Welcome everyone, to this session of our August 2024 Microcap Conference. I'm Alex Hantman, and I serve as an equity research associate here at Sidoti & Company. Today, I'm pleased to be in conversation with CEO Leonard Mazur of Citius Pharmaceuticals, ticker CTXR. During the presentation, please feel welcome to submit questions using the Zoom Q&A interface at the bottom of your screen. After the presentation, we'll open to your questions. And with that, Leonard, I'll turn it over to you.
Oh, thank you very much for the introduction, and also I want to thank all those that are online right now participating in this, for taking the time to join us on this conference call, where we'll go through the recent developments at Citius Pharmaceuticals. And also, we have a spin-off company called Citius Oncology, Inc. So with that, since I'm going to be making forward-looking statements, I think it's very important that all shareholders are informed shareholders. We strongly advise everyone to either go to sec.gov, put our symbol in, CTXR, and then or go to our website, citiuspharma.com. And there you'll find every filing that we've ever done. And I think an informed investor really is the best investor that the company can have.
So with that, some highlights on the company, but before I get into what we have in our portfolio and where we are with everything, something that I need to highlight for you is that, in terms of this comp, our company, we're different from everybody else. And one of the reasons for that difference is the fact that we've put our own money into the company. So I have $22.5 million invested directly into the company. Myron Holubiak, our co-founder, along with me, has put $4 million of his own funds into the company, and that's a reflection of the fact that of confidence in our portfolio.
And as proof of all that, in terms of our portfolio, we last week received FDA approval for LYMPHIR, which is a fusion protein of denileukin diftitox. That drug is indicated for the treatment of cutaneous T-cell lymphoma, which is a very rare, rare cancer. And we also have on deck in a very late stage Mino-Lok, which we just completed a phase 3 trial, where we had incredible top-line data, where we hit both our primary and secondary endpoints with the statistical significance of 0.0006. And our third asset is Halo-Lido, which is a prescription drug for the treatment of hemorrhoids.
This is something that we have in our portfolio because when we were private, we merged in with Citius, which was public at the time, and they had this drug in their portfolio. We took a good look at it, and even though it's a little bit of field from where we are with the Mino-Lok and LYMPHIR, the reason we kept it is because in the 21st century, there isn't a single FDA-approved prescription drug for the treatment of hemorrhoids. So with that, we think our goal here is to monetize this for the shareholders, complete a trial where we'll be able to prove statistically that this Halo-Lido is effective in the treatment of grades 2, 3, and 4 hemorrhoids.
As you all know, the over-the-counter market has Preparation H. Those are strictly for drugs like that. Over-the-counter drugs are strictly for grade one hemorrhoids. So as I've indicated to you, 2024 has been a year of great momentum for us in that we received our approval from the FDA. An FDA approval for every company is an important event, and for us, it was, it's dramatic, to say the least. So for us to receive this approval meant an awful lot. We anticipate launching the drug within five months.
And just to explain, everybody always asks, "Well, what, what's going to take so long?" It, there's a number of events that that we're going through in terms of making sure all state licenses are covered, that we've got the permission from all the individual states, as well as reimbursement and other aspects of it like this. Plus, given the fact that in the fourth quarter, what we have is we've got Thanksgiving, from Thanksgiving to Christmas through the holidays. It's not a time to be launching a drug, so we'll wait till the beginning of January at this point. So we also created a spin-off company, Citius Oncology, Inc., which basically started trading actually yesterday, August twelfth. Or I think August twelfth. It's August thirteenth. Twelfth? Okay.
So, and we own 90% of that. We set this up so in order as to raise the funds to be able to launch LYMPHIR into the marketplace, and not dilute the Citius Pharmaceuticals shareholders with the expenses of that launch. So, the company will own 90% of the symbol on it. It's CTOR. And as I said before, we had tremendous results in terms of Mino-Lok phase 3 trial. So, with that, so the just to cover quickly for you, the Citius Oncology will be a company focused on developing and commercializing targeted oncology oncological therapies. We're starting with with LYMPHIR, which has been approved.
We think LYMPHIR is in about a $400 million market. We think there's some interesting growth opportunities potentially down the road. LYMPHIR is now the subject of two investigator INDs, one at the University of Pittsburgh, where it's being combined with a PD-1 inhibitor, otherwise known as KEYTRUDA, to see if the addition of LYMPHIR to a regimen that also has KEYTRUDA will help improve the overall efficacy of KEYTRUDA. There's some animal data that was published last year that I'll cover later, that showed that that was indeed the case. At the University of Minnesota, that investigator IND trial is one where the investigators are combining LYMPHIR with CAR T, which is another new form of cancer treatment.
