CytoDyn Inc. (CYDY) Earnings Call Transcript & Summary

Greetings, and welcome to the CytoDyn Investment Community Webcast. [Operator Instructions] Please note this conference is being recorded. It's now my pleasure to turn the conference over to your host, Cristina De Leon. You may begin.

Hello, everyone, and thank you for joining us today. This is Cristina De Leon with CytoDyn. Joining us on today's webcast is our President, Cyrus Arman. Before we begin, it is essential that we provide you with important cautionary language related to certain federal securities laws. Our remarks during today's webcast will include forward-looking statements, including statements regarding our ability to successfully obtain the listing of the FDA's partial clinical hold, leronlimab's potential efficacy in certain immunology and oncology indications, the company's ongoing ability to raise additional new capital and the company's ability to maximize shareholder value. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are difficult to predict. Actual results may be materially different from any future results expressed or implied by such forward-looking statements. These risks and uncertainties include among other matters that clinical trials may not commence or proceed as planned, products that appear promising in early trials may not subsequently prove to be viable on safety or efficacy grounds or receive regulatory approval or market acceptance, competition may reduce the commercial potential of our products, we may face product recalls, manufacturing issues or product liability claims and our patents may be challenged or unenforceable. Although forward-looking statements help to provide complete information about the company, forward-looking statements may be less reliable than historical information. The company undertakes no obligation to update publicly these forward-looking statements, except as required by law. Please refer to our recent quarterly and annual reports filed with the Securities and Exchange Commission for more information about the risks and uncertainties that could cause actual results to differ materially versus our current expectations. I will now turn the webcast over to Cyrus Arman.

