and eliminate much of the warrant overhang in our stock. Net proceeds of approximately $12.8 positioned the Company to remove the going concern from our financial statements and qualified Matinas to uplist to the NYSE MKT. We were so honored to celebrate these achievements by ringing the closing bell on the NYSE last Wednesday, a great day for Matinas and its stockholders. Finally, and most recently, we are thrilled to have added Dr. Eric Ende to our Board of Directors officially today. As we continue to grow our Company and make progress on all fronts, getting the right mix of seasoned biotech talent to our Company and Board of Directors is of great importance. We are excited that we were able to attract someone of Eric's track record and expertise and we look forward to continuing to build our team over the course of 2017. Turning to our financial results for 2016, you will see that we ended 2016 with approximately $4.1 million in cash. Following the warrant tender our cash position today is the best it has ever been, and with approximately $16.8 million in cash on hand following completion of the tender, we believe that we are positioned to fund operations through the second quarter of 2018. This is important because that runway is well beyond multiple near-term data points and as those data points and our update on our product development plans that are the key focus of our call this morning. So, it is my pleasure to turn the call over to our CEO Roelof Rongen to walk you through our progress and also our expectations on the clinical front in more detail. Roelof?

Thanks for that update Jerry. I will spend the next few minutes addressing our two key development programs, our lead antifungal program MAT2203, the oral formulation of amphotericin B, and our amikacin antibiotic program MAT2501 which is targeted at non-tuberculous mycobacterium, unexplored for other difficult-to-treat gram-negative infections. So beside of making very significant progress on our corporate finance side, we are also very encouraged by the progress that we've made on the clinical development side and we believe we are on the way to address several key company value drivers. First, proof-of-concept with efficacy data for our lead program 2203, and with that proof-of-concept for the entire lipid crystal nano-particle cochleate program and also put a first stake in the ground for that and show the value of our technology platform with the advancement of MAT2501. So I'd like to first go to our most recent announcement which were the positive results for our Phase 1 study of MAT2501, which is our cochleate formulation of the currently IV-only aminoglycoside amikacin. I'd like to share with you a vision, a vision that we are actively exploring with preclinical research at this point, of how this product potentially can take the most potent agent of a mostly hospital-based intravenous antimicrobial category called the aminoglycosides and take this in oral delivery form to the community for the treatment of drug-resistant gram-negative bacterial infections and with that add to the armamentarium of infectious disease specialist treating these drug-resistant patients at home instead of an expensive hospital environments and thus saving very dear healthcare system dollars. The need in this vision is widely recognized and unfortunately the field is marked with several failures to develop approvable forms of novel medications in the field. And we believe that this provides a unique opportunity for MAT2501. MAT2501 came to the Company with an active SBIR contract with the NIH, a long-standing supporter of the technology, along with solid data in the area of non-tuberculous mycobacterium. This was both in disseminated as well as in lung biofilm infection models. The data for this represented at earlier medical conferences and the summary posters are available on our Company website. NTM is an infection caused by environmentally present bacteria and is not transmitted from person to person is believed, at least that is the current belief. NTM is it mostly manifested as a lung infection, typically in middle-aged women, and it is also prevalent in cystic fibrosis patients. And if not treated properly, it will progress in a similar way as we know of tuberculosis. In the U.S., we have approximately 50,000 to 90,000 patients, but unfortunately about 40% of patients do not respond well to the established three drug guideline therapy. And it's these refractory patients that are the source of a very substantial unmet medical need. Now IV amikacin is being used frequently in these refractory patients, but it is very inconvenient, it's costly because of long-term infusions, but more importantly the side effects are leaving patients with impaired kidney function and more frequently with hearing loss due to the ototoxicity of aminoglycosides. And these side effects are being triggered by the high P concentrations of amikacin in the blood after an intravenous administration. Fortunately, in the pre-clinical research studies of orally administered MAT2501 we significantly muted these P concentrations in the blood, which provides the setting in which MAT2501 may become the leading therapy for the treatment of refractory lung NTM. At this point, we have an active IND for MAT2501 for the treatment of NTM and the FDA designated the product as a QIDP and orphan drug product, which potentially provides up to 12 years of marketing exclusivity upon approval, very significant. So, this recently completed Phase 1 study was a key study for us to start executing on our development vision for MAT2501. When we go through the slide, we can see that the study was a single-ascending dose study of MAT2501 at 200, 400 and 800 milligrams with a fast fat crossover element to develop an understanding of the effect of food on the kinetics and tolerability versus the administration after fasting. We evaluated kinetics on blood, urine, feces and we carefully looked at tolerability and acute safety. Peak blood levels were an area of focus. We discussed how IV amikacin is known to generate these high peak levels with potential kidney and ototoxic effects causing hearing loss. So, the FDA wrote limitations in the labeling for the current IV amikacin products and requires that re-dosing cannot happen, if the concentration is higher than 10 micrograms per ml and peak levels are not supposed to exceed 35 micrograms per ml. So with that background, we observed in our study, in our single-dose study that MAT2501 peak levels did not exceed 0.1 micrograms per ml. That leaves a more than 100 times safety margin and it is strongly supportive of our development thesis that with multiple dosing this will not be exceeded either. So that was a very important finding for us. Now you cannot look at this in this in isolation, but other key kinetic data indicate that we indeed had significant absorption and distribution. And that was exemplified, for instance, by the single-dose peak levels in the urine exceeding 3 micrograms per ml or 30 to 40 times peak blood