Celcuity (NASDAQ:CELC) Inc. reported a net loss of $18.4 million for the third quarter of 2023, an increase from last year's Q3 loss of $10.9 million. Despite this, the company is making significant strides in its development of treatments for specific cancer types. It is also bolstering its financial stability with a recent $50 million private placement.
Key takeaways from the earnings call include:
- The company is focused on developing treatments for cancers involving the PI3K/mTOR or PAM signaling pathway, which they believe represents a significant drug development opportunity in solid tumors.
- Celcuity is conducting a Phase 3 program in HR-positive HER2-negative advanced breast cancer and a Phase 1b/2 program in metastatic castration-resistant prostate cancer.
- The Phase 3 trial for gedatolisib in breast cancer is expected to provide initial data in the second half of 2024, while the Phase 1b/2 trial for prostate cancer is set to activate in the first quarter of 2024 with initial data in the first half of 2025.
- The company closed a $50 million private placement in October, aiming to extend its cash runway.
- Celcuity is adding staff to support the management of the VIKTORIA-1 study and preparation for a new drug application.
During the earnings call, CEO Brian Sullivan discussed the progress of the Phase 3 trial, the tolerability of the drug, and the utilization of the recently raised funds. Sullivan stated that the study was designed with traditional assumptions and has a sufficient sample size to detect a statistically significant effect size difference. He also noted that the drug's IV administration and balanced volume of distribution contribute to its tolerability.
Sullivan further explained that the funds raised from the private placement would primarily extend the cash runway, providing more financial stability for the company. The company is also bolstering its staff to support the day-to-day activities of managing the VIKTORIA-1 study and preparing for a new drug application.
In line with expectations, R&D expenses have increased as more patients are enrolled in the trial. The company has not made any major recruitment protocol changes for the study and is actively staying in touch with the multiple individuals involved. Sullivan thanked participants for their support and mentioned upcoming conferences where the company will be presenting.
InvestingPro Insights
Drawing on real-time data from InvestingPro, Celcuity Inc. has a market capitalization of 240.56 million USD. The company's P/E Ratio stands at -4.25, indicating that investors are paying for each dollar of a company's earnings. The P/E Ratio adjusted for the last twelve months as of Q2 2023 is -4.88, while the price to book ratio for the same period is 2.18.
InvestingPro Tips highlight that Celcuity holds more cash than debt on its balance sheet, which is a positive sign for financial stability. This is in line with the recent $50 million private placement mentioned in the article. However, it's important to note that the company is experiencing a declining trend in earnings per share and is quickly burning through cash.
Furthermore, InvestingPro Tips reveal that Celcuity is not profitable over the last twelve months and does not pay a dividend to shareholders. This is crucial information for potential investors to consider. For more comprehensive insights, InvestingPro offers an additional 4 tips related to Celcuity's financial health and performance.
Full transcript - CELC Q3 2023:
Operator: Greetings, and welcome to the Celcuity Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Maria Yonkoski with ICR. Thank you, ma'am. You may begin.
Maria Yonkoski: Thank you, operator, and good morning to everyone on the call. Thank you for joining us to review Celcuity's third quarter 2023 financial results and business update. Earlier this morning, Celcuity released financial results for the third quarter ending September 30, 2023. The press release can be found on the Investors section of the website. Joining me on the call today are Brian Sullivan, Celcuity's Chief Executive Officer and Co-Founder; and Vicki Hahne, Chief Financial Officer. Before we begin, I would like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, which are outlined in today's press release and in our reports and filings with the SEC. Actual events or results may differ materially from those projected in the forward-looking statements. Such forward-looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. On this call, we will also refer to non-GAAP financial measures. These non-GAAP measures are used by management to make strategic decisions, forecast future results and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the company's ongoing core operations and prospects for the future. You can find the table reconciling the non-GAAP financial measures to GAAP measures in today's press release. And with that, I would now like to turn the call over to Brian Sullivan, CEO of Celcuity. Please go ahead.
