Biora Therapeutics, Inc. (NASDAQ:BIOR) Q2 2023 Earnings Call Transcript

Biora Therapeutics, Inc. (NASDAQ:BIOR) Q2 2023 Earnings Call Transcript August 14, 2023

Biora Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-1.47 EPS, expectations were $1.6.

Operator: Greetings, and welcome to the Biora Therapeutics Second Quarter 2023 Earnings 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] As a reminder, this conference is being recorded. It’s now my pleasure to introduce your host, Chuck Padala, Managing Director with LifeSci Advisors. Thank you. You might begin.

Chuck Padala: Thank you, operator. Good afternoon, and welcome to the Biora Therapeutics second quarter 2023 corporate update and financial results conference call. Joining me on the call are Adi Mohanty, Chief Executive Officer; and Eric d’Esparbes, Chief Financial Officer. Before I turn the call over to Mr. Mohanty, I would like to remind you that today’s call will include forward-looking statements within the meaning of the federal securities laws, including, but not limited to, the types of statements identified as forward-looking in our quarterly report on Form 10-Q that we filed or will file later today and our subsequent reports 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 projected in any 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 will turn the call over to Adi Mohanty, CEO of Biora Therapeutics. Adi?

Adi Mohanty: Thanks, Chuck. and thank you everyone for joining us. During the second quarter, we continued to make excellent progress with our NaviCap platform, advancing toward our planned IND filing in Q3 and with our BioJet platform, where we continued our progress on device development and testing. We also further strengthened our intellectual property position for both platforms. First, an update on our NaviCap Targeted Therapeutics platform with our lead program BT-600 in ulcerative colitis. Currently available therapeutics for ulcerative colitis or UC work by entering the bloodstream and circulating systemically throughout the body with a limited amount of drug reaching the colon, which is the site of the disease. Research suggests there is a minimum amount of drug needed in the tissue at the site of disease to achieve better therapeutic outcomes.

Reaching or exceeding this threshold in the tissue should improve patient outcomes for UC. Our NaviCap platform uses a device about the size fish-oil pill that once swallowed is designed to deliver drug directly to the colon using our GI track localization technology. The commercially available version of tofacitinib is approved in capsule form for the treatment of UC. Like other drugs, tofacitinib is taken up systemically with a limited amount reaching the area of disease in the colon. By delivering drug where it is needed at the site of disease, we believe our BT-600 program can deliver sufficient drug to the tissue of the targeted area to improve efficacy. This localized delivery along with our proprietary formulation has shown in animal studies, the ability to deliver the right amount of drug to the tissue even with a lower overall dose than the currently approved dose for tofacitinib.

We also expect our approach the result in reduced systemic exposure which may improve safety for this patient population. So we’re extremely focused on getting NaviCap into the clinic and everything we’re working on right now with this program is intended to enable our planned September IND filing. I’m happy to report that we are on track with our plans. All of the analyses from our talk study which was conducted earlier this year, have been completed. We continue to believe that these results support our assessment of readiness for Phase 1. As we shared previously, all plan devices were administered without any adverse events or safety signals, even at the highest 25 milligram dose of tofacitinib. We measured drug levels in colon tissue 24-hours after administration of the last dose, and observed drug levels supporting our ability to reach the appropriate tissue drug concentration.

We observed that the drug did not accumulate over time, which is a favorable sign of safety. We also observed peak drug levels in blood that are approximately one-third of what would be expected with the equivalent dose of commercially available tofacitinib. As we prepare for our Phase 1 trial, we have conducted another device function study, which demonstrated outstanding performance and supports our assessment of device function in humans. We recently announced preliminary results from this study and we subsequently completed the study as planned after 16 healthy volunteers had been administered the NaviCap device. Our Phase 1 ready device performed as intended in 15 out of 16 subjects. The NaviCap device accurately identified entry into the colon, triggered release of its non-drug payload and achieved distribution throughout the colon.

