BiomX Inc. (PHGE) Earnings Call Transcript & Summary

Greetings, and welcome to BiomX Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Marina Wolfson, Chief Financial Officer. Thank you, Ms. Wolfson, you may begin.

Thank you, and welcome to the BiomX conference call to review the second quarter 2024 financial results and provide an update on our business and program. Yesterday, we filed the quarterly report on Form 10-Q with the Securities and Exchange Commission. In addition, the press release became available at 6:30 a.m. Eastern Time today and can be found on our website at biomx.com. A replay of this call will also be available on the Investors section of our website. As we begin, I'd like to review the safe harbor provision. All statements on this call that are not factual historic statements may be deemed forward-looking statements. For instance, we are using forward-looking statements when we discussed on the conference call sufficiency of the company's cash, potential market opportunities, the ability to drive value for stockholders, the design, recruitment, aim, expected timing and interim and final results of our preclinical and clinical trial, the regulatory process and discussions with the FDA, the potential benefits and commercial opportunities of our product candidate and the potential safety or efficacy of BX004 and BX211. In addition, past and current preclinical and clinical results as well as compassionate use are not indicative and do not guarantee future success of our clinical trial. Except as required by law, we do not undertake to update forward-looking statements. The full safe harbor provisions, including risks that could cause actual results to differ from these forward-looking statements are outlined in today's press release, which as noted earlier is on our website. Joining me on the call this morning is our Chief Executive Officer, Jonathan Solomon, to whom I will now turn over the call.

Hi, everyone. Thank you for joining us on our earnings call. We're excited to discuss BiomX status with you this morning. Earlier this year, the company took a momentous step in merging with Adaptive Phage Therapeutics, or APT and completing a concurrent $50 million financing. Last month, we were delighted to update an important milestone with respect to this transaction was met when our stockholders overwhelmingly voted in favor of the conversion of up to 256,000 Series X non-voting convertible preferred stock issued upon the merger and concurrent financing to up to 256 million BiomX common stock. The Series X preferred stock was issued to certain APT shareholders and investors who participate in concurrent financing. As a result of the stockholder vote in favor, each share of Series X preferred stock issued converted into a 1,000 shares of BiomX common stock, subject to certain beneficial ownership limitations set by certain investors. Subject to such beneficial ownership limitations to date, over 100,000 shares of Series X preferred stocks were converted to over 100 million shares of the company's common stock that were added to the company's outstanding share count. I'd like to now discuss why are we so excited about the clinical programs in our combined pipeline. As we previously announced, we expect to report important results for our 2 lead clinical assets in 2025. I will review these anticipated readouts in just a moment. By integrating the 2 companies programs, we believe we now have the leading phage related pipeline in advanced clinical testing. Key to the strength of our combined programs is the diversity of our complementary approaches. At BiomX, we are developing fixed phage cocktails, which can target a broad host range of various bacterial strains and address multiple resistant mechanisms, allowing treatment of patients with the same phage cocktail. We are also developing personalized phage treatment that can address bacterial diversity and potentially polymicrobial infection, tailoring a specific phage treatment to a given patient. BiomX pipeline demonstrates the diversity of our approaches. BX004, the company's novel fixed phage cocktail is advancing in development of treatment of serious chronic lung infection in cystic fibrosis patients or CF patients caused by Pseudomonas aeruginosa. During the second quarter, we presented positive safety and efficacy results from the Phase Ib/IIa trial of BX004, including at the 47 European Cystic Fibrosis Conference and the ASM Microbe 2024, both of which took place in June. As a quick recap, after only 10 days of treatment, 14.3% of patients in the BX004 arm of the Phase Ib/IIa study converted to sputum culture negative for Pseudomonas aeruginosa compared to 0% of the patients in the placebo arm. BX004 versus placebo also showed signal of improved pulmonary function. We have entered into discussion with the U.S. FDA regarding our next clinical trial for BX004 and are making progress in preparation for its initiation including completion of the remaining CMC work and finalizing Phase IIb study protocol. We expect to release topline results from this study in the third quarter of 2025. For second, advanced clinical candidate, BX211, we expect initial topline results through week 13 for the current Phase II trial in the first quarter of 2025. As most of you know, BX211 is our asset acquired through the merger with APT. BX211 is a personalized phage treatment currently being evaluated in a randomized double-blind placebo-controlled multi-center Phase II trial for subjects with diabetic foot osteomyelitis or DFO, associated with Staphylococcus aureus infection. The design of our ongoing Phase II study was guided in part by reports in the scientific literature of compassionate use of phage therapy, which showed positive outcome of wound healing and avoiding amputation in 11 of 12 patients. Both our lead programs, we have continued to see and are grateful for the growing excitement among the clinical community. We are also grateful to our stockholders whose ongoing support has been vital for [indiscernible] and has provided key validation for phage-based therapeutic modalities we are advancing into the clinic. We believe that both BX004 and BX211 have the potential to significantly change how we address the substantial unmet needs of patients with intractable infections. Overall, we are thrilled with the promising data already reported and with the key readouts we are anticipating from both of our lead programs. As Marina will review based on the proceeds from the finance in concurrent with the merger with ATP and existing capital, BiomX continues to expect to have sufficient funding to reach these multiple important clinical milestones, potentially driving significant value for our shareholders. Now, I will pass the call back to Marina, who will review BiomX financial results. Marina?

