RedChip Companies, Inc. (FBLG) Earnings Call Transcript & Summary

Hello. This is Craig Brelsford with RedChip Companies. Thank you for joining today's event with FibroBiologics, which trades on the NASDAQ under the ticker FBLG. With us today, we have Pete O'Heeron, Chairman, Founder and CEO of FibroBiologics; and Hamid Khoja, Chief Scientific Officer. We will begin with a brief presentation in a moment, and then we will answer your questions. Welcome to everyone joining us today on X, YouTube, LinkedIn and other social media platforms. [Operator Instructions] Before we begin, please note that the FibroBiologics team will discuss forward-looking statements. Forward-looking statements may include, but are not limited to, information concerning FibroBiologics' goals, plans for and the anticipated timing of the initiation of and results from FibroBiologics' current and future preclinical studies, clinical trials and research and development programs, potential clinical benefits of fibroblasts and fibroblast-derived materials, potential indications for FibroBiologics programs, estimates of market size and other statements about future expectations, beliefs, plans or prospects. Actual results may differ markedly from those projected in any forward-looking statement he makes today. The factors that could cause actual results to differ materially are discussed in FibroBiologics' annual, quarterly and current reports that are filed or furnished with the Securities and Exchange Commission and any subsequent public filings. Pete, please go right ahead.

