Aptorum Group Limited (APM) Earnings Call Transcript & Summary

Thank you, everyone, for joining me today. My name is Darren Lui. I'm the President and Executive Director of Aptorum Group. Aptorum Group is a biotechnical currently listed on the NASDAQ under the ticker, APM. And recently, we also cross listed on the Euronext, also traded under the ticker APM as well. Before I proceed, I'd like to point you to Page 2 of our disclaimer. To the extent you consider investing in our company, I urge you to read this disclaimer right now, which contains certain forward-looking statements in our below presentation itself. For those who are here with us the first time, I'd like to give you a quick overview of Aptorum Group. Aptorum Group was established in 2010. We focused on a number of unmet medical needs, including orphan diseases, infectious disease, metabolic diseases and women's health. Currently, we have over 15 therapeutic candidates are under development. And our business strategy is to focus on early-stage drug discovery and then moving them and develop them all the way into the proof-of-concept stage. After which we have a number of options, including continue the pivotal studies ourselves or explore further co-development or licensing opportunities with major pharmaceutical companies. Our regulatory strategy is the U.S. FDA. So our upcoming planned clinical trials are actually mostly conducted in North America. And also our key other major market focus includes the Europe EMA, Australian markets as well as the China and MPA markets. Currently, our principal office is based here in London, in the U.K., but we have a core development site also in Toronto in Canada, where -- which is responsible for the conduct of GLP/GMP work as well as the clinical trial coordination out of North America itself. The company, as a whole, we have over 40 full-time staff as well as approximately 45 also scientists, advisers and consultants, who have vast experience in the drug development and clinical studies. Moving on to Page 4. I'd like to highlight some of our key appointments lately to our senior management and significant employee section. We are welcome to have Dr. Herman Weiss, who joined us from Israel. Dr. Herman Weiss was previously trained as a MD in Ohio State University and actually, also attains his MBA in George Washington University as well. One of his most significant position previously was that he was the Head of Clinical Development and Medical Affairs at Juniper Pharmaceutical Companies, which was previously a NASDAQ-listed company before it was subsequently acquired. Dr. Herman Weiss has over 20 years of experience in medical field, and he actually has now been appointed as the CEO of our microbiome platform, Claves Life Sciences, as well as Senior Medical Adviser of Aptorum Group itself. So we're very glad to have him to join us to be able to take our microbiome platform in particular for metabolic diseases forward into further development itself. On Page 5, I'd like to point out our other key appointment, which is Dr. Robbie Majzner. Dr. Robbie Majzner is currently an Assistant Professor in the pediatrics space at the University Medical Center of Stanford. He completed his residency training in pediatrics and fellowship training in pediatric hematology and oncology field and attained his -- previous attained MD at Howard Medical School as well. Currently, Dr. Robbie Majzner is working on our SACT-1 program and providing valuable input into the development process of SACT-1. I would like to quickly give you an overview of our pipeline for those who are joining here with us today for the first time, and then subsequently, I would like to focus on some of our key announcements that was released as of today in September 2020 of our 2 leading programs, SACT-1 and ALS-4. As I said that we have a wide portfolio. On Page 6, you'll see a snapshot of our portfolio. You see that SACT-1, which is one of our leading assets right now, is target against a disease called neuroblastoma, and now today, we are excited to announce further exciting in vivo data related to neuroblastoma. It is currently also undergoing the final stages of IND preparation, and we'll be looking to submit the IND application shortly to be able to commence what we call the Phase Ib/IIa trials under the U.S. FDA's 505 (b)(2) pathway. Our second leading asset here is ALS-4, which is focused on a very deadly infectious disease called MRSA. MRSA is actually classified as a high-priority development target by the WHO. ALS-4 pursues a novel mechanism in targeting MRSA, and right now, we are in the final stages of our IND-enabling studies. We've targeted IND submission for -- to start the Phase I trials in Q4 2020 itself. In later slides, I would like to update you some of our latest data on our ALS-4 as well. Our other major platform, as I already mentioned, is the Claves series, which is now headed by Dr. Herman Weiss. Claves is a platform that is focused on microbiome-based research, in particular, developing how and modulating how chemical signaling in our microbiome alters our ability to cope with metabolic diseases such as obesity. Here, we have our leading asset right now, CLS-1, which is currently in lead automization stage right now, and we believe that Dr. Herman Weiss will continue to be able to drive our program forward into the next milestone as well. I would like to jump straight into our SACT-1 program and to update you our latest results. On Page 10, you'll see a quick market overview of our SACT-1, which is one of the most targets for neuroblastoma, which is one of the most common type of solid tumor in children. The market as of 2017 is $2.6 billion and has a compounded annual growth rate of 3.7%. Now -- and based on previous data, you will see on Page 11 and on Page 12, you'll be able to see that in our in vitro studies, we were able to visibly demonstrate SACT-1's effect on neuroblastoma