Brian Sullivan: Thank you, Maria, and good morning to everyone joining us on today's call. Our current focus at Celcuity is to develop treatments for patients who have cancers involving the PI3K/mTOR or PAM signaling pathway. The PAM pathway is one of the most important oncogenic pathways. It regulates key metabolic functions, cross regulates other oncogenic pathways and affects the tumor microenvironment, which can directly affect how a patient's immune system responds to a tumor. It is also the most highly mutated by a significant margin of all signaling pathways. 38% of solid tumors have a PAM-related mutation or alteration. Mutations obviously serve as potential targets, but the overall proportion of pathway alterations in a tumor highly correlates to its overall role as a cancer driver. Despite its importance as a cancer driver, the number of patients treated today with a PAM inhibitor is trivial compared to the number who could potentially benefit from them. And that is why we think the PAM pathway represents the largest drug development opportunity in solid tumors. The primary reason why PAM inhibitors have not become standard of care drugs despite the importance of the PAM pathway, is because it is very difficult to safely and efficaciously inhibit this pathway. Unlike most pathways, where inhibition of a single kinase may induce the desired activity, the PAM pathway involves multiple nodes, each of them must be targeted because of the complex interaction that takes place between them. Otherwise, uninhibited nodes may be activated and compensatory resistance may be induced, which in turn, compromises efficacy. The available therapies that target this pathway, only target a single node such as mTORC1 or PI3K-alpha, and have only reported limited improvements in patient outcomes. That is why we believe development of an optimized PAM inhibitor, like gedatolisib, that targets all Class I PI3K isoforms and mTORC1 and mTORC2 represents one of the most important opportunities to improve the standard of care in these cancers. With our Phase 3 program in HR-positive HER2-negative advanced breast cancer and our newly initiated Phase 1b/2 program in metastatic castration-resistant prostate cancer, we hope to eventually impact over 500,000 patients globally who have one of these tumor types. Our Phase 3 VIKTORIA-1 clinical trial is evaluating gedatolisib in combination with fulvestrant with and without palbociclib in adults with HR-positive HER2-negative advanced breast cancer, who have progressed on prior treatment with a CDK4/6 inhibitor. We are now recruiting patients at nearly 220 sites in 23 countries in North and South America, Europe and Asia. The trial remains on track to provide initial data and analysis of the PIK3CA wild-type patient subgroup in the second half of 2024, and the data for the PIK3CA mutated patient subgroup in the first half of 2025. In August, we announced our plans to initiate the clinical development of gedatolisib in patients with metastatic castration-resistant prostate cancer, whose disease progressed while receiving treatment with an androgen receptor inhibitor. Treatment options for these patients are limited, and there is an urgent need for new drugs to treat this patient population. Numerous preclinical studies have demonstrated interaction between the androgen receptor and PAM pathways suggest that combining a PAM inhibitor with an androgen receptor inhibitor may induce a synergistic antitumor effect in patients with prostate cancer. There is also compelling clinical evidence with an earlier generation PAM inhibitor providing a proof of concept of our hypothesis that combining gedatolisib with an androgen receptor inhibitor may be efficacious. The FDA cleared our IND and gave us allowance to proceed with our Phase 1b/2 trial to evaluate gedatolisib in combination with darolutamide, which is a potent androgen receptor inhibitor, in patients with metastatic castration-resistant prostate cancer. We expect to activate this trial in the first quarter of 2024 and report initial data in the first half of 2025. In the Phase 1b portion of the study, the acuity expects that up to 42 participants will be randomly assigned to receive 600 milligrams of darolutamide combined with either 120 milligrams of gedatolisib in Arm 1 or 180 milligrams of gedatolisib in Arm 2. An additional 12 participants will then be enrolled in the Phase 2 portion of the study at the recommended Phase 2 dose level to enable evaluation of a total of 30 participants treated with a Phase 2 dose of gedatolisib. The primary objectives of the Phase 1b portion of the trial include assessment of the safety and tolerability of gedatolisib in combination with darolutamide and the termination of the recommended Phase 2 dose of gedatolisib. The primary objective of the Phase 2 portion of the trial is to assess the six-month radiographic progression-free survival rate of patients who received the Phase 2 dose. We're excited that Bayer (OTC:BAYRY) agreed to enter into a clinical trial collaboration and supply agreement to provide darolutamide, their approved androgen receptor inhibitor, for this trial at no cost. Darolutamide is structurally unique to other androgen receptor inhibitors with an excellent efficacy and differentiated tolerability profile, coupled with minimal drug-drug interactions, making it an ideal combination partner for gedatolisib. And finally, in September, we hosted a virtual Science Day, where we provided an in-depth overview of the scientific and strategic rationale supporting our clinical development strategies. We reviewed how gedatolisib's differentiated mechanism of action, safety profile and potency solves the rid of comprehensively inhibiting the PAM pathway without inducing unacceptable levels of toxicity. We then characterized the significant unmet needs in breast and prostate cancer and why gedatolisib is uniquely positioned to potentially improve the outcomes for the hundreds of thousands of patients with these tumors. For nearly 20 years, the PAM pathway has confounded drug developers. This has led many drug developers and investors to question the relevance of the pathway as a cancer target. We think that sentiment is misguided. We blame the drugs, not the pathway. We're excited about the opportunity to potentially offer breast and prostate cancer patients effective treatment for their PAM pathway-involved tumors, and we look forward to updating you on our progress over the coming quarters. With that, I'll turn now the call over to Vicky Hahne, our CFO, to review our financial results.
