Altamira Therapeutics - H1 2023

Transcript

Operator (participant)

Good morning, and welcome to the Altamira Therapeutics H1 2023 financial results and business update conference call. On today's call are Thomas Meyer, Altamira Therapeutics Founder, Chairman, and Chief Executive Officer, and Covadonga Pañeda, Chief Operating Officer. Earlier today, Altamira Therapeutics issued a news release with the H1 2023 financial results, as well as a comprehensive business update. The release is available on the company's website at ir.altamiratherapeutics.com and has been filed with the SEC. During today's call, the company will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that address future operating, financial, or business performance or our strategies or expectations.

Forward-looking statements are based on management's current expectations and beliefs and involve significant risks and uncertainties that could cause actual results, developments, and business decisions to differ materially from those contemplated by these statements. These risks and uncertainties include, but are not limited to, the timing and conduct of our clinical trials, the clinical utility of our product candidates, the timing or likelihood of regulatory filings and approvals, our intellectual property position and our financial position, as well as those described in the risk factors section in our annual report on Form 6-K and future filings with the Securities and Exchange Commission. In addition, any forward-looking statements represent the company's views only as of today and should not be relied upon as representing its views as of any subsequent date.

While it may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even when its views change. With that, I will hand the call over to Thomas Meyer.

Thomas Meyer (Founder, Chairman of the Board, and CEO)

Thank you, operator. Hello, everyone, and thank you for joining our H1 of 2023 financial results and business update call. Together with our Chief Operating Officer, Covadonga Pañeda, I'm pleased to be providing an update on the advancements that we have made during the H1 of this year, which includes updates on our clinical activities, recent strategic partnerships, positioning our legacy business for future opportunities, corporate developments that make us a stronger company today, as well as our financials. We will then address questions that we receive from investors. For investors right now, macroeconomic uncertainty continues to prevail on a global scale, and also there is softening in many areas: labor, consumer demand, housing markets. I still believe in the resilience of our economy. In the biotech sector, what we are seeing is a sense of renewed optimism.

Many companies within our industry continue to make positive strides. What's more, the future looks promising, thanks to exciting new discoveries and development, making this an opportune time to strengthen product offerings and pipelines through strategic partnerships and acquisitions. We continue to make headway in our RNA therapeutics business this year. This has been a process of repositioning the company that we initiated last year to generate long-term shareholder value. The evolution of our company includes leveraging our various pipeline assets, which we have been very transparent and methodical about. RNA-based therapeutics represent a highly attractive and promising market. In fact, Light Market Research estimates that sales of RNA-based therapeutics based on RNA interference and antisense oligonucleotides are expected to reach $25.1 billion by 2030.

Given that the corresponding figure for 2021 was just $4.9 billion, the industry is registering a compound annual growth rate of 17.6%. This is only one part of the market and opportunity, as it does not even include any sales of mRNA therapeutics. RNA-based therapeutics hold vast promise for addressing numerous diseases that presently lack optimal or viable treatment options. Thus, our focus in the long term is to hone in on tools for RNA delivery through therapeutic targets beyond the liver and efficient endosomal releases inside target cells. With regards to our legacy assets centered on OTC consumer health and inner ear therapeutics, we have achieved significant milestones in the clinical and regulatory domains. Notably, our clinical trial featuring Bentrio for seasonal allergic rhinitis successfully met its primary endpoint, adding to the existing body of compelling efficacy data.

In addition, we were pleased to report that the FDA cleared an investigational new drug, IND, our AM-125 drug, which targets acute vestibular syndrome. These milestones are important elements in our ongoing partnering discussions. Our intent is to divest or partner our legacy assets, Bentrio and AM-125, for further development and commercialization in the context of our strategic pivot to RNA delivery technology. To this end, our discussions are ongoing, and we'll provide you with updates as they become more concrete and mature. Concurrently, we achieved significant strides in elevating awareness and recognition of our OligoPhore SemaPhore platforms, particularly in the realm of extrahepatic RNA delivery and efficient endosomal release. We recently announced our collaboration with Heqet Therapeutics to pursue the development of cardiac regeneration treatments, harnessing the power of RNA through our OligoPhore platform.

This serves as an encouraging testament to the growing interest in our technology, and we hold a strong conviction regarding the potential for forging additional partnerships with other biopharmaceutical companies. And now I will pass the call over to our Chief Operating Officer, Covadonga Pañeda, who will talk more about that and our RNA programs. Cova?

