Good day, and welcome to the Delcat Systems Third Quarter 2022 Financial Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note today's event is being recorded. I would now like to turn the conference over to David Hoffman, DelCap's General Counsel.
Please go ahead.
Thank you. And once again, welcome to Del Cast Systems' 3rd quarter 2022 earnings call. With me on the call are Gerard Michel, the Chief Executive Officer Doctor. Jonny Jon, Senior Vice President of Medical Affairs and Clinical Development Kevin Muir, Vice President of Commercial Operations and Anthony Diaz, Vice President of Finance. I'd like to begin the call by reading the Safe Harbor statement.
This statement is made pursuant to the Safe Harbor for forward looking statements described in the Private Securities Litigation Reform Act of 1995. All statements made on this call, With the exception of historical facts, may be considered forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes that expectations and assumptions reflected in these forward looking statements are reasonable, It makes no assurance that such expectations will prove to have been correct. Actual results may differ materially from those expressed or implied in forward looking statements due to various risks and uncertainties. For a discussion of such risks and Please see risk factors detailed in the company's annual report on Form 10 ks, those contained in subsequently filed quarterly reports on Form 10 Q as well as in other reports that the company files from time to time with the Securities and Exchange Commission.
Any forward looking statements included in this earnings call are made only as of the date of this call. We do not undertake Any obligation to update or supplement any forward looking statements to reflect subsequent knowledge, events or circumstances. Now, I would like to turn the call over to Gerard Michel. Gerard, please proceed.
Thank you, everyone, for joining today. DelCap has had a productive Q3 of 2022 for both hepatobKid, the company's product development candidate in the United States and ChemoCyt, the company's market in Europe. In the U. S, we have 2 centers enrolled and currently treating patients under the Expanded Access Program or EAP with a 3rd center enrolled in pending training. In addition, 4 other sites are in various stages of the startup process These include sites that were not involved in the FOCUS trial.
We are on track to file the Hezano class 2 resubmission of the NDA to FDA by the end of December. We expect that within 30 days after the submission, the FDA will confirm receipt of the submission and if they agree the resubmission is sufficiently complete to warrant review, Establish a PDUFA date 6 months from the submission date. As we previously reported, in the Q3, our retrospective analysis of patients Treated with chemo stat in 3 European centers, 1 in the Netherlands and 2 in Germany, between February 2014 December 2019 was published. The analysis involved 212 PHP procedures on 101 patients. The publication reported an overall response rate of 59.4% at a disease control rate of 89.1%.
The safety analysis showed mostly Grade 1, 2 and self limiting toxicity Consistent with previous reports on PHP, this continues to add to the growing body of published research documenting the efficacy and safety of our chemo system in the European Commercial Center. Researchers from Leiden University Medical Center in the Netherlands are making rapid progress Recall the goal of this combined Phase 1b randomized Phase 2 trial is to study the safety and potential synergistic effects of systemic immunotherapy, ipilimumab and nivolumab or ipilimumab when combined with Delcat's proprietary liver target treatment and metastatic uveal melanoma patients. We look forward to the completion of enrollment into this trial, possibly as early as late next year given the pace of recruitment And to provide updates on the progress of the 7 patients who completed the Phase 1b course of the trial, at ASCO earlier this year, the investigators reported an ORR of 85 If similar results are seen in the current larger randomized Phase 2 portion of the trial and the combination continues to be well tolerated, It could represent a significant improvement over current standard of care, including THP alone. While the results will be important in terms of the for sales, marketing and distribution activities, which occurred on March 1, 2022.
Excluding the Netherlands, where most patients are now being treated in the CHOPAN Our units increased 41% over the same quarter last year and increased 26% versus the 2nd quarter. These submissions are reliant on the publication of the FOCUS trial results, which will now occur early next year. The first submission for national coverage will be in the UK. In late October, we agreed with MEAC, the previous distributor of ChemoSET in the UK and EU On terms to settle the parties' ongoing dispute over the termination of the distribution agreement, the parties will reach definitive settlement agreement before the end of 2022 And with this dispute behind us and the planned upcoming publication of focused trial results, we are confident that Europe will become a meaningful revenue contributor to the business With EU revenues likely growing along with U. S.
Commercial launch of HEPSATO if approved next year. Also in October, we successfully completed and notified body audits to recertify our Queensbury, New York manufacturing facility for ChemoSET under the European Medical Device Regulation or MDR. While recertification even under the new MDR regulation has become routine for the company, It is important to keep in mind that our team at Queensbury has been undergoing audits for years and I'm confident that we are well prepared for a pre approval inspection from the FDA. Finally, we continue to lay the foundation for the planned commercialization of HEBSADA. During the Q3, we held advisory board in the United Interventional radiologists and anesthesiologists to gain further insight into the way treaty facilities will utilize Obsatto if approved within their continuum of care.