Vicky Hahne: Thank you, Brian, and good morning, everyone. I'll provide a brief overview of our third quarter 2023 financial results. Net loss for the third quarter of 2023 was $18.4 million or $0.83 loss per share compared to a net loss of $10.9 million or $0.75 loss per share for the third quarter of 2022. We also included in our press release non-GAAP adjusted net loss for the quarter ending September 30, 2023. Our non-GAAP adjusted net loss for the third quarter of 2023 was $17.3 million or $0.78 loss per share compared to non-GAAP adjusted net loss for the third quarter of 2022 of $9.5 million or $0.63 loss per share. Research and development expenses were $17.5 million for the third quarter of 2023 compared to $9.6 million for the third quarter of 2022. Of the approximately $7.9 million increase in research and development expenses, $7.5 million was due to an increase in expenses related to the VIKTORIA-1 Phase 3 clinical trial, and $0.4 million was related to increased employee-related expenses. General and administrative expenses were $1.4 million for the third quarter of 2023 compared to $1 million for the third quarter of 2022. Employee-related expenses accounted for $0.3 million of the increase. The remaining $0.1 million increase resulted from professional fees and other expenses associated with being a public company. Net cash used in operating activities for the third quarter of 2023 was $12.7 million compared to $9.3 million for the third quarter of 2022. This was a result of non-GAAP adjusted net loss of approximately $17.3 million, offset by working capital changes of approximately $4.6 million in accounts payable and accrued expenses and partially offset by other assets. We ended the quarter with cash, cash equivalents and short-term investments of $133 million -- $133.9 million. On October 20th, we closed on a $50 million private placement, which is not reflected in the September 30th cash and investment amount. We believe this will extend our cash runway into mid-2026, and fund us through multiple critical milestones. With that, I will now hand the call back to Brian.
Brian Sullivan: Thank you, Vicky. Operator, could you please open the call for questions?
Operator: Sure, thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Maury Raycroft with Jefferies. Please go ahead.
Unidentified Analyst: Hi, good morning. Thank you for taking our question. This is [Yao] (ph) on the call for Maury. Our first question is...
Brian Sullivan: Good morning.
Unidentified Analyst: Our first question is on the Phase 3 trial. Regarding the primary analysis between Arm B and Arm C, which compares geda plus fulvestrant versus fulvestrant alone, what kind of delta went into the powering assumption? We assume fulvestrant alone has maybe four to five months of PFS. So, what does geda and fulvestrant in combo need to show to be static? And similarly, between Arm D and Arm E in mutant patients, what kind of delta went into the powering assumptions there, that would be versus alpelisib plus fulvestrant combo in that comparison? And I have a follow-up.
Brian Sullivan: No, thanks for the question. We powered the study with traditional powering assumptions, which are typically 90%. And so, we have sufficient sample size to detect an effect size difference that's statistically significant with that. And so, we haven't disclosed the specific effect size difference that we're assuming. But given the low -- the medium PFS rate that's been reported for fulvestrant, one could deduce that the level of improvement or the effect size difference doesn't have to be significant to be statistically significant. For just as an example, a two-month improvement in PFS, which would translate to 100% improvement relative to what's been reported in fulvestrant recently two months medium fulvestrant, it would represent an HR of 0.5. And that would: A, be statistically significant; and B, would be on the edge of being clinically meaningful. And a similar analysis was done with our assumptions for Arm D versus Arm E. We power the study 90%, and derive our sample size accordingly.
