BioCardia, Inc. (BCDA) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Good day and welcome to the BioCardia 2022 Second Quarter Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately 1 hour after the end of the call through August 24, 2022. I would now like to turn the conference over to Jules Abraham of CORE IR, the company's Investor Relations firm. Please go ahead sir.

Thank you, Kate. Good afternoon, everyone, and thank you for participating in today's conference call. Joining me from BioCardia's leadership team today are Peter Altman Ph.D, President and Chief Executive Officer; and David McClung, the company's Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address BioCardia's expectations for future performance or operational results, references to management's intentions, beliefs, projections, outlook, analysis or current expectations. Such factors include among others, the inherent uncertainties associated with developing new products or technologies and obtaining regulatory approvals. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in BioCardia's most recently filed periodic reports on Form 10-K, Form 10-Q and Form 8-K filed with the SEC, particularly the cautionary statements in them. The content of this call contains time sensitive information as accurate only as of today, August 10, 2022. Except as required by law, BioCardia disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It's now my pleasure to turn the call over to Peter Altman Ph.D, the company's President and CEO. Peter, please go ahead.

Thanks, Jules. And good afternoon to everyone on the call. We've had a great quarter. But before we get into the details, let's take a few moments to review what we're doing and why we're doing it. BioCardia's efforts are focused on advancing 2 cell therapy platforms to treat significant unmet cardiovascular and pulmonary diseases, specifically ischemic heart failure, chronic myocardial ischemia, and acute respiratory distress. All of our cell based therapies involve local delivery of the therapeutic to the heart or lungs where we intend them to act locally. In the heart, our proprietary Helix minimally invasive delivery system is used to deliver the cells to target regions of damage. For the lungs, we intend to use intravenous delivery which will result in investigational cells being localized in the small blood vessels of the lungs. Local delivery of therapeutics to the target location where their action is desired, maximizes their effective dosage within the tissues where delivered and minimizes potential negative effects remote from the target tissues. Heart failure is the first problem we are going after. Heart failure is an enormous unmet need that affects more than 26 million people worldwide. The latest blockbuster drugs and pretty much the same indication we are going after, don't have much of an impact on mortality. Patients in the published results of the pivotal trials for these new drugs have a mortality of roughly 7% per year regardless of whether they were treated or controlled patients. This data makes clear that heart failure is still a problem in great need of new therapeutic solutions. In preclinical studies, cardiac mononuclear cell therapy has been shown to release proteins locally within the tissue to facilitate cardiac recovery after heart damage with improvements in heart perfusion and contractile function. All known previous clinical studies similar to the approach we are taking in our 2 lead CardiAMP Cell Therapy programs have shown patient benefits on average. In some of the studies, including our own, the benefits have been remarkable. Our FDA breakthrough designation in ischemic heart failure validates this perspective. In granting this designation, the FDA looked through all of our clinical results patient-by-patient and agreed that CardiAMP Cell Therapy data to-date shows it has promised to provide for more effective treatment for ischemic heart failure. Advancing this and our other therapeutic candidates is what we are all about. Our efforts to complete the CardiAMP autologous cell therapy pivotal clinical trials for the indications of heart failure, or BCDA-01 and chronic myocardial ischemia, or BCDA-02 remain our primary focus. The lead heart failure program has 114 patients enrolled and 10 control patients have crossed over to receive therapy. Here today, we will only detail the new accomplishments towards completion of these studies. For both of these trials, the Centre for Medicare and Medicaid Services, or CMS reimburses clinical sites for performing these procedures. In May of 2022, CMS increased the reimbursement up to $20,000 per patient procedure for both control and treated patients, retroactive to April 1, 2022. This is important for our clinical partners, as it enhances confidence that they will be paid at the level they seek for both treatment and control procedures, and enhances the blinding of the trial, as all patients should be coded identically with respect to billing. We've also been adding additional clinical sites and expanding the study. The first of 4 anticipated world class sites in Canada was activated and is now enrolling in our heart failure trial. Canadian sites are critically important as a second approach to mitigate potential impact that the CMS reimbursement is causing a delay in enrollment. We are also working to provide additional educational materials for patients, including a simple but elegant animation of the CardiAMP heart failure trial, which is now live on our website, and which