cells, and as a result, it was able to reduce neuroblastoma cells both physically and chemically. And you'll see on Page 12, when we actually conduct our previous combination studies together with standard of care chemotherapy, it was able to show synergistic effect in our in vitro studies itself. Now I'd like to move on to Page 13, which contains some of our latest in vivo model data for SACT-1. It is also the subject of our announcement today on 1st of September through our Business Wire release. Here, you will see that we actually conducted a -- based on our initial 22-day data of a recent study in a xenograft mouse model of neuroblastoma. Our SACT-1 was actually administered orally in combination with what we call a standard of care chemotherapy. Here, this is depicted by the green line. And we were able to demonstrate that SACT-1 brought a statistically significant tumor shrinkage between day 15 to day 22 when it is compared to the control group, which only received standard of care treatment alone. And this is depicted by the blue line. So during this period, the combination of SACT-1 managed to reduce the tumor size by up to 54.2% when compared to the control group itself. As a result, the SACT-1 appears to be effective in accelerating the effect of the standard of care treatment, especially in early time points as you can see, a sharp decline of the green light from day 1 to day 7 against the control blue line. This actually further supports our earlier in vitro observation that SACT-1 actually promotes tumor DNA damage and tumor cell death as well. Our other update is that actually, we also believe that SACT-1 was -- is effective against not just neuroblastoma, but potentially, other cancer types. As you can see our press release today, we actually conducted an in vitro screening of SACT-1 against the panel of over 300 cancer cell lines. Similar to our previous findings against neuroblastoma, SACT-1 exhibited similar antitumor efficacy across other major cancer types as well, and this is including, but not limited to, colorectal cancer, leukemia and lymphoma cell lines. So as a result, in addition to treating neuroblastoma, SACT-1 may have potential applications in the treatment of other cancers. Based on this discovery right now, our company plans to continue to carry out further in vivo studies to study the efficacy of SACT-1 over these other type of cancers in order to maximize the potential of SACT-1 and potentially expand our future Phase II clinical trial indications of SACT-1 as well. I would like to move on to our ALS-4 update. First of all, I'd like to point out to Slide 16, which contains a brief market overview of ALS-4 and the MRSA market. MRSA currently attracts almost a 30% mortality rate with what we call MRSA bacteremia, which is a form of blood infection in patients. And attracted a $2.9 billion global market in 2016, we have a compound annual growth rate of 3.2%. Now ALS-4 pursues a novel mechanism in terms of targeting what we call antimicrobial resistance. It's actually a first-in-class drug, targeting a oral-form based approach towards this MRSA bacteremia model. Right now, MRSA bacteremia has only got 2 drugs that was approved by FDA so far, which is vancomycin and daptomycin, and ALS-4 is currently looking as a promising alternative candidate for MRSA bacteremia. You see on some of the latest results that was announced today, on Page 24, where we administered ALS-4 in a MRSA bacteremia mouse model. And here, if we demonstrate that across major organs, including the liver, the kidney, the lung and the spleen, ALS-4 depicted here as compound IM032 was able to show a statistically significant reduction in bacteria count across major organs when compared to our first-in-line treatment vancomycin as a control. Now this is extremely significant and actually consistent with the data we observed on Page 23, which is our previous in vivo studies of ALS-4, showing a more than 99.5% reduction of bacteria count in our previous studies. The other update I would like to bring to your attention is on Page 25, which is also further described in our news release today as of 1st of September. We conduct another in vivo study in another MRSA in vivo study right now, which involves skin wound infection model. Now MRSA skin wound is actually an extremely common infection. In particular, it's also associated with work on a community associated MRSA infection itself. Here, conducted by third-party country research organization, ALS-4 is able to show effect in accelerating the healing of open wound infection with MRSA in a mice model. When this is compared with 2 of the most commonly uses antibiotics for skin and wound infection, which is mupirocin and linezolid, the oral dose of ALS-4 is able to show a statistically significant improvement in wound healing. Specifically, at the end of the day 7, ALS-4 exhibited 63.8% of wound closure compared to 48% for linezolid and 43% of topical mupirocin as well. And you can demonstrate here from the graph on the left-hand side, and also from the pictoral mouse pictures on the right-hand side here to demonstrate the skin wound healing effect. So we are extremely excited that ALS-4 is effective against multiple MRSA indications. My final update I wanted to show you is on appendix in Page 35 of the slide. Today, we have also announced our interim results as of 30th of June, 2020, which you'll find as part of our press release as well. Here, we'd like to report to you our balance sheet right now as of June 30, 2020. Currently, we have -- including our credit facilities and our working capital, we have in excess of $15 million of working capital available right now, which is actually sufficient to sustain our company's development for the next 12 months. Here, I would like to conclude my presentation today. To the extent you would like a copy of these slides, please visit our IR website at ir.aptorumgroup.com. Thank you.

