Altamira Therapeutics - H1 2024

Transcript

Operator (participant)

Good morning, and welcome to the Altamira Therapeutics First Half 2024 and Business Update Conference Call. On today's call are Thomas Meyer, Altamira's Founder, Chairman, and Chief Executive Officer, and Covadonga Pañeda, Altamira's Chief Operating Officer. Earlier today, Altamira issued a news release with the first half financial results as well as comprehensive business update. The release is available on the company's website at www.altimatherapeutics.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 its strategies or expectations. Forward-looking statements are based on management's current expectations and beliefs, and involves 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 20-F 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 it should not be relied upon as representing its views as of any subsequent date. While it may elect to update these future forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even if its views change. With that, I'll hand the call over to Altamira Therapeutics CEO, Thomas Meyer. Please begin.

Thomas Meyer (CEO)

Thank you, operator. Hello, everyone, and thank you for joining our first half 2024 financial results and business update call. I will kick off the call by providing an overview of recent corporate developments. Our Chief Operating Officer, Covadonga Pañeda, will then discuss the progress in our new core business of RNA delivery. Finally, I will discuss our financials and outlook for 2024 before opening the call for any questions. In 2021, we entered the field of RNA delivery through the acquisition of Trasir Therapeutics and initiated our strategic repositioning around Trasir's exciting peptide-based nanoparticle technology for extrahepatic RNA delivery. Looking back, this was definitely the right decision to take, although it has taken us longer than expected to harness the potential of the Trasir technology, which we now call our OligoPhore and SemaPhore platforms.

I'm pleased to say that we have made great progress and continue to gain momentum with our RNA delivery programs. This shows in various forms. Fresh in vivo data, recently published in Nature Immunology, a top-ranking scientific journal, show dramatic reductions in cancer growth following treatment with ZBTB46 mRNA, delivered with our SemaPhore nanoparticle technology. Development of both the OligoPhore and the SemaPhore platforms, as well as of our AM-401 and AM-411 flagship programs in KRAS-driven cancers and in rheumatoid arthritis, is progressing, benefiting from our new access to lab space at the Switzerland Innovation Park in the Basel area. At the same time, we are evaluating our platforms for use in cardiac regeneration and for mRNA vaccines in joint projects with two partners. Through our business development activities, we are exploring and discussing additional exciting collaboration opportunities with other pharma and biotech companies.

While we progress with our RNA delivery activities, we keep working towards completion of our strategic repositioning by divesting or licensing out our legacy assets. We already divested part of our Bentrio nasal spray business by retaining a 49% stake and additional economics from share of licensing revenues, and in case of a sale, we will still participate significantly in the upside of this business. The main focus of our current partnering activities is on AM-125, our betahistine nasal spray for the treatment of vertigo. In connection with the repositioning, we have also been optimizing our cost structure, significantly reducing the cash burn rate and contributing to this, further simplifying the group structure. Ultimately, the goal will be to have a much different business model.

Compared to the development of drug products, we expect to operate a much less capital-intensive business based on revenues from contract development and revenue streams from licensing rights to our RNA delivery technology. Last week, we raised in a public offering of common shares, gross proceeds of $4 million to strengthen our financial position and support the ongoing transition to the new business model. The shares were issued together with warrants, which could provide us with up to $8 million in additional cash upon reaching certain development and business milestones. Following this summary, I'm handing the call over to Covadonga Pañeda, our COO, who will provide you with a more detailed update on our RNA delivery business. Cova?

Covadonga Pañeda (COO)

Thanks, Thomas, and good morning, everyone. These are exciting times to work in the RNA space. Research and development activities in Altamira's core business, RNA delivery, built on our peptide-based OligoPhore and SemaPhore nanoparticle platforms, continue to progress. The key focus during the first half of the year has been on nanoparticle formulation and process development around the platforms, as well as on the evaluation and development of nanoparticles for delivery of specific siRNA and mRNA payloads for our partners and for our two flagship programs, AM-401 and AM-411, the treatment of KRAS-driven cancers and rheumatoid arthritis, respectively. Evidence for the effectiveness and versatility of Altamira's RNA delivery platforms keeps growing, as shown by two recent scientific publications.