And then, we probably will have some, some additional use for LYMPHIR and peripheral T-cell lymphoma, which is a much larger market segment. So this, what, what's important about, about these trials, these investigator IND trials, is that it places LYMPHIR squarely in the, in the cutting edge and in new frontiers of cancer treatments. So, being combined with, with something like KEYTRUDA and, CAR T, treatments are, have really put us in, in, in rare company, and it's something that, we think, we'll see how it works out. We can't comment on these yet, but, hopefully we'll have, we'll have some preliminary data coming out in, in, in the coming months. So, as I said before, it, it LYMPHIR is FDA approved.
It's indicated for the treatment of adult patients with relapsed or refractory stage 1 through 3 cutaneous T-cell lymphoma that have had at least one prior systemic treatment. So, this is what cutaneous T-cell lymphoma looks like. It's not a pretty picture. It's in two phases. The black phase is the beginning phase, and it's usually treated by dermatologists, usually with topical type agents. And then it will progress into the tumor stage, where again, it now moves to the treatment by the oncologist. This is a form of non-Hodgkin's lymphoma. It can also be determined as mycosis fungoides and Sézary syndrome, so, more prevalent in men than women, and usually appears in patients in their 50s and 60s. This disease is considered to be incurable.
So, LYMPHIR has a very unique mechanism of action in that, it eliminates or reduces something known as Tregs. So Tregs are red blood cells that are contained within the microenvironment of a cancer cell. And so, what happens when PD-1 inhibitors are prescribed, those Tregs can increase over time. And, a higher number of Tregs will reduce the overall effectiveness of the PD-1 inhibitor, such as KEYTRUDA. So by combining it with LYMPHIR, where you're reducing the Tregs, that then potentially should show the ability to render the PD-1 inhibitor much more effective.
So, the market is $300 million-$400 million, and it basically is comprised of two main principal drugs that are in this market. ADCETRIS, which was a Seagen drug. Seagen has been acquired by Pfizer. It's a CD30 antigen directed. Also, we have POTELIGEO, which is marketed by Kyowa Kirin, a Japanese pharmaceutical company. These two are the principal competitors in here. Bristol Myers Squibb had an entry that has not. They've not been promoting in recent months. So, what we expect is that once this drug comes on board, we will be additive to the overall market. So, and that, and the reason being is because of the way the oncologist practices the treatment of this disease.
So, there's no one, two, three order in here. They go from one to the next. The objective of the oncologist is to prolong or to extend a patient's life. So, another potential indication is peripheral T-cell lymphoma, as I said. That is approved in Japan by Eisai, the company that we licensed this drug from. This is a little bit more of an overview in terms of the upside that we have with the LYMPHIR in combination with KEYTRUDA in patients with this, the, that study at the University of Pittsburgh is being conducted by an OB-GYN oncologist, who is looking at solid tumors mostly in female cancers.
So this was the study that I referred to earlier, the animal trial, where LYMPHIR was combined with a PD-1 inhibitor, and it clearly demonstrated this was published in a peer-reviewed journal. But it's an animal trial that clearly showed that the combination of LYMPHIR and a PD-1 inhibitor was superior to the PD-1 inhibitor by itself. So with that, let me move quickly into the Mino-Lok. And again, this is an antibiotic lock solution designed to salvage catheters in patients with catheter-related bloodstream infections. Long-term catheters are placed in mostly in cancer patients. They're a lifeline. They deliver everything. So with that, we've this was invented at the university or at MD Anderson by Dr. Issam Raad, Chief of Infectious Diseases. Had a phase 3 trial completed.
We think this is a about a $2 billion market. We're the only ones in this market. There's nobody else. We have this all to ourselves. There's nobody else doing any research, and basically, the results that we had showed that a measure of time to the endpoint was time to catheter failure, that with our drug we've had phenomenal results in terms of the treatment success there. And because this does not go into a vein, it stays locked within the catheter and the line. There were no drug-related serious adverse events. So I'm gonna skip this because we're running out of time.
