Good morning, everybody. Welcome to Cynata's quarterly update to cover our recently released quarterly activities report for the quarter completed on the 30th of June. It looks like we still have people joining the webinar, so I will not commence formally for a few seconds yet. For now, just to explain that we will go through a fairly brief presentation just to summarize the key highlights of the recently completed quarter. Following that, we'll have a Q&A session. I know that we already have some questions that have been submitted, which is great. Any of you who wish to submit questions during the webinar can do so using the Q&A function on Zoom here. Okay, it looks like the participants have sort of stopped adding up so we can get started in the interest of time.
The recently completed quarter is one where we have continued to make a great deal of progress on our various clinical development programs, which I will talk to in a moment. Just quickly to start off, our share price is around about AUD 0.17, which gives a market cap of about AUD 38 million. We still have our largest shareholders being BioScience Managers, Fidelity, and Fujifilm, and the top 20 still holding not far off 50% of the shares on issue. In terms of the key highlights for the quarter, I'll start just by reminding everybody, if you're not familiar already, about what Cynata's really all about in terms of our manufacturing platform. We are focused on making mesenchymal stromal or mesenchymal stem cell-based products, also known as MSC-based products, which can be used to treat a wide range of clinical disorders.
The unique thing about Cynata is how we make these products. Lots of other academic institutions and some companies make MSC-based products using what we would describe as conventional manufacturing means. That really involves getting tissue donations such as bone marrow or fat from donors. They need an ongoing supply of new donors supplying these donations all of the time. They have to isolate the MSCs from each donation. Because they don't get many MSCs from each donation, they then have to grow the cells in a lab, which is a process known as culture expansion, to generate enough cells for therapeutic use. The challenges with that is, first of all, the logistics and the cost associated with continuously finding new donors. There's also substantial variability between donors, which can result in inconsistent product.
MSCs are known to change when they go through this extensive culture expansion process, which can introduce further inconsistency and potentially loss of function and potency. They're all quite fundamental challenges which our Cymerus platform is designed to overcome. By using iPSC or induced pluripotent stem cell technology, we have an iPS cell master cell bank in place, which was made from one donor one time. On an ongoing basis, we now simply take a vial of these iPSCs out of the freezer, we thaw those cells, and then we use our patented process to turn those cells into MSCs. The real advantage of iPSCs is they have an effectively limitless expansion capacity, meaning they can keep reproducing themselves indefinitely. This gives us enormous scalability. It means we don't need new donors at all.
It means we're using the same starting material every time, so we get consistent product over time. We also avoid the need to extensively culture expand the MSCs, so we also avoid the loss of function and potency that I mentioned can occur when that is done. Overall, this is a way for us to produce consistent MSCs with improved function and potency in an eminently scalable manner. Moving on to what we've been doing during the quarter. Of course, we're mostly focused at the moment on our clinical pipeline, which has four assets in four very different indications, being osteoarthritis, graft versus host disease, diabetic foot ulcers, and kidney transplantation.
During the quarter in phase II, in our phase II graft versus host disease trial, which is ongoing in Australia, the U.S.A., and Europe, we have now reached 75%, in fact, a bit past 75% of the targeted patient enrollment of 60 patients in this trial. We're now looking at completing enrollment within the next few months. If we do that will translate to the primary results in the first half of next calendar year. A reminder that the primary results will come after a 100-day follow-up period. From the time that the last patient is enrolled, we have 100 days until that patient completes the primary evaluation period. After that, we will be preparing the results. This really is reaching the end now, this trial.
We appreciate that it has been going for some time but we are really seeing the light at the end of the tunnel, and we expect to complete it in the next few months in terms of enrollment. A reminder that this is building on our very successful phase I clinical trial in graft versus host disease. We do have reasons to be optimistic about the outcome of this trial. In our phase III osteoarthritis trial, so this is a trial being conducted in Australia in partnership with the University of Sydney. As I'm sure everybody will know if you've been following us, the enrollment and treatment of all 321 patients in this trial is complete. We now anticipate the final results of this trial between February and April next year.
Potentially just about six months or thereabouts from now, we'll have results from this trial. Also importantly, during the quarter, we had an advisory meeting with the TGA, which is the Australian Therapeutic Goods Administration, the body responsible for regulating products like this in Australia. Following on from that meeting, we're optimistic that positive results in this trial could support marketing approval of this product in Australia. That's a very important point. Clearly, that is the aim ultimately of these trials, is to get products on the market. We now really have good reason to believe that we have a clear route ahead to get this product approved in Australia. Again, a hugely exciting milestone coming up from this trial later during this financial year.
