Aptorum Group Limited (APM) Earnings Call Transcript & Summary

The next presentation is for Aptorum. Please begin.

Hi. Thank you...

Thank you for attending Solebury Trout Virtual Global Healthcare Conference. My name is Julia Balanova, Vice President here at Solebury Trout. Before we begin, I'd like to remind everyone to submit their questions. With that, it's my pleasure to introduce next speakers, Ian Huen, Founder and CEO; and Darren Lui, President of Aptorum. Gentlemen, go ahead.

Hi. Thank you very much, everyone, and good day. My name is Ian Huen. I'm the Chairman, Founder and CEO of Aptorum Group. I was previously -- finished my undergraduate studies at Princeton University, and then I started my career as a healthcare analyst at Janus Mutual Funds. So Darren and I found the Aptorum Group in 2016. And our mission is to create a biopharmaceutical company that's focused on unmet medical needs. There are 3 pillars of focus that Aptorum Group has. The first one is the Smart-ACT platform, which is a systematic approach to find repurposed drugs for orphan diseases. The second one is the Acticule platform. It's the infectious disease platform that focuses on unmet viral and bacterial infections. The third platform is the Claves platform and that targets metabolic diseases, and we have a platform to create global targets in the microbiome space. We have 2 development sites, a preclinical laboratory in Hong Kong, mainly focusing on non-GLP, CMC and formulation work and also a GMP facility in Toronto, Canada with our strategic partner, Cubist Pharmaceuticals that focuses on GLP and GMP and also clinical trials coordination in North America. We currently have 40 staff members, and our company was listed on the NASDAQ in December 2018, with ticker symbol APM. With that, let me hand over to Darren, the President of our firm for further presentation. Thank you.

Thank you, Ian. Hi. My name is Darren Lui. I'm one of the Executive Director of the company. A little bit of background myself. I graduated with a chemistry degree with Imperial College in London, following which I spent most of my career at Barclays Capital on the Investment Banking division side. And currently, together, Ian and I, my responsibility includes looking after the capital market strategy of the company, business development and obviously from an investor relations standpoint as well. So it is a pleasure to here to present a little bit about our company today, and we thank you for your time for joining this conference. Let me kick off with our first pillar, our first platform, which is what we call the Smart-ACT platform. The idea of the Smart-ACT platform is really is to tackle of what we call unmet and orphan diseases. Now orphan disease is actually, in our view, a huge growth area right now. It is extremely untapped. Just to give you a little bit of landscape, in the U.S., the orphan disease landscape, there are more than 7,000 orphan diseases that have been identified and is still increasing every year. Now this is compared to just 5 years ago in 2015, only 2,500 orphan diseases were identified by the FDA. Of these 7,000 orphan diseases right now, 90% are still untreated or does not have effective treatment. And in last year, on the other side of the world in China, the NMPA has also announced a 120-strong orphan disease list, a focused and encourage for companies to develop, and they are constantly also expanding their reimbursement regime for these diseases as well. The concept behind the Smart-ACT platform is to look at systematically approaching orphan diseases using a drug repurposing approach. Now for those who don't know what repurposed drug is, repurposing drug is the process of taking a regulatory, already approved drug and finding new disease indication that the drug could be efficacious against. There are a number of advantages with drug repurposing: to get a combination with orphan diseases. These include, for example, in orphan disease case, typically, these clinical trials are much smaller scale. There are clinical trials which are as small as 15 people. There are ones there that are as large as only 250 people for their pivotal trials itself. Orphan disease also benefit from a 7-year marketing exclusivity by the FDA, obviously on top of any patent protection that you may have for the assets. And also the clinical trials are usually expedited. For example, you have a much faster Phase I trials or even, in some cases, your asset could go directly into the pivotal Phase II trials, typically by passing the GLP toxicology studies. And the reason for that is because the drug has previously been approved for use in the market and have undergone extremely rigorous clinical trials progress previously usually approved by the FDA. So this allow us to greatly reduce the duration of the drug development, typically from an average for a new molecule of 12 years down to, on average, 3 to 4 years using this method. Our idea here is to actually to be able to combine, on a systematic basis, targeting already prioritized orphan diseases to allow us to rapidly generate late-stage clinical candidates every year targeting different types of orphan diseases. So on average, just to give you our numbers, from initial screening to an asset ready for IND submission, we are currently targeting an average development time of somewhere between 12 to 18 months to complete for each candidate, from bringing them from start all the way into Phase II-ready. And this Smart-ACT