Thank you, Jonathan. As a reminder, the financial information for the company's second quarter 2024 is available in the press release that we issued earlier today as well as in more detail in our Form 10-Q, which we filed yesterday after market close. I will take you through some of the highlights of our second quarter financial results. As of June 30, 2024, cash balance, short-term deposits and restricted cash were $32.7 million compared to $30.7 million as of June 30, 2023. The increase was primarily due to our private placement financing of $50 million in March '24, which was partially offset by net cash used in operating activities and the full repayment of a debt facility. We estimate that our cash, cash equivalents and short-term deposits are sufficient to fund our operations through the fourth quarter of 2025. Research and development expenses net totaled $6.9 million for the second quarter of 2024 compared to $3.8 million for the same period in 2023. The increase was primarily due to preparations for Phase IIb in the clinical trial of our CF product candidate, BX004 and expenses related to our clinical trial of the DFO product candidate, BX211. In addition, the second quarter of 2024 represents the first full quarter following the merger with APT, incorporating the combined workforce. The increase was partially offset by higher grants received. In the second quarter of 2024, general and administrative expenses were $2.8 million compared to $2.3 million during the same period in 2023. This increase primarily reflects the first full consolidation of expenses following the APT merger, reflecting the combined workforce, professional services and subcontractor costs. Net income was $4.5 million for the second quarter of 2024 compared to a net loss of $6.4 million for the same period in 2023. The increase was mainly due to the change in the fair value of the warrants issued as part of the $50 million PIPE financing in March 2024, partially offset by our expenses and operating activities. Net cash used in operating activities for the 6 months ended June 30, 2024, was $22.6 million compared to $9.1 million for the same period in 2023. I should add here that we announced today a reverse stock split of 1 for 10 of the company's common stock approved by the company's stockholders and the Board of Directors. The split is intended to become effective when the market opens on August 26, 2024. And now, I'll turn the call back over to Jonathan for his closing remarks. Jonathan?

Thanks, Marina. To sum up, we are excited to see our momentum in 2024 has continued through the second quarter and through the present. We have made great progress in integrating our programs following the merger with APT. And for BX004, we've had the opportunity to present our promising clinical data at additional key meetings during the second quarter. We are also continuing on track for our first major Phase II readout with the expectation reporting initial topline results for BX211 in the first quarter of next year. The recent stockholder vote that the conversion of preferred common stock is also part of this progress. We believe the company can reach our important clinical milestones on the current cash runway with the potential to build further value for our stockholders. We are dedicated to demonstrating the advantages of our diversified phage pipeline in addressing serious chronic infections. We'll continue to keep you updated on our further progress. Thank you for joining us this morning. Operator, would you open the call for questions?

