Biora Therapeutics, Inc. (NASDAQ:BIOR) Q4 2023 Earnings Call Transcript

Biora Therapeutics, Inc. (NASDAQ:BIOR) Q4 2023 Earnings Call Transcript March 26, 2024

Biora Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Welcome to the Biora Therapeutics Fourth Quarter 2023 Financial Results Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow a formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I will now turn the call over to Chuck Pedala, Managing Director with LifeSci Advisors, Biora’s Investor Relations Firm.

Chuck Pedala : Thank you, Operator. Good afternoon and welcome to the Biora Therapeutics fourth quarter 2023 Corporate Update and Financial Results conference call. Joining me on the call are Adi Mohanty, Chief Executive Officer; Ariella Kelman, Chief Medical Officer; and Eric d’Esparbes, Chief Financial Officer. Before I turn the call over to Mr. Mohanty, I’d like to remind you that today’s call will include forward-looking statements within the meeting of the Federal Securities Law, including but not limited to, the types of statements identified as forward-looking in our quarterly report on Form 10-K that we plan to file in the next few days 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 the 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. The fourth quarter capped a transformational year for Biora. We made excellent progress with both our platform technologies as we continued our strong execution. The NaviCap platform continues to hit its lodestones. As forecasted, we achieved clearance of our IND by the FDA, and we initiated our BT-600 clinical trial, which we believe to be the first clinical trial in the U.S. for an ingestible drug-device combination. I’m also pleased to see the progress with our BioJet platform. We’ll talk more about BioJet a bit later. But first, I’m joined today by our Chief Medical Officer, Ariella, who will share an update on our BT-600 clinical trial. Ariella?

Ariella Kelman : Thank you, Adi, and happy to be here and to speak with you all. Patients with ulcerative colitis, or UC, continue to have significant unmet needs, and research shows that the inability to achieve high enough levels of drug in colon tissue with current treatments is a barrier to better efficacy. Our goals are to improve efficacy by precisely delivering drug to the colon with our NaviCap device, thereby achieving increased drug concentration in colon tissue, with potentially less systemic toxicity due to lower drug levels in the bloodstream. As you know, we previously conducted four separate device function studies in humans confirming that NaviCap is able to bypass the upper gastrointestinal tract, detect the colon and precisely deliver payload into the colon.

Our ongoing Phase I study is the first clinical trial of our NaviCap device platform in combination with active drug. We initiated our BT-600 clinical trial in January. It is a randomized, double-blind, placebo-controlled single and multiple ascending dose clinical study. Its objectives are to evaluate the safety, and pharmacokinetics and pharmacodynamics including effects on colon tissue of BT-600 when administered orally in healthy adult volunteers. The study consists of two parts. The first is a single ascending dose, or SAD, comprised of 24 participants receiving BT-600, which is NaviCap in combination with a proprietary liquid formulation of tofacitinib at 5-milligram or 10-milligram doses or placebo. This portion of the trial has now been completed, and I’m happy to share those results with you today.

We intend to present the full data in future publications and scientific forums. We’re excited about the single-dose data. It’s consistent with what we expected in terms of pharmacokinetics and safety. BT-600 was well tolerated. The pharmacokinetic data show that BT-600s functioned as intended and designed. Specifically, devices opened in the colon and release drug at times that we predicted in human device function and animal studies. All administered devices containing active drug, showed corresponding systemic absorption. This indicates that every NaviCap device released and deliver drug in every study participant. There is evidence of anatomically targeted delivery in the colon measurable tofacitinib in blood was first observed at approximately six hours with maximal concentration patients at approximately eight hours post ingestion.

This is what’s intended with NaviCap and it’s different than what is seen with conventional oral tofacitinib where maximal blood concentrations occur at 30 minutes to an hour after ingestion. This suggests that drug delivery and absorption occurred in the colon as opposed to the upper gastrointestinal tract. Further, dose-proportional pharmacokinetics were observed with consistently lower plasma drug concentrations with the 5-milligram dose than the 10-milligram dose. Tofacitinib plasma levels were approximately 3 times to 4 times lower than are seen with conventional oral tofacitinib at the same doses confirming results from previous animal studies with BT-600. The pattern of plasma levels over time suggest passage of drug through the colonic tissue into systemic circulation, indicating that we might expect to see elevated colon tissue levels.

