Aptorum Group Limited (APM) Earnings Call Transcript & Summary

Hello, everyone. This is Craig Brelsford with RedChip Companies. Thank you for joining today's event with Aptorum Group, which trades on the NASDAQ under the ticker, APM. With us today, we have Darren Lui, President and Executive Director of Aptorum. We will begin with a brief presentation in a moment, and then we'll open up this event for Q&A. I will keep everyone's appliance muted throughout the presentation. Users may ask a question at any time by using the Q&A tool at the bottom of the Zoom window. Before we begin, please allow me to read the safe harbor statement. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results along with other statements about the future expectations, beliefs, goals, plans or prospects expressed by management constitute forward-looking statements. Any statements that are not historical facts should also be considered forward-looking statements. Of course, forward-looking statements involve risks and uncertainties. With that said, I now turn this webinar over to Darren. Darren, please go ahead.

Thank you. Thank you, Craig, and thank you, everyone, for your time. My name is Darren Lui. I'm the Chief Executive Officer of Aptorum Group. And it's a pleasure to be here today to talk a little bit about our pipeline. And just before I jump ahead, I urge you to read this disclaimer as this presentation contains forward-looking statements. Should you consider an investment in the company, please do take this into account. For those who have join us first time, so just to give you a bit of background of where we come from and what we do. So we are a clinical-stage biopharmaceutical company. We're focused on 3 major areas of research, including in the areas of oncology, infectious diseases and autoimmune diseases. Now sometimes we get this question why these 3 areas. Actually, if you're a scientist or a clinician, you realize actually very often a lot of the pathways into human body actually share very common pathways across these 3 diseases. So typically, you would have autoimmune responses to different kinds of infectious diseases, including COVID, for example. So this is the 3 major areas where we focus on, and you'll see in later slides some of the updates of our clinical-stage programs relating to these areas. Our business strategy is to focus on the earlier-stage II/Phase II. So typically, we get ourselves involved as early as the discovery stage where we have owned proprietary discovery units. We'll talk a little bit about that in later slides as well as collaboration with some of the academic universities, academic institutions around the world where we look to source interesting assets for development itself. Our first strategy is typically to finance and develop preclinical-stage assets into what we call a Phase II proof-of-concept trial. So that's the stage where typically we apply the drugs or the therapeutics to patients to offset the initial efficacy data. Now typically, we would keep our Phase III trials open in terms of mode of collaboration depending on the data. We do -- it's not unusual for small biotech companies to work with larger pharmaceutical companies to drive what we call a Phase III pivotal trials or to actually continue to drive the development of Phase III trials ourselves if a Phase III trial is required. Our regulatory focus is the U.S. FDA. So everything we do currently is pretty much in North America right now, targeted for the U.S. FDA's regulatory approval. We do look at other major countries, including Europe, U.K. Australia, China as well, depending the outcome of a Phase II proof-of-concept data. As Craig has mentioned, we are trading on the NASDAQ market. We are trading under the ticker APM since 2018. We are also cross-listed on Euronext Paris since 2020 as well also under the ticker APM. Our principal executive office is based here in London in the U.K. However, we do work with a number of partnerships in North America, especially CROs based in U.S. and Canada where we've conducted our previous GLP studies, our GMP manufacturing and also our clinical trials coordination in North America itself. And in terms of quick one-sentence summary that we have since last year completed 2 Phase I clinical trials for 2 therapeutic drugs. One of them is ALS-4, which is targeted for MRSA, we'll talk a little bit about that; and SACT-1, which is targeted for neuroblastoma. We also have a liquid biopsy diagnostics, NGS-based diagnostics group called PathsDx, which is currently continue to be in clinical validation phase as well as a women's menopause supplement product, which currently just started commercializing in parts of Asia, and we have continued to expand that into other regions as well. And also, we have been announced previously before, we have a number of preclinical stage candidates targeted for non-small cell lung cancer, and we'll talk a little bit about that in later slides. So as I said myself, I am the CEO. I have over 15 years of capital market experience. Before I joined Aptorum, I was part of a British bank called Barclays Capital for a number of years. Before that, I was a qualified chartered accountant as well, having graduated first class in biochemistry from Imperial College in London. Joining with me on the management team is Dr. Clark Cheng, who is our Chief Medical Officer. Dr. Clark Cheng was actually trained MD in UCL in London. Subsequent to that, he went over to Singapore, where he spent most of his career at a major hospital group called Raffles Medical Group for over 10 years. His last position was Deputy General Manager. And since then, he's brought with him a lot of clinical patient recruitment and clinical trial experience from that medical group itself. And lastly, I just also want to mention our Head of Research and Development, Dr. Thomas Lee. Dr. Lee has actually joined us previously. He was at Novartis & Celgene for well over 10 years. During his days in Celgene, he was a part of the candidate selection committee, where he was responsible overseeing 25 assets under development across the 2 major companies and over 10 of which have since reached the market as well. So we're very grateful for him to have his input and drive some of our preclinical stage programs into the respective clinical stage. And for those who wants to join us first time, this is a quick summary slide of where some of our 4 core programs are, and we also have a slide on some of our preclinical stage programs. This is the -- these 4 core programs, 2 of them are related to drug therapeutics, which is ALS-4, SACT-1. And 2 of them are what we call nondrug technologies, which is PathsDx and NativusWell. ALS-4, for those of you who joined us the first time, ALS-4 is actually what we call a first-in-class small molecule drug. It's targeted for a very deadly bacteria disease. It is called MRSA. So some of you may have seen in the news, often hospitals around the world, including the U.S. and the U.K. here, is often ravaged by a super bacteria. This is typically what we call Staphylococcus aureus or MRSA for short. It's a very hard-to-treat bacteria. It's immune to most antibiotics that we deploy in the hospital setting. It is actually set at a high priority development target by the WHO in terms of therapeutic development against this bacteria as well. As I said, it's developed resistance to a