[Operator Instructions] The first question comes from the line of I-Eh Jen with Laidlaw & Company.

Congrats on all the progress. And then maybe I'll just start a little bit with housekeeping questions that you have reported this today that in terms of the earnings per share as well as both of the fully diluted and basic share count. I just want to get a little bit color in terms of how would that calculate with the use of net income of $4.4 million as the basis or some other figures to calculate these numbers? And then I have a follow-up question.

Sure. Good morning, I-Eh, it was a pleasure. I'll let Marina handle the tough questions first. So let her do the responsibility.

Thank you, and good morning. Thank you for your question. So yes, we're going to release the full calculations obviously, and they are included in the note in our 10-Q, but yes, this is the full net income from the financial statements. And please note that we do have net income this quarter for the calculation of the earnings per share.

Okay. Great. That's helpful. Maybe just one thing on the [indiscernible] which is the R&D expenses of this quarter? Obviously, it's much higher -- and -- but given that for the combined company, as you guided at the runway to the end of the next year? So should we anticipate R&D expenses over the next few quarters, probably at least for the remaining of this year will be trending down. And so you'll be able to achieve the goal in terms of the cash runway.

Yes, that's an excellent question, and you're very keen to observe it. That's very true. This is the first time that we're operating. We're still implementing all the redundancies and obviously, we do give guidance and we hold behind it, but the cash runway is until the end of next year. So accordingly, you'll see kind of the budget trying to reducing in terms of burn.

Okay. Great. And then I just have a question on the pipeline. In terms of 004 you just indicated that the Phase IIb trial will start in the third quarter of next year. So 2 things here. First of all, is that -- are you guys expecting to have FDA meeting later this year or has this meeting already conducted? And secondly, was there any strategic reasons, this one seems to be pushed out a little bit in comparison to prior sort of cost of estimate from our [indiscernible].

Yes, yes. So yes, another excellent -- another excellent question. So CF is on track. BX004 expected to report data third quarter of 2025. We did have the FDA meeting. It was a successful meeting, and I think we are moving ahead with -- we haven't seen any limitation to the original plan. So that's on track.

Okay. Great. Maybe the last question here. In terms of 211, you talk about the topline first quarter of next year, which is a 13 weeks data in terms of the change of the ulcerative [indiscernible]. And after -- let's assume that you have a positive outcome what might be the next step? Will that waiting for the 52 weeks outcome before you have contemplated the next step or you will have something in between after the read out of the 13 week data and [indiscernible].

So our view is that the 13-week data is the more important data because the study is powered to look at a shrinkage of the ulcer site at that point. I think the follow-up is more descriptive as we're looking at amputations, right? You require a lot more patience. But if we see a good signal in week 13, obviously, we'll have to talk to the agency and our partners and supporters, both investors as well as in the government and we will want to kind of move forward. For us, that is the gating item, right? What happens in week 13. I think we can learn more from what happens in the 26 and 52 weeks, right? But for us, if you see something in week 13, it's as much as we can [indiscernible] the metal.

Next question comes from the line of Joseph Pantginis with H.C. Wainwright.

This is Sara on for Joe. I just had a question regarding BX211 enrollment, if you can provide any update on the status of enrollment in the study? Have you seen any challenges? Or is it progressing as expected now.

Thank you, Sara, and good morning. Thanks to Joe. So as we said, the study will be complete in the first quarter. Obviously, overall, this has been a challenging study to recruit, right, spanning over more than 2 years. We didn't give specific guidance on the status of enrollment. I mean, we've kind of passed the majority of patients and kind of look forward to [indiscernible] the study on time.

Next question comes from the line of Michael Higgins with Ladenburg Thalmann.

