Dogwood Therapeutics, Inc. (DWTX) Earnings Call Transcript & Summary

Good morning, and welcome to the Virios Therapeutics, Inc. Second Quarter 2022 Financial Results Conference Call. [Operator Instructions] Please be advised that today's call is being recorded at the company's request. At this time, I'd like to turn the call over to Angela Walsh, Senior Vice President of Finance and Treasurer for Virios Therapeutics. Please proceed, Angela.

Thank you. Good morning, everyone, and thank you for joining us on today's conference call. We are pleased to be with you today to discuss Virios Therapeutics' Second Quarter 2022 financial results, as well as to provide you with an update on the operational progress we have made during the past 6 months. Please note that our financial results press release is now available on our website. We'll start today's call with our CEO, Greg Duncan, providing you with a brief update on our corporate progress during the past quarter, and then I will return to review our second quarter financial results. In addition, Ralph Grosswald, our Senior Vice President of Operations, is with us for the question-and-answer portion of the call. Before we begin, I'd like to remind everyone that statements made during this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially from the information expressed or implied by these forward-looking statements. For more information regarding such risks and uncertainties, please see the risk factors outlined in the company's filings with the SEC. Any forward-looking statements are made only as of today, and we disclaim any obligation to update these forward-looking statements other than as required by law. Please see the forward-looking statements section in our financial results release issued this morning for more information. It is now my pleasure to turn the call over to our CEO, Greg Duncan.

Thank you very much, Angela, and good morning, everyone. The team and I are exceptionally excited to provide you with an update on the substantial operational progress Virios Therapeutics Inc. has made over the past few months. First and foremost, I'm exceptionally pleased to report that under the expert leadership of our Chief Medical Officer, Dr. Mike Gendreau, in July 2022, just 1 month ago, our final patients completed their 16 weeks of treatment in our landmark 425-patient Phase IIb fibromyalgia clinical study. This study is also known as the FORTRESS study. Now that all patients have completed their participation in this study, our clinical team and our vendors are working hard to enter final data into the electronic data system to resolve any outstanding queries and to begin the cleaning process leading to database lock next month. Once the database is locked, the data will be transferred to our statistical vendor, along with the unblinding codes, to allow the production of the unblinded Phase IIb top line results. We are really excited to maintain our projections to report Phase IIb fibromyalgia results next month. The likely recall, the primary endpoint for this study will focus on the therapeutic effectiveness of our lead development candidate, IMC-1, which, as I'm sure you know, is a fixed-dose combination of famciclovir and celecoxib to reduce systemic fibromyalgia related pain. IMC-1 pain reduction effectiveness will be measured using the very same endpoint that was used in our previously successful Phase IIa fibromyalgia study. This pain endpoint was also used to assess the effectiveness of the 3 drugs for the treatment of fibromyalgia the Food and Drug Administration has approved here in the U.S. We will also assess IMC-1's effects on a host of other key secondary outcomes measures related to both quality of care as well as safety. In parallel to our FORTRESS Phase IIb study, our chronic toxicology studies in 2 species have now completed under the direction of our Senior Vice President of Operations, Ralph Grosswald. The results of these studies will be required by regulatory authorities before we are committed to dose study participants with IMC-1 for intervals of 1 year or more, which we plan to do in our Phase III clinical study program. Results from these chronic toxicology studies are an important element of the package we intend to submit to FDA to facilitate our future Phase III program discussions. As a complement to our ongoing fibromyalgia phase IIb research program, we recently announced that we will be progressing a second development program featuring a combination of valacyclovir and celecoxib into clinical development. This exciting new exploratory trial will assess the potential of this antiviral combination to reduce fatigue and other symptoms associated with long COVID sequelae. This program is being supported through an unrestricted investigational grant to the Bateman Horne Center, a nonprofit, interdisciplinary Center of Excellence advancing the diagnosis and treatment of chronic fatigue disorders, fibromyalgia, post-viral syndromes, and related comorbidities. We project enrollment of patients for the balance of 2022 in this program with results from the program presently projected for the first half of 2023. For context, long COVID can be very debilitating. It has been estimated to affect approximately 20% of patients who were previously infected with the COVID virus. This prevalence rate translates into well over 100 million long COVID patients on a global basis. Further research will help determine how many patients infected with new variants of COVID will progress to develop long COVID sequelae. And finally, we want to convey that our current cash position is expected to provide the company of operational runway through the end of 2022. With that brief update on our operational progress, let me turn it over to our Senior Vice President, Angela Walsh, to discuss our Q2 financials. Angela?