In our kidney transplantation trial, which is being conducted in the Netherlands in partnership with Leiden University Medical Center, we're pleased to say that we've now completed enrollment and treatment of the patients in cohort 1 of this trial, so that's three patients. As we communicated previously, once this cohort was complete, we have to follow up these patients for six weeks each, and then there's an independent data safety and monitoring board who will review the data from this cohort and then make a recommendation for next steps. That's where we are now. We're awaiting that review, and we expect to have the results of that by quarter four this calendar year. During the quarter, we announced some more positive preclinical data.
Again, for those of you who've been following the company, you'll know that we have conducted quite a wide range of preclinical studies over the years, all of which have generated very encouraging results. This is the latest in that series of preclinical studies. This was conducted in collaboration with an academic group led by St. Vincent's Institute in Melbourne, but with many other participating parties. What this study tested was a device that encapsulates these MSCs and is then implanted under the skin, and it allows the factors, the molecules that MSCs release, to be released over a long period of time while the MSCs remain alive inside this device. It's a bit like a sort of a sustained release version of an MSC product.
This was tested in rat models of heart attack, and it showed that the treated animals showed significantly improved cardiac function, reduced scar tissue, and lower levels of heart muscle thickening, all of which are very positive signals. There was also support for these findings through some in vitro data where 3D models of human heart tissue, known as cardiac spheroids, were used in these studies. These demonstrated enhanced tissue survival and function using the MSCs that we've used in this study. Again, that's very encouraging, and it really just adds to that wider body of data that we have using these cells for a very wide range of clinical conditions, all of which have really huge unmet needs. Moving forward to the outlook. We really do have a very catalyst-rich period coming up.
We have three different clinical trial readouts anticipated during this financial year. The first of those, of course, will be the kidney transplant initial cohort that I just mentioned, followed by final results from the GVHD trial in phase II and the phase III osteoarthritis trial. All of these indications are targeting very large markets with very limited treatment options and high unmet needs. Our strategy is to develop multiple products in these types of clinical indications. These are the types of indications we're focused on. There are more beyond what we are currently in the clinic around as, again, we have numerous preclinical studies. Ultimately, what our platform allows us to do is to develop multiple possible clinical products for a wide range of indications with unmet needs.
Finally, we have cash runway through to the middle of the 2026 calendar year, and importantly, that gets us beyond each of these three upcoming readouts. Just to finish off with a reminder of those catalysts. The next big announcement that I would expect is the enrollment completion in the GVHD trial. Then, as I said, we should have results from that and the osteoarthritis trial in the first half of the next calendar year. Before that, we'll have our initial cohort 1 results from the kidney transplantation trial by quarter four this year. That's the end of what I, as I said, will be a brief presentation. We'd like to use the rest of the time to address some of the questions that have come in.
Mathias, I know we already had some before we started, and perhaps we've got more since, but I'll pass it over to Mathias to read out the questions, and then either myself or Mathias will answer them.
Yeah. The first question pertains to the GVHD phase II and the recruitment. There's been an apparent slowdown in recruitment. What was the reason for that? After that slowdown in recruitment of the GVHD trial, what is Cynata doing to boost and bring the numbers up again?
Yeah. Look, certainly in GVHD, the enrollment rate has been very up and down. I would stress that we're not seeing a sort of a trend where it is slowing down or stopping or getting worse, but it really is up and down. We were very optimistic around the time of the last quarterly because we had a couple of really great months leading into that previous quarterly. Sadly, since then it has continued to go up and down. I guess to provide a bit of context, the longer term average number of patients recruited per month is sort of between five and six, but each month has potentially been quite a bit below or above that. It's frustrating for all of us, I can say. It does make it quite difficult to then accurately project when we're going to complete.
As I said, we are optimistic. We'll certainly be within the next few months. In terms of why. Look, it's not really that something has changed or that recruitment has got worse. What we have here is a rare condition where even major transplant centers do not necessarily see these patients who are eligible for our trial all of the time. They might only see a handful of these patients in a year, and they're not necessarily evenly spread out. You get a lot of variability, certainly within every particular center. We had sort of aimed to smooth that out by having a lot of clinical centers involved in this trial. It's more than 30. Unfortunately, in practice, that doesn't sort of smooth it out entirely.