[Operator Instructions] With us today live is Darren Lui, the President and Executive Director of Aptorum Group. [Operator Instructions] Now let's get started with our first question. How is the commercialization for the women's menopausal product coming along?

Yes. No, that's a great question. So at the moment, the women's health supplement product, just to remind everyone, is the DOI supplement, which is called NLS-2 as a project name. It's targeted for women's menopause cycle as well as women who's suffering from osteoporosis. Now currently, this particular supplement is under registration with a number of countries, including U.K., a number of nations across the EU and over in Asia as well. We're expecting to be commencing distribution towards Q4 of this year. At the moment, we have a second commercializing batch being produced and manufactured out of Canada right now. And we're expecting to be able to start distribution initially in Asia and U.K. most likely, and then subject to registration requirements, the rest of the EU towards the end of Q4. We have currently plans to do 2 form of distribution, one is to directly distribute ourselves through -- with various channels from private clinics to direct selling. We're also currently in discussion with some major distributors who will be able to potentially carry out some of these distribution through those B2B channels itself.

Okay. We have a second question from one of our viewers. Can you give us a breakdown of the inside ownership percentage?

So -- and most of this is already public information, which is available on Bloomberg and on some of our SEC filings. At the moment, the company is around 60% held by our CEO, who is also the major founder of the company, and this is around 60% of the company. The remaining around -- I would say, around 15% or so, is held between myself and a number of inside the management right now. So I think I would say inside ownership right now is probably around 70%, 75% of the company. We're also glad to report that, if you track back the history of our filing, you'd notice that actually none of the insiders have ever sold a single share since the company IPO up till now. Actually, during the February on capital raising earlier in the year, our CEO, Chung Yuen Huen, has also subscribed -- put another $4 million as part of that February round into the company as well. So I would say, right now, we are around just up to 70% held by the insiders right now.

We got a third question. How many drugs does Aptorum look to add into its drug pipeline each year?

Yes, that's a good question, and that's largely a function of our discovery platform as well. So as some of those who follow us for a while now, as you know, we have a number of proprietary drug discovery platforms. In particular, I'd like to mention is our SACT series. SACT series focus on systematically approaching some of these other disease targets, using a drug repurposing approach. And behind the scene, it's a combination of the computation of base screening as well as a validation process. I would say that we target to bring new -- potential new therapies into our development pipeline of somewhere between 2 to 3 per year. And some of them, obviously, we won't be able to develop everything ourselves in full. So one of our business model, other than those we develop ourselves, is actually seek other pharmaceutical companies, need to launch that pharmaceutical companies to potentially co-develop or even in-license some of our assets as we come up from our discovery pipeline. So as a result of that, we are continuing to target somewhere between 2 to 3 new assets against a different what we call unmet diseases, especially in the orphan disease space and that we target each year, starting from 2021 and onwards itself.

Are any of your trials that are currently underway fully funded yet?