Covadonga Pañeda (COO)

Thanks, Thomas, and good morning, everyone. Altamira's progress in advancing RNA delivery technology to our OligoPhore and SemaPhore platforms is meaningful. These platforms are built upon a patented peptide designed to deliver RNA in nanoparticles to tissues beyond the liver and efficiently release them into target cells. Recently, we received further external validation of this technology through two in vivo studies conducted by independent research teams at Washington University School of Medicine in St. Louis. In one study, the research team shared animal data showing that nanoparticles based on our SemaPhore platform, loaded with ZBTB46 mRNA, efficiently restrained tumor growth. What's more important is that the introduction of ZBTB46 mRNA specifically into the tumors of treated animals prompt the creation of an immune stimulating environment around the tumor, further limiting its growth.

This effect was notably enhanced when combined with anti-PD-1 immune checkpoint inhibition therapy, indicating that ZBTB46 mRNA delivered by SemaPhore nanoparticles could serve as a valuable supplementary therapy alongside immunotherapy for cancer management. This exciting development highlights the potential of our technology in the field of cancer treatment. In a second study, researchers administered nanoparticles based on SemaPhore, loaded with an mRNA encoding for DNMT3B, a protein known to be involved in cartilage homeostasis, directly into the joints, that is, intra-articular administration of mice with meniscal injuries. The outcome was quite promising. There was a robust increase in DNMT3B protein levels, and the mice experienced significant reduction in bone sclerosis, cartilage degeneration, and synovitis. In addition, the functional assessment revealed that the treated mice showed significantly decreased pain sensitivity and improved weight bearing in the active treated mice compared to controls.

The research serves as a testament of the potential of RNA therapy, and we couldn't be prouder of their achievements. These findings also bolster unwavering commitment to advancing RNA therapy and underscore the significant impact that it can have on improving healthcare outcomes. Together with our partners and researchers, we remain steadfast in our mission to harness the power of RNA for the betterment of patients worldwide. At the same time, we advanced the work on our two flagship development programs, AM-401, for the treatment of KRAS-driven tumors, and AM-411, for the treatment of rheumatoid arthritis, targeting NF-κB, aiming for an IND submission in 2024. We plan to out-license the two programs either following IND or after a phase I clinical trial at the latest.

Importantly, we filed a provisional patent application related to the single polyvalent siRNA sequences, which is part of AM-401, can target different KRAS mutations. We call this polyKRASmut. If granted, the patent would extend IP coverage for the programs to 2042. In line with our strategy of leveraging OligoPhore SemaPhore throughout licensing and partnering, rather than commercializing our own products, we have significantly expanded our business development activities. This includes the engagement of Maria Grunwald, Ph.D., a highly experienced business developer based in Boston, as a senior business advisor. As Thomas mentioned earlier, on 5 July 2023, we announced that we were entering into a collaboration, an option agreement with Heqet Therapeutics, a biotech spin-out from King's College London.

Our collaboration centers on the testing of nanoparticles utilizing our innovative OligoPhore delivery platform, combined with specific non-coding RNA, for the purpose of regenerating damaged heart tissue, post myocardial infarction in animal models. Should these experiments yield successful outcomes, Heqet will have an option under certain conditions to initiate negotiations with Altamira for a license, granting access to our technology and intellectual property. This, in turn, would enable Heqet to advance their discoveries into development of therapeutics for cardiac regeneration. The potential of cardiac muscle regeneration remains a topic of great interest to the global scientific and medical community, given the substantial complications and elevated mortality rates associated with myocardial infarction. We firmly believe that Altamira's peptide-based OligoPhore platform, tailored for RNA delivery, possesses the capacity to serve as a secure and efficient conduit for controlled, localized cardiac regeneration.

In late May, we shared some exciting news about an article published in the International Journal of Molecular Sciences. This paper, titled "Peptide-Based Nanoparticles for Systemic Extrahepatic Delivery of Therapeutic Nucleotides," was authored by researchers from Washington University in St. Louis, University of California, Los Angeles, and our very own Chief Scientific Adviser, Samuel Wickline, who discussed the challenges when trying to safely and efficiently deliver important RNA molecules to cells outside the liver. These RNA molecules have great potential for treating various diseases. The difficulties lie in their natural instability and getting them inside cells. While there are some delivery methods that work well for liver-related conditions, they aren't as effective for other parts of the body. Additionally, even when one manages to get RNA into cells, getting it out of the endosome and into the right part of the cell can be tricky.