It really just has been, I guess what you would say is the natural variability of enrollment in a clinical trial like this. In terms of what we have been doing, we've been very active, both directly and via the contract research organization that we're working with to make sure that we are continuously engaging with all of these clinical centers, making sure that they are actively seeking out any of these patients who do appear. As I said, they aren't patients who come through the door every day of the week. What we want to do is make sure that we get them when they come through, and that the sites identify them and make sure that they're considering them for the trial and providing the patient with the information they need and so on.
We've been very actively engaging with the sites in terms of having visits to the sites in person, Zoom calls, et cetera, to just make sure that they're very much engaged with the study, and also just to make sure that there aren't any sort of practical or logistical issues that might be sort of holding things back. That's something that we've been doing and really ramping up. As I said also via our contract research organization, who we are paying a lot of money to help manage this trial. We've been very forthright in reiterating to them what our expectations are and making sure that they are very much on the ball as well. We're very much doing everything we can to move this forward, and as I said, we are optimistic that we will get there in the next few months.
To keep on the same topic, assuming the phase II trial is successful, would a phase III trial be required for approval? Is there a chance of accelerated approval? What are your views on the number of patients, duration, and costs for a phase III trial?
Look, great questions. Unfortunately, not necessarily a simple or direct answer at this point in time. Firstly, will we need a phase III trial? Well, the sort of default expectation is that we would, right? If the results of this ongoing phase II trial are really, really good and there's just very clear evidence of efficacy in this trial, there is the possibility that that could support some kind of conditional or accelerated approvals, at least in certain jurisdictions. It very much is a case-by-case scenario if we're in that territory. It would mean us going and talking to the various regulators, like the FDA, the EMA in Europe, the TGA in Australia, et cetera, and arguing the case. That's certainly a possibility, but I do need to be clear that that's sort of not what everybody should just automatically expect.
As I said, the sort of default pathway would be that following on from this trial, there would be a further phase III confirmatory trial required. If that's required, the next question I believe was what would be the duration and size of the trial and the cost and so on. That is something that would depend on the outcome of this ongoing phase II trial. What happens is we use the estimated effect size, in other words, how effective the therapy is to inform the statistical calculation that tells us how many patients we need in the trial. How many patients we need also has a very big influence on how long it will take and how much it will cost. We can't really answer those questions yet. It really will depend on the outcome of the phase II.
What I can say is that we believe that the design of the trial in terms of endpoints and the patient population and so on, would likely be very similar to the ongoing trial now. That obviously means that when we're looking at the expected effect size and so on, we will have very real data to base that on. That's all something that will really only come to light once we get the results of this ongoing trial.
Cynata recently stated that it is optimistic that it could get approval if the phase III osteoarthritis results are positive. Could you please share further information on your meeting with the TGA?
Yeah. We had, as I said, an advisory meeting with the TGA, which was to discuss that question primarily, what is the next step? I should probably give a little bit of context here. In Australia, our product is regulated under what they call the Biologicals Regulatory Framework, which really means cell and gene therapy. There's a separate regulatory framework in Australia for cell and gene therapies, which is not quite the case in most other jurisdictions. That means that we don't necessarily have the same sort of guidelines or precedents with other types of products that we can just follow. That meant there was a little bit of a perhaps gray area or uncertainty as to what exactly the expectations of the TGA would be. We had a meeting with them, and of course, they were already aware of this trial before.
We had met with them in collaboration with the University of Sydney before we started this trial to make sure that they agreed with us actually going straight into this phase III trial and so on. They did. This was a matter of coming back to them to let them know where we are and really to get their views. During the meeting then, they confirmed that, yes, in principle, this trial is appropriately designed as a phase III registrational trial. If the results are successful and they all point in that direction and so on, then this trial should be sufficient to support a commercial approval in Australia. That, as I said, is very positive news because it shows that we have that very clear path ahead of us. We were very pleased with that outcome.
Now, of course, it is a matter of awaiting the actual results because, of course, that's the next key question and everything will depend on what the results are.
What is Cynata's strategy to obtain market approval in markets other than the United States, for example, Japan, for the osteoarthritis product?