We have solidified our market access plans and are confident that for Medicare patients, Hepsata will primarily be reimbursed using pass through status, initially with the miscellaneous C code before being assigned our unique C code. We are carefully watching Uniper's progress and noticed that in their 1st full quarter, We obtained a unique C code and booked $20,000,000 in revenue from U. S. KimTrax sales, despite being restricted to less than 50% of the patient population given their mechanism of action. Based on publicly available information, the U.
S. Contract is Priced at a level, which equates to approximately $925,000 per patient based on the average duration of therapy reported for their pivotal trial. An equivalent price for the Exaneum kit would be somewhere between $150,000 to $225,000 per kit, Depending upon whether the price is based on a 9 month duration of therapy or 6 kits or 4 HEPSETO treatments over 6 months, The mean number of treatments from the BOCUS trial, while it is premature to finalize the price, this dynamic is important Combined with a very focused set of treating centers we will support and the growing number of EAP sites will translate into rapid revenue growth, A short runway to becoming cash flow positive and very strong operating margins. Obviously, there is much to get done between now and launch, but the commercial potential This first indication and the value it represents is clear. I look forward to taking questions.
But first, we'll turn the call over to Tony to review the financials. Tony?
Thank you, Gerard. Product revenues for the 3 months ended September 30, 2022 was approximately 900 $6,000 compared to $395,000 for the prior year quarter from the sales of ChemoSat in Europe. Revenues increased 129 over the same period last year, primarily because we're not booking all European revenue after the termination of the MEDAC distribution agreement versus a royalty in the revenue Research and development expenses for the quarter increased to $4,000,000 compared to $3,000,000 in the prior year quarter, primarily due to higher professional service costs relating to the preparation for our NDA submission at the end of this year. Selling, general and administrative expenses for the quarter were approximately compared to $4,000,000 in the prior year quarter. The increase was primarily due to recording an estimate of $1,200,000 for the settlement of the Mead Act litigation, offset by lower share based compensation expense of $800,000 Other expenses increased to $730,000 from $420,000 due to a full quarter of interest expense and amortization related to our debt financing during the Q3 of 2022.
The company recorded a net loss for the 3 months ended September 30, 2022 of $8,500,000 $0.92 per On September 30, 2022, the cash company had cash, cash equivalents and restricted cash totaling 14,000,000 As compared to cash, cash equivalents and restricted cash to $27,000,000 on December 31, 2021. During the 3 months ended September 30, 2022 and September 30, 2021, we used $5,200,000 $4,900,000 respectively, in our cash and our operating activities. On July 20, 2022, we closed a private placement for $5,000,000 issuance and sale of 690 Each share of common stock was sold at a price per share of $3.98 and the prefunded warrants were sold at a price of $3.97 prefund warrant. The prefunded warrants have an exercise price of $0.01 per share of common stock and immediately exercisable. Yes.
Bell Cat received gross proceeds from the private placement of approximately $5,000,000 before deducting offering expenses. That concludes my financial remarks. I'll ask the operator to open the phone lines for Q and A. Can you please check for questions?
Today's first question comes from Marie Thibault with BTIG. Please go ahead.
Hey, good morning, everyone. This Sam Ibro on for Marie. Thanks for taking the questions here. Maybe I can ask with my first question here. Any updates or color on maybe what's happening behind the Seems here at the CROs, maybe what's left that's needed before getting this resubmission before the end of the year?
Thanks.
Sure. The primary thing at this point is medical writing. We have about 98% of the data from our TCRO, a little bit more to get out of them. But really right now, the gating item is medical writing. And I would say, we're well down the path.
It will be towards the very end of December. If it slips, it will slip slightly a week or so. But I'm confident We're very close to getting it filed and I don't see any major issues in getting it done at this point.
Okay, very good. Thanks for answering that. And then Maybe on the EAP sites here, I might have missed this in the prepared remarks, but maybe how many treatments have been done or scheduled at this point so far? And Maybe how are some of those early learnings there, informing maybe the referral pathway for when you potentially do get At the approval here.
Johnny, can you answer that in terms of how many treatments we've done to date?
Sure Gerard. So to date, we have 7 treatments. There is actually a treatment occurring today at Moffett Cancer Center, so
that would be the 8.
In terms of your question on learnings, we're using the learnings from our European experience and the FOCUS trial in the training and the conduct of the EAP. So it's still a little bit early. We're monitoring the safety of these patients and we don't see any concerns with the adverse events so far that have been reported. And Kevin,
it might be worth you noting what you've noticed some interesting referral patterns going into Moffett, I think?