we invite you to view on the site cell therapy clinical trials page. We anticipate submitting this animation to clinical sites as soon as other materials are also available for Institutional Review Board approval, which is required for the materials to be shown to patients. Many patients are believed to not participate in the trial because they want to receive the therapy and prefer to not have a 40% chance of being in the control arm. The animation explains why this randomization is important and makes it clear that should patients in the control arm wish to proceed to therapy after they complete the follow up in the control arm, they may. To explain this further, a new patient testimonial is also now available on our website on the same cell therapy clinical trials webpage, telling, Tim's Story. Tim was an ultra-marathoner and developed heart disease in his 40s. Now in his 70s, he participated in the CardiAMP Heart Failure Trial at the University of Wisconsin and was in the control group. After his 2-year follow-up, he elected to receive therapy and is now in the treated group. We also anticipate submitting the video on Tim's story to clinical sites as soon as other materials are also available for Institutional Review Board approval. These efforts to enable patients to be well informed on the CardiAMP Cell Therapy Heart Failure study and to share their experiences with one another are continuing. We anticipate this will have a significant impact in the percentage of patients eligible who decide to participate in the CardiAMP Cell Therapy Trials. These efforts show we are working diligently to support our world-class clinical partners and complete enrollment in the CardiAMP Trials as soon as possible. We are working with the goal of a 2023 completion of enrollment in the full 260 patient CardiAMP Heart Failure Trial and enrollment of 100 patient in the CardiAMP Chronic Myocardial Ischemia Trial to enable its interim readout. We have just had our second consultation with Japan's Pharmaceutical and Medical Device Agency regarding registration of CardiAMP Cell Therapy. This consultation is based on the quality of our clinical data and the regulatory approvals that exist around all of the elements of the CardiAMP Cell Therapy System in Japan, the United States and the European Union. For the second consultation, in addition to high level analysis, we provided Japan's PMDA with all of our clinical data on a patient-by-patient basis from all of our trials. The second consultation meeting went well, and there were no questions on our existing clinical data sets provided. We are still on this pathway, aiming for approval of the CardiAMP Cell Therapy System in Japan based on our current data, and planning for our next submission, where we will provide much of the same data in a new format, more details on our clinical protocols and preclinical testing, and provide written responses to questions from our last consultation. Japanese researchers established the building blocks for this therapy many years ago. The therapeutic approach we are pursuing was first studied in a preclinical model by physician scientist in Yokohama. Hi early work was performed in parallel to another Japanese vascular biology scientist who identified important aspects of bone-marrow derived mononuclear cells and tissue repair. Their early efforts underlie our CardiAMP Cell Therapy, and we hope to be able to provide this therapy to the many in Japan who could benefit from it. Now I'd like to move to our 2 allogeneic cell therapy product candidates based on our allogeneic Neurokinin-1 receptor positive mesenchymal stem cell platform, which is also progressing this second quarter. Our allogeneic MSC program in heart failure, which we have designated as BCDA-03 is intended to include the patients who have been excluded from our autologous program due to the nature of their cells. This program has completed what we believe is the last pharmacology and toxicology studies to enable IND submission targeted for acceptance in 2022. Much will depend on the final data, which we expect soon. Our allogeneic MSC program and patients recovering from acute respiratory distress syndrome, which we have designated BCDA-04 was approved by FDA in April to treat patients. This program is expected to have clinical cells available from our Sunnyvale production facility and our first clinical site activated this quarter. Our expectation is that enrollment will soon follow after we have final lot released testing of the cells. We are optimistic due to the long-standing promise of mesenchymal stem cells in lung repair and the unique clinical indication we have identified. We aim to address the need to reduce local and systemic inflammation after a patient has taken off respirator support with goals of accelerating recovery, enhancing survival and reducing both relapse and hospitalization. In summary, we are advancing 4 therapeutic product candidates that address important unmet cardiac and pulmonary diseases based on our autologous and our allogeneic cell therapy platforms. From these therapeutic development efforts, we have 3 active business development initiatives. First is partnering our CardiAMP Cell Therapy platform internationally. Second, is licensing our catheter based biotherapeutic delivery system for cell, gene and protein therapy candidates to the heart. And third, monetizing our AVANCE transseptal introducer sheath product. I will now pass the call to David McClung, our CFO who will provide some financial perspective. David?