process involves a twofold approach: first of all, we have access to a 2,600-or-so approved small molecule drug library, which we deploy a computational method to assess the initial screening against the selected orphan disease targets. These were narrowed down to a very small group of candidates, which then we bring into what we call the wet-lab validation process, involving a combination of in vitro validation, which typically involves a cell line models, observing the IC50 results. And, in some cases, we also compare a combo treatment together with standard chemotherapy to observe things like is this synergistic effect of that particular small molecule in combination with chemo. This will be followed by what we call a in vivo validation, which involves animal model to observe the in vivo advocacy. And the most important part is actually when we come to narrow down to a small handful of candidates, we typically we have to assess the IP protection of those candidates, which we'll talk a little bit more in the next slide, before we select the candidate onto development into the clinical trials. And typically, the U.S. FDA's 505(b)(2) pathway typically allow for a repurposed drug. Now because of the huge landscape of orphan disease right now, as I said, there are over 7,000 orphan diseases at the moment, it is not physically possible to be able to assess all these diseases in one go. So we typically come out with a disease selection criteria in assessing the orphan diseases that we would like to prioritize for screening. And we take into account a number of factors in determining this high-priority development list. So for example, we take a look at how unmet that particular disease is, what is the market size as well as the competitive landscape in terms of existing therapies available. Also, we also assess the complexity of the clinical trial design, we do take this into account as well as other factors, such as, for example, if the disease is unmet pediatric diseases, we know this is particularly something that the U.S. FDA is more encouraging and have more accelerated review process for these type of diseases. So applying this criteria, we usually come up with a whole list of a prioritized orphan disease list that we'll look to screen in the next 12 to 18 months. One question that we get a lot is our IP protection from our investors. So typically, a repurposed drug, a typical question that comes up is how do you actually protect an IP for a drug that has already been approved by FDA in the past? Now we typically we only select drugs that are either already off-patent or soon to be off-patent within the next 5 years. And on top of that, we typically look at other patent protections, which could broadly be classified into 4 main groups. So first of all, you look at indication patents. So could you file protection against that particular orphan disease that you are developing? Also, when you look at things like reformulation patents. So typically, the administration method of the drug is changed to observe potentially increased, increase relief into the bloodstream. And that reformulation, usually, we will file a reformulation patent to protect the asset. As we approach the clinical trials, we also file further patents, including, for example, combination patent to the extent if it's relevant and also other patents such as dosage patent to protect the drug from off-label use itself. So in other words, we only select drugs for further development into the clinical trial to the extent that there are patent protection available for that particular candidate. Just to give you a snapshot of our current pipeline right now. So at the moment, we have a 4 assets that were currently under active investigation and development right now. SACT-1 is an asset against a disease indication called neuroblastoma. It's a pediatric cancer, one of the most common pediatric cancer at the moment to consider to be hugely unmet. This particular asset, we are now completing our preclinical preparation work. We're expecting to be able to file the IND submission in second half of this year. Following with subject to regulatory approval, of course, we'll swiftly begin our Phase II trials in the second half of 2020. We've also recently announced an additional R&D program, which is the targeting COVID-19 program we'll talk about in the next slide. And also we have 2 other further assets, SACT-2 and SACT-3, which are -- we [indiscernible] to disclose to the market. We expect to be able to take one of these assets to submit for IND filing towards the end of the year. Now COVID-19, as everyone would know, one of the reasons why we're doing this [ strategic ] conference is the impact of the SARS-CoV-2 virus or COVID-19 disease. So it is highly infectious right now. I think as we speak, the confirmed cases have now reaching close to 1 million worldwide, and the WHO has declared this COVID-19 disease as a global pandemic. The mortality rates, although is quite low relative to other -- the 2003 SARS-CoV-1 and the 2012 MERS-CoV virus, which has a 37% mortality rate. At the moment, unfortunately, the COVID-19 disease is extremely infectious relative to the other 2 viruses. So across the biotechnology landscape right now, almost a lot of companies are now targeting one of these approaches, from a therapeutic standpoint, from a vaccine standpoint and also from a diagnostic standpoint as we can observe on the news on a daily basis. So we actually do believe to tackle