The greater than 90% performance is consistent with our previous human studies. It exceeds our minimum device function requirements and it gives us confidence as we head toward the clinic. From the latest study, we generated a series of images that show the NaviCap device progressing through the GI track activating upon entry to the colon and dispersion of the payload throughout the colon. We’ve included these time lapse images as a video in our corporate deck on our website. I invite you to take a look at that. The study once again showed the robustness of our NaviCap platform, which performed as designed across a range of expected differences in GI motility between study participants. Looking ahead to the planned Phase 1 study, we hope to see data that confirm the learnings from our animal studies and confirm our hypothesis that BT-600 can safely deliver tofacitinib locally to the colon resulting in sufficient colonic tissue levels and low systemic exposure.

The Phase 1 study design includes a colon tissue biopsy in all subjects at the end of the study. Tissue biopsy is not typical for a Phase 1 study in healthy volunteers. But we feel this information will be extremely valuable in informing the design of our future studies in patients with UC. This proposed trial design has been discussed with the FDA, and they have been supportive of it so far. We expect to exit Phase 1 with safety data, but also with critical data on potential exposure in both serum and tissue, which could be much more informative than a typical Phase 1 trial. In addition to progress towards the IND we also had some nice wins on the IP front recently. Having been awarded a group of U.S. and European patents directed to methods of treating ulcerative colitis using our NaviCap device to deliver well known IBD drugs such as Janus kinase inhibitors, anti-integrin’s and IL-12/23 inhibitors.

Our extensive IP will allow us to organically expand our pipeline to several potential targets. We believe the NaviCap platform could transform treatment options for many other diseases of the GI track and that progress with BT-600 will unlock significant new opportunities for Biora. To summarize, we’re on track and remain confident in our progress toward a September IND filing for the NaviCap program. We believe we can potentially address the large unmet need for UC patients by solving one of the primary treatment gaps, which is the inability to achieve high enough drug levels in the diseased tissue without systemic toxicity. Moving on to our BioJet Systemic Therapeutics platform. Our goal with the BioJet platform is to provide needle free, oral delivery of large molecules.

It is based on the device the size of a multivitamin that once swallowed is designed to deliver drug into the small intestine. Using liquid jet injection to maximize systemic uptake. We believe the BioJet platform can transform patient care by improving patient convenience, which has been shown to affect patient compliance. We see this leading to better disease management and associated patient outcomes across a range of chronic use indications. During the second quarter, we presented recent data generated with the BioJet platform at the American Diabetes Association Scientific Sessions, where we assess the bioavailability of semaglutide delivered via our BioJet device in an animal model. In two studies, we achieved more than double our target average bioavailability of 15%, which tells us that so far based on the data the BioJet platform can deliver existing liquid drug formulations with bioavailability similar to injection.

We base our claims on data generated in animals where we use IV delivery as our control, because IV is considered the gold standard, particularly when it comes to bioavailability. Using the IV standard as a measuring stick, our buyer availability would be quite impressive, compared to other oral delivery modes. However, some of our competitors use subcutaneous injection as their competitor arm. Subcutaneous injection is known to achieve about 60% of the bioavailability of IV administration. If we compare our BioJet platform, using the measuring stick of subcu injection, we see that we’re achieving bioavailability similar to injection for the molecules we have tested, which is meaningfully better than what others have achieved. We will be presenting more BioJet generated data at the European Association for the study of diabetes annual meeting, which will be help in October.

As planned during Q2, we have continued development and testing of the autonomously triggered version of our latest BioJet device. We have successfully adapted our previous autonomous trigger designs to this latest device. After several rounds of design evolution and testing, we’ve been able to achieve our device function targets, while continuing to exceed our performance target of 15% bioavailability. We’re now repeating these tests, so we can have a robust data set for discussions with the former collaborators. We remain encouraged by interactions with our collaborators and look forward to further progress and subsequently advancing toward our goal of achieving meaningful partnerships for our BioJet platform. While many organizations have been working to solve the challenges of oral delivery of large molecules, our approach stands out because of our liquid jet delivery method, which is not only able to achieve excellent bioavailability, but is also able to deliver an existing liquid formulation.

Reformulating a drug is time consuming and expensive, so the ability to use existing liquid formulations gives us another potential competitive advantage. Looking ahead to the future of disease management, we think it will involve more complex molecules such as dual and triple agonist for diabetes management and also combination therapies, which are all harder to make into pills. We think our BioJet platform will be well positioned to deliver these more complex therapies. Another potential advantage of our technology is the ability to achieve uptake of drugs in hard to reach areas like the liver. A large number of disease targets reside in the liver, and it is a key area for gene expression therapies, for example, RNA therapies that rely on liver targeted delivery of antisense oligonucleotides.

Other oral delivery technologies have not been able to address this challenge. We are awaiting data from studies we completed with one of our collaborator that may provide useful information on our ability to deliver these types of therapies and we look forward to sharing more of this in the coming weeks. We recently announced further progress on the IP front related to the BioJet platform as well. With additional patent covering key features of our liquid jet injection technology with approximately 38 issued patents and pending applications covering our delivery platform and methods for using liquid jet delivery to treat patients, we are in a strong competitive position to participate in delivery of the $100 billion plus GLP-1 agonist market, as well as many other large molecules such as proteins, peptides, and nucleic acids.

To summarize our anticipated milestones, for our NaviCap platform, we remain on track filing an IND for BT-600 in September, and we anticipate initiating our Phase 1 trial before the end of the year. For our BioJet platform, we’re confirming the performance of our autonomous next generation BioJet device and we expect to continue generating preclinical data during the third quarter of 2023. We expect to continue testing the BioJet device with the molecules of a pharma collaborators in the coming months. We look forward to sharing additional BioJet preclinical data at the European Association for the Study of Diabetes annual meeting in October. 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, Adi, and good afternoon, everyone. During the second quarter, operating expenses excluding stock-based compensation expenses remained stable at $12.5 million, with continued investment in device development and preclinical activities. Breaking this down G&A expenses in the second quarter were $7.7 million, excluding stock-based compensation expenses, while R&D expenses in the second quarter were $5.2 million, excluding stock-based compensation expenses. We’ve been continuing to streamline our G&A expenses and making great progress in focusing on investments on our R&D programs. While more than 30% of our G&A spend in Q2 was still composed of legacy spend, we expect that will gradually tail off by early next year.

Our core OpEx expense remains very much focused towards our R&D programs, which makes sense as we rapidly move towards the clinic. While spending will continue to fluctuate from month-to-month as we progress towards the clinic, we maintain our guidance of an average monthly operating cash burn of approximately $4 million. We successfully raised $8 million in gross equity proceeds during the second quarter, which funded the majority of our Q2 operating expenses, leading to only a slight reduction in our cash balance to $26.5 million as of June 30th, 2023. We also continue to make progress with monetizing remaining legacy assets, which will also add incremental funding. Finally, we continue to work actively on optimizing our capital structure to maintain and enhance our public company profile, and we expect to have some updates soon.

With that, I will now turn the call back over to Adi.

Adi Mohanty: Thanks, Eric. Biora continues to make strides with both our NaviCap targeted oral delivery platform where we are focused on entering with our BT-600 program and our BioJet Systemic oral delivery platform where we’re focused on confirming the performance of our next gen device and progressing with pharma collaborations. We look forward to providing further updates as we achieve these milestones. With that, operator, we’re now ready for question.

Q&A Session

Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from Joe Pantginis from H.C. Wainwright. Please sir, go ahead.

Joe Pantginis: Good afternoon, gentlemen. Thank you for taking the question. Very nice to see the recent NaviCap data. So I wanted to focus on that for a couple of moments, if you don’t mind. So I guess the focus of my question is on business development. So, obviously, you’re dealing with UC right now and UC associated drugs, you’re also getting the level of bioavailability that you’d like to see and you’re getting the tissue targeting. So I guess my two questions are, you know, how do these data impact your overall business development strategy and also what is the potential, sort of, scientific or clinical impact based on the type of drug that you use within the NaviCap system? Thanks a lot.

Adi Mohanty: Yes. Thanks for the question, Joe. So it’s a slightly complex question when you talk about how does it impact our BD strategy. Clearly, we’re really excited about how it’s performing. So our NaviCap platform, you know, are Phase 1 ready devices, we just ran it, it is working amazingly well. So our GI tract localization technology figures out exactly where we want the drug to be dropped, so the programming is set, we can tweak that if we want and do different drugs in different parts of the GI track. There’s various ways we could do a lot more with this platform, but we’re staying focused on trying to get to this UC trial where — the for those who may know, the UC area, you would know that tofacitinib is a very powerful molecule.

It works extremely well. Problem is it works so well that, you know, a huge amount of this becomes toxic to the body. And in order to get the right amount of drug in the colon, you got to dose up to the point where it’s toxic, and you get a great response. So solving the problem of not having systemic toxicity by having too much going around in the blood, but getting enough drug to the tissue would make this a substantially different therapeutic option that many physicians would love to have and certainly the patients. So what we’re seeing is with the way we have delivered it and this is through the animal studies, we get something in the range of a third or quarter of the amount of drug that you would normally get in the blood when we’re getting a lot more in the tissue, which makes sense, right?

We have a formulation that is a liquid formulation that when it’s dropped in the “colon” and you get most of that uptake through that colon tissue and getting a lot more in that tissue than any other method. So we want to stay focused on getting a little bit further along. We think it we don’t need to go much further, right? If we can show in our upcoming trial that we get the kinds of blood concentrations we’re getting in animals. The kinds of tissue concentrations we’re getting in animals that we get confirmation that you can get a large amount of drug in the tissue, the amount that is required, and you can use a much smaller dose of tofacitinib and get less systemic exposure, but still get some, all of those things allow us to then have the opportunity to discuss how we keep going forward.

For now, we’re planning to then move on to using the drug in patients. We want to stay focused on UC, because we think that it not only is a great target as you mentioned, right? You know, right now, there’s been a couple of three really great business transactions in the UC arena worth billions of dollars for companies that have had early stage drugs that large companies want. But it unlocks our entire platform. I know there’s a long answer, but what it says is if we continue just a little bit further and show that the platform works and the particular approach, for UC works, we could do something in the UC space. We could do a lot more with the entire platform. We also got some new IP that allows us to do a lot more drugs of various kinds in the GI track.

Most of these you might be familiar with. So we unlock many different paths forward, and we will remain open to many of those options in a short few months.

Joe Pantginis: Great. Appreciate the answer, Adi.

Operator: Our next question comes from Julian Harrison from BTIG. Please sir, you go ahead.

Julian Harrison: Hi, thank you for taking my questions and congrats on the progress. On BT-600, I’m curious how soon you could proceed to dosing in ulcerative colitis patients? And then are there any device related considerations or parameter changes when you make that move from healthy volunteers to UC patients?

Adi Mohanty: Yes. Thanks, Julian for the question. Second part, I’ll take first, which is really interesting, right? There’s been a lot of questions about, hey, when you put this in humans, does it work? Because, you know, and yes, we have done it. So far, we have done more than 80 human subjects. And interestingly, we’ve actually done it with patients. So we’ve had UC patients and, you can find it on our website. We have some data where we’ve used this device with the card programming in UC patients of various different severity. So we’ve gone from, you know, less severe, you know, the male score going from 2 to 6 to 8. So we’ve gone to more severe patients. Amazingly, it worked every single time. So even in the environment where they’ve got, inflammation, bleeding, motility issues, it worked.