These data are what we hope to see with more drug being delivered in the colon and a reduced amount in the blood. We are also pleased with the performance of the device with what appears to be all devices functioning as expected, and adding to the growing body of data on NaviCap device performance. This is single-dose data, and we look forward to confirming and expanding on these findings with the multiple-dose portion of the study. The multiple ascending dose, or MAD, cohort is comprised of 24 participants receiving BT-600 at 5-milligram and 10-milligram doses of tofacitinib or placebo with once-daily dosing for seven days. This is half of the daily dose for conventional tofacitinib, which is normally dosed twice daily. In addition to regular blood samples, we will also be obtaining colon tissue biopsies at the end of the study.

Dosing for the MAD portion of the study is currently underway, and I can confirm things are progressing well, and we’re pleased with the execution of the study so far. We anticipate having final study data, which includes both the SAD and MAD portions including data on effects in colon tissue toward the end of the second quarter. Adi, at this time, I’ll turn it back over to you.

Adi Mohanty: Thanks, Ariella. The data we’re seeing so far are truly outstanding, which isn’t a surprise to us, but it’s very gratifying as we work to prove the NaviCap platform’s potential to create a new treatment paradigm for IBD. As Ariella mentioned, our NaviCap technology can potentially increase tissue concentration while reducing systemic exposure, which is what we’re aiming to demonstrate at the conclusion of the current trial. We believe this will lead to better outcomes for patients suffering from ulcerative colitis. So far, our clinical trial has demonstrated that the NaviCap device has functioned as intended by delivering drug precisely in the colon, illustrating the potential for our platform beyond the current tofacitinib payload delivery.

The data suggests the potential to achieve greater concentration of drug in the colon tissue compared with conventional methods. We believe this will lead to improved patient outcomes. We also saw that blood concentration of tofacitinib absorbed through the colon was substantially lower than the conventional treatment. This could reduce toxicity for patients and open the door to combination therapy in UC. In addition to the anticipated conclusion of our clinical trial, we’re also looking ahead and actively planning a study in using patients during the second half of 2024. The purpose of this study is to confirm plasma and tissue pharmacokinetics and pharmacodynamics in UC patients and to inform our plans for future trials. Although KOLs have confirmed that healthy volunteer data on blood and tissue are fairly representative to that in UC patients, we want to proceed to trial in UC patients quickly and maintain an accelerated pace of development.

While we are focused on clinical execution for NaviCap and the BT-600 program, our team also continues to increase the strength of our intellectual property portfolio for both our platforms. We believe we hold the most comprehensive IP portfolio for drug delivery using ingestible devices with over 100 granted patents and over 100 pending applications across our two platforms. Recent wins included a patent addressing anatomically targeted delivery of JAK inhibitors to the GI tract. This patent directly supports our BT-600 program, which involves delivery of a proprietary formulation of tofacitinib, a JAK inhibitor. We also received notice of an important new patent for our BioJet platform, which broadly covers key jet parameters for liquid jet delivery of a drug to the GI tract.

Between this, and our existing IP portfolio for the Biojet platform, I think we can say that we invented and we own liquid jet delivery to the GI track. We continue to make excellent progress with the BioJet platform. Liquid jet deliveries the foundation of this platform, it’s designed to achieve oral delivery of large molecules using a small capsule that once swallowed delivers a stream of liquid drug into the wall of the small intestine where it can be absorbed into systemic circulation. We believe the BioJet platform can provide an alternative to needle-based delivery of complex molecules. It could also enable those molecules to more efficiently reach the liver, which is difficult with other oral delivery methods. Over the past few quarters, we’ve made strong progress in assessing both our own as well as collaborative molecules with the Biogen device.

We have optimized benchtop systems that enable rapid iteration with our animal studies, enabling faster assessment of molecules and formulations, which has made us more efficient in our development. We successfully performed animal studies with peptides, antibodies and oligonucleotides and achieved bioavailability in excess of 20% compared to IV infusion with our first-generation device. As a reminder, the performance target that is considered commercially viable by us and our pharma collaborators is around 15% compared to ID. In December, we announced a new research collaboration with a large pharmaceutical company. We recently completed animal studies with their molecule, and we expect to receive the data from that study in coming weeks. While we execute on collaborative molecules, we also continue to enhance our core BioJet platform.