this disease, we do need a multidimensional approach collectively around the world to be able to bring this disease under control. So on this basis, Aptorum Group earlier in the week, we have initiated a new strategic project here targeting coronavirus, in this case, the SARS-CoV-2 virus. Here, we are deploying both a combination of our existing Smart-ACT drug repurposing platform, screening out of our 2,600 small molecule library, trying to find identified -- interesting candidates for further investigation against this particular virus and also to leverage off our infectious disease expertise platform under the Acticule platform. At the moment, we have entered into collaboration with the University of Hong Kong Microbiology Team. This particular team is actually quite well known within the microbiology world because it is the team that has actually identified the 2003 SARS-CoV-1 virus in Hong Kong back in 2003. And at the moment, the team is also developing their own vaccine strategy for the SARS-CoV-2 virus. And the leader of the team is currently also acting as a special adviser to some of the regional governments against the COVID-19 disease. So in terms of selecting our potential drug candidates right now, we have actually targeted 2 protein targets, we just selected and are essential in the viral reproduction cycle. The first protein target is the 3CL-Protease, which plays a pivotal role in mediating viral replication and transcription functions through extensive proteolytic processing. The second protein target is the RNA-dependent RNA polymerase, which is the enzyme that capitalizes the replication of RNA from the RNA template. Our methodology here is that with this proposed, we have to inhibit a 3C approach is all RDRP in order to slow down and terminate the replication of the coronavirus. So based on our initial Smart-ACT selection process of out of the 2,600 approved small molecule library, we have identified at least 3 small molecule candidates that have not yet been reported so far that have shown potential interference against these 2 enzyme targets. Now currently -- investigation is currently ongoing, and we are preparing for pre -- further preclinical validation right now, and we hope to be able to report that as soon as we can in this quarter to our stakeholders of the progress of our results. I can assure you that some of these selected candidates, they all have established -- previously established safety, toxicity and PK profiles in prior human clinical trials right now. So hopefully, to the extent we can achieve positive data readout from our preclinical data, we'll be able to move this swiftly into the human clinical trials, subject to, in this case, the FDA regulatory clearance. Moving on to our next indication right now involving the SACT-1 program on neuroblastoma. As I said, neuroblastoma is actually a form of nerve tissue cancer on -- predominantly in children. So every year, we're talking -- there's at least 800 new cases of being diagnosed in the United States. The neuroblastoma accounts for up to 15% of childhood cancers. It's actually the most common type of solid tumor in children. The value of the global neuroblastoma market is over $2.6 billion as of 2017. It has a compounded annual rate of growth of 3.7% per year. On top of that, neuroblastoma actually accounts for 50% of all cancers in infants, making it the most common tumor in infants younger than 1 years old. At the moment, the 5-year survival rate is still relatively low despite all the treatment that we have. At the moment, the 5-year survival rate is somewhere around 40% to 50% only. The treatment of this newly diagnosed high-risk neuroblastoma may include a combination of the following: involves combination chemotherapy, surgery, radiation therapy. There is one particular antibody therapy, monoclonal antibody therapy, which is called dinutuximab. It's available. It is owned by EUSA Pharmaceuticals. Actually recently, in January 2020, they entered into a deal agreement with BeiGene and actually have bought over the China rights for dinutuximab in China itself. In our in vitro analysis so far, our SACT-1 was able to demonstrate, we selected out of 48 candidates, 1 particular candidate called SP055 was able to demonstrate in neuroblastoma cell line studies, has an IC50 of 2.97 micromolar. And you can see a visibly confirmation that it is very effective in killing neuroblastoma cells over 4 cell lines, which has different mutations to cover different risk groups of neuroblastoma. And in further in vitro studies over 2 cell lines, we were able to demonstrate a synergistic effect in combination with the standard chemotherapy, which is doxorubicin in this case. And within that concentration range, you can see the synergistic effect highlighted in yellow was observed around at 0.37 to 1.11 micromolar of the SP055 against 0.4 micromolar of standard therapy. Now this is extremely significant because potentially implied that in many pediatric patient cases who often do not survive on the chemotherapy processes. As you can appreciate, it's extremely toxic. We may be able to benefit the patient from a reduced dose of chemotherapy in combination with our SACT-1 candidate and still able to achieve similar efficacious results. This will, of course, be subject to further clinical validation as we progress towards the Phase II trials. Now just a little bit of background of our SP055 candidate. Now SP055 candidate, it was previously an FDA-approved drug. It