Q4 2023 Protagenic Therapeutics Inc Earnings Call

Participants

Alexander Arrow; Chief Financial Officer; Protagenic Therapeutics Inc

Garo Armen; Executive Chairman of the Board; Protagenic Therapeutics Inc

Robert Stein; Director, Chief Medical Officer; Protagenic Therapeutics Inc

Andrew Slee; Chief Operating Officer; Protagenic Therapeutics Inc

William Wood; Analyst; B. Riley Securities

Presentation

Operator

Greetings and welcome to the Progenics Therapeutics fourth quarter and fiscal year 2023 earnings call. (Operator Instructions) Please note this conference is being recorded. I will now turn the conference over to your host, Alex Arrow. You may begin.

Alexander Arrow

Thank you very much. Good afternoon, everyone. I'd like to welcome you to project Therapeutics Earnings Call to review our fourth quarter and fiscal year 2023 year end operating results.
Participating on the call today with me is our Executive Chairman, Dr. Garo Armen; our Chief Operating Officer, Dr. Andrew Slee; and our Chief Medical Officer, Dr. Bob Stein. I'd like to thank them and each one of you for your time and commitment to project therapeutics.
I'm the Company's Chief Financial Officer, Alexander Arrow. 2023 was a pivotal year in the history of our company. During 2023, we began our first ever clinical trial of our lead products, known as PT. zero zero one one four, a drug candidate that has the potential to benefit millions of patients suffering from depression, chronic anxiety, PTSD for drug addiction.
On today's call, will be providing a detailed discussion about the significance of this clinical trial and an outlook for what to expect specifically in 2024 before we before we begin those remarks.
I'd like to note that the following commentary will include some forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from those that we forecast. Forward-looking statements include statements regarding the field of neuro active peptides and the potential for therapies that have a quantifiable effect on anxiety, depression and PTSD or addiction.
The expectation that KickApps will become accepted treatment regimens for neurologic disease conditions and potentially replace less effective antidepressant antics IT Oriente addiction therapies as the standard of care.
Development, regulatory and commercialization efforts and the timeliness of the Company's peak users are one of our drug candidate or any licensees or partners potential for our single neuro peptide drug candidate to reduce the severity of disorders that has been targeted to treat.
The potential for the Company to bring in funding either by monetizing some of its potential future royalty streams or executing a new strategic collaboration or selling stock at a price per share that is higher than current levels and other forecasts of forecasts of future events.
These risks and uncertainties include, but are not limited to those identified under the heading Risk Factors in our annual report on Form 10-K for the year ended December 31, 2023, which has filed been filed today with the SEC.
And now I'd like to introduce you to Dr. Garo Armen, the company's Executive Chairman, to make opening remarks and frame today's discussion. After the discussion of our clinical progress and outlook, I will come back and review our financial performance in Q4 and fiscal year 2023. And then Garo will open the call up to your questions. Garo?

Garo Armen

Thank you very much, Alex. I'm excited to share with you the progress that we've made with Progenics therapeutics in 2023. As we transform the Company into a clinical stage company with the initiation of our first in-human trial of PT. zero zero one one four.
This drug candidate, which is an analog of the naturally occurring neuro peptide, can union C-terminal associated peptide otherwise known as ticker works through a novel mechanism of action distinct from currently available treatments for neuropsychiatric disorders.
PT zero zero one one for precisely target specific neuronal path peptides or pathways involved in the stress response and emotional processing with the potential to restore heavily brain, have a healthy brain function and provide relief to patients suffering from anxiety, possibly depression, PTSD and addiction.
By working in harmony with the brain's innate regulatory system's PT. zero zero one one four may deliver meaningful improvements in symptoms and quality of life with fewer side effects compared to existing medications. And of course, the field knows a lot of the limitations of existing medications.
As you will hear in more detail from Dr. Stein and Dr. Slee, our extensive preclinical research provides a robust foundation for the clinical development of our agents. We believe this groundbreaking therapy could transform the treatment of landscape and bring new hope to millions of people, as Alex alluded to, living with the burden of undertreated and debilitating mental health conditions.
I'd now like to introduce Dr. Bob Stein, the company's Chief Medical Officer, to share with you more details. Bob?

