Good afternoon, ladies and gentlemen, and welcome to the Celcuity 2nd Quarter 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If, at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, the 10th of August, 2023. I would now like to turn the conference over to Robert Uhl, ICR Westwicke. Please go ahead.
Thank you, operator, and good afternoon to everyone on the call. Thank you for joining us to review Celcuity's second quarter 2023 financial results and business update. Earlier today, Celcuity released financial results for the second quarter ending June 30th, 2023. The press release can be found on the investors section of the company website. Joining me on the call today are Brian Sullivan, Celcuity's Chief Executive Officer and Co-Founder, Vicky Han, Chief Financial Officer, as well as Igor Gorbachevsky, Chief Medical Officer, who will be available during Q&A. 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. With that, I would now like to turn the call over to Brian Sullivan, CEO of Celcuity. Please go ahead.
Thank you, Robert. Good afternoon to everyone joining us on today's call. Our top priority this quarter was continuing to execute enrollment activities at trial sites globally for our VICTORIA-1 phase III clinical trial. As we've discussed previously, VICTORIA-1 is evaluating our lead compound, gedatolisib, combined with fulvestrant, with or without palbociclib, in patients with HR-positive, HER2-negative advanced breast cancer, whose disease progressed while receiving a CDK4/6 inhibitor. We are pleased to report that we now have nearly 200 trial sites recruiting patients in 20 countries. Throughout the first half of this year, our team has done a fantastic job of coordinating with regulatory authorities and individual sites to ensure our sites can begin recruiting patients as quickly as possible.
They're relentlessly focused on keeping us on track to report the primary analysis for the PI3K non-mutated patient subgroup in the second half of 2024, and the primary analysis for the PIK3CA mutated patient subgroup in the first half of 2025. This is consistent with our previously discussed expectations. We are seeking to improve outcomes for a patient population that receives limited benefit from current second-line standard of care therapies. We estimate that this initial potential targeted population represents over 100,000 breast cancer patients globally on an annual basis. Current standard of care for these patients includes endocrine therapies such as fulvestrant and regimens that combine fulvestrant with an mTOR-specific or PI3Kα-specific targeted therapy. These therapies offer only modest progression-free survival periods, and in the case of the approved PI3Kα inhibitor, a very challenging safety profile.
The significant unmet need for these breast cancer patients has led to development and subsequent investigation of a significant number of new therapies aimed at these patients. An oral SERD for patients with an ESR1 mutation was recently approved, and an AKT inhibitor reported positive results from its phase III study late last year. Median PFS for these two new therapies ranged from 3.8- 5.5 months in our patient population. While the availability of new drug alternatives for patients is always good news, based on the results reported for these drugs, the unmet need for these patients will still remain. As we've discussed previously, there's a general consensus amongst leading breast cancer researchers that HR-positive, HER2-negative breast cancer involves the estrogen, CDK4/6, and PI3K/mTOR pathways, each of which can cross-activate the other.
To most effectively treat this disease, we believe data from our phase I B study strongly suggests that simultaneous inhibition of these three pathways is required to optimize outcomes for these patients. To date, randomized studies have consistently shown that partial inhibition of the PI3K/mTOR pathway with drugs that only target a single component of this pathway, such as ones that target PI3K-alpha, AKT, or mTORC1, can provide only modest antitumor effects when patients have progressed on prior CDK4/6 treatment. We believe gedatolisib's highly differentiated mechanism of action as an equipotent pan-PI3K/mTOR inhibitor, is uniquely suited to most effectively address this unmet need, especially since gedatolisib has demonstrated activity independent of the presence of PIK3CA or ESR1 mutations in a patient's tumor.
Our confidence that gedatolisib can play an important role in improving outcomes for women with HR-positive, HER2-negative advanced breast cancer, was reinforced with the updated PFS data we reported at the ESMO Breast Cancer Congress in May for first-line patients from our Phase 1b study. Treatment naive patients with HR-positive, HER2-negative advanced breast cancer treated with gedatolisib, palbociclib, and letrozole obtained a median progression-free survival period of 48.6 months, and 79% reported an objective response. Outcomes were comparable for patients with and without PIK3CA mutations, highlighting the rationale for comprehensive as opposed to selective inhibition of the PI3K/mTOR pathway. These results compare very favorably to the median PFS of 24.5 months and the 55% objective response rate reported in the PALOMA-2 study for palbociclib plus letrozole. We believe the data suggests gedatolisib has the potential to eventually become a first-line treatment option.
Last year, we began evaluating and prioritizing new potential indications for gedatolisib. We assessed previous trials for other PI3K and mTOR inhibitors and characterized the activity of gedatolisib and other PI3K/AKT/mTOR inhibitors in different hormonally driven tumor types. Our initial results from non-clinical studies in prostate cancer were presented at ASCO GU in February, and in gynecological cancers at AACR in April. In each of these studies, gedatolisib exhibited superior activity relative to all of the other PI3K/AKT/mTOR inhibitors evaluated. Thus, based on the review of prior clinical studies with PI3K/AKT and mTOR inhibitors, and our assessment of the relative advantage gedatolisib's mechanism of action provides, we believe there is a significant opportunity for us to develop gedatolisib in these additional tumor types over time. We expect to provide you with an update on our pipeline development strategy by the end of the third quarter.