In recent years, science made tremendous strides in understanding how cells react to RNA treatments, but major challenges have remained for diseases that aren't liver-related. That's where our peptide nanoparticles, like OligoPhore and SemaPhore, come into play. They offer a promising way to deliver RNA treatments to diseases beyond the liver and ensure they get where they are needed. I will now turn back the call to Thomas.

Thomas Meyer (Founder, Chairman of the Board, and CEO)

Thank you, Cova. Now, let's discuss our legacy assets, the Bentrio drug-free nasal spray, and our AM-125 betahistine nasal spray for vertigo. In the month of May, we shared exciting findings from the randomized controlled NASAR clinical trial evaluating Bentrio nasal spray in patients with seasonal allergic rhinitis, short SAR. To study the efficacy of Bentrio, the NASAR trial enrolled 100 patients in Australia who were randomized at a 1-to-1 ratio to receive either Bentrio or saline nasal spray for two weeks via self-administration, three times per day or as needed. For eligibility, patients had to have a baseline reflective total nasal symptom score, or rTNSS, of at least five points out of 12, referring to the worst level of nasal congestion, sneezing, nasal itching, and rhinorrhea, which is a runny nose, within the past 24 hours, averaged over a one-week, treatment-free run-in period.

The primary efficacy endpoint was defined as the difference in the average rTNSS over the subsequent two-week treatment period between Bentrio and saline nasal spray, which is the current standard of care when it comes to drug-free allergic rhinitis management. The NASAR results demonstrated for Bentrio a statistically significant and highly relevant clinical improvement in efficacy over saline nasal spray. The improvement from baseline was 1.9 points in the rTNSS, which was 1.1 points or 2.4-fold larger than saline. Both outcomes came in well above the minimal clinically important difference of 0.2-0.8 points. 63% of Bentrio-treated study participants rated treatment efficacy as very good or good, compared to just 29% of saline spray users.

Whereas a saline nasal spray aims to rinse out allergen particles, Bentrio forms a thin protective layer, which prevents contact of those particles with the nasal mucosa and helps to remove them through natural mucociliary clearance. As already demonstrated in a previous trial, Bentrio stays for about 3.5 hours within the nasal cavity, where it can exert its protective effects. In contrast, saline spray is present for only about 1 hour and provides narrower distribution and less coverage within the cavity. We expect to release further results from the NASAR trial shortly and to submit an article for publication in a peer-reviewed medical journal. The data readout from the NASAR trial completes the Bentrio development program in allergic rhinitis.

Previous clinical trials demonstrated already safety, tolerability, and efficacy of Bentrio in patients exposed to grass pollen or house dust mites under controlled conditions, and the extended nasal residence time of more than three hours in human volunteers. The accumulated data suggest that Bentrio, based on a drug-free and preservative-free formulation, can help to effectively reduce the most common symptoms of allergic rhinitis. The reduction of symptoms was similar to that observed in response to medicated nasal sprays, but without the tolerability issues frequently experienced with the use of such sprays. In July, we announced an exclusive agreement with Pharma Nordic for the marketing and distribution of Bentrio in Norway and potentially further Scandinavian countries.

The collaboration agreement will allow Pharma Nordic to market and commercialize Bentrio in Norway, beginning in the Q1 of 2024, and subject to meeting certain milestones, also in Sweden, Finland, and Denmark later on. We look forward to building Bentrio together with Pharma Nordic into one of the leading brands for allergic rhinitis management in Scandinavia. Discussions with potential marketing and distribution partners for the U.S. and other key markets have continued to move forward and are still ongoing at this time. In the context of these partnering discussions, we have made the decision to suspend preparations for launching Bentrio in the U.S. on its own, and minimize marketing and sales activities in Europe as previously communicated.

It's worth noting that in 2023, the U.S. sales of over-the-counter allergy remedies are estimated to reach close to $4 billion, representing a major opportunity in a non-medicated, preservative-free treatments category. Together with our marketing and distribution partners, we are looking forward to making Bentrio available as an effective and safe treatment option to help patients deal with the daily burden and discomfort associated with allergic rhinitis. With regards to our AM-125, on June 29th, following review of our IND application for AM-125, we received from the FDA a study may proceed letter. The IND clearance means that the proposed phase II clinical trial with AM-125 in the treatment of benign paroxysmal positional vertigo, BPPV, which is the most common form of vertigo, has been authorized and may be conducted in the U.S. This has been a major step in our development program.