has not shown any genotoxic potential, even at the highest feasible concentration dose both in vitro and in, in vivo results. And in a prior Phase IIb study over 2 years, the SP055 candidate was safe and well tolerated. And most importantly, there was no dose relationship between SP055 and any adverse events. SP055 also have a very established and FDA-approved pharmacokinetics profile. The package itself can be accepted again by that 505(b)(2) pathway. And it has a relatively long half-life averaging around 48 hours. And on this basis, frequent dosing is not required. And just to wrap up our Smart-ACT platform. In the next 12 to 18 months, we have shortlisted 30-or-so orphan diseases that we'll be looking to screen under the same systematic approach towards as our SACT-1 program, which is actually split into 2 main family groups. So one here, we're targeting half of them in orphan cancers, and the other one non-cancer group include genetic immuno-metabolic disorders as well. Out of this strong list, we expect to be able to take 3 to 5 new indications to reach Phase II trials towards the end of 2021. Now moving on to our infectious disease platform, which is called the Acticule platform. Under this program, we have 4 assets currently under active development and investigation. The most advanced asset right now is what we call the ALS-4, which is targeting indication, a very deadly bacteria called staphylococcus aureus, of which MRSA is one of the subtypes. So MRSA, most people well know that as super bug. This particular ALS-4 asset is a first-in-class oral formulation, a nonantibiotic targeting this particular deadly bacteria disease. And we'll be expecting to submit IND submission in the second half of this year to commence Phase I trials in North America. The Phase I trials itself will last for 6 months. Towards the Q2 of 2021, we'll be expecting to embark on the confirmation Phase II studies and potentially exploit the LPAD accelerated pathway for approval. We also have other assets right now also called ALS-1, which is targeting anti-influenza A and also 2 further program, ALS-2 and 3, covering a more broad spectrum at gram-positive bacteria group. A little bit of a market overview of the staphylococcus aureus market. So overall around the world, there are estimated 2 billion people carrying staphylococcus aureus worldwide, and of which 53 million people are carrying the deadly super bug MRSA. In the U.S. alone, more than 150,000 patients require hospitalization from staph aureus infections per year, and the mortality rate is up to 30%. In cases of MRSA sepsis, the mortality rate may be even up to 55% even with existing treatment right now. The global -- the U.S. market right now -- global market right now for MRSA drug is over $2.9 billion back in 2016 and a compounded annual growth rate of 3.2%. Some of the more headline deals that was done in this area recently includes the 2014 deal where Merck made an acquisition of Cubist Pharmaceuticals, which is a large developer of antibiotics for close to $8.4 billion. And in 2018, Roivant also announced the in-licensing of iNtRON's Phase II assets for USD 667.5 million in upfront and milestone payments. The valid proposition for ALS-4 is as follows. So we have adopted what we described as an antivirus approach. So it's actually not bactericidal. It doesn't actually kill the bacteria on its own unlike the antibiotics. A part of the reason antibiotics develop a lot of resistance and has been discovered in most prescribed antibodies by MRSA, it is typical antibody has a very broad spectrum and indiscriminate, and it actually commonly affect your normal flora leading to super-infection in case of drug resistance. Well, SACT-1, as I said, is not bactericidal. So actually, we were able to demonstrate in our later resistance studies that where there's less selective pressure and much less likely for bacteria to develop resistance. The approach of ALS-4 is to disarm the bacteria by reducing its pathogenicity and that to allow for the bacterial clearing to be mediated by your host, so by your own immune system inside your body. A little bit of a landscape of the approved drugs for MRSA infections right now. And you can see that the top of the list is vancomycin, which is a antibiotic that has been used in the market for more than 60 years. It has already gone generic. It's primarily administered as an IV form. It was -- there has been a vancomycin-resistant strain car was first discovered in 2002. And you will notice that on the WHO website, that VRSA, together with MRSA, are high-priority development targets announced by the WHO. The second line of defense is actually Daptomycin, owned by Merck, also an IP-based antibiotic. Daptomycin resistance has been described as early as 2006. And also a number of other antibodies have also encountered resistance since 2010 and so forth. What's more important here is that most of these antibiotics are all IV-based as they are large molecule and biologic molecules, with the exception of Vancomycin, which is 1 oral form for local GI infection only and Linezolid, which has an oral form targeted for soft tissue infection. And this is a significant difference compared to where our ALS-4 itself because it is a small molecule approach, which obviously have cost advantages compared to some of these larger biologicals. ALS-4 actually is a oral form-based molecule, allowing us to distinguish ourselves from some of these major antibiotics. ALS-4, what