Now, I'd like to shift our discussion to the diagnostic side of our business that centers on CellSignia, our third-generation diagnostics platform. Our FACT-1 and FACT-2 trials are ongoing and enrolling patients with early stage HR-positive, HER2-negative breast cancer, whose HER2 pathway is hyperactive, as detected with our CellSignia test. We continue to expect to announce interim results in these studies in the first half of 2024. With that, I'll turn the call now over to Vicky Han, to review our financial results.
Thank you, Brian. Good afternoon to everyone. I'll provide a brief overview of our second quarter 2023 financial results. The second quarter net loss was $14.6 million, or $0.66 loss per share, compared to net loss of $10 million, or $0.67 loss per share for the second quarter 2022. Because these quarterly net losses include significant non-cash items, including stock-based compensation and interest expense, we also include in our press release non-GAAP adjusted net loss for the quarter ending June 30th, 2023. Our non-GAAP adjusted net loss for the second quarter of 2023 was $12.8 million, or $0.58 loss per share, compared to non-GAAP adjusted net loss for the second quarter of 2022 of $8.3 million or $0.55 per share.
Research and development expenses were $13.7 million for the second quarter of 2023, compared to $8.4 million for the second quarter of 2022. The approximately $5.4 million increase during the second quarter of 2023 primarily resulted from costs supporting activities related to VICTORIA-1 pivotal trial. We expect this expense to increase over the next two quarters, consistent with the increase between Q2 and Q1 of 2023. Again, primarily due to activities associated with VICTORIA-1. At that point, we, we expect expenses to remain roughly flat in 2024. General and administrative expenses were $1.3 million for the second quarter of 2023, compared to $1.2 million for the second quarter of 2022.
Net cash used in operating activities for the second quarter of 2023 was $9.7 million, compared to $11.3 million for the second quarter of 2022. This was a result of non-GAAP adjusted net loss of approximately $12.8 million, offset by working capital changes of approximately $1.4 million, and changes in cash received from interest income related to maturities of short-term investments of approximately $1.7 million. We ended the quarter with approximately $146.2 million of cash, cash equivalents, and short-term investments, compared to $168.6 million at December thirty-first, 2022. With that, I will now hand the call back to Brian.
Thank you, Vicky. operator, we're ready to take questions if there are any.
Thank you. Ladies and gentlemen, we will now conduct a question-and-answer session. If you have a question, please press star followed by the number one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Your first question comes from the line of Maury Raycroft from Jefferies. Your line is now open.
Hi, thanks for taking my questions. I was just gonna ask for the phase 3, if there's any additional perspective you can share on how enrollment is going based on types of patients, potentially, how it relates to wild type versus mutant patients, and also geographic regions?
We're enrolling patients, consistently in all the regions. Some regions, as expected, will be more active than others, but we're not breaking that out, you know, at this point in time. You know, so far, activities are proceeding as we expected. You know, the site activations have gone well. The startups have gone well, and the sites are engaged.
Got it. Okay, you mentioned that you're recruiting at nearly 200 sites in 20 countries. Are you going to open additional sites, or are you satisfied with the current number of sites open and enrollment rate? I guess any additional perspective there?
We have, we have some additional sites in the pipeline. In some ways, they, they act as backup because, you know, not every site does exactly what you'd like. You know, we will over, in effect, activate, we'll activate more than 200 sites to anticipate that some of these sites might not be as productive as we'd like.
Got it. Okay.
Sorry.
One more question, then I'll hop back in the queue. I think you said in the past, there could be data this year supporting the three week on and one week off dosing schedule, which allows for the immune system holiday. When and in what forum should we expect to see data from that?
Well, I, I think, what we, we said was that we would have some data, animal data, that would show immune system activity that we think is consistent with what occurs during the one week off dose period with the three week on, one week off schedule. We expect to, you know, cover that when we provide an update on our overall pipeline, our R&D day, so to speak, which will happen, you know, we think, before the end of this quarter.
Got it. Okay. Thanks for taking my questions.
You're welcome.
Your next question comes from the line of Marc Frahm from Cowen. Your line is now open.
Great. Thanks for taking my question. My first question is on the VIKTORIA-1 1 trial. My understanding is that arm A is the key triplet arm in the study, which you plan to compare to arm C. I'm just curious, does the success or failure of arm B really matter here?
you know, so arm B is intended to serve two purposes. One is to, potentially support a registration of, gada plus Verzenio. That, analysis, B versus C, is, is powered, independently and, and is, is gonna be tested as a primary analysis. The second is it, it helps, demonstrate, you know, the contribution of gedatolisib, and, allows, analysis of the contribution of palbociclib. So you, you will see, or, or you want to see a, some form of arithmetic, difference, between, those three arms. They don't statistically, for, for purposes of supporting an A versus C comparison, need to be, significant.
Great. And my, second question, also on VIKTORIA-1 trial. Do you have a sense of the dropout rate at this point, maybe even on a, on a, on a blinded basis altogether?
