Of our June 2025 Small Cap Conference. I'm Alex Hantman, and I serve as an equity research analyst here at Sidoti & Company. Today, we're pleased to be in conversation with CEO and Chairman Greg Duncan of Dogwood Therapeutics, ticker DWTX. 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. With that, Greg, I'll turn it over to you.
Alex, thank you very much. I would like to thank and welcome everybody to today's presentation to learn more about Dogwood Therapeutics. Dogwood is traded on the NASDAQ Exchange under the ticker DWTX, as Alex just mentioned, and we're developing a novel new pain drug. The drug is called Halneuron, and it is a non-opioid Nav 1.7 specific channel inhibitor to treat both chronic and acute pain. I am the Chairman of the company and have been so for about the last five years or so. Let me start by introducing you to the team and a little bit of our experience. In addition to myself, I work with a terrific team of development experts and commercialization experts coming from various backgrounds: small biotech, academia, large biotech, and bellwether or bulge bracket, if you will, pharmaceutical companies like Pfizer or J&J.
We have a strong history of developing drugs that have become household names. My first drug launch, for example, was a drug called ZOLOFT back in 1992. I've had teams that have launched drugs like Viagra and LIPITOR. Importantly, in the stable of drugs we've worked on, because we're focused on pain here at Dogwood Therapeutics, are Celebrex and Lyrica, two household name drugs to treat pain, CIMZIA, an injectable drug to treat rheumatoid arthritis, and SAVELLA, a drug for fibromyalgia, another pain condition. I won't go through the background of all of the team members, but I would highlight Mike Gendreau, our Chief Medical Officer, who is an MD/PhD in pharmacology, and he actually served as a consultant to the FDA to develop the guidelines that are used to approve chronic pain therapies.
Not only do we understand the research and commercialization space, but we have a very good handle on the regulatory requirements to get a drug to the marketplace. If I were to give you a snapshot of the company, this Nav 1.7 research pipeline has potential, as I mentioned, in both chronic and acute pain. Our lead program is in chemotherapy-induced neuropathic pain. Many patients get cancer each year. Unfortunately, about half of them turn to chemotherapy as a treatment. Chemotherapy, because of its indiscriminate mechanisms, oftentimes creates a condition known as neuropathic pain, a chronic long-term pain condition.
Halneuron, the lead program, is in actual CINP, or chemo-induced neuropathic pain, and has been granted fast-track designation, which allows us more rapid discussion with the FDA and is potentially a precursor to breakthrough designation based on both the unmet medical need in the space and the novelty of our existing data. In addition to data in CINP, we also have data to show that Halneuron is safe and effective to deliver statistically significant reductions in pain for patients with general cancer pain. They get the cancer diagnosis, but we have data supporting that those who go on to chemo show pain reduction, as well as those who try other therapies. This drug could be a very good palliative care pain drug for patients, broadly speaking, in the cancer community. We also believe this mechanism has significant potential in post-acute surgical pain.
The duration of response that we see in responders to Halneuron is upwards of two months. You can imagine, if you have a hip replaced or a knee replaced, using this drug to get people through that acute pain period, to get them up on their feet, to start their rehab better, because we know by controlling acute pain, we deliver better post-surgical outcomes. Halneuron fulfills the requirements of an ideal analgesic. We've shown pain reduction data in phase II studies in both broader cancer-related pain and chemo-induced neuropathic pain. As I mentioned before, the average response for responders who respond during an initial trial is upwards of almost two full months. There is no evidence of addiction, euphoria, or tolerance buildup, a common issue with opioids, which unfortunately are used to treat many patients with cancer-related pain. We have demonstrated safety in over 700 patients.