we're trying to do here is to take ALS-4 to address some of the shortfall of Vancomycin. Even with the application of Vancomycin, typically the mortality rate is somewhere around 40% and the relapse rate of the patient from MRSA is extremely high. Every relapse case actually increases the mortality rate by 16%. And the VRS strain sometimes even exceeds that of 50% of the strain population itself. So ALS-4 is here to potentially complement some of these other bacteria antibiotics such as Vancomycin. And it's here to address something that these antibiotics cannot do, for example, some of the clinical endpoints that we'll be looking to observe includes reduced mortality rate, reduce relapse rate and actually reduction in the hospitalization duration of the patient itself. It is not a direct competitor of antibiotics, and we will be expecting this as a combination therapy together with existing first-, second- and third-line defenses in the antibiotics world. The [indiscernible] of ALS-4 is to inhibit one of the key enzymes that is responsible for the biosynthesis of staphyloxanthin. Now a staphyloxanthin is actually a golden pigment, a golden keratinoid pigment synthesized by staph aureus. It is an important virulence factor owing to its antioxidant property. It can react with and [indiscernible] the activate reactive oxygen substances, ROS, and help the bacteria evade the host neutrophil-based killing. And this is usually observed visibly as a very golden pigment of this bacteria group. And here, we can demonstrate that as we increase the dose of ALS-4, the pigment disappears, and you can see they actually decolorizes with increasing concentration of ALS-4, demonstrating that ALS-4 is effective, inhibiting this staphyloxanthin pigment production. In our in vivo studies in the rat models, the rats were treated with a high lethal dose of MRSA at 10 to the power 9 colony-forming unit. And the conclusion here is that the black line control shows that all animals die after 4 days. The red line results show that at day 7 and statistically significantly speaking, over half the mice, which still survive with the treatment of ALS-4. In a non-lethal model with [ 20 to 7 ] CFUs, we proceeded to counting a bacterial count inside the kidney, and you can demonstrate able to demonstrate that 99.5% reduction in bacteria count after the application of ALS-4. And in subsequent resistant studies, we were also able to demonstrate that ALS-4 does not trigger antibiotic resistance. This is a standard 11-day resistance test adopted by most antibiotic testing because [indiscernible] has demonstrated resistant to develop well within 4 days. So in here, we were able to demonstrate that ALS-4 does not trigger antibody resistance. And more importantly, we're also able to demonstrate ALS-4 is not affected by clindamycin resistant bacteria as well. So here is the graph on the left and the pigment confirmation on the right is able to demonstrate that with or without clindamycin resistance bacteria, ALS-4 being applied at day 11 and onwards, it is still effective in reducing staphyloxanthin production as evidenced by facial confirmation of the reduction in the golden pigment. So and we can conclude here, the ALS-4 is still not affected by clindamycin resistant bacteria. Now moving on to our third platform, which is our metabolic disease platform. Now there have been increased studies globally right now to assess the relationship between our microbiome environment with various metabolic immunological and, in some cases, neurodegenerative-related diseases. It is now often shown that actually this bio system, which is microbiome imbalance is a significant factor of this disease. Our approach under this platform is to target what we call the bad metabolites produced by the microbiome. And research have shown that these metabolites could be responsible for some of the major metabolic diseases such as obesity, fatty liver and diabetes.

Darren, I apologize. We are getting close to the wrapping time. If we can start wrapping in the next minute or so.

Sure. Yes, of course. So maybe very quickly here, we have a snapshot of our metabolic disease platform. Our first candidate here is CLS-1, which targets obesity, involves a large molecule approach in removing some of these bad metabolites responsible for obesity. We have some very interesting animal results. We've demonstrated that CLS-1 is able to reduce the obesity of the mice by 20% within 2 weeks. This particular asset, we'll be bringing this to be Phase I-ready towards the end of the year. And we also have 2 further assets right now, which we'll be disclosing in due course. Maybe just to wrap up our company right now. So we have a little bit of the financial snapshot of the company. The company is, before the IPO in 2016 to 2018, we raised capital of up to $37 million. In the December 2018 in IPO, we raised a further $12 million. We recently also completed a further capital raise in February this year of another additional $10 million. As of mid-March 2020, our cash undrawn credit facility now exceeds USD 20 million at the moment. And in terms of shareholder structure, currently, around 69% of the company is still owned by insiders and founders as well. And well, we -- given the limited time, we thank you very much for participating in this conference. And please feel free to send your questions, and we'll do our best to answer those questions as soon as we can. We thank you very much for your time. We appreciate it.