An earlier phase II clinical trial conducted in Europe, the TRAVERS trial, demonstrated that a four-week treatment course with AM-125 in vertigo patients following surgical removal of a tumor behind the inner ear, was well tolerated and helped to accelerate vestibular compensation, enabling patients to regain balance and recover faster. The new phase II trial is designed to demonstrate AM-125's tolerability and clinical utility also in BPPV. As previously announced, we intend to divest or partner the AM-125 program for further development commercialization in the context of our strategic pivot to RNA delivery. To this end, we have initiated discussions with a number of potential partners based on a structured approach. It is probably worth mentioning that vertigo and balance problems are among the most frequent and increasing health issues in the general population.

In 2016, 36.8 million adults, or 15.5%, reported a balance problem in the past year, compared to 24.2 million or 11.1% in 2008. Betahistine, the active substance of AM-125, is the standard of care treatment in oral form for vertigo in dozens of countries worldwide, but it's not marketed in the U.S. We believe that AM-125, which offers much better bioavailability than betahistine tablets, holds great potential, both in existing betahistine markets, but in particular, also in the U.S. Turning next to our financial highlights for the H1 of 2023.

Revenues for the H1 of 2023 were CHF 0.01 million, compared to CHF 0.3 million for the H1 of 2022, reflecting the waning of SARS-CoV-2 infections, and more importantly, the aforementioned strategic decision to temporarily reduce commercial activities around Bentrio in anticipation of a partnering transaction for key markets. Total operating loss for the first six months of 2023 was CHF 4.6 million, compared with CHF 8.4 million for the first six months of 2022, a reduction of 45.5%. The improvement was primarily driven by lower expenditures for research and development as clinical trials wound down, and for marketing and sales as commercial activities were reduced. General and administrative expenses slightly increased in the H1 of 2023, as higher costs related to capital market projects outweighed reductions in admin expenditures.

The net loss for the H1 of 2023 was CHF 5.4 million, compared with CHF 8.2 million for the H1 of 2022. Financial liabilities decreased from CHF 5.9 million at the end of 2022 to CHF 3.1 million at June 30. Shareholders' equity improved at the same time from a deficit of CHF 8.3 million to a deficit of CHF 1.8 million. Cash and cash equivalents on June 30, 2023, totaled CHF 50,000, compared with CHF 15,000 at December 31, 2022.

In early July 2023, we raised $5 million in equity through the public offering of 11.1 million common shares or pre-funded warrants at $0.45 each, and the same number of warrants with an exercise price of 0.4 CHF and a 5-year duration. The transaction yielded net proceeds of 3.7 million CHF. As a result, we expect total cash need in 2023 to be in the range of 12-14 million CHF, and in the 12 months from the issuance date of our most recent financial statements here, to be in the range of 12-14 million CHF. I would now like to turn to answering the questions that were submitted to us for today. The first question is about our betahistine program. Who are the competitors?

Why do you think AM-125 is going to be a success in the U.S. market? The competitive landscape is different between the U.S. and the rest of the world when it comes to dizziness treatments. In the U.S., dizziness or vertigo today is treated primarily with vestibular depressants like meclizine or benzodiazepines, which are generic drugs. They typically sedate patients to deal with immediate symptoms like nausea or vomiting. However, they should not be taken for more than three days since they tend to suppress vestibular compensation and healing. These drugs are also known in the rest of the world, but one important difference, that is, there, oral betahistine is available as another treatment option. Actually, it is considered the standard of care in most of these markets. Annual sales of oral betahistine are currently about $450 million.

Unlike the vestibular suppressants, betahistine does not sedate patients. It actually increases alertness and enhances vestibular compensation. There are two major players today in the oral betahistine market, which are Viatris in Europe, Canada, and Australia, and Abbott in probably more than 100 countries around the world. With AM-125, we have a formulation for intranasal application, which has a much higher bioavailability than oral betahistine, as mentioned. Based on this, we expect AM-125 to help grow the market and to take share from oral betahistine in the rest of the world. Now, for the U.S., we see the lack of oral betahistine as a great opportunity since doctors, neurologists, ENT physicians, and others, they clearly see the need for non-sedating vertigo treatments that support vestibular compensation rather than suppress it.

It's very unusual that a drug that is so frequently used worldwide is not on the market in the US. We expect the AM-125 to fill this important gap in the US market. The next questions are about RNA activities, and they will be answered by Dr. Pañeda. The first one is: If your platforms are truly exceptional, how come that you still need to make a lot of efforts to make it known? Cova, please.