Thank you. He saved me the agony of reading my own forward-looking statements. So I'll just start. FibroBiologics in a strong place today, stronger than we've ever had in our history. We couldn't be more excited about where we're heading. Every company that builds something meaningful goes through storms, and we take the long view. If you're willing to completely focus on a product and science, you can build something that lasts for decades. That's exactly what we're doing. And look what we've accomplished along the way. Our Phase I/II wound care trial is underway. We're enrolling and dosing patients. We filed our IND with the FDA for psoriasis, and we've added depth to our Board with 2 new remarkable directors, Kate Rubins and Leigh Steinberg. Let me start with the big picture. There's 4 things I want everyone to take away from today. First, we're building an untapped differentiated cell therapy. Fibroblasts are the most abundant and architecturally central cell type in the body. They remodel tissue, regulate inflammation and communicate across every organ system. For decades, the world overlooked them in favor of immune cells and stem cells. We did not. Second, we have real clinical momentum. We're enrolling and dosing patients in our Phase I/II trial in diabetic foot ulcers, and we've submitted our IND for Phase I/II trial in psoriasis. Both programs come from the same fibroblast platform. Third, we built a patent fortress. More than 270 plus issued and pending patents protect a platform that can reach across many therapeutic areas. And fourth, the opportunity is massive. Chronic disease represents a $4 trillion market. That gives FibroBiologics a rare chance to build a diversified, durable business from a single biological engine. Most people ask what's going to change over the next 10 years. We ask a different question. We ask what's not going to change. Patients will always want to heal faster, live longer and suffer fewer side effects. We're building this company around those things that will never change. Here's a bold statement. Despite decades of pharmaceutical innovation, chronic diseases remain uncured. 60% of Americans live with chronic disease, and 90% of America's $4 trillion in annual healthcare costs is driven by chronic disease. Traditional drugs tend to manage symptoms. They suppress, they block, they inhibit. But biology is not a switch to be flipped, it's a system that has to be restored. We believe cures will come from cell therapy, gene therapy and immunotherapy. These are approaches that work with biology, not against it. And we believe fibroblast is 1 of the most promising opportunities in that landscape. Fibroblasts are the most prevalent cell type in the human body, and they do 3 things extraordinarily well. They drive wound care and repair, they modulate the immune system, calling an overactive response with dangerous suppression, and they regenerate tissue by secreting proteins and signals that rebuild damage at the cellular level. On top of that, they're practical. They're allogenic. So 1 donor can treat many patients. Their [ immune privilege ], which means they're low rejection risk. And we have a validated library of commercial use fibroblasts, low manufacturing costs, scalable spheroid delivery platform and more than 30 years of peer-reviewed science behind us. Put simply, our approach guides the immune system back to balance and lets the body heal itself with the potential for durable treatment and significantly fewer side effects. This is our engine. It's versatile and scalable. It starts with cell sourcing. We harvest allogeneic fibroblasts from accessible tissue sources, giving us an abundant starting material with minimal invasiveness. Next is expansion. We grow disease-specific cell subtypes at scale, each with its own therapeutic properties. Then delivery. Fibroblasts target the disease source where they get to work on tissue repair and appropriate immune modulation. And finally, therapeutic action. Fibroblasts act as living factories, releasing cytokines, growth factors and matrix proteins that can drive anti-inflammatory and regenerative outcomes. One platform, many diseases. That's the power of this model. Every program we advance teaches us more about fibroblasts. That knowledge makes the next program faster and less costly, and every success adds momentum to the entire platform. Here's how the platform translates into a pipeline. Please note, we've revised our pipeline [ or met ] to better illustrate the different strengths of fibroblasts. In wound healing, CYWC628 is our lead program for diabetic wound care and it's in the clinic today. It's a platform technology with potential for treating DFUs, VLUs, [ bed sores ], burn victims and even surgical wounds. In autoimmune and immune modulation, we have CYMS101 for multiple sclerosis, CYPS317 for psoriasis and CYTER915, which aims to restore thymic function and pushes back the effects of aging on the immune system. In tissue regeneration, we have CybroCell for degenerative disc disease and CYAPO913, an insulin-producing artificial pancreatic organoid, for diabetes. In oncology, TCB190 is exploring fibroblasts for cancer immunotherapy. Each of these programs draws from the same core strength, immunomodulation and tissue repair. That gives us many shots on goal from a single foundation. Let's talk about why we chose diabetic foot ulcers as our lead indication. Globally, more than 33 million people with diabetes develop foot ulcer. These aren't minor complications, they're life-altering events. 40% of these ulcers come back within a year and 70% within 3 years, 60% become infected. 20% of patients require lower extremity amputation and 10% die within 1 year of their first ulcer. DFUs are the leading cause of nondramatic lower limb amputation in the world. And it's a real shortage of FDA-approved therapies designed to heal them and keep them from coming back. That's a significant commercial opportunity and more importantly, a deeply human one. If we can improve healing here, we can change lives. We can validate the power of our fibroblast platform. So how does CYWC628 work? Well, instead of single cells, we use spheroids. Each spheroid is a small sphere containing 1,000 to 3,000 individual fibroblasts. Once applied, those spheroids attach the chronic wound surface and migrate onto that wound surface. We place the fibroblast directly into the fight, where they release chemokines, cytokines and growth factors the body needs to kickstart the healing process. And they act fast. As you can see, these images just 6 hours after administration. The spheroids are already attaching and spreading across the wound. It's a predictable time release biologic that keeps working on target. This is the data that gave us the confidence to move into the clinic. In animal models, we compare multiple doses of our fibroblasts spheroids against [ graphics ], a [ Smith & Nephew ] FDA-approved product and against the control group. By May 19, our spheroids achieved 83.8% average wound closure compared with 66% for [ graphics ], which is the #1 product in the market. Our spheroids be controlled with statistical significance at every dose. And by the third and fourth doses, they were statistically superior to [ graphics ]. That's exciting data, and it's real hope for patients. Dr. Khoja, our Chief Scientific Officer, will now walk us through the CYWC628 clinical design and provide an overview of our psoriasis program.