number of antibiotics in the past, including even the most commonly used MRSA antibiotic, which is vancomycin, so vancomycin-resistant Staph aureus, VRSA, has also been commonly observed across clinics and hospitals in the last decade or so. This drug, we have -- for those who follow us, you know that actually we started this drug since the lead optimization stage a number of years ago. We've since progressed substantially on the development of this drug from the lead optimization stage over the past number of years into what we have now completed the Phase I clinical trials last year in Canada over -- this is over 72 healthy volunteers, including both, what we call, a single ascending dose and multiple ascending dose studies. The Phase I data was extremely positive, extremely encouraging. It replicated the data that we received when we conducted the large animal studies during our preclinical IND-enabling studies, so we are very pleased with the results right now, which is in the process of interacting with the FDA, this is the U.S. FDA, in allowing us to commence a Phase II clinical trial, which is now initially targeted for MRSA skin and wound infection models. This is looking at MRSA skin and wound patients across the U.S. to treat the MRSA infection on their skin. For those who are not aware of MRSA skin and wound, it is actually a very prevailing bacterial infection across, for example, places like care homes where a high congregation of what is immunocompromised people, including the elderly. And here, in this case, the recurrence rate for MRSA skin and wound infection is up to 70%. So people keep getting it, keep getting it, and it's very hard to get rid of. Through this data, it's in a significant demand in the market right now. We're looking at well over $1.5 billion a year in terms of the MRSA market itself. At the moment, we are now targeting initially to start the Phase II clinical trial for MRSA skin and wound infection on this side of the year, subject to the IND approval from the U.S. FDA. And we look to be able to update the investors in the market on the progress of our IND application with the U.S. FDA very shortly. Our second drug asset is our SACT-1 asset, which is a, what we call, a repurposed small molecule drug. A number of years ago, we started a, what we call a SACT discovery unit, where we have access to over 2,600 U.S. FDA approved small molecule drug library. So these are drugs that have been previously approved by the U.S. FDA. We have this library of molecules on our computer system. We did a, what we call, in silico screening, so basically using a computer modeling to screen targets against our library of small molecule drugs. And through this process a number of years ago, we've discovered one particular drug that is potentially efficacious against a number of cancer types, including a specific cancer, which is called neuroblastoma. Neuroblastoma is actually a very hard to treat oncology disease. It's basically a nerve tissue cancer, predominantly in children. And the 5-year survival rate right now in the U.S. is about 40%. So it's extremely low survival rate, and it's something that the U.S. FDA is very desperate, very encouraging for companies to develop therapeutics targeting this area as well. Over this, as a result of that, over the course of last year, we received an FDA orphan drug designation, which is -- which gives a lot of incentives for us, including, but not limited to, things like fast-track approval process, fast-track review process ahead of some other non-orphan drug molecules as well as a 7-year post-approval marketing exclusivity. So once it's received an NDA approval, it will be allowed a 7-year marketing exclusivity in the United States for this particular drug. We are also planning to submit a similar destination request in the Europe, in the EU. So in Europe, it also has a very significant market size. We're also looking at a similar orphan drug destination here in the EU, which typically gets applied after the respective Phase Ib clinical trials. And [ urge of ] this designation in Europe provides for what we call a 10-year marketing exclusivity. So a slightly longer marketing exclusivity as well. We're pretty confident this trial would also similarly qualify for that drug designation itself. This is a small repurposed small molecule drug. It's a drug that we have repurposed from a previous drug that was discovered by Johnson & Johnson. And it was a drug that was used daily for the last decade for HIV for the treatment of HIV infection. It was interesting that the drug was never considered for oncology process. But through our in silico screening, we actually identified this particular drug, SACT-1 is particularly efficacious when combined the use with traditional first-line chemotherapy itself. So as a result of that, what it does is basically it sensitize the cancer against typical first-in-line chemotherapy, that's 4 of them and actually allow potentially better treatment and response of patients with neuroblastoma against the first-line treatment of chemotherapy itself. In our preclinical data, in our animal data, we saw a 50% -- more than 50% reduction in tumor size in our animal model over the course of a 21-day treatment period. The 21 days is typically the period that's being used for chemotherapy. Typically, it's a 3-week process. And as a result of that, we saw a 50% reduction in tumor size across a number of chemotherapy in our animal models. Over the course of last year, we completed a short Phase I, what I call a food bioavailability study. So for those who have followed us in the news, you've seen a number of releases over last year. And as a result of that, we are now -- we just have completed our pre-IND meeting with the U.S. FDA, and we look to shortly submit our IND application for what is now a Phase Ib/IIa clinical trial with the U.S. FDA to commence basically trial of this SACT-1 drug for neuroblastoma patients. So we're very excited by that. Because it's part of that Phase Ib/IIa, we will be now looking at applying this drug to neuroblastoma patients. Particularly these will be children who basically have run out all options -- treatment options over the last couple of years and will be -- hopefully, will be very beneficial to be able to receive this new drug for the treatment of their neuroblastoma condition. What we've also identified in our Phase I clinical trial is that the neuroblastoma itself, because of our new formulation, we were able to develop a proprietary and patented oral suspension formulation for this drug and what we actually identified is that with oral suspension, the oral bioavailability, the absorption of the drug is actually much better than the actually original formulation of the drug that was designed by Johnsons & Johnsons, which is an oral tablet form. And in any case, actually, having an oral liquid is something that is more favorable for ingestion by the patient itself -- in this case, which are mostly young children itself. So we're very encouraged by that and have received a patent grant as we have announced last year, patent grant for the neuroblastoma condition for this drug as well as including other potential cancer types as well. So we're very excited about that. We hope to be able to update the market very shortly on the progress of our IND application and as a result, progressing onto the very