This is [indiscernible] on behalf of Michael. I just wanted to follow up on your comment on BX004's FDA meeting. Any feedback that you can share with us?

Obviously, it's a sensitive so we need to be very careful about what we can provide. But all I can say is that it was a successful meeting and our plans remain unchanged moving forward.

Next question comes from the line of I-Eh Jen with Laidlaw & Company.

I'd just like to get a little bit more color in terms of 004 when you may be enrolling the first patient for the Phase IIb study, would you announce that when that happens?

Yes. Traditionally, we didn't announce, I think that was -- we just kind of -- if there's something dramatic. So we traditionally didn't announce, but we can look into it, so far kind of moving ahead according to plan. We didn't usually have first patient enrolled something to consider.

Okay. And maybe just a little bit of follow-up in terms of 211, again for the 13 weeks data. What do you consider as a good outcome in terms of the reduction of ulcer size and that will propel you guys to think more aggressively to move the program forward.

So in general, I think as we talk to the KOLs and the [indiscernible] analysis, you're looking for something like a 40% reduction of the placebo arm, right, because they are on top of standard of care antibiotics and something around 70% on the phage arm on top of antibiotics will be exciting in our view, right? So again, this is still a small study. We're not looking at [indiscernible], I think we'll be interested in trends. But if you see something like that, then I think that could be something that we'll be excited about. These patients don't usually improve that much. So you see something along that pushes like by 30%. That's quite a dramatic move.

And maybe lastly, just in terms -- given just the 13 weeks data, by the time of 52 weeks, which is about a year, would you anticipate the effect expanding or at that point, in other words, could achieve a different level of efficacy.

So I think the 26 -- and to your point, the 52-week data is mostly about amputations, right? That's really what -- again, right, patients want the ulcer to heal, but what we really care about is the amputations. And that's what we'll be looking at week 52. The challenge is that, again, amputations, you need a much bigger number of patients to see much of an effect. So I think we'll be looking at sort of like general high-level trends, if something is happening there. The data from the [indiscernible] was very exciting, right? Because in 11 out of 12 cases like phage treatment has prevented amputations. But I think we want to be cautious in our guidance. So we'll look at amputations. I think that's where we're focusing on week 13, that's where the data is. I will also note that we're looking at ulcer healing as exploratory in week 13 because that's also an indication usually when the ulcer heals that the infection has been resolved [indiscernible], right? So we'll look into it, but again, study is powered for ulcer shrinkage and everything else will be a bonus.

And maybe just to [indiscernible] on that a little bit more, is that do you anticipate or have you spoken with the consultants, whether amputation will be the kind of endpoint that ultimately for potential approval or just simply the ulcer reduction as well [indiscernible] other metrics will be potentially sufficient for the approval in this indication, which is obviously tough to treat and very few drugs has been simply available for this.

Yes. So I think in a pivotal study, the most conservative estimate is amputations, right? That's [indiscernible] like a 300-patient study and do it properly. There is talk about looking at more imaging modalities, et cetera, and try to be a bit more sophisticated. But conservatively, it's amputation, but potentially, I think we'll work with all the experts to explore some other endpoints as well, of course.

Okay. Great. Again, Thanks for the follow-up questions. And congrats on the progress. Maybe last one question here. This is probably for Marina. In terms of the reverse split in the press release, you indicated from 178 million shares back to about 17.8 million shares. Are these total share outstanding of the basic or that fully diluted?

So thank you for the question. Actually, I'm happy to clarify. So first of all, please note that the reverse split is not reflected in the numbers of the Q. Because it was on the filing of the Q that we announced it. It will be effective August 26. And the number of shares, the 178 million is just the outstanding. So that's not the fully diluted.

As there are no further questions at this time, ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to turn the floor over to Jonathan Solomon for closing comments.

So I wanted to thank all of you again for joining us this morning and the great questions. We look forward to providing you with additional updates as we make progress. Thank you, and have a good day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.