Theracryf Plc (TCF) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the TheraCryf half year results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. [Operator Instructions]. The company may not be in a position to answer every question it receives during today's meeting; however, company can review all questions submitted today and will publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over today's management team, Toni, Huw.

Thanks, Mark. Good morning, everybody, and thanks for attending our half year results presentation. I want to start by paying tribute to our late Chair, Dr. Sue Foden. Sue had a profound effect on many people in our biotech industry, and we send our deepest condolences and sympathies to her family. She passed away at the beginning of this month. But as Sue would say, now then let's get on with business, and that's what we're going to do. So we're going to take you through the RNS that was issued this morning in a bit more detail, and we'll deal with as many questions as we can, and thank you for those questions who have already been submitted. And we're a public company listed on AIM, as you know, and the usual disclaimers apply. So now then let's remind everybody of what we're about. We're on a mission to build a drug development powerhouse. And where we see this is where as appropriate for a small biotech to act. Where are those profitable segments, we have to segment somewhere and our segments that we seek are currently in oncology and in behavioral brain disorders. Those are those juicy segments that we seek to exploit with our R&D and our acquired portfolio. So to take you through now the highlights in the period, I'll do the qualitative piece, and then I'll hand over to Toni here, who's sitting next to me in our office in Alderley Park to take you through some of the financial information that's in the RNS this morning. So it was a busy half year. We acquired and completed the acquisition of Chronos Therapeutics Limited, which was an Oxford-based biotech company working in neuropsychiatry, after a long search by Dr. Helen Kuhlman, our Chief Business Officer. Now we've added, in that acquisition, I'll tell you a bit more about these in the pipeline chart, 2 preclinical -- late preclinical, that means that we're about 1.5 years post funding away from admitting these things to [indiscernible] and their new chemical entity program, so that means they're genuinely new chemistry. There's no prior art in this area of chemistry, you can own that piece of chemistry, and we'll cover a bit of that in the post-period news. So we completed. That's a lot of work assimilating an acquisition. It's a great deal of work for the team here and I complement the team who are in the office with us on the very efficient work in bringing Chronos into fully owned subsidiary status within TheraCryf. At the same time, we made a placing and a retail offer of GBP 0.9 million gross and the people in this room and others who are related to the company invested 10% of that sum, those are the Directors and persons discharging management responsibility. If you haven't reviewed the R&D Day presentation and you're of a technical bent, well, I urge you to do that. It's on our website and there's a long video also associated with it. If you want to delve into the technical detail, please do on the website, and of course, as ever, send us questions through the website, if you have any; and we'll endeavor to answer all questions that are submitted. So that R&D Day was a half day in June held in London. We talked a lot about SFX-01, our collaborators in Rotterdam from the Erasmus Medical Center, Dr. Geurts and Wouter, the PhD student, who was also a neuro-oncologist, presented their work so far, and we're very, very pleased with the work that's going on there. We, also, using other external experts, gave a briefing on our acquired programs in that June meeting, the orexin-1 antagonist focusing on addiction and anxiety and the dopamine uptake inhibitor or uptake transport inhibitor focusing on fatigue and narcolepsy. So there's a detailed brief in there for you, if you haven't seen it already. The grant work from the Erasmus Group as presented in June and the updates that have come since then have essentially confirmed the results we've seen elsewhere that is SFX-01 in the test tube is effective in killing cells that are derived from people's tumors -- people's brain tumors, particularly glioblastoma tumors. And we've seen that before. We've seen it through an academic group in Italy, and we've seen it through an academic group in New Zealand. And when you're looking at data and your belief level goes up, if you see triangulation, that is, if you see the same result from different centers using different tumors, from different people, your confidence level and the eventual effectiveness of a drug goes up. That's what we've seen in this third group through the grant we have from the Dutch government. In line with our policy, our collaborators in Rome in La Sapienza University, got a full paper published on a different cancer, a childhood cancer model that they're particularly interested in, rhabdomyosarcoma. Rhabdomyosarcoma is one of the most common cancers in childhood. Mercifully, it's relatively uncommon. It's an orphan condition. And they saw the same thing as we see in brain tumor or glioblastoma cells and animal models that SFX-01 potentiates the effect of radiation, 1 plus 1 equals more than 2 in most of these experiments. That's potentiation as opposed to simply an additive effect. So we're seeing in other cancers where radiation is the mainstay of treatment, the fact that SFX-01 can potentiate the effect of radiation and even bring it back to effectiveness when resistance to radiation starts to develop. That publication was in July. It's a full paper and also available via our website. In the post period, we published our own clinical study on SFX-01 in our own healthy volunteer study. We released top line data via RNS on this study. As it was completing, we released the fact that we completed the clinical study report. And now, again, in line with our policy, we've published the PK data, the pharmacokinetic, the way the drug is handled in the body, in advances in therapy this month. So what it did show? It showed that the enteric-coated tablet that is the tablet that's designed to pass the acid environment of the stomach did that from the timing of when you see blood levels, the tablet seems to have become resistant to acid in the stomach, as expected, as designed and been released in the proximal small intestine, which is where most drugs are released and getting into the blood stream from that route without being destroyed by the acid that happens higher up in the gastrointestinal tract. So we've got levels of “sulforaphane” and active metabolites. Sulforaphane is metabolized quite quickly into active and inactive metabolites. We've seen those levels in those volunteers, male volunteers, in the range where you see effectiveness in the lab. So that's very reassuring to us that we see at least levels of active metabolites on the active drug at levels that are relevant to the disease models that we study. So that's also available on the website. We're in frequent communication with our partner, Stalicla. I know there's a lot of questions on this. We are talking about optimal Phase II design for the autism spectrum disorder deal that we have with Stalicla. So it's a 2-level conversation. It's a conversation about what's the optimal way forward for the development plan. It's also a conversation about the financials that everybody is talking about. When those discussions, both technical and commercial, are complete, of course, the minute we know there is something firm to say, we'll say it. I should point out, and Toni will emphasize this shortly, that none of the milestone payments from the Stalicla deal are factored into our current financial plan. Our cash runway is without any further milestone payments. We'll do a bit more detail about that shortly. And yesterday, we got notification on one of the acquired programs, the orexin-1 antagonist program that we acquired via the acquisition of that Oxford Company that the European Patent Office has said on the 18th of December, the patent will be issued to you. This is the very latest last stage of a patent grant. This is a unique structure. It's a unique structure for orexin-1 antagonist. There's no prior art and no other copying possible. So the European patent office covers more than the EU, it goes as far as the EU, the U.K. as well, Moldova, Turkey. So a very large group of countries covered by that patent. And it complements what we've already got. We've got a patent in China, we've got a patent in the United States also already granted. And these are long patents. The U.S. patent goes until 2039, and the European patent goes until 2038. So from a partnering point of view, it's one of those important boxes to tick, that is have you got a long life of exclusivity left for this molecule? And the answer is yes, and the patents are now granted in the vast majority of territories across the world. A lot of hard work went into that, a lot of hard technical work. And I thank the technical experts that drove that patent for their work because it was ultimately very successful. So what does that give us now? Well, neuro-developmental disorders, Stalicla we've covered and the ongoing technical and commercial discussions that we're having pretty frequently, I have to say. Glioblastoma, our collaborators at the Erasmus Medical Center in Rotterdam are moving on with their work. We'll talk a bit about that in the outlook slide. Rhabdomyosarcoma is published. If we could do a childhood program, we don't currently have the resources to, that will be one of the first cancers that I think we'd like to address given the fact that radiation is the only treatment for these children and that radiation wanes in its effectiveness and if SFX-01 could bring that effectiveness back or even make it more effective as a de novo treatment, that will be fantastic for those young people. Now the acquired programs add 3x more to our pipeline now. The addiction program, the orexin-1 antagonist, the patent that was just awarded. Orexin-1 is highly relevant in addictive disorders. It's highly relevant in anxiety disorders and there are publications where that system, if you block it, can work well in those conditions. And the dopamine uptake inhibitor, which we call DAT, for short, is highly relevant in slowly lifting brain dopamine in things like fatigue, fatigue due to multiple sclerosis, long COVID even would be a target for raising brain dopamine and indeed narcolepsy, which is our genetic condition where people spontaneously fall asleep and it's usually discovered in childhood, but is lifelong. So we've got many, many shots at goal now, a lot more shots at goal than we had in March. And we're looking forward to finding the right route of funding those newly acquired programs. To remind you, our glioblastoma program in SFX-01, the clinical one, is funded through to patient treatment with SFX-01. The first patients we expect to be administer the drug once regulatory approvals are done and some more R&D is done that's expected in the first half of 2026. There's quite a lot of work to do in Rotterdam before that. There's quite a lot of work to do here internally to prepare the regulatory submissions to permit us to -- with our collaborators in Rotterdam to give this to people with a rapidly fatal brain cancer. So the reason we acquired the Chronos Therapeutics assets and the company is because of the resurgence of CNS, or central nervous system, diseases, particularly neuropsychiatric diseases, actually, in the pharmaceutical world. We've got, at the clinical stage and mid- to late-clinical stage, multibillion-dollar deals being done, acquiring these CNS companies that, frankly, in the last decade were a bit unloved. Now they're becoming loved again. AbbVie acquired a neuroscience company in the U.S. right at the end of last year for $8.7 billion. Bristol Myers Squibb, a company that hasn't really shown much interest in neuropsychiatry for some time, paid over $14 billion for a company called Karuna Therapeutics, a similar neuropsychiatry company. So there's a resurgence in interest in this neuropsychiatry field. And what we need and what we believe we have in what we've acquired in mainly share-based transaction is new therapeutic options that are going to work that are going to produce durable responses that are not subject to abuse because that's a curse of many psychoactive drugs that they're not abusable and that we have an acceptable and limited range of side effects. Those are our targets, and we think we've achieved those with the late preclinical programs we've acquired, and we're busy looking for nondilutive funding routes to take those programs forward to [indiscernible], which is about an 18-month process post funding. So now, Toni, I'll hand over to you for a quick run through the financials for the period.

Thank you, Huw, and good morning, everybody, also from my side. So as Huw mentioned, we had a very busy year. Yet at the same time, I think we've done a very good job here in being very mindful about our cash burn. So post tax loss, GBP 1.1 million, contrasted of GBP 1.5 million a year ago. So that's 26% reduction. And then cash out from operations, GBP 1.1 million versus GBP 1.3 million, it's also a 15% reduction. So it really shows that we have been very -- turning every stone and really trying to maximize the cash runway of the company. Invested cash deposits of GBP 1.2 million at the end of the period versus GBP 3.7 million a year ago. And I think here it is important to note that in the GBP 3.7 million a year ago, we have received the GBP 900,000 R&D tax credit from the government. Whereas, now in the GBP 1.2 million, we have not yet received that. We are expecting to receive that in the next few weeks, which is GBP 390,000. So GBP 1.2 million plus GBP 390,000, that gives us currently the cash runway to the end of 2025 -- calendar year 2025 without any milestone payments, as Huw mentioned, they're not factored in. So our guidance in terms of cash runway remains unchanged.

Thanks, Toni. And now to the outlook for the next 6 months-or-so. We expect to see more preclinical work from Rotterdam on our glioblastoma brain cancer program funded by that grant in whole animal models this time. So we've done the test tube work from donated sellers from people's tumors. There's now a rodent model that the Rotterdam team are going to examine the effect of SFX-01 in. And then in parallel with the regulatory work to get commissioned to give it to patients, we'll be working through that in the next 6 months and indeed the next 12 months through end of '25. In funding, we're very busy looking at nondilutive sources of funding for our acquired programs. We've been successful at this in the past, both within TheraCryf and in previous companies. So we are looking at nondilutive routes of funding to get the orexin-1 in addiction and anxiety and the dopamine uptake inhibitor programs funded as efficiently as possible. Patents. Well, on the 18th of December, you'll be getting a press release from us, so you know it's coming, saying that the patent for the orexin-1 antagonist, composition-of-matter patent, is with us in-house. We'll have the piece of paper in our hand on the 18th of December. I should add a little bit about this. Composition-of-matter patents are the strongest form of patents in our industry. You really can't beat the COM patent. It protects the chemical structure and a whole family of related chemical structures from anybody copying them for that period of 20 years from priority date. So they are the strongest form of patterns. And both the acquired assets have composition-of-matter pattern coverage. So as I said a couple of times, we're working on manufacturing. A large chunk of our expenditure goes on manufacturing of SFX-01 into GMP, to good manufacturing practice, and then making the tablets required for initially our GBM clinical trial and the number of tablets acquired for our collaboration with Stalicla will also be calculated into that one of those technical discussions that are ongoing with our partner. So that concludes the formal part of the presentation, a brief quick run through the highlights of the 6 months. So we can turn to questions now. Mark, if that's...

[Operator Instructions] Huw and Toni, you've received a number of questions ahead of today's event, along with the numbers throughout your presentation. [Operator Instructions]. If I may just hand back to you guys, if you could just read out the questions, and then I'll pick up from you at the end.

Okay. First question in, in time terms at least, is, please can you confirm the likelihood of any product launch in the next 12 months? Well, that's the first and actually easiest question because the answer is a clear no. The stage of drug development that we occupy is the early and mid-stage of drug development. Product launches require large-scale trials in hundreds, sometimes thousands of patients, and that's something for larger companies to conduct. So our business model is actually to create compelling datasets that is datasets that are attractive to the market and to people who might take on the programs for financial gain and then do the large-scale trials and the commercial launch themselves. Personally, I've launched a good number of products into the market in other companies, but that's not the business model that we were about. So thanks for the question. Well, in the next year, it will be more preclinical and clinical work and no launches, that's for others to do when we've done a deal with them. So next question. Several AIM-listed biotechs have delisted. And given the current state of the Stalicla dispute, can we reassure there are no plans to follow suit and delist? Yes, there are no plans to follow suit and delist. There are no active plans at the moment for TheraCryf to take ourselves off the AIM exchange. The cash runway prediction is the secondary part of this question. Cash runway predictions, enough cash to fund to the end of '25. This would mean a cash raise? Well, we're not speculating on the cash position. The market needs to settle down. We need to see how our nondilutive funding efforts work the resolution of our current dispute. So there's a lot of pieces in the mix there. And I'm afraid we can't speculate on when or if a raise would happen at this point. And I hope that clarifies the question. Do ask some more if you want more clarification. Next question. When can we expect PD data from the Phase Ib trial? We've looked carefully at that dataset. There are some gene changes that happen as a result of short-term administration of SFX-01 to volunteers. The decision we've made internally is to keep that as know-how. We're holding it close to our chest because it does inform development programs. And rather than release it into the market for others to benefit from, we're hanging on to it for the time being. If there's any change to that, of course, we'll let you know. Stalicla in the process of raising Series C, so I believe. And is the current dispute about their fundraise? No, they are raising money, we believe, but it's not really for us to comment on what another company is doing other than in the context of our joint asset. So how long would you anticipate before STP2 would be ready for IND? Again, that's a matter for Stalicla. We're working carefully with them on Phase II planning and the commercial consequences of that. So as soon as we have something that's not speculation, we'll, of course, let you know as is our policy and our obligation. So question next is about the orexin-1 antagonist. It says there's some previous work on the use of orexin-1 receptor antagonists to treat autism spectrum disorder and other neuro-developmental disorder. Is there a possibility of using roX1 for disorders like autism spectrum disorder? I think the field is too muddy for orexin-1 antagonism, or indeed orexin-2 agonism and antagonism in this field. So our partner is taking SFX-01 into autism spectrum disorder, that's Stalicla's role for SFX-01 only, I should add. Our focus on orexin-1, after a lot of due diligence and analyzing of markets by our technical experts and Dr. Helen Kuhlman, our Chief Business Officer, our focus is on these twin and related disorders of addictions and anxiety. Now psychiatrist will tell you there's a sort of addictive, anxious personality type. And that's really where we're going with the orexin-1 antagonist because the evidence base is much clearer and there's a much cleaner development pathway in those indications. So that's the priority for the OX1. And thank you for the question. So the acquisition of Chronos, given the current climate for nonrevenue biotechs, where valuations are discounted, are companies in financial distress and possess novel IP? Yes. When we searched the world that ended up in the acquisition of Chronos, we reviewed seriously over 130 companies or assets. Chronos, and the company and the assets therein, we defined were the best fit for us. It's the pair of shoe story. You're trying on the first pair of shoes, you go around the mall, you come back to the first pair of shoes you tried on because it just happens to be the Chronos was the first one we looked at seriously and that was the best fit. So yes, there are a lot of interesting opportunities out there. But I think for now, our job is to assimilate fully the Chronos assets and get them going again. So restart those programs through nondilutive funding, any other means of funding we can find to get value increasing for those acquired assets. So we're not going to bolt on any other assets or companies for the time being. Although we're always looking; of course, there's always opportunism that applies here. But for now, it's about completing the acquisition that's done in the half year and then moving that acquisition forward in terms of funding those development programs. So that's how that one is going to work. The next one. More details on the company's plans to further monetize the expanded R&D portfolio. I think we've probably covered that, especially the new preclinical assets from Chronos. Again, when there's something to say, we will say it immediately. We're looking very carefully at nondilutive funding for these assets. The resurgence of neuroscience is making that somewhat easier process, we hope, than has been in the past, past 1.5 decades, at least for psychiatry-driven potential assets. So we are in talks with lots of different parties to try and get those funded as quickly as possible. So there is grant funding, there are other collaborations that could be done, and we're looking at all avenues, as you'd expect from a reasonably active and experienced biotech management team. We look at every avenue to get those things restarted. Over 2 years ago, you said you'd buy shares when they were over 3p. I bought shares in the last raise. We draw large salaries. Actually, our salaries are not large in comparison with our peers. I can tell you that very clearly. We benchmark where we are. And we took a salary cut around the period of the last raise. So that's not correct. So we've had a drop since the last raise. Yes, we're almost constantly in a blackout period as management because we're aware of a lot of work in progress. We invested 10% of the last round as a group, as a Board and a team. And we'll continue to look, but we are largely in blackout periods, and we certainly don't draw excessive salaries. So if there is an opportunity, we will look at it. But we put our money where our mouth is. We work extremely hard in this company to get the right shape and funding for the assets that we already have and those that we've brought in. This next one is for leveraging partnerships for academic and medical institutions. Yes, we've got a lot of those. We've declared them, of course. We've got partnerships in Italy, 2 of them, that's an academic partnership. We've got a partnership in Rotterdam. We are talking to places like King's College London, which has a very extensive psychiatric department. We're in touch with the head of that department, Prof. Allan Young, for advice. So we are constantly looking for partnerships. We don't -- we get some incoming requests as well for use of compounds. And we don't always say yes. We -- if it fits within our model that is if it fits within the areas of R&D that we want to pursue and those potential diseases and conditions that we want to pursue, we will give free drug to academic partnerships. And we've been very lucky and productive with our academic partners in the sense that they've produced a lot of very high-quality data for us. But it's not always a yes. Sometimes it's a no. So we are in constant touch with the academic world and looking for opportunities to collaborate where it fits. And the fit is the important thing there.

I can take the next one...

Okay. Next one for you, Toni.

Yes. Have all creditors being paid on time? If not do the management need to take insolvency advice? All creditors we pay them on time. So we honor our contracts and our obligations to our vendors, and we always pay them on time.

Thanks, Toni. And the last one is a question for all of us, I guess, but when can we expect to see a significant rise in the share price? That's really a matter for the market and the macro factors we've talked about before about the AIM market in London. We'd all like to see a raise in the share price. We're all working very hard in developing novel drugs, which when they succeed, should see that reward in the marketplace. But our job is to develop new exciting medications as capital efficiently as possible. And that's what we're about. And the reason we're in this business is we have to believe that those rewards will come in the shape of the valuation of the company when we succeed. So we're all still working or beavering away very busily on these programs on the best way to fund them, the quickest way to get inflection points through the portfolio. If you believe in an active and functioning market, we'll get the reward when those things happen.

[Operator Instructions] Huw, Toni, I know investor feedback will be particularly important to you both. I'll shortly redirect those on the call to give their thoughts and expectations, but perhaps before doing so, if I could just come back to you, Huw, for a couple of closing comments.

So a busy half year, a tripling of our portfolio, a search for the best way to fund that new portfolio, given the market background that we're sitting and the market winds that are blowing against us. And we're looking forward to generating even more value from the portfolio and eventually getting the rewards for that. I thank you for your patience with us and patience with all the biotech sector in the U.K. currently. And like us, we hope that you'll hang on in there. Thanks very much.

[Operator Instructions] Can I please ask investors not to close this session as we'll automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team at TheraCryf Plc, I'd like to thank you for attending today's presentation, and wish you a good [Audio Gap].