exciting Phase Ib/IIa clinical trial this year. For the other 2 nondrug diagnostic technologies, the first one is actually, what we call, PathsDx, formerly it was known as RPIDD, R-P-I-D-D. And currently, this technology, we've just rebranded it because actually it's now getting closer and closer to commercialization. This is actually in a very hot area right now, which is a liquid biopsy diagnostics. So for those who don't know what liquid biopsy diagnostics, is, it is basically through blood sample, a drop of blood, typically a small volume of blood to perform genomic sequencing. It is NGS next-generation sequencing, to actually analyze in this case, what type of pathogens is currently residing inside the patient's blood sample. So it's very small drop of blood to identify the type of virus bacteria or fungus in this area. So it's actually a very hot area of development right now. You may have heard of other diagnostic companies in this space, like a major company that was acquired by Illumina, it's called GRAIL. That particular company does a liquid biopsy diagnostic for cancer. In our case, we're looking at liquid biopsy diagnostics to read and do deep analysis on the type of pathogens that are currently affecting the patient itself. So through the last -- over the course of last year, we have been collaborating with the origin of this asset. It came from an epidemic institution. It's called A*Star done in Singapore. We have a very strong molecular engineering team in the past decade. We exclusively license this technology. We completed subsequently the product optimization of this diagnostics technology and have been deployed in clinical validation setting in a hospital -- in a major hospital in Singapore over the course of last year. And we've since then made certain announcements. We actually published a paper a couple of weeks ago with the help of the major sequencing company Illumina and actually over 100 patients were being analyzed for this technology itself. And through that validation circa, what is quite a limited number of patients, we were able to observe extremely encouraging, extremely high specificity and sensitivity, over 95% specificity and sensitivity in conjunction with some of these major sequencing platforms, including the iSeq and the MiniSeq, which are the basically very popular sequencing platforms developed by Illumina. We also saw our over 93% agreement in -- of this technology in comparison to some of these traditional standard of care diagnostics technology, which is, things like blood culture things like PCR, we saw a more than 93% agreement with this at a traditional point of care -- standard of care diagnostics, which is fantastic because some of the competitors are in the market right now on only over actually 92%. So we expect these numbers to continue to improve as we embark on further clinical validation over the course of this year, which will lead us much closer to commercialization, hopefully, towards the beginning of last year in the U.S. and also around the world of this particular technology in the market, so sorely needed technology right now for clinicians in the space of infectious diseases. And lastly, one of our final asset here, which is not a drug but it actually a nutraceutical supplement. It's called NativusWell. It's a novel supplement targeting women undergoing menopause. As you may well know, women when they go through the menopause process, which is caused by a sharp deterioration of estrogen production inside the body, this particular molecule that we have identified from a naturally occurring plant is called the cinnamon vine. And within that, a number of years ago, our principal investigators identified that there are certain bioactive ingredients residing within this plant that actually has the effect of stimulating certain receptors that are responsible for estrogen production down the process. So through that process, we -- over the years, we developed a specific formulation for the extraction of this bioactive ingredient, detection and extraction of this bioactive ingredient, we've since able to formulate it into a pill -- into a pill. As a result of that we are now able to start commercializing and distributing this nutraceutical. We just started the commercialization process of this nutraceutical down in Asia and particularly in Hong Kong. We hope to be able to get this product now open into the much larger market, so the 3 major markets we're targeting right now is the European Union, China and the U.S. on this side of the year, and we hope to be able to update the market within the next few weeks on the continued progress of the distribution of this product into those 3 major jurisdictions over on this side of the year as well. So we'll keep you posted on the progress of this particular asset. And also under some of the other more preclinical stage programs, so we have a very rich second-generation pipeline right now. We believe that within this portfolio, there are at least 2 assets, which we're very excited that we believe we can bring into Phase I clinical trials towards -- over the course of next year, 2024. And these are the -- especially in the areas of our oncology platform. So we're currently working on 3 specific assets on our proprietary oncology platform. It's called DLS-1, DLS-2 and DL3-3, DLS-1 and DLS-2 are basically a first-in-class small molecule drugs that we have been developing for very hard-to-treat lung cancer, it is called non-small cell lung cancer, it is actually the most predominant form of lung cancer itself. And within that, we're targeting 2 major classes of mutations, which is called EGFR and ALK mutation cancers. Right now, any of these 2 mutations are the latest- generation mutations right now, which is the fourth generation mutation basically do not survive beyond the 5-year period. So you see cancer is actually very small. As we continue to deploy oncology drugs, it's able to mutate, as a result of that evade the action of some of these latest generation non-small cell lung cancer drugs. One of the major drugs that we are looking to overcome resistance is a drug that's called osimertinib. Osimertinib is a drug that was developed by AstraZeneca, is currently -- is targeting EGFR mutation, third-generation mutations. However, it's ineffective against fourth-generation mutation. So this drug actually even then is currently selling well over $5 billion a year for AstraZeneca. It's going to compounded annual growth rate of over 15% at the moment. And we're looking to basically have the drug basically able to address not third-generation mutation, but also the fourth-generation mutation as well. So we've got some very encouraging preclinical results that we look to update the market within next few weeks, quite shortly on the progress of our DLS-1 and DLS-2 programs. So if all goes well, we hope to be able to finish off the optimization easily on this side of the year and to commence the IND-enabling studies towards the end of the year, allowing us to start a focused Phase I clinical trial next year, targeting a possible, even a possible conditional approval after the Phase I trials for these patient, obviously subject to the FDAs in our application and their consideration for this. So, in a nutshell, this is our pipeline. I think at this stage, I'd like to take a pause and answer any questions that you may have.