levels. And it was sustained on the second day we saw levels of 0.2 micrograms per ml, still two to three times more than that peak blood level. So, these enhanced concentrations in certain body compartments are highly encouraging and potentially supportive of uses beyond NTM lung infections. And we think here, for instance, of urinary tract infections, pneumonia and other types of infections that are typically caused by gram-negative bacteria. In this study, no serious adverse events were reported. Most adverse events were mild and gastrointestinal of nature and were similar to those seen with MAT2203, not that we believe of an antibiotic nature. So when we put the picture together for the future, we believe that the tolerability data from this study appear to support 400 milligram b.i.d. dosing which we are going to confirm in a multiple ascending dose Phase 1 study to evaluate the kinetic safety and tolerability of the product in that multiple dose setting. We believe that MAT2501 has significant differentiation potential. So, we decided that this multiple ascending dose Phase 1 study would provide the best understanding of our product, not just in a single narrow indication, but with the breadth and depth of information that we need to tap into the full potential of the product. As we discussed, we see the potential of MAT2501 as demonstrated in lung NTM and provide significant potential benefits for patients that have difficulty with inhaled therapies, but we also see the potential in treating mycobacterium abscessus in NTM and cystic fibrosis patients where the need is very high because there is lack of effective therapies in this field. And, in fact, the Cystic Fibrosis Foundation was so encouraged with our preclinical data it awarded us recently with a research contract to establish the MAT2501 efficacy in animal models of NTM infections in cystic fibrosis. So, we think that will be a very important addition to our program. Finally, we see the potential for MAT2501 in the field of gram-negative infections with bacterial strains resistant to common antibiotics like amoxicillin, cephalosporins, carbapenems and quinolone antibiotics where the CDC has reported the rapid increase in resistance rates. We noted several product failures recently in this field, and we believe it is important that we develop MAT2501 in the best way to embark upon key studies in the future and we think that is best done by first knowing our product well. That's where our multiple ascending dose studies come into play. So very happy with the first stake in the ground on MAT2501, I'd like to switch gears now to our lead program MAT2203. MAT2203 is the cochleate formulation of amphotericin B, is currently only deliverable by IV. Our formulation brings a number of key benefits together. One, amphotericin B is probably the broadest spectrum and most fungicidal agent that we have available, not liver metabolized and that reduces drug interactions with other medications that are liver metabolized and allows use in complex oncology regimens including chemotherapy for hematologic malignancies. Now, the amphotericin molecule also has drawbacks. It can only be administered by IV and highly toxic, mostly for the kidneys. So, the unique attributes of our cochleate technology appeared to overcome these as the tiny lipid crystals that contain the amphotericin B on the inside are absorbed in the intestine after oral administration and protect sensitive organs by keeping the drug locked up until it reaches the site of infection. It's a very unique product profile we believe. And when we showed this to the key opinion leaders in the antifungal field with whom we have close collaborative relationships, they advised us that we should pursue an indication for the prevention of fungal infections in immunocompromised patients. And we think here of patients that are indeed being treated with chemotherapy for cancer and hematological malignancies. They think that would be the best indication for our product, and as a result we think we have a program that focuses on the best fit between the product and unmet need. This is laid out and we presented this last fall in the Phase 2 program with three studies towards a pivotal study in a invasive fungal infection prevention in patients with hematological malignancies, which are included on this slide here. And I'd like to provide an update on these three slides, a very important update we think. First, the ongoing NIH study in patients with mucocutaneous candidiasis. This is a study in severely immunocompromised patients typically because they have hereditary immunodeficiency and often picked up in azole-resistant strain of Candida typically of oral esophageal or vaginal nature. Now, recently the NIH took key initiative to submit an abstract for a poster presentation at the ASM Microbe Medical Conference, which was accepted and is now scheduled for June 3rd. So with this submission we are going to see data in the hardest-to-treat patients as soon as June. I think also of important note here is that at the request of patients and physicians involved in this study, the NIH IRB recently approved an extension of the study with six months. So, that is very good for the participants in this study to have that option. The second study on this slide is a 75-patient efficacy study in vulvovaginal candidiasis, assessing the safety and efficacy of MAT2203 at doses of 200 and 400 milligram per day versus fluconazole which is approved for this use. We included this study in the program to increase the number of patients in which we established the efficacy for MAT2203. And we are not just doing this in a vacuum, but we are doing this versus an established and known to be efficacious active comparator, so we can understand how our product stacks up versus approved medications in this field. The study is progressing very well. At this time, we have enrolled over 75% of the patients, and we are on track to report a top line efficacy and safety data in June, as well. Finally, on this slide you see the PK tolerability study in hematologic malignancy patients who have developed significant neutropenia and are therefore immunocompromised. This study will allow us to validate our clinical development strategy in this key Phase 3 population and allow us to spot any study design issues that need to be addressed before we embark upon a significant study like a Phase 3 study. As you can see here, from this discussion, first year of 2017 is a period of key data milestone for us, taking the Company forward to the validation of our cochleate technology platform through the release of key data on two clinical studies with MAT2203 in June just around the corner and position the Company to continue the development of our two clinical stage development programs. Clearly, this is a very exciting time for our Company. And now, I will turn it back to the operator for the Q&A.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from the line of Jason MCcarthy with Maxim Group. Please proceed with your question.