Yes, we have we've seen some patients being Refer to Moffett Cancer Center as been using hepato as a first line treatment function before treatment with KimTrak. So it's an interesting dynamic that we've seen here kind of sequencing these
And what's interesting is this concept although obvious is not something that we've driven at this point because obviously we're not approved. But this seems to be it's one specific doctor, but he was a very active, I believe active in the trial and he is now steering his It's only I think n equals 2 at this point, if I have it correct, but he's steering his HLA, the patients with the appropriate HLA genotype I'd like to map it to get treated first and then move on to chemtrax. So as I've said before, I don't view that chemtrax as a competitor product. I think it's a win win for Patients and that they're both out there and doctors will figure out a way to use them best in a combined fashion.
Makes sense. Thanks for taking the questions.
Thank you. And our next question today comes from Scott Henry of ROTH Capital. Please go ahead.
Thank you and good morning. I guess just starting on the FDA process, Yes. First, do you think there's any risk to it being a 6 month review? It would seem likely given the indication. And Any thoughts on whether there'd be a panel, as well as do you have any planned meetings prior to the filing?
Thank you.
Yes. In terms of risk of it being a lever and a 6 month Review, we're trying to make sure that the package is complete as possible. And quite frankly, we've been focused on making it very easy to navigate. If you take everything given to you as some of the writers, some especially the non clinical writers give it to you, it can be a bear to an abrogate. So We're trying to make it and there is fair amount we could do as easy as possible to navigate and review.
The second thing in our favor is that it's not a particularly large filing. The drug has a long history behind it admittedly, but it's not a very large filing being a single trial that we're submitting. But The FDA, we all know they are overworked and they have kicked some things down the road. So we're hopeful not and we're doing everything we can on our end to avoid that. In terms of any meeting scheduled with them, none at this particular time.
And in terms of advisory, I think it's probably as likely as not, but we will of course be prepping forward as if we have 100% certain That will happen. Obviously, there'll never be enough time to prepare if you wait for the notice.
Okay, great. And then with regards to the European revenue trends, certainly good sequential growth from 2Q to 3Q. Should we expect Continued sequential growth or will it be kind of lumpy?
Yes, these are still fairly small numbers. So by definition, when you have small numbers, it can be very lumpy at times. Most of this revenue is coming from Germany and the UK. In the U. K, we have a rep.
We hired 1 a little bit before getting the product back. We've actually converted an MSL to a rep. And in Germany, actually, it's just it's all referrals on their own. Basically, the product has been on autopilot for years. We are I think some of that growth is definitely due to our efforts.
I think lumpiness is probably in order. I think what will really drive revenue In the short term, it is us hiring a rep in Germany to help improve referral patterns. As I mentioned a second ago, it's all kind of on autopilot. And then longer term, what will really drive revenue will be UK reimbursements. We'll probably focus on France at some point as the next market given the burden of disease.
When the Chopin trial winds down, But I think the focused trial data is the last dynamic. When that gets published, I think that will help a tremendous amount. But As is always the case, it's a matter of getting reimbursement in each individual market that will take a number of years. So, steady growth, But we need to get those reimbursement submissions in.
Okay, great. And final question just with regards to The EAP site, 8 procedures seems like a pretty good number. I guess, how should we think about the volume per site? Is this like a once a week type procedure? I guess, 1, does it go I imagine it goes up volume goes up significantly once the product is approved.
But just In general, how do you think about and obviously there are higher volume and lower volume, but on average, how do you think about volume per site As far as number of patients post approval based on what you've learned so far, just any color there would be helpful. Thank you.
Yes, that's a great question. And we've been obviously focused on that ourselves. And I think it will vary not surprisingly dramatically by sites. I think an average of 1 a week per site is probably a reasonable efforts After some period after launch, in terms of getting the sites to that level prior to launch Via the EAP, we have to make an effort with our MSLs. We have one right now to drive patients, inform Clinicians about the sites and the referral patterns in a compliant manner, of course.
Could we get it up to 1 a week prior to that? That probably would be a reach given our current resources. But I think the demand is certainly there. We're able to communicate it. But again, we're being very careful as to how hard we hit the accelerator.
I think I've said this before, Just trying to harbinger our resources at the moment. But I think post launch, I think 1 a week is feasible and I think we probably could get to maybe as high as 20 sites over time within perhaps 2 years post launch. But we're hopeful that we'll have
Okay, great. That's helpful. Thank you for taking the questions.
Thank you. And our next question today comes from Yale Jen with Laidlaw and Company.