Thank you, Darren. Yes. [Operator Instructions] Darren, we've already received a few questions from [ Renee Gupio ]. He writes, "Congratulations on the recent financing support, converting and almost doubled today's stock price and what sounds like a very strong pipeline. Which program from your pipeline offers the best chance at a near-term potential catalyst?"

Yes. So excellent question. Thank you, [ Renee ], and I see that you have a number of questions following that as well. So yes, to be honest, we are working very diligently on these first 4 assets that we just presented because all 4 of them offer a very substantial reward opportunity on this side of the year. So this year is actually a very exciting year for us, especially with ALS-4, SACT-1 now marching into the respective very pivotal Phase II, Phase Ib/IIa clinical trials. I think a lot of our counterparties, large pharmaceutical companies that we remain to be in conversation with every now and then. We know these 2 assets are currently being tracked by some of these large pharmas. So we believe that these 2 assets now entering into their respective, what we call, proof-of-concept stage. In particular, ALS-4 is a very interesting drug. We also, at the moment, are investigating any possible animal use for ALS-4 as well because as you can appreciate, MRSA infection is not something that just affects humans, but it's actually affecting livestock and animal market very substantially. And actually within that space, the treatment options are even more limited. So we're currently exploring the opportunity right now, which is another potential substantial revenue driver for that ALS-4. We need to complete such an animal study first to be able to demonstrate that proof of concept. We hope to be able to update the market a little bit towards the Q2 this year on the progress of those animal markets. So within that, I would say, and certainly, SACT-1 itself is also very exciting for what is a very hard-to-treat oncology disease, which we're just about to look to start a Phase Ib/IIa clinical trial as well in pediatric cancers. I would say that actually PathsDx itself is also a very near-term catalyst. PathsDx right now has an opportunity to also be looking to commercialize not just in the clinical market, but we're currently also exploring the R&D research market for PathsDx. Actually, if you look at genomic companies such as [indiscernible], and sometimes over 50% of typical genomic sequencing companies have come from R&D research use. So it is a substantial market and at the moment, largely driven also by COVID, there's been a lot of clinical academics and researchers are now looking at R&D-based molecular diagnostics in the infectious disease [ space ], very often is for a drug use or drug development. And even for public health care, they're looking at more substantially genomic-driven analysis of their, things like water, things like patient blood sample, patient blood banks to capture the trend of infectious diseases. So right now, I would say PathsDx is actually also very close to a major catalyst. We are currently in discussion with a genomics company to seek for collaboration. And also, we also know the major sequencing provider Illumina extremely well. You may have seen some of our publication a couple of weeks ago. So I would certainly keep you posted on this and keep the investors updated on the progress of our collaboration with some of these major partners of PathsDx as well.