We have an intellectual property protection that's going to expand in the middle of this year. Plus, we have trade secrets and know-how, which I'll come on to in a minute, which are quite a bit different for this particular asset. As I mentioned earlier, there's nothing approved to treat CINP, so there's a very significant commercial opportunity for Halneuron as it goes through its development phases. Let me talk a little bit about the company. Back in October of last year, we executed a strategic transaction to acquire a company called Pharmagesix (Holdings). Within the umbrella of Pharmagesix (Holdings) is WEX Pharmaceuticals, which owned Halneuron, the Nav 1.7 program, and the other programs that are associated with this particular mechanism. Pharmagesix (Holdings) was owned by CK Life Sciences, which is a Hong Kong-listed company, publicly listed on the Hong Kong Exchange.
The market cap is a little north of $650 million, depending on the day. The transaction we executed with CK Life Sciences was we acquired the asset, we acquired their team, they contributed $20 million in capital to get the company through the initial phases of research and development, and we gave them a combination of both preferred and common shares. We intend to convert their preferred shares at some point, subject to shareholder vote, in the next six to nine months. That combination of preferred shares, which convert at a ratio of 10,000 to one into common shares, will take our public float from just under 2 million shares to upwards of 27.5 million shares. Post that vote, effectively, we will have 27.4 million shares. We will have a very large, stable shareholder with several board members.
That stable shareholder means we have a very tiny float even in the future. As you'll come on to, and I'll come on to in a minute, good news moves our stock. We've seen very significant trading given our small float on very good news, with trading of over 90 million shares, six or seven times this year. That's a little bit about the shareholder background and the cap table. It's a little confusing if you look at your base summary right now, which is 1.9 million shares. Post this conversion, we'll have 27.4 million shares. That takes a market cap well over $135 million on a fully diluted basis. Why are we so excited about this new asset? Nav 1.7 inhibition represents a very logical target. Why do I say that? Many of you are probably aware of a condition where patients can't feel pain.
You may not know that the formal name for that condition is congenital insensitivity to pain syndrome, highlighted here in the New York Times Sunday Magazine article. The primary reason these people do not feel pain is because they do not have Nav 1.7 functioning. The Nav sodium channels sit in your peripheral nervous system. They send a signal of pain, burn, some stimulus from your extremities into your central nervous system, your brain, and effectively, you pull back from that stimulus or you stop injuring yourself. These patients do not have that read-through, so as a consequence, they do not feel pain even for serious injuries or burns. The opposite end of the spectrum is erythromelalgia. This is when these Nav channels are constantly firing. They are constantly opening, and these patients feel extreme pain all of the time.
These patients talk about wanting to get out of their own skin because the pain is very substantial. What Halneuron does is it takes the 99.99% of the population that has active Nav 1.7 functioning, which in the case of chemo-induced neuropathic pain is overfiring, giving them the pain read, and it calms that channel down. It resets that channel and reduces pain at a statistical and clinically significant level. That frames, if you will, why we're so excited about this particular target. A little bit about the condition, and then I'll talk about the data supporting our hypothesis. Chemo-induced neuropathic pain is caused by nerve damage associated with chemotherapy. You're probably aware, chemo doesn't just target tumors. Unfortunately, it is somewhat indiscriminate in its targets. That leads to pain, numbness, tingling in the hands and feet and the extremities.
CINP is generally characterized as mild, moderate, or severe, like most diseases, but three-quarters of the disease tends to be moderate or severe in nature, significantly disabling patients and, in fact, impacting their quality of life. Estimates suggest that over 70% of patients, while they're going through chemo, actually experience neuropathic pain. Some, in fact, stop the chemo because the pain is so severe. Interestingly enough, six months after a patient's last chemo dose, still 30%, or roughly one-third of those patients who've gone through their chemotherapy regimen, are still exhibiting chronic neuropathic pain. Chemo is not expected to go away. In fact, chemo is expected to increase by over 50% over the next decade and a half because we're diagnosing cancer earlier and patients are living longer.
Fully, one-third or more of these patients ultimately turn to opioids to treat their pain because nothing else works. There is nothing approved. People try all other drugs off-label and ultimately land, in many cases, on opioids, which, as we know, are a bad long-term choice. Each year, there are about 20 million new cancer patients diagnosed worldwide. About half of them go on to chemo. If you take the epidemiology data, there are roughly 3 million people who are suffering from chemo-induced neuropathic pain six months after their last chemo dose. That number is expected to increase to 4.5 million by 2040. It is a very significant unmet medical need and, as a consequence, a very significant commercial opportunity. I mentioned opioids are the mainstay choice for many, many patients, which is a bad fact. I think we all are aware of this fact.