Thank you very much, Pete. The milestone we have worked so hard to reach is here. Our CYWC628 Phase I/II clinical trial is underway. This is a randomized controlled trial of up to 120 patients across 3 arms, standard of care long, standard of care plus low dose of CYWC628 and standard of care plus a high dose. Patients are randomized in this trial in a 1:1:1 ratio. We're focused on refractory wounds, the hardest to treat patients, which make any success even more meaningful. Patients received weekly treatment for up to 12 weeks, followed by a 6-month follow-up visit. Our primary endpoint is safety and tolerability in the proportion of patients with complete wound closure at 12 weeks and percent area reduction within 12 weeks. As a secondary end point, we'll assess recurrent rate through 6 months, an improvement in the blood flow. We expect the primary outcome data at Week 6. Testing 2 dose levels also sets us up to select the right dose for Phase III. This is a well-designed trial, and we are proud to have the product. In fact, we are assessing the FDA's new guidance surrounding acceptance of a single trial to grant marketing authorization and may pursue a BLA upon completion of the DFU trial without the need to conduct a Phase III trial if the 6-week interim results support this approach. Our second program targets psoriasis. Psoriasis affects 123 million people worldwide and 7.5 million here in the United States. It carries a heavy lifestyle and psychological toll. They can progress from mild to severe and is associated with considerable comorbidities. There is still no disease-modifying treatment. Current therapies often fail to provide long-term relief and can bring unwanted side effects. Our approach is different. We use allogeneic human dermal fibroblasts to recalibrate the immune system back to homeostasis and not to [ silence it ]. That distinction matters, and I'm thrilled to share that we have filed our IND with the FDA for our Phase I/II trial in psoriasis. Here's why we are encouraged. In a chronic relapse model of psoriasis at an animal model, a single administration of our fibroblasts delivered lasting benefit. During the first relapse, disease severity scores dropped 67% compared to control. During the second relapse, they were still 39% lower. Both results were statistically significant. The durability from 1 treatment is exactly what patients are missing today. We also looked at what's happening inside the lesions. Our fibroblast reduced 3 key inflammatory signals, IL-23, TNF alpha and IL-12 [ P70 ]. Why does this matter? These are the very same targets of blockbuster monoclonal antibody drugs on the market today, including [ Humira ], [ and April ], [ Salera ], [ Scores ], [ Intrum fire ]. These drugs each go after 1 or 2 targets. Our fibroblast-based potential therapeutic reduces all 3. This slide brings it all together. We compared CYPS317 against the leading classes of psoriasis drugs on 5 criteria, disease modifying potential, breadth of cytokine targeting, to immune restoration, dosing frequency and scalable cost-effective manufacturing. CYPS317 checks every box. We aim to offer a durable immune reset with limited treatment instead of chronic injections in a manufacturing model that can easily scale. We believe that psoriasis CYPS317 as a truly transformative platform level cell therapy for psoriasis. Pete will now walk us through the other projects.

Thanks, Hamid. Beyond our clinical programs, our platform keeps opening new doors. In multiple sclerosis, we have fully characterized fibroblast subtype has demonstrated significant [ remolination ] and immune balance in animal models. In degenerative disc disease, our fibroblasts reduce inflammation and help replace damaged cartilage. It's a high-value orthopedic market with very few regenerative options. In human longevity, we're developing fibroblast-based artificial thymic organoids. By age 60, most of our thymic function is gone, and that decline is linked to cancer, infection, chronic inflammation, and reduced response to vaccination. Restoring it could be truly transformative. And in cancer, we're exploring how fibroblasts shape the tumor environment and support immuno-oncology. It's early, but the long-term potential is significant. Behind every breakthrough is a team willing to take on the hard road of development, and our leadership team brings more than 60 years of combined experience in medical innovation, product development, finance, and capital markets. Dr. Hamid Khoja, our Chief Scientific Officer, brings more than 2 decades of research leadership at [ Caron ], Novartis Vaccines and Eli Lilly. Jason Davis, our CFO, brings more than 2 decades of public company finance, capital markets and SEC experience. Biotech demands resilience, adaptability and relentless execution. This team has lived at the past year and delivered, and I'm proud to work alongside them. We're also fortunate to have an outstanding Board of Directors. And in this year, it got even stronger. Dr. Kate Rubins is a retired NASA astronaut, microbiologist, genomic scientist, and she's a valued member of our Scientific Advisory Board since 2022. Her first-hand knowledge of how the body adapts and heals in extreme environments makes her a natural fit for our Board. Our most recent addition, Leigh Steinberg, is widely regarded as the most influential sports agent of this generation. Leigh brings 5 decades of deal-making experience, and he's been a pioneering champion of brain health and human longevity for decades. His network across sports medicine, business and media is second to none. He has the biggest role index I know. Kate and Leigh join Rich Cilento, Victoria Niklas, Robert Hoffman and myself on a Board with broad biotech, biopharma and operational leadership. Our Scientific Advisory Board includes world-class experts from UCLA, [ Senior Sinai ], [ Dell ] Medical School and Indiana Cancer Center. They help us move quickly and wisely as our science advances. Think of them kind of as our co-pilots keeping every decision pointed towards our goal of curing chronic disease. Before we open up to questions, let me say this. We've met the challenges of being a public company with diligence and perseverance in this business. And you have to be stubborn on the vision and flexible in details. Our vision has never wavered. How we got there? Well, we refine that every single day. Our wound care trial is underway, our psoriasis IND is filed, and our best days are ahead of us. Thank you.