Yes. I'll just read them out loud, if you don't mind, so that everyone else can know what we're talking about because the other participants cannot see the questions, if that's all right with you.

Yes, of course.

Okay. Great. Okay. I like this one here from anonymous attendee. "Coming off a difficult year in biotech, can you comment on the potential for a better year in your stock performance?"

Yes. And totally, yes, it's been a very challenging half year, I would say, in the last -- across global markets and not just in the biotech space but across, in the [ tech ] base in particular. We -- obviously, we -- actually, we've had one of the most preclinical stage programs. We have put that behind us in the past now. Actually, we've since made a huge amount of progress into the clinical stage, and COVID hasn't stopped us. And certainly, the bad markets in the last 6 months have not stopped us from continue to progressing in the various assets that we have. I'm also pleased to say, actually, in terms of the insider shareholding and insider, right now we've over 65% shareholding of the company, we have not disposed a single share since we IPO-ed the company. So we'll continue to retain the shares. And you will see actually just a couple of months ago, we have further insider support for over $3 million into our entire company from insider subscription to continue to show support of our programs through the market itself. So I would say, actually, in my view, we are -- we continue to drive the progress of our clinical products. Our company is only as good as how well our products develop. So at this stage, actually, we have a very exciting year ahead. And we believe that at the moment, it is a very attractive level to potentially invest in our stock right now because we really believe the worst of the markets are now behind us. In any case, as I said, we have a number of catalysts across these 4 assets, including also our preclinical stage assets coming up into the next few weeks and months at different stages of things. So we believe that we will have a lot more catalyst to offer, as I said, to update the market and continue to drive investor interest in our company.

Thank you very much, Darren. [Operator Instructions] Darren, [ Renee ] asks again, "How has AI helped your pipeline proceed? And could your AI data engines add value to potential pharma partners?"