A research group from Washington University presented in a preprint form, publication, the results of a study showing that administration of SOD2 mRNA delivered systemically with SemaPhore nanoparticles to mice with abdominal aortic aneurysm or AAA, resulted in a significant reduction in aorta dilation, delayed rupture, and promoted a significant improvement in survival rate. AAA is an inflammatory disease involving oxidative stress caused by excessive levels of a reactive oxygen species, which result in abnormal enlargement of the abdominal aorta and rupture, maybe life-threatening. In the second study, published in Nature Immunology, SemaPhore was evaluated as a delivery vehicle for mRNA in the context of cancer. Here, another research group from Washington University showed that systemic administration of ZBTB46 mRNA with SemaPhore nanoparticles to mouse models of sarcoma and metastatic breast cancer, resulted in sustained ZBTB46 expression, restored immunostimulatory tumor microenvironment and highly significant reduction in tumor growth.

When ZBTB46 mRNA nanoparticles were combined with an immune checkpoint inhibitor treatment, such as anti-PD-1, outcomes were even more pronounced, showing an anti-PD-1 response in both the anti-PD-1 responsive sarcoma model and in the anti-PD-1 refractory breast cancer model, generating long-term complete remission of tumor in many of the treated animals. Extended monotherapy with ZBTB46 nanoparticles produced complete remission, even in the mice refractory to anti-PD-1 treatment. Mice with sarcoma eliminated through treatment did not develop additional tumors following repeated challenges, indicating the development of a protective immunological memory. Meanwhile, Altamira's own development work has resulted in significant enhancement of nanoparticle stability, which has been one of the key challenges in handling and transport of RNA formulations.

Thanks to its newest flow process production method, the company obtained formulations of OligoPhore nanoparticles that are stable in liquid form when stored at four degrees for a period of at least one month. These formulations were, in addition, able to withstand shaking stress without significant physicochemical changes. The ability of the nano formulations to maintain their attributes during shaking stress is essential for transportation and one of the key limitations of lipid nanoparticles, the most common type of RNA delivery vehicle. Focusing on our proprietary development programs, AM-401 and AM-411, Altamira filed during the first half of 2024 several patent applications with the U.S. Patent and Trademark Office. This aimed to complete the existing intellectual property and extend directional protection. For AM-401, coverage of different KRAS mutations in cancer treatment with nanoparticles comprising the OligoPhore platform and a single siRNA sequence, Poly-KRASmut is sought.

In vitro data confirm the ability of Poly-KRASmut siRNA to knock down KRAS carrying the following mutations: G12C, G12V, G12D, G12R, G12A, and A146T, which account for the majority of the KRAS mutations in pancreatic, colorectal, and non-small cell lung cancer. For AM-411, coverage of nanoparticles comprising siRNA sequences targeting the p65 protein, a component of the NF-kappaB transcription factor and OligoPhore is sought. Activation of p65 has been observed in multiple types of cancer as well as in many inflammatory diseases. For instance-... p65 is a well-known key checkpoint in rheumatoid arthritis inflammation, and starts to regulate key biological processes that become dysregulated in rheumatoid arthritis.

The company aims to advance both AM-401 and AM-411 towards an investigational new drug application filing with the FDA in 2026, and to outlicense them either following the IND or after phase one clinical trial at the latest. Altamira is pursuing a picks and shovels strategy with the RNA delivery business. This strategy is based on the licensing of its platform technology to partners in the biotech and pharma industry for the use with their own RNA payload. The first of such collaborations have been set up. With Heqet Therapeutics, a spin-off from King's College London, Altamira is working on nanoparticles based on the OligoPhore platform and comprising certain non-coding RNAs for the regeneration of damaged heart tissue following a myocardial infarction in animal models. With Belgium-based Univercells Group, Altamira is evaluating the use of the SemaPhore platform for delivery of mRNA vaccine.

Thanks to lower mRNA loss during cell entrance, the nanoparticles may allow for using lower doses and thus resulting potentially more effective and efficient vaccines. Upon positive outcomes of this evaluation, Altamira and its partners intend to discuss and negotiate licensing agreements. Through its business development activities, the company is pursuing additional collaboration opportunities with other pharmas and biotech companies. In August 2024, part of the company's expanding research and development team moved to Switzerland Innovation Park in Allschwil, near Basel. At the new location, the company has access to modern and well-equipped lab facilities to support its growing activity. I will now turn the call back to Thomas.