Good morning and thanks for taking the questions. Gerard, I remember that there is For the Focused study in terms of the final survival data, that potentially could be available, I believe by May of next year. If that's the case, would you need to further submit that data to the agency For the approval or that's not relevant in that for that process?
The primary endpoint of the Trial is objective response rate, so there won't be any need to update the data. The data we're Billing to the FDA is a slight update since the last update we've given publicly. And in regular filings, if there is Abstract is something that we published with a further update that will go into the FDA. So they would be informed, but it wouldn't be a significant update. So short answer is no.
It's not necessary. It's not part of the process, but they will be kept informed.
Okay, great. That's very helpful. Just 2 more quick ones. First, housekeeping questions that Based on the expenses, operating expenses, should we anticipate that going down further Sequentially compared to Q3 for the Q4, how should we think about that?
I think you just assume they're about on a steady state for the next 2 quarters.
Okay, great. And maybe the last question here is that once the FDA accept the Application, I assume a month after it was submitted. Could you tell us The procedure or the process in terms of the FDA facility inspection and Ask for timeline of that, so that's probably the last piece for the agency to in the process to complete their work.
Yes, there's no formal cut and dried, it's always X, but I would expect 4 to 6 weeks prior to the PDUFA date, Then scheduling a preapproval inspection.
Okay, great. Okay, great. That's very helpful and congrats on all the progress And look forward you guys filing the things before end of the year.
Thanks, Gil.
Thank you. And our next question today comes from Bill Mulgan with Canaccord Genuity. Please go ahead.
Hey, good morning and thanks for taking the question. So after a recent FDA advisory committee for another oncology product in a small orphan population. There's
A little bit more of
a renewed focus on what the FDA is expecting to prove efficacy in a single arm trial in So I was just hoping you could kind of hit the highlights again. I know you've gone through it before, but In terms of what the FDA expected or required of your pivotal data, specifically as you can, What they needed to see to prove efficacy and any to the extent that you were able to Compare that to results outside of your trial, the suitability of that And how satisfied the FDA will be that, that HEBSATO Is achieving the level of response needed for approval?
Sure. Well, I think the first thing is a single arm trial and what the FDA stated to us when we were discussing with them turning this into a single arm trial is they wanted clinically meaningful objective response rate, that had a clinically meaningful duration of response. Picking up that second one, duration response, because that's the simplest. They asked us to do a follow-up for at least 6 months to demonstrate that the duration of the response was meaningful. And what we actually had was a 14 month duration and that is Frankly hitting the ball out of the park in terms of durations.
So we know we're on very, very solid ground there. In terms of objective response rate, that's a little harder to point to something specific the FDA has said to us. Now we did tell them that we were Power in the trouble trial to show a meaningful improvement based on a meta analysis of immuno oncology agents. And we had our lower bound needed to be 8.3% on that, our lower bound was 26.4%. So obviously, we're well over that Now the FDA might decide that that in itself is inadequate and we of course will input in terms of evidence in terms of a comparison.
So we have other things we can pull upon, which are some are quite obvious. I think the most compelling one is to look at OS, our OS is fairly similar to what the Ventifoss showed, and we had sicker Patients in terms of we had first, second, third line patients. We have a variety of parameters that we can compare it to and will Based on their published data, it demonstrates that our patients were further along in the disease process that we came within spitting distance of their overall OS. And then if we look at 1 year OS, they were, I believe, 77%. We were at 77 Excuse me, survival for a year, they were at 73%.
So we have a number of things we can point to. If we look at more Older survival data pre contract to bevintopust publication, we're well over, It's well under a year in terms of survival. So that's well in our favor as well. So I think With our overall OS, we said 19.25 percent last time we gave an update, but that was versus The BAC, that little stuff, the PericStar, we have 14.5 months. We have that delta.
MetOS continues to mature, so that's definitely not the final number. It compares Reasonably favorably with our KinTrak. We have the meta analysis in terms of ORR, objective response rate and that our response rates Our head and shoulders above anything else out there. Most response rates are single digit. So and then the duration of 14 months.
So taken in totality, I think we're in great shape. But the last thing I would mention is although we haven't published this, I have stated Qualitatively, our response rates, our category of response rates, whether or not you are complete responder, a Partial response or progressive disease that all correlates with survival quite cleanly. So therefore, we can show that the response rate, The ORR is meaningful in terms of rollouts, which is always the case for all classes of therapy. So that's an important component as well. So I've thrown a lot at you, I think we have a lot at our disposal.
So I just wanted to make sure I was complete with that.
Absolutely. I appreciate the thorough answer. Thank you.
Thank you. And ladies and gentlemen, this concludes our question and answer session and today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful