Biora Therapeutics, Inc. (NASDAQ:BIOR) Q2 2024 Earnings Call Transcript

Biora Therapeutics, Inc. (NASDAQ:BIOR) Q2 2024 Earnings Call Transcript August 12, 2024

Biora Therapeutics, Inc. beats earnings expectations. Reported EPS is $9.0E-5, expectations were $-0.45.

Operator: Welcome to the Biora Therapeutics Second Quarter 2024 Financial Results 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. I will now turn the call over to Chuck Padala, Managing Director with LifeSci Advisors, Biora’s Investor Relations firm. Please go ahead.

Chuck Padala: Thank you, operator. Good afternoon and welcome to the Biora Therapeutics Second Quarter 2024 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 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 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 will now turn the call over to Adi Mohanty, CEO of Biora Therapeutics. Adi?

Adi Mohanty: Thanks, Chuck, and thank you, everyone, for joining us. It’s been a very productive and busy quarter for Biora with the announcement of our successful Phase I clinical trial for the BT-600 program using our NaviCap platform and significant work and progress with partners on the BioJet platform. I’ll begin with our NaviCap platform. We were pleased to see the large number of people who joined our recent KOL event, which was cohosted by Dr. Bruce Sands of Mount Sinai and Dr. Brian Feagan, of the University of Western Ontario. These two physicians are legends in the treatment of IBD. And if you look at many of the major clinical trials in UC therapies, you’ll see both these names appear over and over, including as principal investigators.

It was great to have them help us present and contextualize our clinical trial results for BT-600. BT-600 is being developed for the treatment of ulcerative colitis, which is an inflammatory disease that affects the mucosal and submucosal layers of the colon. It’s largely a local disease of the colon tissue. Despite knowing for over 30 years that UC is the disease of the colon tissue, even now patients are treated by receiving powerful drugs systemically in an attempt to reach therapeutic levels in the colon. Research shows that UC patients with higher drug exposure in the colon tissue have significantly better responses to therapy. Although several attempts have been made, there has not been a reliable way to achieve colon tissue targeted delivery of therapeutics.

With our approach, we aim to achieve higher drug exposure and activity in colon tissue by delivering drug directly to the site of disease. Our Phase I clinical trial was a very big step forward in demonstrating the NaviCap platform’s ability to achieve this direct topical delivery to colon and we’re incredibly pleased to have met all our objectives with this study. Looking at the pharmacokinetic data, we achieved a PK profile consistent with drug delivery in the colon. The timing of when tofacitinib shows up in the blood at about six hours compared to 30 minutes for conventional oral therapy is an indicator of the drug entering systemic circulation via the colon. With this delivery approach, we wanted to see lower levels in systemic circulation and we did.

Systemic levels were three to four times lower than with conventional oral delivery. We believe this could help reduce toxicity risks, which are known issue with many UC drugs, including JAK inhibitors. We also wanted to get some data on colon tissue exposure to tofacitinib. As you may recall, NaviCap has been programmed to deliver at the entry to the colon. We wanted to confirm that drug travels from the proximal colon to the distal or far side of the colon as we saw with payload delivery in several previous device function studies. Our Phase I results did indeed confirm this with tofacitinib detected across all three biopsy sites in the distal colon. We anticipated that tissue levels of these biopsy sites could be quite low because of a trial design that required performing those biopsies at 24 hours or four to five half-lives after the final dose along with extensive colon prep before the procedure.

Despite the late timing of the biopsy, we observed drug tissue concentrations above the IC50 level for all three locations. This is especially notable since we studied daily doses of 5 mgs and 10 mgs in this trial, which are 1/4 to 1/2 of the approved doses for conventional tofacitinib. The data also showed a strong correlation between plasma and tissue levels. And because of this correlation, we were able to model tissue concentrations at earlier time points, which predicts that tissue levels should exceed IC90 through at least 16 hours after dosing. Across both study arms, we saw greater than 95% accuracy of release in the colon with no early release before colon entry, which is excellent performance. We also saw excellent safety data in the trial.

A lot of the details were included in our KOL presentation. If you haven’t viewed that event yet, I invite you to watch the replay, where our Chief Medical Officer, Dr. Ariella Kelman, who did an amazing job leading this clinical trial, presents the data. Patients with UC continue to experience tremendous difficulties in achieving and sustaining remission. And we remain focused on this serious unmet need. Despite the many approved advanced therapies, a therapeutic ceiling exists at about 30% above placebo. A delta of 15% to 30% induction efficacy simply isn’t good enough for a condition that causes tremendous suffering for so many. We believe the NaviCap platform is important because it has the potential to break this therapeutic ceiling through several approaches.

First, we think this platform can optimize JAK inhibitor therapy by achieving better therapeutic outcomes while reducing safety risks. Our Phase I data demonstrate a proof of mechanism for this. Second, research shows that colon targeted delivery could also improve outcomes for other drug classes such as TNF inhibitors and integrin inhibitors. We believe the NaviCap platform could deliver those molecules and we ultimately envision a portfolio of optimized UC therapies. Third, leading physicians talk about the importance of enabling combination therapy for UC in order to target multiple inflammatory pathways. We believe the NaviCap platform would be very well positioned to facilitate combination therapies. In the near-term, our Phase I results clearly support a clinical development plan that moves us into a clinical study in UC patients.

Our objective with that study is to confirm the PK profile in UC patients and to inform dose selection for a subsequent induction efficacy trial. Everything we have seen indicates that our approach should lead to improved response and reduced toxicity for UC patients and we’re eager to continue with clinical development to prove that out. We’re also looking forward to the American College of Gastroenterology’s Annual Meeting in October, where we will be presenting data from our Phase I clinical trial to the medical community. Moving on to our BioJet systemic therapeutics platform. The BioJet platform continues to exceed its performance targets and shows outstanding promise to solve the challenge of oral delivery of large molecules, which has been called the holy grail of drug delivery.

Our goal with BioJet is to provide an alternative to needle-based delivery of complex molecules. The platform could also enable those molecules to more efficiently reach the liver, which is difficult with other oral delivery methods. As I shared with you last quarter, we established a defined partnering process with interested pharma parties, and during the past quarter, we’ve made significant steps forward with that. Our goal was to achieve a critical mass of data and to have partner-stated interest confirmed by midyear. We met that goal. And we’re currently in active partnership discussions with more than one large pharma company. We anticipate bringing at least one of these through to completion in the near-term. I’m unable to provide details until we conclude, but I can say that we remain on track to achieve our partnership goal for 2024.

This progress has also been recognized by several of our large shareholders, who are stepping up to support our operations while we conclude our partnership process. Eric will speak a little more about that shortly. In June, we shared an update at an industry meeting, the Next Gen Peptide Formulation & Delivery Summit, where our Head of Research, Dr. Sharat Singh, presented on a panel discussion alongside his peers from Lilly, Merck, and Novo Nordisk who are all pursuing oral delivery of peptides such as GLP-1 receptor agonist. Dr. Singh also presented a session focused solely on the BioJet platform, where he shared our continued progress in demonstrating category-leading bioavailability across multiple complex molecules, including antibodies, peptides and antisense oligonucleotides.

We remain encouraged by the interest in BioJet platform’s ability to deliver multi milligram payloads using existing liquid formulations and its potential to enable liver-targeted delivery of large molecules. With all of these competitive advantages, we’re in an excellent position with the BioJet platform and we look forward to evolving our plans as we bring on pharma partners. To summarize our anticipated milestones. For our NaviCap platform, we continue to share results from our successful Phase I clinical trial for BT-600. We will next be presenting trial data at the American College of Gastroenterology Annual Meeting in October. We anticipate initiating a clinical study with BT-600 in UC patients towards the end of the year. For our BioJet platform, we’re in active partnership discussions with more than one large pharma company as part of our defined process.

We remain on track toward our goal of partnership for the BioJet platform 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, Adi, and good afternoon, everyone. Earlier today, we announced a capital raise that provides crucial funding for the company. We’re happy to see the continued support from investors as we progress towards important milestones for Biora. I’ll first cover our financial results and then provide more background on the transaction. Operating expenses during the second quarter, excluding stock-based compensation expenses were $14.5 million with continued investment in device development, preclinical and clinical activities. To break this down further, G&A expenses in the second quarter, excluding stock-based compensation expenses were $7.5 million of which approximately 60% was core activity spend leaving nearly 40% of G&A costs associated with legacy matters which we are working to eliminate by the end of the year.

R&D expenses excluding stock-based compensation expenses were $7 million. As a result Biora’s core OpEx spend was $11.7 million in Q2. With the majority of the spend allocated to our R&D programs, including the execution of our clinical development with NaviCap and BT-600 and preclinical work with BioJet with our pharma collaborators. I’d like to remind investors that our financial results include many noncash items, which is why we also refer to operating expenses excluding those elements for better guidance on our actual operating cash burn. We also have other noncash items in our income statement, including changes in derivative and warrant liabilities. As a result, we are posting a $6.5 million net income position for the second quarter of 2024.