Thank you, Peter. In the second quarter of 2022, we had revenues of approximately $1 million on a net loss of $2.5 million, which compares favorably to Q2 2021 where our net loss was $3.5 million. This increase in revenue and decrease in net loss is primarily due to increased collaboration revenues. The value of these collaboration revenues is greater than just the dollars we received and the moderation of our dollar rate. Although we are potentially enabling competitive efforts, success of our partner programs provide additional pathways for BioCardia to achieve our mission of developing and enhancing therapies to treat cardiovascular disease and delivering significant value for our shareholders. Research and development expenses were essentially flat with $2.3 million reported in Q2 2022 compared to $2.4 million in the second quarter of 2021. SG&A expenses of $1.2 million in Q2 of 2022 were also unchanged from the same quarter in 2021. And the company ended the second quarter with cash totaling $8.6 million, which provides runway to the first quarter of 2023. To extend our runway, we're working on business development activities as Peter has shared, that we expect will provide non-dilutive financing and we intend to enter into modest takedowns on our ATM facility at market prices as these opportunities present themselves. For example, during the second quarter, we sold 575,000 shares, raising $1.5 million at $2.60 per share under this facility. We do not expect our operational costs to increase significantly and we believe a series of small raises in addition to continued business development activities that result in non-diluted funding are in the best interest of our shareholders. We do not expect [indiscernible] financing in the near term. We are now ready to take questions. Operator?

[Operator Instructions] The first question is from Kumar Raja of Brookline Capital Markets.

And also congratulations on getting the first site onboard in Canada. When do you expect the first patient to be treated in Canada and when do you expect the other 3 sites to come onboard?

So thank you, Kumar for the question. And in Canada, the first site is activated. There are currently screening patients today. So we were on standby for -- when a patient clears the enrollment hurdles for inclusion exclusion and you know, there'll be randomized, there's no delays at this point other than identifying the patients and moving them through the process. As far as the other sites we're currently targeting, we're very late in the process on the other 3 sites. We began this in parallel to the submission to Health Canada, which was involved both branches, the device branch and the biologics branch and Health Canada to secure approval. But our expectation is those other 3 sites are coming onboard soon as well.

Okay. And in terms of the efforts in US to encourage patient enrollment, what kind of results are you seeing there? Are you seeing in terms of screening, are you seeing any increase in patients being screened?

So many folks don't appreciate it. I shared this in our last call that 1 of the things that really is difficult for sites is that a lot of the staff that they had, has changed during the pandemic. So a lot of sites are staffing back up. So yes, we have sites that are more fully staffed, we have sites that are actively enrolling. And we are throughout this process been working to solve issues or concerns for them. And we have detailed in our press release today, the things we've discussed previously, but I think, we are working through the process with sites to enhance the ease of enrolling patients in the CardiAMP heart failure trial. I note also that 1 of the bigger things is patients who don't want to be the patients who are in the control group. I think the materials I identified in the call that are now publicly available show that we're working diligently to help give them all of the information they would like to make the best choices for themselves in this study and I think that's going to have a meaningful impact in enrollment on its own. So I think sites are all working very hard that have the staffing. The things that are changing are, with the breakthrough designation, that's external validation that the data is really solid with the reimbursement from CMS sites don't have any concerns about getting paid by either CMS or their insurers if they follow CMS. We've launched some things to cover costs associated with research study, support where an insurer won't provide coverage for this investigational therapy that we're still working on. And then lastly, you're just really trying to make it easy for centers to identify where these patients are, as well as to help those patients that are then identified to understand the trial as well as they can to potentially make the decision to participate in the trial.