Thomas Meyer (CEO)

Thanks, Cova. I will discuss now our two main legacy assets, the Bentrio drug-free nasal spray for allergy, and our AM-125 betahistine nasal spray for vertigo and other disorders of the central nervous system. Our associate, Altamira Medica AG, made further progress in implementing its growth strategy with Bentrio, a drug-free, preservative-free nasal spray for the treatment of allergic rhinitis. We are very pleased that Medica agreed with two of its international distributors to expand their exclusive distribution territories. With Nuance Pharma, to extend the territory across Southeast and East Asia. Under the amended agreement, Nuance territory will expand from China, Hong Kong, Macau, and South Korea, to also include Singapore, Malaysia, Thailand, the Philippines, Indonesia, Vietnam, and Taiwan, with a combined population of greater than 630 million people.

Nuance has been marketing Bentrio since late 2022 in Hong Kong, and recently submitted the request for marketing approval for mainland China. We expect Nuance to launch Bentrio in mainland China in 2025, and this huge market to become a key growth driver in the years ahead. Medica will be entitled to a milestone payment of $1 million upon Chinese marketing approval. With Pharma Nord, to extend the territory from Norway to also include Sweden and Denmark, which together have a population of 16.5 million people. Pharma Nord launched Bentrio successfully in Norway in 2024, and intends to introduce the product to Sweden and Denmark in 2025. Scandinavia is a very interesting market for nasal sprays in general.

The two licensed territory expansions are a strong mutual vote of confidence by the partners, and we look forward to further growing the Bentrio franchise with them. Meanwhile, discussions and negotiations for the marketing and distribution of Bentrio in the U.S., Europe, and other key markets are ongoing. With our second nasal spray program, AM-125, for the treatment of acute vestibular syndrome, AVS, and potentially other disorders of the central nervous system, we continue to work towards partnering of the asset. AM-125 has been developed to help acutely busy patients get back on their feet more quickly. The drug product is a reformulation of betahistine, a histamine analog, which, in the traditional oral formulation, is the standard of care treatment for vertigo in many countries around the world.

A phase 2 clinical trial in Europe demonstrated that a four-week treatment course with AM-125 in AVS patients was well tolerated and helped to accelerate vestibular compensation, enabling patients to regain balance and recover faster. In the U.S., where oral betahistine exceptionally has not been marketed for decades and no comparable product exists, Altamira received in summer 2023 IND clearance from the FDA for a phase 2 clinical trial in Benign Paroxysmal Positional Vertigo, BPPV, which is the most frequent type of AVS. BPPV accounts for 17%-42% of all diagnosed vertigo cases. U.S. healthcare costs associated with the diagnosis of BPPV alone approach $2 billion per year. Now, a few words about the simplification of our corporate structure.

Since the partial divestiture of the Bentrio business in late 2023, we have continued our efforts to streamline our group structure and align it with our strategic positioning around the RNA delivery platforms. In the first half of 2024, we transferred our Irish subsidiary to Altamira Medica AG, and merged two of our subsidiaries in Basel to the combined entity, which is called Altamira Therapeutics AG, and which continues to serve as the core operating subsidiary. Following this restructuring, the Altamira Group comprises the parent company, Altamira Therapeutics Limited in Hamilton, Bermuda, and its subsidiaries, Altamira Therapeutics AG in Basel, Altamira Therapeutics Inc. in Newark, Delaware, Otolanum AG in Basel, as well as the associated company, Altamira Medica AG. This means that we are no longer using the name of Auris Medical.

Upon the partnering or licensing out of AM-125, which is currently concentrated in our Otolanum AG subsidiary, we expect to do one more final step of simplification. Now, turning to our financials. Before reviewing our financial results for the first half of 2024, I would like to note that the financial statements are presented for the first time in U.S. dollars rather than Swiss francs. Further, I need to highlight that the income statement for the first half of 2023 has been revised retrospectively due to the partial divestiture of the Bentrio business. The Bentrio activities are reported now as discontinued operations. Continuing operations thus comprise the RNA delivery development programs, as well as those related to AM-125. Overall, we were pretty much on track with expenses in the first half of 2024.