Moving on to our capital raise announced this afternoon. We made a series of transactions last year and in early 2024, where we substantially reduced our outstanding notes balance, but more importantly, we brought in $19.8 million in new investments from a core group of large institutions. We are happy to see these same institutions adding an additional $16 million to their capital commitment to Biora. The transaction is structured as an additional $16 million contribution from our noteholders to the existing facility to be provided in tranches of $4 million increments as needed by the company. This allows us to raise complementary capital from other sources if available and preserve this funding as required. In addition, there’s a large equity component to this capital raise from convertible features and warrants allocation, highlighting a strong focus on the future value of our stock.

We and our investors view and structure this transaction as a bridge to an anticipated pharma partnership and we’re excited about what lies ahead for Biora. With that, I will now turn the call back over to Adi.

Adi Mohanty: Thanks, Eric. We’re actively working towards completing our first pharma partnership for the BioJet platform and we look forward to sharing more. And for BT-600 and the NaviCap platform, we’re preparing for the next stage of clinical development as we work to break the therapeutic ceiling in UC. Operator, we’re now ready for questions.

Q&A Session

Operator: Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. [Operator Instructions] The first question is from John Vandermosten with Zacks. Please go ahead.

John Vandermosten: Good afternoon, Adi and Eric. I’ll start out with a question on just the topics of negotiation with your partnership. I know you can’t say too much about it, but is it revolving around market assumption, pricing, penetration, technical execution or I’m just wondering kind of how the talks are going? And what are the main areas of focus?

Adi Mohanty: Hi, John. Yes, the discussions are narrowing. So they did start very broad with all the things you’re talking about. But they are starting to narrow and we’re trying to figure out the best way to work with potentially more than one partner and how that would work. So we’re getting there. We’d love to tell you more, but it’s kind of difficult. We’re really close to the end of it. And so hopefully we’ll be able to share fairly soon.

John Vandermosten: Great. Exciting times for that. And then a couple of technical questions about the results from the BT-600 trial. When we look at the uptake of the drug from the oral versus when it’s given through the pill, in one way, it’s getting to the tissue through the vasculature, and the other way, it’s through direct contact with the tissue. And I’m wondering if there’s any, if you looked at that at all and have anything to say about the difference in the way it kind of gets to where it needs to go?

Adi Mohanty: Interesting question because for us, that is the core of why we believe we can do what they have not been able to do, which is get a lot more tissue I mean drug where it matters. So Xeljanz or oral tofacitinib basically gets absorbed just after the stomach in that small GI tract, which is where a lot of these oral medications get absorbed, lots of vasculature. It goes into the entire blood system. And certainly, the blood circulates everywhere, including the colon. So it comes in through the blood into the colon, and you get to a certain quantity. And all the published data shows what quantities they get to. So we are able to compare because there’s enough publications that show, hey, if you had a 10 mg dose and if you had it twice a day, how much do you get in the tissue.

And the difficulty there is if you want to increase that, how do you do that, and they’ve tried. So on our KOL event, I think, it was Dr. Feagan who also mentioned that, look, people who did these drug trials also tried 30 mgs and got better outcomes response, however, with the toxicity, the adverse events were worse. And so the approved label is 10 twice a day, so 20 mgs and not 30. All of these telling you, look, through the blood, you get to the colon, but in order to get enough, we just cannot dose high enough. We get past the small intestine into the colon. And when we drop the drug along the colon, one of the concerns was, would you actually have uptake in the tissue. So when it goes through the tissue, again, in that KOL event, there’s actually some really nice how it works, presentation done by Dr. Sands as well as there are some pictures.

So if you look it up, it goes through the tissue and comes out some of it into the blood. And so our — what we noticed first time is about six hours into the dose that you start seeing drug in the blood and then it peaks around eight to 10 hours. So it’s over time, getting more and more absorbed in the tissue and coming out in the blood. Being in the blood systemically is not great. You need just a really small amount, not the high amounts. So we can get large quantities into that tissue that we need to reach without having to get a lot into the blood. And that was the beauty of it. So if you look at it, there is some information in clinical trials already that says more would give you better outcomes. And you can compare with other JAK inhibitors also where they keep dosing higher and higher, response is great.

It’s the adverse reactions they have to stop. So the fact that we can get extremely high tissue exposure with very small systemic exposure is a big deal. And we did walk through how we got that information partly in the KOL, partly in the dex. So I encourage people to look it up. It’s really exciting. We were thrilled with what we saw, exactly what we hoped for.