Okay, great. And finally, with regard to the PMDA, looks like they have some questions which is not related to the clinical data, maybe you can talk a little bit about it. And also the next steps there? Thank you.

Yes. So Kumar, thank you for that question. I guess with PMDA, there's lots of nuances that I don't think we should dive into. I think the key thing is our clinical data is solid as the breakthrough designation shows and we have treated quite a few patients in the 3 trials that we've published on as well as the ongoing randomized trial. And keep in mind that there has been a cardiac cell therapy approved in Japan based on only 7 patients treated. Furthermore, our cell processing platform is already approved in Japan and all of our delivery systems are approved in Europe and 1 of them is actually approved here in the United States. So the amount of regulatory review we've already had is pretty solid. So our efforts are to enhance their comfort with that dataset and we'll see where it goes. There is potential risk that they won't approve it, we'll get guidance on a clinical protocol that's required. But our initiative today is to secure approval for it based on the data that we have today.

The next question is from Michael Okunewitch of Maxim Group.

Congratulations on the progress. So I guess first off, I'd like to follow-up a bit on the discussion about Japan and a bit about your plans or if you do end up getting this approved, the strategy to get it to patients and for commercialization over there?

Thank you, Michael, for the question. So the conversations in Japan with PMDA dovetail with other conversations we're already having with distribution partners in Japan and there is potential that we enter into a distribution deal that's even before approval, which would involve development efforts as well. Currently in Japan we have 2 wonderful co-national principal investigators who we have not yet identified to support the work that we're pursuing. Our expectation is we will even post approval be working with them to collect additional data supporting the therapy should we be successful in having it approved. We've had a lot of interest from potential distribution groups in Japan that are world-class outfits and it's an honor to interact and work with them. We have spent time in Japan this past summer and as we're looking forward really the initiative is on derisking efforts in Japan with PMDA on approval, but also the Ministry of Health on reimbursement issues ahead. I think that our United States Medicare reimbursement level at $20,000 per patient procedure for both treated and control will be helpful for us ahead and I note that, that reimbursement level is a reasonable level for us today. I also note that, that level is significantly less than the reimbursement level achieved by the other approved cell therapy in Japan, which is closer I think to USD130,000, and my understanding is that therapy has not advanced in part because they can't make money at that price point with the nature of that therapy where we could do quite well. I also note that there's roughly 1 million patients in Japan with heart failure and even though it is an ageing population, in Japan the culture is not one that has found allogeneic organ transplantation attractive. However, autologous cell-based therapies are quite attractive and have done well in other areas. So our sense is that this is a real fit and there is a high degree of potential for this to come together in the short term with a reasonable pathway for approval if not approval based on the data that we already have. Does that answer your question fully, Michael?

Yes, a very comprehensive answer. I'd also like to see given that the allogeneic program that's quickly approaching an IND, can you discuss a bit more about how that program is differentiated compared to other mesenchymal stem cell approaches particularly in heart failure?