Good morning guys. Thanks for taking the questions. For 2203, I'm really forward towards a pivotal program in prophylaxis. Can you discuss your thoughts on how many patients you would expect to enroll? How many centers given the variability in IFI high rates at different centers and really what the endpoint of the study would be? Would it be prevention of infection over the period of neutropenia or would it be time in the hospital? Can you walk us through what you are thinking?

Yes, good morning, Jason. Thank you. That's a very good question. And we have thought carefully about that. There are a number of precedents out in the field. So, there has been some regulatory action, successful regulatory action in this field. And if we look carefully at the palette of studies that is out there and the risk profile we see in these patients, there are slightly north of 15% infection rate, we probably need a patient, a trial that is in the range of 400 to 500 patients. And we will look at the key endpoint of prevention of proven or probable IFI infection during that neutropenic period. And that can range from 6 to 14 weeks, depending the type of patients whether it's ALL or AML.

Okay, great. And for 2501 I know that there are FDA limitations for standard IV. Do you think that docs would use IV amikacin and transition patients to oral or would you just go straight to an oral? Thank you.

I think that probably depends on the situation. Physicians are at liberty to treat the patients in the best mode. I also know that there's a lot of pressure on physicians nowadays to minimize the use of healthcare resources. So, in between those tensions, we believe it would be great to have the MAT2501 option available. I think for our lead indication, oral treatment is probably going to be the standard. NTM is not an acute infection and, therefore, warrants that oral use from day one on. That may be different in other indications, but as I said those type of gram-negative drug-resistant infections we're still exploring how we best enter that and how we best design our studies.

Our next question is from the line of Robert LeBoyer of Aegis Capital. Please proceed with your questions.

I was hoping that you could elaborate a little bit on the data presentations coming out in June in terms of where they will be and anything that you can disclose at this point without jeopardizing the presentation?