Thank you, Greg. As of June 30, 2022, we had $7.7 million in cash as compared to $14 million as of December 31, 2021. As Greg just mentioned, we expect our current cash to be sufficient to fund the company's operations through the end of 2022. With respect to our income statement, as a development stage biotechnology company, we did not generate revenue during the 3 months ended June 30, 2022, or during the 3 months ended June 30, 2021. We reported research and development expenses of $2.4 million for the second quarter ended June 30, 2022, as compared to $3.2 million for the year ago quarter. The decrease in research and development expenses quarter-over-quarter was primarily due to a decrease in clinical trial expenses for our FORTRESS study of $0.1 million, a decrease in expenses related to our chronic toxicology program of $0.6 million, and a decrease in drug development and manufacturing costs of $0.1 million. We reported general and administrative expenses of $1.3 million for the second quarter of 2022, as compared to $1.1 million for the year ago quarter. The increase quarter-over-quarter was primarily related to an increase in accounting and legal fees of $0.1 million, and an increase in salaries and related costs of $0.1 million. And finally, we reported a net loss of $3.7 million for the second quarter of 2022, as compared to a net loss of $4.3 million for the year ago quarter. The lower net loss was primarily due to the lower research and development cost I just mentioned. I'll now turn the call back over to Greg to moderate the question-and-answer portion of today's call. Greg?

Thank you, once again, Angela. In closing, we believe the role of activated herpes virus as a potential catalyst in triggering diseases like fibromyalgia, fatigue-related disorders, and chronic GI disorders represents an exciting new innovation paradigm. Virios' combination antiviral development programs are supported by both mechanistic and clinical data. The novelty of our approach is further illustrated by the fast track designation granted by the FDA to IMC-1 for the treatment of fibromyalgia, which, to the best of our knowledge, represents the first time a new drug candidate has been granted this important designation. If the forthcoming IMC-1 fibromyalgia Phase IIb FORTRESS data anticipated next month are consistent with the data that emerged from our successful Phase IIa study, we believe our novel antiviral combination, IMC-1, could be a game changer for the millions of patients in the fibromyalgia community. I hope you'll agree that it's shaping up to be an exciting year at Virios Therapeutics, possibly our most exciting to date. As always, we remain committed to frequent and proactive outreach to the investment community as well as the medical community as we progress our journey to improve the treatment standards for hundreds of millions of fibromyalgia patients across the globe. Operator, we are now ready for questions.

Certainly. [Operator Instructions] Your first question is coming from David Bautz from Zacks Small-Cap Research.

So Greg, assuming positive results in the FORTRESS trial, aside from meeting with the FDA, obviously, to discuss what the Phase III program is going to look like, what other things need to occur, such maybe CMC issues, drug supply, those types of things?

David, and thank you for joining us for today's call. As you correctly mentioned, job 1 will be to organize submission to FDA to catalyze forward discussions about exactly what's required for the Phase III program. In the meantime, under Ralph Grosswald's expert direction, we have already commenced work on CMC preparation to supply drug for what we anticipate to be 1 or 2 Phase III studies, depending on where we land with the FDA. So those activities have actually started from a process perspective. We will then commence manufacture, if you will, of supply for those studies shortly thereafter. We're obviously waiting for the Phase IIb data, which we expect to read out next month. And we will then also contemplate the talent we need to hire to bring in to the organization to run what will likely be a larger program than the program we just ran. So we'll need extra capabilities, if you will, from a research perspective, from an operational perspective as we transit over to Phase III. So those would be short-term priorities in addition to raising additional capital to run the Phase III, which I don't think is a secret to anybody. We've made that pretty clear through the course of our journey. We will also need to capital scale to fund the Phase III program. Does that answer your question?

Yes. And turning to the long COVID trial. I'm just curious what kind of input did Virios have in kind of setting up that trial? And/or if there wasn't necessarily an input there, what are you hearing back about how that trial was being run?