I'd be delighted to. So what we find pretty exciting about ourselves so these are cells that we are take from the bone marrow from young patients, we expand them here in our cell manufacturing facility here at BioCardia and then we will then ship them in cryo canisters to clinical sites where they will be sort according to our protocols and administered. They're sort of the off the shelf strategy others have talked about. Physicians who don't wish to perform bone marrow aspiration for our autologous program and patients who don't wish to have bone marrow aspiration will find it quite attractive. So our cells that we're advancing are what we call Neurokinin-1 receptor positive or NK-1 positive and that is the primary receptor for Substance P. Substance P being 1 of the primary mediators of distress in the human body. It's a neuropeptide that is involved in all of our flight or fight responses. If you stub your toe and feel pain, that's Substance P. If your foot gets blown off by a landmine, that Substance P as well and it causes the mesenchymal stem cells from the bone marrow as part of the normal reparative process to home in. So we think that having the mesenchymal stem cells that are Neurokinin-1 receptor positive is a very compelling aspect of ourselves. We do not have head-to-head studies with other mesenchymal stem cells in a clinical trial with this formulation although I do note that we have head-to-head studies of our lead program relative to both autologous and allogeneic MSCs in the cardiac indication and our lead program actually fared far more favorably than the MSC programs. And we've taken the steps to focus in on these Neurokinin-1 receptor positive cells because they're just so compelling. As you as you read up on Substance P, it's a remarkable neuropeptide and it's a signaling peptide that having the cells that actually have the receptor upregulated on their surface to respond to it is exciting. Now that said, we may not have data that is any better than any other group's mesenchymal stem cell program. Our MSCs have all the key hallmarks of other MSCs both in phenotype and surface markers that we assess in lot release testing. But it's the Neurokinin-1 receptor that is the substantial differentiator. And another differentiator is how we're doing things. So in our cardiac program we're going after the patients we've excluded from our lead program and that is a modest population. It will enhance the potential of our lead program, but it also potentially sets the stage where we'll have phenomenal safety on everything other than the actual cells in the lead program that the NK-1 cells will then build upon. And so there's potential for an orphan indication there ahead. I also note that in our indication of acute respiratory distress where there's some phenomenal work that's been done with mesenchymal stem cells, including a very large NIH trial that is completing enrollment or has just completed enrollment. And we're following those efforts in others, but we're not targeting the patients who are on the respirator. For those who've heard me talk over the years on our efforts in heart failure, we're staying away from the sickest patient primarily because clinical development we view it as it's a signal to noise issue. And so we're not treating the patients on respirator. We're treating those who have begun recovery and been taken off respirator and that's actually an indication where there is no development activity today and it's becoming more and more important. We just presented at the second annual Acute Respiratory Distress Syndrome Drug Development Symposium and we're speaking with excellent companies with significant Phase II and even Phase III datasets. And we are humbly the company that has no clinical data yet in our acute respiratory distress indication and yet we had quite a favorable response because we're going after an indication where there is no activity today. And in fact even groups who said well, we're treating patients in that area today, they're referring to the patients on ventilator. And we clarify that what do they do to the patients once they've cleared ventilator and they've cleared the follow-up and they've realized that they don't have anything for those patients. So we're focusing to a degree on confirmed COVID ARDS, it's secondary that it's a very specific indication. There is potential for us to expand in the future. But right now I think that we've gotten some pretty positive signals from our peers in the community that our indication is one that's worth pursuing and we can learn from the other work that's been done on the other mesenchymal programs. We're not planning on doing any head-to-head studies, Michael, against the MSCs without Neurokinin-1 at this point. But that could be something that's done in the future and potentially post approval in the distant future.

All right. And 1 more, if you don't mind. I'd like to just follow-up on the development in ARDS and specifically, your thoughts on how easy or difficult that could be to enroll especially given the trajectory of COVID-19 can be quite unpredictable?