It's a health priority agenda here in the U.S. to get people off opioids, as it is in virtually every developed country across the world. Though we've made some progress, it pains me to tell you that 53 patients died from opioid-related deaths in the past 12 months alone. That's a bad fact, and we have an opportunity to change that with a safe and effective non-opioid pain alternative. A little bit about Halneuron. This is a very unique asset. We're very excited to be developing this asset. The active ingredient in Halneuron is tetrodotoxin. Tetrodotoxin blocks the Nav 1.7 sodium channel. The way we identify this is through people's eating habits in the Asia-Pacific region. In fact, pufferfish, as you may know, are a delicacy in many high-end restaurants in Asia.
When people eat too much pufferfish, they actually get numbness in the mouth, which was the first hint of analgesic properties of this particular compound. Halneuron is administered as a sub-Q injection, and we actually take Halneuron from the ovaries of pufferfish. We identify where the fish are. We actually catch the fish. We process the fish, create a lyophilized powder that, when mixed with saline or some form of solution, can be injected into patients to reduce their pain. This process is quite laborious. In fact, one of the reasons we acquired Pharmagesix and Halneuron is because there has been no other company other than WEX Pharmaceuticals that has created this level of scale to run clinical trials. You can get tetrodotoxin in very, very small doses, but this laborious, somewhat intensive process is owned fully by WEX Pharmaceuticals.
We are pleased to tell you that that process provides great intellectual property protection. I am more pleased to tell you that we are going to expand that intellectual property protection with a fully synthetic version of this process, which we have now developed. I will come on to speak to that in more detail in a minute. As I mentioned before, the Nav1.7 sodium channels are located in your peripheral nervous system. You get a stimulus at your hands or your feet, fire, cold, extreme hot, or pain. That neuron, excuse me, sodium channel from that damaged neuron actually sends a signal to your brain to get away from that stimulus. That is what keeps you alive. These pain impulses travel along these sheaths. Effectively, what Halneuron does is it actually calms that nerve. It inhibits that sodium channel from firing and slows down that pain signaling.
Virtually all pain drugs work through some form of reduced signaling, and Halneuron follows that same basic process by focusing specifically on the Nav 1.7 sodium channel. We have clinical data to support this hypothesis. I'll share data from two trials with you. One is a phase II cancer-related pain study of 165 patients distributed amongst both placebo and drug. In this trial, Halneuron demonstrated statistically significant pain reduction. Specifically, if you focus on the red boxes on the left-hand side of slide 10, you'll note that of those treated with tetrodotoxin, 51% responded. Response here is defined as a 30% or greater reduction in pain or a 50% or greater reduction in opioid use. The delta versus placebo here of 16% was statistically significant in this relatively small trial. I would say that the placebo response in this trial was actually quite high.
We would expect a placebo response for a team and sites that are educated on how to manage placebo response would be closer to 20% or 25%. Nonetheless, the 16% delta was statistically significant. For those of you who are familiar with biotech, will know that you need to show statistically significant efficacy to gain approval from the Food and Drug Administration. Highlights of this trial suggest that we have a safe and effective drug. In this particular trial, Halneuron was dosed twice a day, so two injections over eight days. The endpoint was measured one month after this treatment, and we have exhibited an acceptable safety profile to progress the drug into phase II-B and ultimately phase III development. This is the first hint to myself and the rest of the team that this drug really had legs as exhibited in a clinical trial.
The team we acquired did something very smart. They asked those patients who responded to therapy if they would consent to participate in a longer-term assessment of their efficacy. They were not treated once they left the trial, but they consented every 15 days to convey whether they still had significant pain response as compared to when they started the trial. What you can see here are the patients that consented to progress into the long-term extension. Not everybody did. People's daily lives get in the way of clinical trials. They move, take the kid to school. Nonetheless, we had several dozen patients in both the drug-treated group and the placebo group consent to continue to assess their therapy through calling in every two weeks.