Yes, thank you, Robert. That's a good question. So, the NIH team of physicians involved in the mucocutaneous candidiasis study, they submitted an abstract for the ASM Microbe Medical Conference, which is one of the leading infectious disease conferences. This will be in the period of June 1 through 5 in New Orleans and this particular study poster is going to be presented on June 3rd on the Saturday. We believe that there will be at least one more other poster presented at that meeting, which is to be announced in the future.

Okay, and is there any information in abstract or anything else that is publicly available or disclosable?

At this point not yet. I think the ASM Microbe Conference has a policy of disclosing that at midnight just before June 1.

Okay. And can you remind us on what the design and endpoints of the NIH study were that will be presented?

Yes, the NIH study was focusing on both safety, tolerability and efficacy endpoints in patients with mucocutaneous candidiasis that were refractory to azole therapy or standard oral therapy which at this point essentially is limited to azoles. It means most of those patients have a resistant strain of Candida on their mucous membranes, and with that they have a chronic infection. Many of these patients already had infections for more than a decade, and so this is a very detrimental condition and people have a very poor lifestyle, quality of life with these infections. So, it was our goal to demonstrate that we could alleviate that quality-of-life burden in these patients and they have many other issues, but just focused on this issue to really improve their quality-of-life. And with that for taking it back to the Company side, show the benefit of the product and the ability to dose not just for the typical two weeks in which you can use the amphotericin B IV formulations, but extend this to multiple weeks, up to eight weeks in this protocol and with the extension a potential additional six months. We think that is revolutionary because physicians have never dreamt of using amphotericin longer than a few weeks. So, if you can take this out to months we think that will be monumental.

Your next question is from the line of Jason Napodano of BioNap. Please proceed with your question.

Can you give us a sense of the number of patients that we will see data on in June?

We have not disclosed anything on the number of patients that's in any trial at this point in time. The NIH trial is in essence out of our control. But we were very encouraged that they took the initiative to say this is something we want to present at a major medical conference. So, I think that is very good. I think it's good for everybody to be able to see the data in this very hard-to-treat patient population firsthand from the NIH in a way that they prefer to disclose key data like this.

Okay. I'm just trying to recall, you guys were looking for a certain type of response rate and I'm curious if we'll see maybe in June the number of patients that have essentially progressed to the point where the NIH has put them in this open label extension study and that would signify certainly a response and if we're already essentially meeting that target with the data that we'll see in June?

We cannot be 100% certain how many patients there will be in June. We still have a few months to go. But, again, I think the fact that, one, they requested the extension and, two, that they now moved to file the abstract which got accepted it is very positive and we are encouraged by that.

Okay, just one more question. In terms of you guys have now demonstrated safety with the 2501. We will see initial data in June on 2203. And I'm curious in terms of platform validation and whether or not that brings forth the opportunity for some sort of business development activities, whether it's either with new molecules and potential partners or opportunities outside the US, obviously the more you can validate the platform the more valuable it gets. And I'm wondering if you're seeing interest from other parties now that you are starting to present this type of data?

Hi, Jason, this is Jerry. Thanks for the question. Obviously, we continue to tout this technology as having that broad applicability and certainly as the months have passed, those discussions have increased. Certainly the opportunity for data in patients demonstrating the platform technology and its delivery capabilities is a very important component of advancing those sorts of discussions. The way BD works in these large organizations, it usually revolves around them being able to analyze that sort of data. So it adds another element of importance to being able to disclose this data in June, two months away. And we expect and are really looking forward to not only discussions on our own products but more importantly advancing those discussions, which are already ongoing, and putting other sorts of compounds into our delivery technology and improving the therapeutic profile of those drugs. So it's an active part of our strategy. It's something that we will in certainly intensify post-June. But we will be very strategic with what we explore next because it really is important that we identify the right sort of not only compounds but partners to responsibly advance the science. So good question, and something certainly in the back half of this year that we expect to move the ball forward on.

I will now turn the call back to Jerry Jabbour for closing remarks.

Great, in summary just thanks everyone for joining this morning. Obviously, the next two months are an exciting time for the Company as we anticipate data and we look forward to continuing to update you on our progress. Thanks for joining today.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.