Right. Look, the other markets are not necessarily the same as the situation in Australia, right? As I just explained, in Australia, there is a specific framework for biologicals, which really means cell and gene therapies. In other markets, there's a lot of different sort of ways that these therapies are regulated and indeed the therapies in general are regulated. What we can say is there are certain markets that if we got approval in Australia, we would have a very fast route forward to getting approval in certain other markets. Perhaps in some cases, it's essentially a direct recognition of the Australian approval. In some markets, that's not the case though. Japan, I think, was mentioned in the question. Japan is certainly a different case.
In Japan, there's a very clear expectation among the regulators to have data in Japanese people, usually Japanese people in Japan who are being treated in the Japanese healthcare system. That's because they don't necessarily accept the data generated in people with other ethnicities, other genetic makeups in other healthcare systems. They don't necessarily accept that those data are directly applicable. We will need to generate data in Japan, in Japanese people to support approval. That could be, for example, part of a further global trial that includes some Japanese centers or potentially even a standalone trial in Japan. That is definitely something that we would seek to do via a partner. Japan is still not a place that's particularly easy to work in for a foreign company and especially for a very small foreign company like Cynata.
Our view with Japan in particular would be to try and work with a Japanese partner to generate the data required to support approval there.
I might add that in the past I have lived and worked in Japan for a pharmaceutical company, so it is a very specific and demanding requirement when it comes to product development and approval. However, in general, the Japanese regulator is also known to be quite supportive of cell and gene therapies. I think based on positive overseas results, we can be optimistic to be able to work with a partner and chart a path to market in Japan that is efficient. I'm optimistic about that. Next question. Does Cynata have any IP rights for the new encapsulation device? That is referring to the heart ischemic model in rats. I will answer that. No, we do not have any IP rights to this new encapsulation device.
Of course, it is very interesting now based on these very encouraging results in the animal study to talk about a new program, and these discussions are now being initiated. One question about the technology. Obviously the iPSC cells that we are working with have been derived from a single donor at one time. But isn't that also a risk in terms of continuing supply and safety, Kilian?
Well, in terms of continuing supply, I should clarify that we have a very large master cell bank in place, and from each master cell bank vial, we can make what we call working cell banks. In terms of the, if you like, the capacity of this cell bank, it really goes well beyond what we could reasonably expect to use over the sort of life cycle of these products. We don't think that there's a sort of a supply risk, right? In terms of safety, I suppose it depends what people are referring to there. I can explain that we have done a lot of work to illustrate the safety of our process, and that includes doing quite advanced testing on the cells in various ways, which includes genomic sequencing and so on, looking for any kind of abnormalities.
We've also done experiments where we've grown these iPS cells to an extent that goes well beyond the level that we would ever use in our process. We've shown that even when we do that, we don't see any sort of acquisition of these genetic abnormalities or anything that would raise any concerns from a safety perspective. I think perhaps I'm maybe reading into what the question might be getting at. Sometimes people imagine that what we have is a sort of a supply of cells that continuously grows and grows and grows forever, and ultimately that could be associated with some sort of changes in the cells. Just to clarify that in practice, that's not really what we do. What we have, as I said, is this cryopreserved, in other words, deep frozen master cell bank.
These vials, each of them independently sits in the cryopreserved conditions in liquid nitrogen until they're used. When we use them, we're not growing them to a huge extent that would raise these sorts of concerns. Again, look, I might be reading something into the question that wasn't intended, but I just thought I'd mention that. We believe that we have a very stable supply of these cells and that we've really satisfied ourselves, and indeed regulators, that the safety risks are addressed and that we have no reason to be concerned there. One final thing I should say, though, is if for some reason we or a partner decided that it was desirable to use a different iPS cell bank for a different donor, for example, or iPSCs with some other characteristics or genetically modified iPSCs even, we can do that.
There's nothing stopping us doing that. That is something that our technology allows as well, but that isn't what we intend to do for our existing product. We intend to be able to continue to make them using the existing master cell bank.
Was there any interest from parties after the DFU results? Cynata previously mentioned that there were a few companies waiting for the results. I'll take that. Indeed this DFU trial, which concluded with a very successful outcome, is a great validation of the Cymerus technology. It adds to the previous phase I trial in steroid-resistant acute GVHD. Regarding the partnering of the specific DFU program, of course, there's interest in the technology. Bear in mind, this is a drug device combination, and companies that may be interested in this have different capabilities. They often come either from the wound area or they come from specialty hospital from that segment of the market, or from a device angle. That means each of them has specific strong capabilities, but also gaps, and that obviously leads to some complexities that simply need to be addressed and resolved.