So we know that the device would work and we did it without, obviously, the drug payload. So the device would work in UC patients. The device works in healthy patients with over 80 subjects now. We know that we’re getting a greater than 90%, performance functionally, and it’s doing the right thing at the right time. So we don’t think we will need to tweak the device going from our Phase 1 where we will be using, healthy volunteers to the patients themselves. What I think will be more interesting and which we want to get to is, is there accumulation in the tissue? As I mentioned, right? In the animals, we saw that there wasn’t any, but getting to that answer, and getting some of the other, which we’re not worried about getting, but will be just a good confirmation to get in the Phase 1 is what the systemic exposure is, what all the other safety PK/PD data we can gather.

All of those would be helpful input, so that we can quickly propose a inpatient study, and we intend to do that. We think that in terms of derisking, when we get just this Phase 1 data, lots of, people will begin to appreciate what we’re going to be able to do in patients.

Julian Harrison: Very helpful. Thank you.

Operator: [Operator Instructions] Our next question came from Mayank Mamtani from B. Riley Securities. Please, sir, you can go ahead.

Unidentified Analyst: Hey, guys [Madison] (ph) on for Mayank. thanks for taking our call. Congrats on the progress. For the device function study, could you talk to any differences to keep in mind as we think about the Phase 1 BT-600 initiation, particularly in regards to the biopsy. Just wondering how performing the biopsy may impact any execution goals, enrollment goals. And then any color on the FDA’s kind of perspective would be helpful. For example, if you sense any kind of pushback or hesitation? And then lastly, could you remind us of the timeline that the FDA has to respond once you submit your IND in September? Thanks.

Adi Mohanty: Yes, thanks for the question. It is an important one because we are fully kind of baked in is the taking the biopsy. We would love to get the answer on, what the tissue concentrations are. Obviously, what we’re doing is a single tissue biopsy at the very end of the MAD study, so it’s not like we’re taking it routinely that would be more difficult in healthy volunteers as opposed to patients. So what we want is a answer on the tissue, we will do that at the end. That is not, as onerous, and we’re working with a very top notch clinical trial operator, who has absolutely confirmed that this is something they can do. As far as the FDA interaction, as few months ago, we actually had a Type C interaction with the FDA where we had detailed all what we wanted to do.

We got, very detailed responses from them that is what gives us comfort that they were quite supportive of our approach and what we were planning to do. They had some helpful input on some small areas of the trial design, which we have incorporated or are incorporating. And so we feel pretty good that, you know, our interactions with the agencies have been good. The clinical trial operator has indicated that is something that is very doable. We’re working very closely with the people, who would actually run the trial and if you remember a few months ago, we got, our new Chief Medical Officer, who is also quite familiar with, what we’re trying to execute. So we’re pretty comfortable. We feel good about where we are. When we file, as you know, a typical IND, you know, after filing, it’s about a 30-day, period of time before you can say, yes, let’s go ahead and start executing on the trial itself.

So we feel sometime later this year, we will be activating the sites in actually doing some treating of people this year and hopefully getting the data fairly soon.

Unidentified Analyst: Alright. Great. Well, I appreciate the color.

Operator: Our next question comes from John Vandermosten from Zacks. Please, sir, you can go ahead.

John Vandermosten: Thank you, and good afternoon. What are some of the primary endpoints you anticipate FDA will look for when you get to a pivotal trial and UC program? And are there any precedent, for the NaviCap platform or what the FDA might look for when you get to that next stage?

Adi Mohanty: Yes, Joe. I think, you know, there’s been a lot of UC trials, it’s pretty well defined. It’s very well understood. Things like you know, how quickly you get, that initial response, how many weeks it takes, they’re extremely well defined, you know, tons of trials have been done in display in this space, you know, so that is really not that big a question, you know, we think we can easily show also comparative data, because there’s just so much data out there on how different molecules are performed, pretty easy to do, very straightforward. We don’t think that’s going to be a question. When it comes to the specifics of NaviCap, no, there is no other such thing out there. There is no localization technology that is only available that you can just take a pill every day and it goes to the right spot and drops, the payload.