Total operating loss from continuing operations was $3.9 million in the period, compared against $3.6 million in the first half of 2023. The increase was primarily related to higher expenditures on research and development, which increased 32.6% to $2 million. This was partially compensated by lower general and administrative expenses, which decreased 11.7% to $2 million. Net loss from continuing operations reached $4.3 million in the first half of 2024, which was 4% lower than in the corresponding reporting period in 2023. Finance expense decreased markedly from $0.9 million to $0.2 million. On the other hand, the company recorded a pro rata loss of its associate company, Altamira Medica, of $0.2 million.

In the first half of 2023, there was no such impact as Altamira Medica was deconsolidated and classified as associate only upon its partial divestiture in November 2023. The company's net loss for the first half of 2024 amounted to $4.3 million, which was 27% lower than the $5.9 million recorded in the first half of 2023. During the first six months of 2023, the company had recorded an after-tax loss of $1.4 million from discontinued operations. There was no such loss recorded in the first half of 2024. Turning to the balance sheet. Here, we are not seeing major changes compared to December 31, 2023. Shareholders' equity amounted to $6.3 million as of June 30, 2024, compared with $7.7 million at year-end 2023.

There was no financial debt outstanding at either time point. Cash used in operations decreased from $8.4 million in the first half of 2023 to $3.2 million in the first half of 2024. Financing activities provided $8.4 million in the first six months of 2023, versus $2.5 million in the first six months of 2024. Cash and cash equivalents on June 30, 2024, totaled $65,000, compared with $55,000 at June 30, 2023. Altamira expects total cash needs in 2024 to be in the range of $5.8-$7 million, which is slightly lower than initially budgeted. During the third quarter of 2024, the company raised $0.7 million from share issuances under the 2022 commitment purchase agreement with Lincoln Park Capital Fund.

In addition, last week, we received gross proceeds of $4 million, net $3.3 million, upfront from a public offering of common shares and pre-funded warrants in lieu of common shares, which have two types of milestone-linked common share warrants attached. These milestones are defined as positive biodistribution data for our AM-401 and AM-411 nanoparticles, which we seek to obtain in the course of 2025. The entry into one or more agreements relating to the further development and commercialization for AM-401 or AM-411, which we seek to obtain, as mentioned, upon opening of an IND by the FDA in 2026 or completion of a phase 1 clinical trial at the latest. Both milestones will be very significant for the company and could provide additional funding of up to $8 million.

It is, however, to be noted that there can be no guarantee that the warrants will be exercised by their holders. With the current cash as well as expected proceeds from our RNA delivery project revenues, our associate, Altamira Medica, the partnering of AM-125 as well as from other sources, we consider our cash needs to be covered for the next twelve months. With this, let me conclude with a brief summary and some perspectives. At the beginning of today's presentation, I mentioned the growing momentum in our new core business of RNA delivery. It is very exciting to see the significant progress that we have been making over the past few months and quarters in our R&D. I'm really proud of the great achievements of our strong and highly motivated RNA team, both with siRNA and mRNA applications.

Progress in the latter is particularly noteworthy since mRNA formulation and delivery are generally considered to be challenging. Not the least due to such challenges, the use of mRNA for therapeutics has barely begun. We have just scratched the surface of something that will become a very powerful approach in human medicine. From our business development contacts, we are seeing a very significant potential for our OligoPhore and SemaPhore platforms. We certainly still have some way to go with our R&D. There will soon be much more in vivo work, with biodistribution being a key focus for our activities. I'm glad that going forward, we can benefit from our work from the well-equipped lab facilities at the Switzerland Innovation Park, as well as from our growing network of specialized external service providers. As for our legacy assets, our associate, Altamira Medica, keeps executing on its growth strategy.