We have completed further animal studies over the past few months that demonstrate even better bioavailability in the 30% to 40% range for our peptide candidate, semaglutide as well as with adalimumab, our antibody candidate. We’ll be sharing more details of the data at an upcoming conference in June. We believe we’re in an excellent position with the badge of technology, which has a number of competitive advantages. Its ability to achieve category-leading bioavailability of complex molecules, its ability to deliver existing liquid formulation without complex reformulation, its ability to deliver large payloads in the multi-milligram range and its potential to enable liver-targeted delivery of large molecules. With the broad applicability of this technology, we continue to see interest from potential pharma partners.

Our goal in the near term remains to get a more enhanced partnership this year with either our current collaborators or others, we’re making good progress on that front and continue to see even more interest from potential partner companies. To summarize our anticipated milestones. For our NaviCap platform, we await the conclusion of our BT-600 clinical trial in the U.S., and we expect the execution of the MAD portion to be completed during Q2. We anticipate receiving final SAD MAD data during Q2, and we plan to share top-line data from the study as quickly as possible. We also plan to initiate of clinical study in UC patients during the second half of 2024. For our BioJet platform, we anticipate data from the recent animal study with our large pharma three collaborator during Q2, and we expect to share an update on some of our recent animal studies at an upcoming conference.

We continue to progress toward our goal of an enhanced partnership 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. We had a number of important capital market activities since our last call. I’ll first cover our financial results and then provide a more background on the positive evolution of our balance sheet. Operating expenses during the fourth quarter were $13.3 million, which was more aligned with our normal expected run rate compared to the prior quarter when we had a onetime stock-based compensation noncash charge related to vesting of employees’ restricted stock units. Excluding stock-based compensation expenses, operating expenses were $11.8 million during the fourth quarter with continued investment in device development, preclinical and clinical activities. To break this down further, G&A expenses in the fourth quarter were $6.3 million, excluding stock-based compensation expenses, while R&D expenses in the fourth quarter were $5.5 million, also excluding stock-based compensation expenses.

Our core OpEx spend remains focused on our R&D programs, execution of our clinical development with NaviCap and preclinical work on BioJet with our pharma collaborators. Net loss was $15.4 million for the three months ended December 31, 2023, also more in line with our expected run rate compared to the third quarter, which included noncash charges for stock-based compensation expense and large noncash charges attributable to the convertible note exchange we implemented in September 2023. We also made substantial progress during the fourth quarter and our ongoing efforts to eliminate activities and spend associated with legacy matters, which still represented more than 30% of our G&A cash spend in Q4. Those efforts culminated recently with the monetization of our investment in Numera molecular, generating $3 million in non-dilutive capital.

We also reached an agreement in principle to resolve one of the company’s legacy securities litigation matters, and we are confident about the potential of any remaining legacy issues having minimal impact on Biora going forward. Moving on to our capital structure. As a reminder, we had made a substantial step forward during the third quarter by reducing on convertible note balance by $50 million through a note exchange agreement. I have provided guidance during our last call that we were making progress in further reducing our remaining notes balance. We executed well on this front and we’re very happy to announce in December a convertible note exchange, which also brought $170 million in new capital to Biora. In total, we reduced outstanding notes by more than $80 million in 2023, a 75% reduction of the company’s net debt in 2023 alone.

In accordance with GAAP, we will be reflecting in our balance sheet other items beyond the actual outstanding balance of the notes, including derivative and warrant liabilities and future interest payables so we invite investors to read Note 6 and 7 to our financials when we file our 10-K to highlight the actual reduced notes principal balance at the end of 2023, which went down from $132 million to approximately $51 million during that period. The substantial reduction in notes outstanding and new capital investment from large institutional investors demonstrates continued support for our programs. In fact, we announced earlier in March a third note exchange, combined with new capital investment bringing total new institutional investment into Biora through these exchanges to $19.8 million over the last four months.

We truly appreciate this commitment from our investors, and we want to highlight the significant equity component of these transactions, which shows their acute focus on the potential value of our stock. We believe this series of transactions sets us up nicely for success ahead of important clinical data and the development of future potential partnerships with pharma. With that, I will now turn the call back over to Adi.

Adi Mohanty : Thanks, Eric. We’re excited to start the year with a great early data from our BT-600 trial and are focused on continuing our strong clinical execution to complete this trial. From the BioJet platform, we’re focused on progressing towards partnerships this year. We look forward to providing further updates as we continue to achieve our milestones. Operator, we’re now ready for questions.

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Q&A Session

Operator: [Operator Instructions]. Our first question is from John Vandermosten with Zacks. Please proceed with your question.

John Vandermosten: Great. Thank you, and good afternoon everyone. I wanted to first say congratulations for the huge reduction in debt. That’s a great change. And wanted to pose the first question about just the next steps for the — for BT-600. Now that you’ve shown good PK and PD numbers and understanding that the underlying drug tofacitinib is already approved, what kind of — what do you expect to see to get this in front of the FDA for approval following the second half study in the UC patients?

Adi Mohanty: Thanks for the question, John. Before we get to what we want to put in front of the FDA, what we should say is we’re really excited about what’s coming up very, very near future that we talked about in this coming second quarter. So, I’ll let Ariella talk to you a little bit about the MAD portion of our data, and then we’ll come back to what’s next. Go ahead, Ariella.

Ariella Kelman: Okay. Thanks very much, Adi. So, we’re looking forward to the results from the MAD portion of the Phase I study. And we expect to have those by the early summer, so end of Q2, and what we expect to see there is, again, pharmacokinetic data, but this time over a multi-dose course, so daily dosing for one week and we hope to confirm a same or similar pharmacokinetic profile, which confirms that the NaviCap is functioning as designed and delivering in the colon. And we also are expecting to receive data on colon tissue including colon tissue concentration from biopsies as well as histology data for safety and pharmacodynamic data from the colon tissue. So, we’re looking forward to that.

John Vandermosten: Thanks, Ariella. So, John, I think once we get this, we will know a lot more. Of course, we’re keen to move this as fast as possible. But it’s really great to get the data we do have now, right? I mean this is what we’ve been looking for. Can you get more drug in the colon and less in the blood so it’s fantastic? We’re getting that. People know tofacitinib has been used so many patients it works. So yes, we have approaches we’re going to look at, but let’s look at this data that’s coming up now.

Eric d’Esparbes : Sounds good. And I also wanted to look at just the larger environment of getting biologics or large molecule drugs delivered orally. We’ve done some research on our side, showing about $300 billion to $400 billion in revenues from biologics. And then, of course, there’s the $100 billion number that I think Goldman put out there about the potential for GLP-1 agonist. So, there’s a lot of products that could potentially be used this way, and there’s a lot of benefits to that, which we all know about. What is keeping sponsors back from really jumping on board with this and moving it forward as fast as possible? What do they want to see before executing, I guess, something that has money behind it?

Adi Mohanty: So, you’re talking about our BioJet platform, which absolutely is designed to be able to deliver these biologics. So, I wouldn’t say — it’s — our difficulty has been we are already engaged with several large pharma companies. I can’t tell you a lot of details. I’ve talked about this in the past because they want to stay quiet until they get to a certain spot where they’re willing to share what discussions end up resulting in. So, we are absolutely fully engaged in several conversations. I think Partnerships are hard to predict in terms of timing, but we feel pretty good about the way these engagements and conversations have gone that we could likely do something this year. So, we keep saying, yes, this year, we’re going to get to a partnership with somebody.

And I know that, that’s kind of hard to say because we don’t publish relationship and what they’re looking for and we’re not allowed to. But what we can say is the engagement is great, fully involved. We’re doing a lot of work. It’s progressing. And hopefully, we’ll be able to share more fairly soon.

Operator: [Operator Instructions]. Our next question is from Julian Harrison with BTIG. Please proceed with your question.

Unidentified Analyst: Good afternoon. This is Ray on for Julien. Congrats on the progress in data so far. We had a couple on BT-600. The first is if adequate PK is confirmed in the final SAD/MAD data expected in 2Q, would you be open to studying or developing any other payloads for IBD where optimized PK in the gut could lead to more efficacy?

Eric d’Esparbes: Fantastic question. So, you do know or maybe you don’t, that we keep talking about we have our own version of adalimumab. We’ve done some work with it. Certainly, we know that there are certain other molecules we could use this approach with and we could quickly turn to that. Now we don’t want to jump ahead. We do have internal know-how, availability of molecule and ability to expand fairly quickly, but we’re not going to jump. We’re going to get this data and have the ability to do all those things either by ourselves or with somebody. So yes, opportunities will start to really grow very quickly in the next few months as we get this data.