John Vandermosten: Great. And that was a good technical description there. And then kind of on the same line, when you take the oral product that’s already approved, the entire amount of drug is processed to the body. But when you’re using the mechanical pill, not all of it is really processed. Some of it passes through. Have you done any work to estimate how much of the drug kind of passes through and not and doesn’t touch upon the body at all or is that something that’s very difficult to measure?

Adi Mohanty: Interesting question. So we do have some of that information. So we collected all these different things and we’ll be sharing more information. Majority of it does get absorbed in the colon. Some of it in sometimes does come out the other end without getting absorbed, but we did collect that information. We know because we dropped the load at the beginning entry to the colon. And over time, it crosses the entire colon. And remember, we took biopsies. So we know it went all the way to the end of the colon. The majority of it does get absorbed and the small quantities that come out. And we’ll share some more of that data in the coming conference as we mentioned. So we do have that and we’ll continue to collect more of that information to see how much of this drug goes in the tissue and what if any comes out the other end.

John Vandermosten: Great. All right. We’re looking forward to it. Thank you, Adi.

Adi Mohanty: Thank you.

Operator: Thank you. The next question is from Joe Pantginis with H.C. Wainwright. Please go ahead.

Joseph Pantginis: Hey, everybody. Good afternoon and thanks for taking the question. So two questions. First, is a logistics question and second is a perspective question. So on the logistics front, in anticipation of more advanced clinical studies, whether in your hands or in a partner’s hands, I was hoping you could discuss your relative current capacity and intermediate needs for device availability and manufacturing.

Adi Mohanty: Yes. So you’re talking about NaviCap?

Joseph Pantginis: Yes.

Adi Mohanty: Yes. So NaviCap, which is being used in our BT-600 for the UC trial, we have some contract manufacturers already that we work with. We have our internal team that has the expertise to build like a handful of these. But we even already work with some contract manufacturers that we could make several hundred and we’ve planned to be able to make several thousand. We’re ready to do that in the short period of time. But in the meantime, we’re working on further automation so that when we need them, we’ll be able to make plenty of these. So all of that is in motion for the next short period of time, which would be 12 to 18 months. The ability to make a few thousand of these pills exists. And we have those vendors and contract manufacturers set up to go.

So we don’t see that as a huge thing. Down the road, though, we do need to do a little more work as we have started building the automation required to build to be able to make the hundreds of thousands that we would need to down the road.

Joseph Pantginis: That’s very helpful. Thanks for that. And then the perspective question is, I was hoping you can provide some information because, obviously, with BioJet, the bioavailability is one of the key attributes of the asset. Now some of the data or a lot of the data that you put out there, and you talked about in your press release also as a reminder, you’re seeing in the range of 40% bioavailability. So I was hoping you could offer up some perspective as to how that really compares to IV formulations of drugs.

Adi Mohanty: Oh, wow. Yes, it’s really interesting. So I could just look back to this when our Head of Research, Sharat, was presenting. There were others on that panel. They were from a lot of large pharma companies. They were all talking about the most commonly used methods of trying to make these available through permeability enhancers, through entire coating, all of those they end up being sort of single-digits or mid-single digits. And it’s really hard to get that beyond. There are some technologies that have claimed to have higher numbers. But there’s nothing that has consistently shown the ability to reach even double-digits. So it’s basically comparing to under 10% for things that potentially could be done reliably and for us to be able to have a technology, which is what BioJet is the platform where we can essentially take your formulation that you currently use in your needle-based delivery system and get close to 40%.

So when you compare to IV, IV being the gold standard, subcu injection ranges in sort of 50% to 60% of IV. And so getting to 40% of IV, it’s almost as good as a subcu injection. We think that’s phenomenal and so do our collaborators. And the fact that we can do this with such minimal manipulation of whatever formulation you have is another big advantage. Over time, we see this as being applicable to so many places. We just got to get to that step 1 and step 2, which is coming up really in the near-term. So thanks for that question. Perspective-wise, we’re thrilled. We keep looking at all these different places for others to show a broadly applicable platform that could do even double-digits and it’s hard to see. We don’t see them.

Joseph Pantginis: Great. Thanks for the added details.

Operator: Thank you. As there are no further questions, I would now like to hand the conference over to Adi for closing comments.

Adi Mohanty: Well I want to thank everyone for joining us. We look forward to keeping you updated as we continue to advance our programs. Good afternoon.

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