But catheter replacement and removal and replacement basically is what the standard of care today is for an infected catheter. So when a long-term central venous catheter gets infected, it's a dangerous situation for those patients. They have to be hospitalized immediately, and they're into the ICU. This is one where, but again, this is the only standard of care for an infected catheter. When a catheter gets removed and replaced, it's two separate surgical procedures. There's a cost of somewhere between $10,000-$15,000 for those two procedures, and the catheter-related infection itself has about a cost of anywhere from $46,000-$65,000 to treat the catheter-related bloodstream infection. So this market is significant here.
There are about 4 million central venous catheters that they're placed, they're in that patient, greater than 1 month. Out of that, about 500,000 infections occur annually in the United States, and again, this is potentially deadly, 12%-25%, depending on the study, where there's associated mortality and morbidity. So, this is how Mino-Lok is administered. It basically, the nurse will come in, inject the solution into the catheter, and it'll fill up the lumens and the line right up to the point of, it gets hemodynamically locked, so it does not enter into the body. The solution will sit there for 2 hours.
At the end of 2 hours, the patient will, or the nurse will come in, aspirate out the contents, flush the line, and, the patient will have 22 hours of uninterrupted IV flow, during this process. We do this somewhere between 5-7 days in a row, and at the end of that time frame, that catheter and that line are completely free of any signs of bacteria inside that solution. So, and also free of biofilm. So biofilm is what forms on the inner walls of the catheter and the line because the bacteria have an affinity for plastic. That's bacterial slime, basically. And so the only solution that can really remove that quickly in that time frame is Mino-Lok. So once again, it gets injected.
The one thing I should highlight for you, most people don't realize this, but that catheter, when it's inserted, it's surgically inserted right to the superior vena cava at the heart. So when it gets removed and replaced, a lot of times they'll do the, they'll place the catheter down in the groin area, and then it gets threaded up, and during that process there'll be some serious side effects. A very painful procedure for the patient to go through. The study that we did with 240 patients, 241 patients, it lasted six weeks. As I said before, primary endpoint was a comparison of to catheter failure.
I should highlight for you, we would have been totally completed with this trial, and on the market already, if it hadn't been for COVID. But once COVID hit, most of the hospitals were unavailable for any kind of clinical trials. What we did ultimately is, we about 25% of this trial was conducted in India, where we were able to complete the trial. So, and this again summarizes for you the data itself. As you can see, 0.06. I should highlight also that if we have a special status with the FDA called QIDP, Qualified Infectious Disease Product, and that gives us priority review.
The NDA that we submit will be reviewed, cut from 12 months to 6 months, and we get an additional 5 years of market exclusivity from the FDA that lasts—they'll give us market exclusivity for about almost a little over 9 years. So, Halo-Lido, very quickly here, it's potentially the very first prescription drug to be—ultimately to be approved for treating hemorrhoids. Again, we, once we generate some data here, we will monetize this asset for the shareholders and either sell it or license it out to a much larger partner. But this is something, this is a drug that would require a large sales force, direct-to-consumer advertising, a big—it has massive potential down the road.
But to summarize quickly here, we had $17.9 million cash as of June 30. We had a capital raise at the end of April 2024. You can see here, at least at this point, myself and I, I'm probably one of the largest shareholders in the company at this point, and Myron Holubiak has a 2.6% presence. The fully diluted shares outstanding is 271 million. So with that, I'll conclude it so we can have some questions. Great. Okay, Alex, what do you have?
Well, thank you very much for sharing the story. We have dozens of questions from the audience. Let me start by kind of grouping them together. Some are around the financials, and, you know, with this week's announcement of a $50 million at-the-market offering, the NASDAQ, you know, compliance requirements for the stock price, like, could you talk to us about, you know, funding and, you know, dilution and, and how you kind of anticipate everything coming together?
Basically, I mean, let me explain that, the ATM. So that's a form of financing. Basically, it's a strategic use of our balance sheet. It's something that down the road, we anticipate this will occur somewhere down the road with higher valuations and so forth. So it's a prudent way of approaching it. There'll be no warrants or anything like that in connection with any of the funds that we would raise. So our goal, also, just to address the NASDAQ issue in terms of dollar share price, is to submit a plan to the FDA.
We're working very, not FDA, pardon me, to the, to Nasdaq, to make sure that there's nothing adverse that would occur with the company. So we're very much on top of it at this point.
Okay. All right, so let me ask, you know, we have also several questions along, Mino-Lok and-
Yeah
... composition patent. Could you talk to us about, you know, the timing of that and what's sort of the implication?