Unidentified Analyst: Got it. That makes sense. And I guess maybe move on to the prostate cancer study. We know darolutamide seems to have pretty low drug-drug interactions, but still there are some reports that seems to suggest darolutamide can reduce Cmax or AUC for some other drugs that had been administered together in the past. I guess, can you maybe clarify if you're going to do very detailed PK monitoring? Or do you think your trial design is sufficient to -- for you to find the optimum dose? And do you have any plans to maybe look at other different dose combos?
Brian Sullivan: Okay. Well, thanks for the question. Look, two things. We have evaluated the DDI profile of darolutamide and assessed that relative to the interactions with geda. But geda is very stable, doesn't metabolize, or metabolizes at a very, very low rate. And so, we don't anticipate any drug-drug interaction between the two drugs just based on their respective PK profiles. We will be doing PK analysis so that we'll confirm that as part of our study. Our focus right now is demonstrating the proof of concept that combining pan-PI3K inhibitor like gedatolisib with an androgen receptor inhibitor like darolutamide, which is very potent, will induce a treatment effect in these patients that could be significant and advance the standard of care. The steps that follow that, there's a lot of potential different steps, and we will start discussing those as we begin reporting data.
Unidentified Analyst: Got it. That makes sense. Thank you so much. I'll hop back in the queue.
Operator: Our next question comes from Boris Peaker with Cowen. Please go ahead.
Boris Peaker: Yeah, thanks. A couple of questions here. So, just for geda in general, what's responsible for the drug's tolerability when we compare it to some prior attempts of targeting mTOR and PI3K? And specifically kind of an extension of that in the VIKTORIA trial, what's the algorithm for dose reduction? And do we have a sense of the fraction of patients that have had a dose reduction?
Brian Sullivan: Great. Well, thanks. So, geda's tolerability profile is a function of two features of the drug. One is that it's administered IV intravenously, which means it avoids the GI tract and the liver. Because PI3K-alpha, which is one of the targets of geda and which is one of the targets of available therapy, regulates glycolic activity which takes place in liver. Avoiding the liver allows you to avoid essentially inducing high levels of hypoglycemia, which is one of the primary adverse reactions associated with PI3K drugs. And the second feature of the drug relates to its PK profile, and that's a function of its chemical structure, which is that it has a very balanced volume of distribution of around 40 liters. And what that essentially means is that it doesn't get retained excessively in the liver, which is in comparison to some other drugs that have been IV administered which had very high volumes of distribution and were retained in the liver 50-fold higher concentrations than in plasma. So, it's a combination of the route of administration, which is a necessary but not sufficient condition to minimize the toxicity. It's also a feature of the PK profile and its balanced volume of distribution. As far as dose reductions, in our Phase 1b study, we had dose intensity levels of roughly 90%. So, there will be a very structured approach to dose reductions. But overall, patients stay on the drug for the most part at the 180-milligram dose level. The dosing intensity was comparable to palbociclib. So, we think that, essentially, the drugs are somewhat equally tolerable as a result. So, there's nothing that would expect us to see anything different in the Phase 3 study.
Boris Peaker: Great. Maybe if I could squeeze in one more just on prostate cancer. Obviously, there's a lot of discussion on PSMA-targeting therapies, particularly in the pre-chemo setting. We just saw some data at ESMO. We're expecting other data readout from companies soon. How do you see that impacting kind of your development pathway to geda plus enzalutamide in these patients?
Brian Sullivan: Sure. Well, we'll see. I mean, it's a function of the data that we report. If the data that we report is consistent with what's been reported in clinical studies that were done with an earlier-generation PAM inhibitor that is no longer under development, then we think geda would be on track to potentially offering a standard of care that was superior to PSMA-targeted therapies. Even if it was just comparable -- and again, I'm just describing scenarios, not projecting anything. But even if it was just comparable, the radiographic progression-free survival was just comparable to the PSMA. We think that we would have an advantage relative to the challenges involved in administering that class of drugs. But it's early days. But ultimately, as is the case in most of these settings, the efficacy will really determine the strategy going forward and the penetration that you could hope to expect. But we don't think that the bar is raised to a level with those drugs that will create an impediment for us to be successful.