Every line on this chart represents either a Halneuron responder in the light blue at the top of the slide or a placebo responder in the dark blue at the bottom of the slide. You can see that the pain response for a Halneuron, the pattern of response is quite different. In fact, the Halneuron responders demonstrated an average response of just under 58 days, almost a full two months of response post their last dose. In fact, we had several patients go over 350 days, one as high as 540 days. This suggests some form of reset or remodeling, if you will, of the Nav 1.7 sodium channel such that this pain response is quite durable, which sets this drug up quite well for pulse dosing over time to control neuropathic pain.
As you can imagine, in something like post-acute surgical pain, this duration of effect could be quite useful in getting patients back on their feet post knee surgery, hip surgery, shoulder surgery, and into rehab much more quickly without having to utilize opioids. Contrast that with the placebo response, which is only 10 and a half days. That response wears off quite quickly, and we really believe this could be a very significant distinguishing feature of this particular therapy. Get patients under control, have a long duration of response, and then pulse dose over time. There is a second trial I'll highlight, which is specifically in chemo-induced neuropathic pain. This was a smaller trial with five arms: placebo, low dose, mid dose, and two once-a-day and twice-a-day high-dose formulations.
This is effectively what we call in the business a signal-seeking study, where we're trying to see if high dose works better than low dose and then what regimen of high dose or whatever dose you determine is the most effective works best. In this trial, we determined several things. First, the high dose works better than low dose, which is good because if you have a thesis that a drug does something, that more of the drug doing something more supports your thesis. In fact, we found out the high dose works better than low dose. We also found that once-a-day dosing, which is much more patient-friendly, or once-daily injection worked as well as b.i.d. dosing. The other thing we learned from the study was the effect size.
Placebo response of X and a drug effect of Y tells you what the relative numeric response could be on the outcome FDA uses to approve new therapies. We used those data to calculate what the statistical sample size needs to be in forward trial to show statistical significance. That is, in fact, what we got out of this particular study. The other thing we took out of these two studies was a very good characterization of the safety profile. The cancer-related pain study, the first study I mentioned that showed response and then good duration of response, shares with us that the majority of adverse events are mild and moderate in severity. They last for an hour or two. The half-life of this drug is an hour and a half, roughly. The duration of this side effect, as I mentioned, was quite short.
There were no clinically significant lab abnormalities. Importantly, there were no serious adverse events associated with Halneuron therapy. The left-hand side of the slide represents the safety coming out of the second trial. What you can see here, if you compare the once-a-day dose, which we're moving forward into our next trial, is quite similar to placebo. In fact, the adverse event rate in placebo was, in many cases, higher than the drug-treated group, which is a good fact when you're developing a new drug. You want to know that it works. You want to know that it works safely. These patients have been through a lot. They've had a cancer diagnosis. They're going to chemo and all the trappings that are associated with chemotherapy. You don't want to test them with a laborious, very heavy side effect drug moving on because that impedes quality of life.
In fact, the only two adverse events we saw were numbness or tingling in the mouth cavity or oral paresthesia. This numbness lasts for about an hour or two. Patients describe this as, "I feel numb when I leave the doctor's office, but much like when I go to the dentist's office for a filling or a cap, that wears off in my car on the way home or on my way back to work." We have a safety profile that was very well accepted by patients in both of these trials. The drug works. It works for good duration. We've identified the dose. We've identified the treatment effect size. We understand the safety profile quite well, which leads us to our ongoing phase II-B trial. In this particular trial, we're randomizing patients to either drug, tetrodotoxin or Halneuron as the brand name, or placebo.