Covadonga Pañeda (COO)

The field of RNA therapeutics is in constant evolution, and drug and biotech companies are continuously assessing different technologies to ascertain the best option to deliver their RNA-based drugs. Up to now, the field has been extremely focused on lipid nanoparticles, or as they are known, LNPs, and for good reason. The progress achieved with LNPs has been spectacular. The technology is very powerful. However, this technology has also limitations, especially when it comes to delivering RNA to target tissues beyond the liver and regarding the release of the RNA cargo within target cells. Given their good performance for liver delivery, a lot of efforts have been made to modify LNPs in a way that they reach also elusive non-hepatic tissues. Success has been rather limited so far, and in addition, there are quite a few intellectual property issues that come with this technology.

Therefore, pharma and biotech companies have started to explore alternatives. I think that we've made great effort and progress within a relatively short period of time to increase the visibility of our technology within, and especially also beyond, scientific circles. We are very pleased that we have been invited to more and more industry symposia conferences to present our technology. The most recent example is our participation in the RNA Therapeutics and Delivery conference in Berlin, where we are moderating a panel on the future of RNA therapeutics outside the liver and chairing a session on RNA formulation strategies. In parallel to increasing our visibility, we have been engaging in a growing number of business development discussions with biotech and pharma companies. So these discussions we can draw on and show potential partners a large and growing amount of data. The Heqet collaboration has been just the start.

Based on our growing pipeline of leads, we expect to enter into more collaborations as we move forward.

Thomas Meyer (Founder, Chairman of the Board, and CEO)

Okay, thank you. The second question to you is the following: How and, well will you start making money on the RNA business?

Covadonga Pañeda (COO)

There are two main paths for RNA business to start generating money. The first is through collaboration with companies that seek to use our technology to deliver their RNA cargo, and milestones coupled with these deals. This is about granting access to OligoPhore and SemaPhore platforms. Longer term, this will be the key driver for us. The second is through out-licensing our two flagship programs, AM-401 and AM-411. Here, as I already mentioned, we expect to partner them either after filing an IND next year or after phase one. Typically, such transactions include some upfront payments, milestones, as well as royalties.

Thomas Meyer (Founder, Chairman of the Board, and CEO)

Okay, thank you, Cova. The next and final question is about our Bentrio program. There are quite many nasal sprays available for treating hay fever. Since you want to partner Bentrio, the obvious question is, what could be the appeal of such a product to one of those larger OTC companies? Well, it's certainly true that there are quite a few offerings out there for sufferers of allergic rhinitis. Importantly, there is no cure for it, except for desensitization, which is allergen-specific immunotherapy. Most sufferers seek to manage the symptoms by either trying to prevent or reduce exposure to allergens or by seeking to relieve them. Frequently, antihistamines are used, either in form of tablets or nasal sprays. They block or reduce the action of histamines, which the body releases when under attack from allergens.

Now, another drug-based option is the use of corticosteroid sprays, which seek to reduce the inflammatory response. Then there are seawater or saline nasal sprays, which help to rinse the nasal cavity and eliminate allergens. This is a very popular drug-free option. Now, as always, there is some kind of trade-off involved with any of these treatment options. Though some of the drug-based treatments, especially older antihistamines, can make you feel drowsy. Drug-based treatments usually contain some preservatives, which may provoke some sting or burning sensation and may dry out your nasal mucosa. A well-moisturized nasal mucosa is very important for the natural line of defense of the nose. While these drugs sometimes may take a while to start acting, which may be an issue, for example, if you unexpectedly get exposed to allergens and would like to protect yourself ASAP.

On the other hand, the saline nasal sprays are usually well-tolerated as they are physiological, so they top the drug-based options on that account. However, the trade-off is that their efficacy is lower. This is rinsing, and, so you, have this seawater drain off relatively quickly, and you will need to reapply frequently, which is not that practical. Now, for Bentrio, we are seeing an attractive positioning, allowing for significant product differentiation. So Bentrio has a triple mode of action, rapid onset, and several hours of nasal residence time. So its efficacy is approaching that of medicated nasal sprays, yet its safety and tolerability is similar to seawater nasal sprays. So in short, we consider that Bentrio is an attractive product for the management of allergic rhinitis, offering strong, clinically relevant efficacy, rapid onset, and favorable tolerability and safety profile.

We believe this is quite compelling, and we are happy to have received patient feedback supporting this, both in the context of our clinical trials and also from patient testimonials. So this is the end of the Q&A session. So these have been good questions. I hope we could answer them well. I believe we've covered all the highlights thoroughly today, so I will simply thank everyone for attending this morning's call, and we'll wish you a terrific day ahead. Thank you very much.