So thank you for the question, Michael. That was a hot topic at the second annual ARDS Drug development symposium. As we all know or I hope we experienced, we've had recent spikes in the infection rate, but at the same time the hospitalizations have not correlated and that's great news for society. That's also great news for our lead programs in heart failure and chronic myocardial ischemia. But to your question, our trial the design, as you can see on clinicaltrials.gov, is a 3 by 3 design and we'll have a DSMB review of the data between the dose escalation cohorts. So we don't need a whole large number of patients today. And as I also detailed, there's really no therapy for these patients currently once they've been brought off the respirator. At that point in time, they've probably been hit with a whole gamut of therapies that are out there. And so I think that it's sort of we're addressing something that physicians wish they had in their armamentarium today and we're going to be advancing slowly with a few number of patients. So also this is -- just to reiterate, this is intravenous delivery and the follow-up in these trials is actually rather shorter than it is in our cardiac indications. So it should be a relatively straightforward trial to perform. The difficulties in this trial are really the logistics around the mesenchymal stem cells, their cryopreservation, their shipping, their thawing, their preparation from an administration. But all of that is we've been involved in that before. So we don't see any significant issues ahead.

[Operator Instructions] The next question comes from James Molloy of Alliance Global Partners.

I had just a couple quick questions on timing. When you look at the Japan next steps, could you walk through what exactly will be next steps for Japan? And when you speak about potentially non-dilutive funding opportunities in particular, what you mean? Are there other opportunities out there that you guys are looking at?

So in Japan, next steps are the process involves a number of consultations and really the PMDA guides us in this process at each stage. So we've shared that our next stage is to essentially resubmit much of the information we've already submitted in a new format and that includes certain sections translated into Japanese. It also includes providing them with full protocols and other details related to conversations we had in the last consultation. And then once we do that, we will likely have their feedback on next steps. So that's where we stand today. As regards the timing of it, we're working on that diligently and as we have this data already because we do have approvals around the world, I don't expect it to take us that long. We'll report out in the Q that follows our next consultation and whether that's this next Q or not, I don't know at this juncture. A lot of folks review these documents in preparation here; including our staff, our consultant staff as well as our co-national principal investigators; and we tend to be very respectful of everybody's input and get alignment. So as regards the potential for business development activities related to Japan to provide non-dilutive funding, yes, there is potential there. There's the potential for it on a number of levels. But I don't want to get ahead of ourselves. I think right now we need to proceed with de-risking this. If you think about this program, it's a significant value proposition. Most late stage heart failure programs even in the markets are valued in the billions of dollars even though they're preclinical and where we are is kind of embarrassing. That said, we have reimbursement clarity in the United States at a flow while we're doing our clinical studies and which is potentially the first time that's ever been done. And we have breakthrough designation from the FDA, we have the various approvals. So they put together the pieces behind this, I think they have a high degree of confidence that this is coming to Japan, it's just a matter of when. And so there's interest in this therapy and firms being able to provide this therapy that, as I shared in our call, originated fundamentally in Japan and fits very well with the significant disease burden of heart failure that is there in Japan as well as the cultural sense of keeping the body whole where autologous therapy resonates significantly. And the cost profile of our therapy is significantly lower than any other autologous therapies because of how we've advanced it. So I think that we will be waiting on feedback as we do the submission. We'll wait on feedback after the submission. We'll keep those who were in conversations with under confidential disclosure agreements privy of the status. And at some point in time, we expect both clarity from PMDA and clarity from our partners in Japan. And forgive me for the longer answer, but...

And Peter, 1 follow-up if I could. On the first quarter call, you indicated that BCDA-01 heart failure trial should conclude enrollment 2023. Is that still on track and just [ should be in ] the top line 2024?

So James, I wouldn't say it's on track, I would say it's what we are working towards. And so we are going at that full bore as a team and you're seeing some of the dominoes fall. It does take time for things to roll through into clinical practice. But yes, we are working diligently to deliver on that and it's non-trivial to deliver on that based on where we are today. But we've got a great team and I'm doing everything I can to help support them as we pursue it and the clinicians that we've been having interactions with are also supportive of that. So that's the key thing. Can we deliver it? And it's a lot of work ahead.

This concludes our question-and-answer session. I would like to turn the conference back over to Dr. Altman for closing remarks.

Thank you. I want to thank everyone for participating on today's call and for the interest in BioCardia. We look forward to sharing our continued progress. Thanks, stay healthy, be kind and have a wonderful day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.