We expect to see a significant increase in revenues in 2025 from distributors, driven by the anticipated launches in mainland China, Southeast Asia, Sweden and Denmark, as well as certain other countries. Given the strong efficacy and good tolerability of Bentrio in allergy, we see a good partnering potential in other key markets. Meanwhile, we are positioning AM-125 for partnering as an innovative reformulated drug product with significant sales potential in vertigo, but also in other disorders of the central nervous system. In short, we look forward to advancing our projects towards important new milestones and to updating you with further reports about our progress. With that, I would now like to turn the call back to the operator to open the lines for questions.

Operator (participant)

Certainly. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Again, star one one on your telephone. Our first question will be coming from Hunter Diamond of Diamond Equity. Hunter, your line is open. Again, Hunter Diamond of Diamond Equity, your line is open, Hunter.

Hunter Diamond (CEO)

Yes, congratulations on the results. Most of my questions were answered, but my question relates to Bentrio's distribution in Sweden and Denmark. Now it's been launched in Norway. Can you discuss the marketing approach in Norway or partnerships to replicate the success you've had in Norway within the new markets?

Thomas Meyer (CEO)

Hi, Hunter. Yeah, Pharma Nord is pursuing here a very good strategy. They are actually working with a network of physicians. So this is allergists and ENT physicians. So to familiarize them with the product. At the same time, they have a sales force calling on the pharmacies. They have also been using social media quite extensively, and just one example was that TikTok event, so which was just three minutes, something like that, which generated within three or four days about 700,000 views and 500 or 600 comments. So it's an approach that plays on various levels. Now, Pharma Nord has pretty detailed plans here also for Sweden and Denmark.

I mean, each country, of course, is a little bit different. However, they're all Scandinavian, and so therefore, there are also benefits here from applying, let's say, marketing materials and experiences to the other countries, so the whole team there is pretty motivated to get going next year, and of course, at the same time, continue the ramp-up in Norway. I mean, we all know from experience that this is a process that takes several years here before you can have a really significant share of the market. But the start has been very promising, and I think it's also a good sign that Pharma Nord was very positive and very keen actually on expanding the territory.

Hunter Diamond (CEO)

Great. Thank you. And the second question, I don't know how much it relates to you, but Moderna, and I'm sure you know, some of these large mRNA companies have cut their R&D budgets. Is there any effect on your business or any thoughts on that, like how it affects smaller enterprises, related to larger companies? Maybe it's a benefit to smaller businesses, that there's less R&D at larger corporations.

Thomas Meyer (CEO)

Yeah. Well, I think there is still a lot of work and activity at companies like Moderna. I mean, I'm certainly not the right person here to comment on Moderna's R&D plans whatsoever. I mean, what I can say is simply that mRNA the use of mRNA here for therapeutics and of course also vaccines still holds tremendous potential. I would rather see this a little bit here as a focusing strategy. I mean, of course, you can pursue many different projects at the same time but it requires obviously certain resources. Now, what we see here is clearly the upside with mRNA. I mean, you can really you boost here certain biological activities.

And when you think of small molecules, I mean, the majority, vast majority of small molecules, they inhibit or block things. And for that, you can use siRNA, and siRNA has a very good potential. Now, for small molecules to actually enhance or boost certain activity, that has been always a very, very big challenge. And now with mRNA, you can do this in a very targeted and specific fashion, and that's going to really revolutionize medicine. It's not just me saying this. I'm definitely not the most, let's say, knowledgeable person to comment on this, but I mean, this is clearly what we feel, what we hear at conferences. mRNA, that's going to be a bright future.

I think what we have read or heard here about some program adjustments. That is not deviating at all from the long-term trend that is going on.

Hunter Diamond (CEO)

Great. No, exactly. I just was curious because you're more immersed in the area from conferences, so I was just wondering your take on it. Okay, thank you for taking my questions. I'll open the line for other questions.

Thomas Meyer (CEO)

You're welcome. Thank you.

Operator (participant)

And again, as a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. I'm showing no further questions. We'll now turn the call back over to management for any concluding remarks.

Thomas Meyer (CEO)

Yeah. Thank you, Antonia. I believe we have covered all major topics today, so I will simply thank everyone for attending this morning's call and for the questions, and I will wish you a terrific day ahead. Thank you. Goodbye.

Operator (participant)

This concludes today's conference call. Thank you for participating. You may now disconnect.