That — there is a part of that that makes it a more interesting than almost any other typical drug trial, right? You know, most of the endpoints will be drug endpoints. And so that’s pretty common. I think what’ll be more interesting is, earlier on, the functionality and safety around just having a device go through every day and come out every day or, you know, as these patients are taking them, which is where there will be some amount of additional, data collection around just any impact of the device, which we think we’ll get very early on. Like I said, we’ve already got you know, over 80 subjects that we’ve done, these devices with, collecting all of that into a database of safety around being able to use a device every day. We’ve done over 600 of these in the talks trial we did with the dogs where we saw.

There was no impact from whether it was a device going through and how it operated, whether it was stuck in there for, you know, with two or three of them at the same time. All various kinds of ways that the device might perform. We saw, and there was no issue. So we’ll see some more of that with the Phase 1. We will see — so I think we will collect all of that. That is the additional data we will have to collect as the device aspect of it. But when it comes to the Phase 3 outcomes, typical standard UC trial outcomes, which are really well established with lots and lots of different data. So we think, by the time we get there, it’ll be quite straightforward.

John Vandermosten: Thank you. I appreciate the detail. And then moving to BioJet, what are the next steps that we anticipate there before an IND is ready for that program?

Adi Mohanty: Yeah. So with our BioJet program, we’ve taken a slightly different attack instead of getting to quickly a IND and a clinical trial on our own. We want to leverage these conversations we’ve had and we do have three current collaborators, really large companies that we’re working with very closely where we want to establish what the BioJet platform could do using their molecules. So where we are is, you know, we had our research device that worked last year. We evolved that to a next generation clinical ready device, this year. We did a, instant trigger mechanism so that everything inside the pill could be tested. We’ve then in the last few months added on the autonomous trigger, because last year we had already used an autonomous trigger.

So we’ve got now data with the autonomous trigger that looks like, yes, it’s working, we can get the autonomous triggered work with the device. We’ve generated some data in a few weeks or less, we will have additional data that will now make a robust enough package to talk with our collaborators, the existing ones and others and start using their molecules. So one of them has already allowed us to use. So we have an antisense, I think this is the one name we’ve been allowed to use as Ionis. And I say allowed to use is the others, you know, we want to work with them in full trust of their requirements, which is we can share their names as we go further. But we have used an antisense device, antisense molecule. we’ll use other molecules from those collaborators.

We will have that data in the coming weeks months. We think that information will allow us to go into something of a more meaningful partnership with these or other collaborators, and we think that is the first step of establishing what the BioJet platform can do. And then proceed with the molecules that we do have in our own trials and our own plans for our own molecules later on. So in the near-term, we want to make sure that, you know, we get some confirmatory autonomous trigger data in the next, short few weeks and start working with the collaborators molecules, in the next few months. and then progress to meaningful partnerships with these or other collaborators in the coming months. And that’s what we have planned. We want to make sure that we stay focused.

We say resource efficient until we get to next year where we can expand both the platforms, right? You know, by then, we will have confirmation of both our platforms and organically be able to expand our pipeline substantially, as our resources grow.

John Vandermosten: Great. And then regarding the collaborations, do any of those collaborations that I need from working in certain therapeutic areas with other prospective partners?

Adi Mohanty: Yes, that’s a good question. At this point, we have not allowed ourselves to be tied down that way. So unless we get to a meaningful partnerships, we will not allow ourselves to be tied down. These give us plenty of room to do anything that we need to do at this point. And hopefully, we will be able to get further down the road where we can talk about, which areas we are constraining ourselves from because we’ve struck a different meaningful partnership.

John Vandermosten: Great. Thank you, Adi. Appreciate it.

Operator: There are no further questions at this time. I’d like now to turn the floor back over to Mr. Adi for closing comments please, sir, you can go ahead.

Adi Mohanty: Thank you all for joining us today. We’re encouraged by the progress we’re making, and we look forward to keeping you updated on our progress. Have a good evening. Thank you.

Operator: This concludes today’s teleconference. You might disconnect your lines at this time. Thank you for your participation.