Thank you, Pete. [Operator Instructions] We already have 1 here for you, FibroBiologics. How many more weeks or days until the interim data for diabetic foot ulcers will be released?

It's a great question. I'll let Hamid take that. He's the boots on the ground.

We're continuing to enroll patients into the study in those patients. We expect 6-week interim data before the end of the year for the study. And that primary -- sorry, the 6-week interim data will focus on percent area reduction, which is our primary outcome for the study.

What does patient recruitment look like so far for the lead program?

Patient recruitment looks good. We are quite encouraged by the results we're seeing. And we expect to have sufficient number of patients for the interim data before the end of the year.

Pete and Hamid, this person is asking the advantages. What advantages do fibroblasts have over stem cells? If you could just give a brief overview there?

We can give an entire presentation just on that, but I'll let Hamid answer to keep it short because I can go on forever.

I think -- well, fibroblasts and stem cells have multiple characteristics in common. But to differentiate between the two, I would like to point out 1. Stem cells are not easily obtained. Often, you have to obtain them through from adipose tissue on bone marrow or from the blood system. But with our -- with fibroblasts, easily as skin punch can accommodate sufficient number of cells of fibroblast for multiple thousands of doses. Now another aspect of fibroblasts is that they're already differentiated. And so when we culture these cells for commercial use, we don't have to worry about the cells differentiating spontaneously. They're already differentiated, very easy and cheaply manufactured as compared to stem cells, which, to point out that multiple clinical trials have been successful for stem cells that Phase I and even Phase II, but they have yet been able to reach Phase III because of the difficulty in culturing these cells. Fibroblasts do not have that limitation.

Thanks, Hamid. When do you plan to do a trial on [ PMIC ]?

Well, for [ semicon ] dilution reversal is a project. It's currently at the preclinical phase. We are actively working on developing additional IND-enabling preclinical study results for us to be able to request an IND. So at this point, we're still at the preclinical phase.

With IND clearance for CYPS317 psoriasis and the IND submission for CYMS101 multiple sclerosis both targeted for the fourth quarter of this year, what specific gating items remain before those filings go in?

Well, for CYPS317, we have filed for R&D. We will work on -- with the FDA to get that cleared. CYMS101, we are planning on filing that IND before the end of filing for the IND before the end of the year.

Across your 4 lead indications, wound healing psoriasis, MS and degenerative disc disease, which 1 do you view as the most likely near-term value inflection catalyst for shareholders and why?

That's wound care, clearly. We chose wound care because we can get the results in 12 weeks. And we're trying to prove this fibroblast platform so that the world will pay attention to the therapeutic benefits of fibroblast. So I think you're going to see wound care results here very soon. And then you'll see psoriasis approval to get an IND to begin a Phase I/II trial here in the States for psoriasis.

What is the current quarterly cash burn rate? And how do you expect that to trend as more programs enter the clinic?

Sure. So last quarter, we disclosed $3.5 million in cash in the bank, which should be enough to get us through the interim results. We just reported a new financing last week with Hamid Khoja buying into the -- buying a significant portion of stock. So we are encouraged, excited and we feel confident in the capital allocation for this program.

Are you pursuing or open to partnership, licensing or co-development deals with larger pharma or biotech companies for any of the 4 lead programs? And what would trigger that decision?

All of the above, and we're in discussions with companies, as you can imagine, at various stages. So I think what you'll see is you'll see increased conversations after we report that interim data. But yes, we are interested in collaboration with anyone in that space.

What does the go-to market and reimbursement strategy look like for CYWC628? If diabetic foot ulcer trials succeed, how does fibroblast-based therapy get priced and reimbursed relative to the standard of care?

Yes. It's a great question. As you know, in January, they came out with new reimbursement guidance and they gave a flat rate reimbursement of $127 per square centimeter. Fibroblasts fall into a different category. We will receive a BLA for those with the human trial. The other wound care products out there don't have that, and they will not be able to achieve differentiated reimbursement that fibroblasts will receive. I think that puts us in an unusually strong position because we will be reimbursed in a whole different category than the existing wound care products.

Thanks, Pete. With the going concern language in your filings, what is your current cash runway? And what specific milestones do you need to hit before you need to raise again?

Well, I think we're always opportunistic in our capital raise. We have enough runway to make it through the results of this trial. But again, we'll be opportunistic along the way.