Thank you, Cristina. Good morning, everyone, and thank you for joining us. As many of you know, since July of 2021, CytoDyn has worked on resubmitting parts of its BLA for leronlimab in the HIV multidrug-resistant or MDR population. As part -- as part of our rolling submission, CytoDyn completed and submitted sections of the BLA related to the nonclinical studies and the product and manufacturing information or CMC section. Since last November, we've worked on completing the clinical study section of the application, and we've been trying to do this despite not having full access to the electronic database from the CRO engaged to manage the studies. As we previously discussed, we have filed a claim against the CRO seeking damages resulting from its breach of the Master Services Agreement. Due to our concerns with the CRO, we commissioned 3 independent audits of the clinical data in addition to our own internal feasibility assessment of the same data. Each of these audits include an investigation of the CRO's performance and data management, monitoring and quality. Based on these multiple audits, we've concluded that the BLA faces a severe risk of receiving a complete response letter from the FDA, which means non-approval. Now that being said, we are confident that the primary findings of the study are sound since these assessments did not find any serious data integrity issues at the level of the clinical trial sites. But due to the CRO's inadequate process and performance around the monitoring and oversight of the data, there are significant challenges to meeting the high bar of passing an FDA GCP audit. In light of these factors and the substantial costs associated with remediating the data or in conducting entirely new trials in this population, we decided to voluntarily withdraw the BLA for the HIV-MDR population. We notified the FDA of this decision on October 25. Given the considerable financial resources that the company has put into the clinical development program for this indication, we did not make this decision lightly. It was only after an extensive review of the assessments by the external auditors, our own internal assessment, expertise from our Board and advice from our regulatory consultants that we came to this decision. Now we realize that this may be disappointing to some. However, it's critical to note that this decision does not undercut the drug's performance in clinical trials as the audit results do not change the fact that a primary endpoint was met. We plan to publish those positive results in a peer-reviewed journal soon, which we believe will help others in the medical and clinical communities further understand the enormous potential of leronlimab. Leronlimab has been studied in over 1,500 patients, many of whom have received the therapy for multiple years, and the drug appears to be well tolerated across many indications studied to date. Now before joining the company and while performing my independent due diligence on leronlimab and CytoDyn, I became aware of the issues the company was facing with the CRO and the BLA. I fully understood that there was a possibility that the BLA might need to be withdrawn, even -- and even while being fully aware of this possibility, I decided to join the organization because I viewed the company as having real long-term potential for significant value creation in oncology, NASH and other HIV-related indications. I believed and still believe that given the promise of other potential indications, we will be able to overcome the situation regarding the HIV-MDR BLA. In fact, I wouldn't be here today and believe this would be a very different story if we did not have solid clinical signals and other indications. Our assessment of the data collected from the clinical trials with leronlimab led us to conclude that our top line endpoint results are valid. This gives us the appropriate confidence to continue to pursue certain clinical programs, such as NASH and oncology and again, other HIV-related indications, where there remains substantial unmet clinical needs and where leronlimab has generated compelling clinical signals to date. We're lucky to have key opinion leaders and experts in the scientific areas -- in these areas of scientific advisers and consultants to the company. They continue to support the future development of leronlimab in their respective areas of expertise and represent CytoDyn's scientific and medical communities. Most companies would be fortunate to have just 1 or 2 of these individuals, but we have several of them, including doctors Mazen Noureddin, Hope Rugo, Jordan Lake and Stefan Gluck, just to name a few. It's worth noting that given all the challenges the company has faced in recent times, these advisers' willingness to continue to stand behind and support leronlimab speaks volumes to the molecule's potential. We continue to view these indications as excellent opportunities to maximize shareholder value. We remain committed to the continued development of leronlimab in these indications and look forward to restarting trials soon. In addition, we're fully committed to the best possible management of future trials possible, including timely monitoring and data integrity. Now to that end, we continue to progress on the document preparation and submissions to address the lifting of the partial clinical hold of the HIV program. As of today, we have prepared responses to 3 of the 5 data and document requests from the FDA, and our team's primary focus and top priority are to address the remaining items related to the clinical hold and ensure that we provide the FDA with complete and high-quality submissions. We aim to have the remaining 2 submissions completed in the coming months. As you know, we recently strengthened our Board with the addition of Stephen Simes for his extensive expertise in operating public biotechnology companies as both the CEO and as a Board member, as well as the addition of Ryan Dunlap, who brings deep knowledge in financial and audit matters and has experience in navigating many of the challenges that CytoDyn is addressing. These additions, along with continued corporate restructuring and a focused development strategy are part of our transformation into a more effective and efficient biotechnology company with meaningful opportunities to bring innovative therapy to difficult-to-treat diseases. Our Board of Directors is now comprised of fully outside and independent directors. And from my perspective, this is the strongest Board of Directors the company has ever had, which is encouraging as we embark on the future and work through the difficult decisions such as the one we're discussing here today. I believe the shareholders' interests are appropriately represented by the current Board. Now regarding our NASH program, which we're particularly excited about, the clinical signals generated in our exploratory Phase II CDI-NASH-01 trial included surrogate imaging endpoints for both hepatic fat fraction and fibro-inflammatory activity. The results from that trial allowed us to identify appropriate dosing strategy for our next NASH trial. And demonstrating potential antifibrotic activity is an exciting outcome that we plan to study in future trials with correlated liver biopsies in a larger sample of patients. We'll be providing an update on our NASH clinical program in the next investor call. Regarding oncology, as we discussed in our last quarterly call, we plan to focus on colorectal and breast cancer, where we already have a Fast Track designation for triple-negative breast. Our pool data in the relapsed/refractory TNBC population showed promising survival data that we plan to follow up on. I want to reiterate that NASH and solid tumors each represent multibillion value -- multibillion-dollar valuation opportunities for the company. And we believe that leronlimab has the potential to become the standard of care in these indications in the future. In summary, I want to express that we remain very confident and optimistic about the future of leronlimab. We're excited to continue the development of NASH, oncology and other HIV-related indications that we believe will lead to maximizing shareholder value. For me personally, I'm thrilled to be here and to lead the company as we pursue the indications which initially attracted me to leronlimab. And I'm confident that our Board and SAB members are aligned with our vision and are well suited to ensuring this company properly executes and become successful as we embark on our new path forward. We're committed to continuing to recruit appropriate leadership and personnel at all levels of the organization to ensure future success. Finally, I'd like to thank all the patients, families, caregivers and physicians who participated in our past clinical trials. Thank you for joining us today.

Thank you. That does conclude today's webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.