Certainly. So the composition patent expired this year, but we also have formulation patents that go out into the mid-thirties. But I know I went over it very quickly, but what really is better than patent protection for us at this point is the QIDP status that we have with the FDA. So what the FDA has done to encourage antibiotic development is that they will award QIDP status to what they determine to be breakthrough antibiotics. So and ours was, is considered to be in that category. And what that means is that once you get this, you have regulatory protection, which is better than patent protection, for nine, almost a little over nine years in all likelihood. And that form of protection, basically, there's no generic intrusion.
The market is all yours, 100%. You can't get jumped by patent jumpers or anything, or those that challenge the patent. So it's a great status for us to have. We're privileged to have it at this point.
Great, thank you for the context. And so I guess, you know, from the Mino-Lok side, could you talk to us about, you know, commercialization, licensing agreements, timing, and, you know, kind of how that works?
First step is, we're in the process of completing, assembling all our data and everything to take to the FDA. We'll sit down with the FDA, and we'll have a review of everything, and from that meeting, we'll determine what the next steps are moving ahead. So I can't comment on any timing or anything like that at this point, but, to say more or less, to say also that, our goal is that we will outlicense, anything out ex-US, outside the United States. We'll be able to do that, I think, readily. There is interest there internationally, and I think, what everybody's waiting on is, where we stand from a regulatory perspective, moving ahead with the FDA.
So I would anticipate that any kind of a transaction on that side would include milestone payments and so forth, as you normally get with something like that. So all that activity will start once we've completed that meeting with the FDA, which we anticipate will be in the next several months.
... Okay. And you know, I know you mentioned that the at-the-market fundraise is, you know, for future use and, you know, to help you manage cash runway. Could you talk a little bit about how Sidoti relates to CTOR and sort of the-
Sure. So CTOR is a subsidiary that, we've placed LYMPHIR, our cancer drug, into. That subsidiary was ultimately acquired by a SPAC, that's Special Purpose Acquisition Corporation. But, and the reason we did this is, we knew that the SPAC would not have any cash in it. But what we wanted was the NASDAQ listing, because the NASDAQ listing will allow us to raise funds, very quickly. So, that, the ultimate... Ultimately, what we'll be looking at, and it'll take some time, but, ultimately, we'll be looking at, how to distribute, the shares of the SPAC into, to the Citius, or, or Citius Oncology Inc., actually. It's no longer a SPAC, it's been de-SPAC.
But how to dividend those shares out to the Citius shareholders, that's something that, we'll, we'll ultimately we'll be speaking about in the future. So, that, also the benefit of, of this, of CTOR to the company is we own 90% of it, so the financial results of CTOR, as it starts to get revenue. And I should highlight again for everybody, we're moving from being a pre-revenue company to a revenue company, so we'll be consolidating the results of CTOR with the CTXR, with Citius Pharmaceuticals. So that, that will be beneficial to the company. Also, certain operating expenses will now be assumed by the Citius Oncology Inc., because we have a management services agreement in place with CTOR on that.
So, there's financial benefits ultimately that will accrue to Citius Pharmaceuticals as a result of what we're doing here. And then, most importantly, it's expensive to launch a drug in this market, even though this one, it's a small market, it's not gonna require a large sales force, but it does take a sizable amount of funds. And so with that, those funds are gonna be raised at the CTOR level, and that's how pretty much everything is gonna work.
Okay, and we're almost at time, so maybe just a couple of questions. So, you know, with CTOR, you, you're still, you know, also committed to maintaining the CTXR listing. Would you say that's true?
Yeah, so both companies will, will exist side by side. That's true.
Okay.
There's no changes there in terms of that. Investors can evaluate both companies and look at either one and decide, make a decision about which one suits their their object- their investing objectives.
Okay, noted. And maybe last question, just to, you know, zoom out and sum up the value proposition for folks who may be looking across oncology or, you know, across in infection.
Right. I think, I think in both cases here, we have a severely, significantly undervalued situation, with especially with Citius Pharmaceuticals. You have a company with an approval and a late-stage drug right behind it. And you have management that's put its own money, more than any other management team, probably across the horizon here. So I think that those are important factors for investors to consider as they make their decisions about where to invest their funds.
Great. Well, you know, with that, we're at time, so I'd like to thank you very much for sharing this story with us, and also thank everybody listening for spending time with us today.
I, I thank everybody also for taking the time to be with us. Once again, thank you very much.
Thank you.