We're giving patients eight daily injections over two weeks. We're measuring the primary endpoint of pain reduction four weeks after they start the trial. These are patients that are moderate or severe in their pain threshold. We're using the endpoint here that FDA uses to approve new drugs and the same endpoint I shared with you in the prior trials. Patients will measure their score on a daily basis, and we're assessing overall global health. The reason we do that is opioids reduce pain, but they actually diminish overall global health. We're measuring sleep, anxiety, depression, and specific pain index scores. The total target of this study is 200 patients. The way we get to 200 patients is by taking the data that precedes us, where we see the effect of placebo reduction versus drug reduction.
We just ladder up the sample size to execute the program with final data due in the middle of 2026. About 12 months from now, we have a very significant clinical milestone data from the full 200-patient trial. We have structured this trial to do an interim analysis quarter four of this year. We will take our data, give it to an external statistical group with rules that will allow them to come back to us. We remain unblinded to tell us what the exact sample size is to maintain 80% power to show a drug versus placebo pain reduction effect in the trial.
So that interim analysis will still tell us if the drug is on track with 200 patients to show a statistical benefit, or it may tell us, "Yeah, you need to go from 200 to 240 to maintain 80% power." The way I would translate that is whatever the final sample size, be it 200 or 240, that interim analysis maintains with the revised sample size or staying with the current sample size in 80% power or 80% likelihood of success if we execute the trial to its conclusion. We're very excited about that interim analysis in quarter four here. First big clinical milestone is quarter four of this year, full data middle of next year. Within 12 months, two very significant clinical milestones. We're very excited about those. We have another important milestone coming up.
I mentioned the process of naturally harvesting tetrodotoxin from the ovaries of pufferfish, catch the fish, process the fish, create the drug. We have now developed a fully synthetic, i.e., man-made process to manufacture this particular drug, tetrodotoxin, using chemistry. That chemistry has now progressed to the point where we can show chemical equivalence between a naturally harvested tetrodotoxin as well as a synthetic version of tetrodotoxin. That filing of new IP will happen sometime in quarter three of this year. If granted, and there's no reason it shouldn't be from our opinion, if granted, we'll reset our patent clock 20 full years and further distance us from the competition. Think of IP as a castle with moats around it. This will be a very significant moat around our castle, which gives us freedom to operate to upwards of 2045.
We're very excited about that third key milestone. That one's coming up in less than a quarter. That's the Halneuron program and the milestones associated with it. We have two other programs, two combination antiviral programs, and then I'll pause for questions. The two antiviral programs are focused on fibromyalgia and long COVID, respectively. We combine an antiviral with celecoxib that has a synergistic mechanism in taking an activated virus back into a dormant state. The fibromyalgia program is ready to progress into phase III. We've agreed the program with FDA. We're talking to external parties about executing that program. The other program is a combination antiviral with celecoxib focused on long COVID. Specifically, we have agreed with FDA to progress the program to develop, excuse me, IMC-2 as a treatment to reduce the fatigue associated with long COVID.
We believe this is the first time that FDA has approved a drug with fatigue as a primary endpoint. We are looking for external funding sources to progress this program with a partner, again, moving into phase II-B development. Two other programs in the portfolio that we will look to license out, if you will, to external parties to progress to their ultimate endpoints. A very rich, significant milestone progression, three specific milestones for Halneuron. We will update everybody on our partnership and external funding for IMC-1 and IMC-2 over the course of our quarter two earnings. With that, Alex, I will turn it back over to you to moderate the Q&A session.
Great. Thank you very much, Greg, for sharing the story with us. A lot of interesting info. Maybe I could just start us off.
You had a very interesting slide about the duration of pain relief in CRP. I know you haven't necessarily proven at this point that you are remodeling the sodium channel, but could we talk a little bit about the significance of that? Is there anything else out there acting at that level of efficacy and kind of where would that put you in the market?
I think it is a very unique feature of Halneuron. I think you're right to point out, Alex, and I will reiterate, we have not proven remodeling because it's very difficult to be able to go in and assess this process. There's no technology that allows us to say, "Okay, let's find the sodium channel and Nav 1.7 channel. What's physically happening?