Boris Peaker: Great. Thanks for taking my questions.
Brian Sullivan: You're welcome.
Operator: Our next question comes from Gil Blum with Needham & Co. Please go ahead.
Gil Blum: Hey, good morning everyone. Thanks for taking our question. Just a quick one on use of proceeds. You guys recently had the financing. Just trying to understand if you expect the majority of these proceeds to be used to maybe extend the cash runway, or is it more to expand the footprint, to invest in prostate cancer program? Thank you.
Brian Sullivan: Thanks, Gil. We raised the incremental $50 million, which really came over the threshold. It was an unsolicited inquiry, and we concluded that. It was -- would be favorable for us to extend the runway. The money we had raised and had on our balance sheet prior factored in development costs associated with the Phase 1b/2 study. And so, for the most part, this incremental infusion of cash will primarily extend our cash run rate, which again, in this environment, having additional runway, we think, is just very prudent. And so, we concluded that it was an opportunity for us to bolster the balance sheet and really -- can't say eliminate, but certainly reduce the potential balance sheet risk associated with our programs. Hello?
Operator: Our next question comes from Alex Nowak with Craig-Hallum. Please go ahead.
Alex Nowak: Okay, great. Good morning, everyone. With the enrollment ramping here, 220 sites, multiple countries, you're now looking -- you're doing the indication expansion into prostate, what additional investment in the talent side, resources, whether it be in Minnesota or other geographies, do you need to plan for here?
Brian Sullivan: We're adding staff to our team throughout. We have added people to our team. We'll continue to add people to our team. They typically will not be at the senior executive level. And those folks are there to support just the day-to-day activities of managing a study as significant as VIKTORIA-1, but also to help us prepare ourselves for a new drug application, or NDA. And so, we have to simultaneously execute our Phase 3 study while also preparing for an eventual NDA submission. And so, as we get closer to an NDA submission, that activity starts to ramp up, we'll add staff accordingly. But the investments from a G&A perspective will still be relatively modest, but there will be some increase in headcount as a result of our progress towards the NDA.
Alex Nowak: Got it. That makes sense. And then, the R&D expense pick-up this quarter, I mean, is that -- is it fair to say that's a direct indication that the enrollment for the trial is going, let's say, better than initially expected?
Brian Sullivan: I would say it's just in line with what we expected. So, as you enroll more patients, you have certainly expenses associated with that. As more patients are on the drug, there's more expenses associated with that. And so, I think what we've reported is pretty consistent with what the expectations have been for our expenses.
Alex Nowak: Okay. Makes total sense. And then just recently, with enrollment creeping higher here, has there been any major kind of recruitment protocol changes that have been made to the study?
Brian Sullivan: No. So far, so good. It clearly requires a lot of very hands-on work with the sites, ensuring that trial has visibility not only with the principal investigator, but they're typically multiple investigators, sub-PIs that can enroll patients. And so, we have a very deliberate approach to staying in contact with the multiple individuals involved with the study. We're constantly assessing the patients they may have who could potentially be eligible for the study down the road if they progress on their current CDK4/6 therapy. And so, we have multiple ways of gauging what the potential activity could be at the site, and also just multiple ways of ensuring that we're as top of mind as we can, and so far, so good. But we have roughly 220 sites. So that means we have to stay in touch with a lot of individuals. And -- but we think we have a very good approach to not only execute that, but also keep track of it. And then, to the extent that we see any site that may be not living up to our expectations, we're following up with them and digging into any potential obstacles that they may think they have that could be preventing them from screening patients.
Alex Nowak: All right. Well, great to hear. Appreciate the effort. Thank you.
Brian Sullivan: You're welcome.
Operator: There are no further questions at this time, so that concludes our Q&A session. I would like to turn the floor back over to Brian Sullivan, CEO, for closing comments.
Brian Sullivan: Well, thanks again for participating in our call today and for your ongoing support. We'll be participating in the upcoming Stifel Healthcare Conference and Jefferies London Healthcare Conference next week, and look forward to hopefully seeing many of you there. Good-bye.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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