Yes, definitely there's interest, but because of the complexities I'm just mentioning it is simply taking time. Mind you, any good business deal is taking time. In terms of new market entrants, yeah, there seems to be a lot going on in different markets in MSC technology, and even in Australia we now see new companies getting listed on the ASX and what is the differentiation, what is the competitive edge of Cynata with respect to everybody else?
Right. Look, again, as I mentioned during the presentation, there certainly are many different groups who have ways of making MSC-based products, and a lot of them have been around for quite a long time. These include academic institutions and various companies, and in some cases, companies that have sort of spun out of academic institutions. As I said, the difference really is all of the other clinical stage players rely on what we would describe as conventional manufacturing process, which relies on isolating MSCs from donated tissue. As I mentioned during the presentation, that has some really fundamental challenges associated with it if you're trying to make large quantities of product at scale in a consistent way. That's what our Cymerus platform allows us to do. That's what is unique about Cynata.
I firmly believe that that is a game changer because if you have a process that relies on finding new donors all of the time, and those donated tissue MSCs are different because they come from different people, and you then have to go through this extensive culture expansion process where the MSCs can lose potency and functionality. Those things are, without question in my mind, going to impact on the clinical trial results you get, and ultimately also just on the practical ability of these companies to make enough product to supply these markets. I think we are very unique in the MSC space and I think with the positive results, hopefully from these upcoming trials, that will begin to be recognized more widely.
What pricing would be anticipated for GVHD infusions and what cell dosage would apply? Setting a reference price for Australia might actually cause issues with the U.S. Most-Favored-Nation pricing requirements that are in development. I think that's the last question we can take due to time. Kilian.
In terms of pricing, we're not in a position to say yet what the price of our product is likely to be, and I think that's fairly typical. Generally speaking, pricing is really only revealed, in fact, around the time of product launch. We're not in a position to do that yet. In terms of the issues potentially with pricing in Australia versus other markets and Most-Favored-Nation issues and so on, these are obviously things that we need to be keeping an eye on. They are changing as we speak. There are a lot of things coming out of the U.S. administration that are clearly quite different to the way things have been before, but it's as yet unclear really what the practical implications of those things are.
We're certainly keeping a close eye on all of that, but we're not yet at a position where we have to make any decisions about what our commercial pricing is in any market. We are in a, I guess, that's a sort of a good thing for us at the moment. Mathias, I don't know if you wanted to add anything.
Yes, indeed. Obviously, at that stage when these questions become relevant, I would expect us to be in a partnership relationship regarding GVHD, and so the commercial partner will obviously have a say in all of this. But I think generally we can say that GVHD is a high-price market, and if our clinical trial results demonstrate a really tangible benefit, then obviously that would be reflected in the price. But yeah, we're keeping an eye on the policy as it evolves. I think we're out of and even a few seconds over time, so we have to close here. But we will strive to answer all other questions pursuant to this webinar. Kilian.
Thanks, Mathias. Actually just one quick one, which I don't know if we did cover, but it is coming through to me directly, was regarding our cash runway and where does that really stand. I just suppose wanted to say that I know some people may be worried that our expenditure in the recently completed quarter was quite high relative to our remaining cash balance, I just need to emphasize that our forecast expenditure moving forward is a lot lower than that. That was an unusual quarter in that we paid a couple of large milestone payments related to the GVHD trial. Our expenditure for the rest of the financial year won't be in line with that. We also have our R&D Tax Incentive rebate expected in the next few months.
We keep a very close eye on our cash position all of the time, as I'm sure everybody would expect. As things stand, our cash runway does remain right into the middle of next calendar year, which is past these three readouts. Beyond that, as Mathias said, if there are other questions that we haven't got to, that we haven't answered, we will follow up after the webinar. I'd just like to thank everybody again for their time today and for joining us. For those of you who are shareholders, thank you for your ongoing support. We have an absolutely huge year ahead, there's no question about that. The GVHD and osteoarthritis trials in particular, each in their own right, are capable of completely transforming the company. It is a huge year ahead, and we're very much looking forward to delivering these results.
Thank you again to everybody, and we look forward to engaging again in the.