What physiologic response is happening there?" It stands to reason that if patients who have responded have a response that exists for up to two months, some form of reset is happening. I think that's really, really exciting, not just for CINP. Think about this. Somebody gets a cancer diagnosis. They go through chemo, fever, nausea, dizziness, all that good stuff. Then six months later, they have this debilitating pain state. If we can get patients' pain state under control and then dose them with a few injections every couple of months, it actually is well-suited to their lifestyle. That could be a game changer for these patients. Presuming success here in the interim and the final data for the CINP program, think about what that could mean for post-surgical acute pain. I had my hip replaced 15 months ago.
I got an injection into the site wound, and my doctor, who was a friend or actually a good friend of mine socially, basically said, "You're good to go. Your pain relief will be there for 24 hours." He handed me two smoky bottles full of opioids. I said, "What are you doing? You're the problem." He said, "Oh, you're not the one who's going to get addicted to opioids." I said, "How would you know that? We don't know who these people are." I think the duration of effect of a month or two, like if we're off by half and it's still a month, could be very profound for patients going through surgery as well. We can't prove it yet, but the data would suggest there's something going on that supports that hypothesis.
Great context.
Looking forward, could you talk a little bit about the exciting milestones that you showed, but then also how that aligns with the resources of the company? Is there a need for a fundraise or a commercial partnership? If you could link that together for us.
Sure. I'd be happy to. As we reported in May, just a few days back, we have $17.5 million in capital. We are burning very efficiently at about $5 million a year, a little over $5 million a year. There are some upfront costs to get a study started. Suffice it to say, we are running this public company on 12 FTEs. We have 12 consultants that help us run. We've worked with them for many years and many programs.
We are effectively like a fully integrated team, but only half of those people actually have comp and benefits and all the good stuff that's associated with that. It is a very efficient burn, i.e., we keep the cash focused on the milestones. That capital gets us to the end of quarter one, 2026. Why is that important? We have the new IP filed quarter three of this year. We get to the interim data readout in quarter four of this year. Effectively, presuming the trial stays at around 200 patients, we will effectively have capital to get us very close to the end of this study. Our goal in quarter four of this year will be to assess what's the best way to raise additional capital to finish the trial after the data.
We think the time to raise capital is on that interim news because we'll know what the sample size is. We'll know the duration. And effectively, we'll have a pretty good sense of what the effect size is. That will give us an 80% likelihood of success. We could fund that internally with CKL S, our internal partner, or we could go to external partners. I believe there'll be keen interest in the program. In fact, you probably saw earlier this week, or maybe it was earlier last week, excuse me, that Lilly just acquired SiteOne , which is focused on Nav 1.8, a corollary mechanism, if you will, to Nav 1.7 for about $1 billion. There will be external interest in licensing the drug. Get somebody else to pay for the end of the trial. For phase III, could be an option as well.
Data is king. That gives us the best hand to go raise capital in the future.
Yeah, great answer. I think you just started connecting the dots to maybe a good question to end on, right, which is for folks newer to the name, maybe they're looking across pain management opportunities. Could you sum up the value proposition for these investors as sort of our last question?
Sure. We have a very novel approach, which is supported by both preclinical and clinical data. We have a team that has delivered drugs to market, which is a very important fact. There are plenty of teams that have never gotten a drug across the goal line. I just gave you an ample list of many, including four pain drugs in the experience of the team. We have a very stable large shareholder and a very low float.
That very low float moves on good news. As I mentioned earlier in the introduction, we've traded over 90 million shares six or seven times this year, with 236 million being the high point back in January on news that we were starting to dose patients in this disease, which, by the way, has nothing approved to treat this disease. We have three very significant milestones coming up: new IP to reset the IP clock, an interim readout in quarter four, and final data coming up about a year from now. We are really excited about this. Hopefully, you can tell in this unprecedented mechanism.
Absolutely. It is certainly an exciting time. I would like to thank you, Greg, for sharing the Dogwood story with us. I will also thank everybody here for listening and spending time with us today.
Thank you, Alex.
Thank you all for joining us today to learn a little bit more about Dogwood Therapeutics, DWTX.