We don't. I mean, we have, you know, the. Again, you know, this early in the study, you, you get, you know, there's two factors, right? There's progression, and then there's, you know, dropout due to factors other than progression. We made assumptions in the trial that are probably pretty consistent with assumptions other companies made, and there's nothing that we've seen to date that would suggest there's, there's anything different than what our assumptions were, in terms of, you know, that would help inform a projection of primary analysis.
Great. Thanks for taking my question.
You're welcome.
Your next question comes from the line of Gil Blum from Needham and Company. Your line is now open.
Hello, everyone, and good afternoon, Brian.
Hi, Gil.
Maybe, maybe a quick one on, you mentioned a couple of agents that have had data recently. Assuming those are potentially approved at some point, could that change the therapeutic landscape for gedatolisib combos? Thank you.
Well, thanks for the question. We don't think so, because the benefit that's being reported isn't substantially better than what's currently available. In the case of the AKT inhibitor that reported data, in this patient population, if you're doing a cross trial comparison, at least, it appears that it's not... it's comparable. The data suggests maybe not as good as the PI3K-alpha inhibitor that's available. It has a better safety profile. You know, I'm sure the argument will be made that it can offer comparable antitumor control, but with less toxicity.
It may be a legitimate and good alternative for patients in light of the current standard of care, but we don't think it necessarily changes or raises the threshold of outcome for patients receiving these therapies. Gil, we can't hear you if you're still if you're asking another question.
Thank you, Brian.
Okay.
That was my only question.
Okay, thanks.
As a reminder, if you have a question, please press star followed by the number one on your touchtone phone. Your next question comes from the line of Alex Novak from Craig-Hallum Capital Group. Your line is now open.
Hi, good afternoon, everyone. This is Albert Hu on for Alex. I have a question regarding VIKTORIA-1. With enrollment ramping and with you guys looking at other cancer indications, what additional investments in talent and resources do you need to plan for?
Sure. What we closed the PIPE transaction late last year that raised $100 million. The intention of that PIPE was to fund the VIKTORIA-1 study through data readout, as well as to fund an early phase study in another tumor type. The cost of an early phase study is certainly relatively very modest, relative to a phase III study, and very modest in the scheme of things. The guidance we've provided about our cash runway has been through the end of 2025, and we're still confident that's where we'll end up.
Gotcha. Thank you. As enrollment creeps higher, what sort of recruitment protocols, changes have you made, or have you stuck to the same?
I'm sorry, did you say recruitment protocols?
Protocols, yes.
Oh, protocols.
Protocols.
No, the activity that we've started the study with and continuing and the overall approach to ensure patients are identified as early as possible, you know, that's the site of the, the, the trial's visibility at the site, that patients are identified, you know, well in advance. That, that's been part of our strategy from day one, and that's what we're sticking with, and it's, it's proven effective. We, we try to work as, as best we can with each of the sites to prescreen candidates or patients who are currently receiving CDK4/6, and those could be candidates for our study. We, we ask them to quantify that, so they actually, we know that they've, they've gone to their, their charts and identified patients.
Then we try to monitor that to see if those numbers are changing. That just helps us get a sense of the flow, as well as whether or not the, the, the site is engaged. You know, each of our sites gets a visit every two weeks from a clinical research associate, you know, to, to monitor, you know, activities in this study, but also, you know, to assess whether, you know, the, the, the study site is, is engaged overall and the recruitment activities are. If everything is proceeding as should be. So we, we feel like we have a very good footprint in the site. You know, we're in regular contact.
We, we separately, establish contact and, routine calls, with the principal investigators at each of the sites. So far, again, that's if you were to talk to people in this area, the engagement of the principal investigator plays a very, very significant role in, in, how well a study accrues at that site, as, as well as the engagement of the study coordinator, who typically, reports, either directly to the PI or, or to an organization.
Having those two individuals engaged, is critical. So those are, among other things, the people we try to pay a lot of attention to and keep track of and ensure that to the extent they have questions or things come up, that we're able to respond as quickly as possible.
Gotcha. One last question here. I believe you mentioned this briefly, but just to reiterate, and the site stats are live, what is the cadence of enrollment, and is it still tracking along well with your expectations?
Sure. You know, each site is different. You know, some sites are community sites, some sites are very large, and some sites just are typically better at keeping track of patients and therefore getting them in the queue for screening to be considered, to be evaluated as a potential candidate. You know, each site, you know, will, will, will, you know, you'll, you'll have a distribution of results across the number of sites that you have. You know, it's not quite the 80/20 rule, but, but you'll always have your A. It, it, it's like anything in life, right? You'll have your A accounts, your B accounts, and your C accounts. You know, you manage accordingly.
So we've, to be frank, we're very pleased with the general level of activity at all the sites. So far, so good.
Thank you. That's all my questions.
Yeah.
There are no further questions at this time. I will now turn the call over to Brian Sullivan, Chief Executive Officer. Please go ahead, sir.
Well, thank you. We appreciate your attending the call. Appreciate the questions, and look forward to updating you in the future. Goodbye.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.