Robert Stein

Hello, everyone. In the quest to address the complexities of neuro psychiatric disorders, our focus at Progenics Therapeutics has been to delve deeply into the mechanisms that underpin our responses to stress and its profound impact on mental health.
Central to our efforts is PTO one one four a synthesized analog of tenure and C-terminal associated peptide or TCAP discovered through the pioneering work of our scientific founder, Dr. David Lovejoy. This groundbreaking therapy acts broadly in the brain with notable effects in the mid-July, the critical brain regions involved in emotional processing and stress response, marking a significant advance over alternative therapies.
Our journey has been guided by a rigorous scientific inquiry, revealing the stress induced knowledge that patients in brain function extend beyond mere symptoms to the very core of neuropsychiatric conditions. The preclinical data on PPO. one one four offer compelling evidence of its capacity to directly modulate brain responses distress, including modulating Limbach in a big dealer activity.
This targeted approach not only promises to mitigate the symptoms of anxiety depression, PTSD. and addiction, but also aims to address the underlying causes of these conditions by restoring neuronal and behavioral balance.
Unlike broad-spectrum therapies that affect the brain in a more generalized manner PTO one one four's precise action on specific neural pathways represents a refined strategy. It holds the potential to improve therapeutic outcomes by engaging with the brain's natural mechanisms for managing stress responses and emotion. This specificity suggest greater efficacy with fewer side effects, aligning closely with the evolving needs of patient care and mental health.
Now that we have advanced PPO. one one four into clinical development. The exciting path forward presents a wide range of opportunities. Our preclinical data support the potential of PTO. one one four to treat anxiety, depression, post-traumatic stress disorder, drug addiction and even conditions such as neurodegeneration.
Our challenge has been to focus and prioritize the indications we explore. The depth of our preclinical insights underscored by a nuanced understanding of TI caps role and stress regulation sets a solid foundation for our clinical trials.
Collaborating with experts like Dr. Maurizio Fava, Harvard University's psychiatrists in chief and leveraging robust pharmacological and safety profiles have initiated clinical trials that are poised to explore PTO. one month four's potential and selected neuropsychiatric disorders.
The implications of our work extends beyond the immediate horizon of drug development. They invite a reevaluation of how we understand and treat neuropsychiatric disorders, emphasizing the need for interventions that tap into and amplify the body's own regulatory systems.
In closing our commitment to uncovering the therapeutic potential of PTO. one one for his unwavering centers, not just about advancing a promising drug candidate. It's about fostering a deeper understanding of mental health and offering hope to the many people afflicted by stress related conditions.
Thank you for your attention, and I will be happy to take any questions you might have about our work at the end of the formal sessions. Now I'd like to introduce you to my colleague, Dr. Andrew Slee, Protagenic's Chief Operating Officer. Andy?

Andrew Slee

Thank you very much, Bob. I'm here today as part of a team deeply committed to transforming the way we approach mental health treatments. Our work with PT. zero zero one month four provides an unprecedented opportunity to bring best in class treatment to people suffering from a broad range of mental disorders.
We have demonstrated preclinically that ITCAP. is both potent and safe and that it has beneficial effects to combat the negative effects of stress. It also has, unlike other CNS acting agents, a very rapid onset and also has a long duration even after a single dose.
We have shown that T camp is effective after injection, either subcutaneously or intravenously and that it can be used after placement under the tongue or delivery internationally. Unlike benzodiazepines such as Valium, it doesn't cause sedation. Furthermore, it does not seem to impact weight gain or impact libido, and we have demonstrated with other classic agents that it does not have the addictive potential of Sentinel or other type agents. And that was carried out by an independent CRO.
In antitrust animals, it can be delivered by a whole variety of routes, as I said, and this gives us an opportunity to ensure that we have compliance with patients. For synthetic analog PT. zero zero one one four actually represents a convergence of natured wisdom and along with or take some credit a little bit of scientific innovation.
This peptide is actually conserved across a fast evolutionary landscape spanning from nematodes to humans. And this suggests it's an integral role. It plays an integral role in CNS function potentially without eliciting toxicities, seen with other agents that are commonly given for mental disorders.
Our approach is grounded in an extensive GLP toxicological study as well as preclinical studies. And we have used both rodents and nonhuman primates, and we have found that we have a very broad therapeutic window. This provides us a solid foundation for moving our application into humans.
As we prepare to test this agent in patients, we have focused on understanding its pharmacology, particularly with focus on developing useful transitional approaches to facilitate movement from bench to bedside. We've evaluated these effects required for an efficacious dose given by various groups and different dosing schedules so that we can optimize our clinical development path.
The operational challenge and our solution has been to navigate the complex transiciel landscape from bench two bid side. Administration route have meticulously selected, as I said, to enhance compliance and accessibility, ensuring that the therapeutic potential of T. cap is fully realize.
We're excited to explore the effects of PT. zero zero one one four in patients anticipating that we will be able to refrigerate very promising activities we have seen in our preclinical models. In the realm of clinical development we have currently under evaluation in SAD, which is a single ascending dose MAD, multiple ascending dose studies involving normal healthy volunteers.
These studies are crucial as they help us delineate the efficacious dose regimen that will be required in humans. Unlike many current drugs that treat mental health, the dose response of PT. zero zero one one four is actually well defined and the drug is very safe.
Therefore, the challenges in navigating the delicate balance between efficacy and safety as seen with other treatment appears not to be that problematic from PT. zero zero one month four. Progress in these clinical trials, not just measured by its potential, but it's testament to our rigorous approach and a patient centric development.
Our insights into the molecule's performance in both acute and chronic model stress underscore a significant leap over traditional small molecule CRF antagonist. Unlike these antagonists, TRF. Sunday for troponin releasing factor, PT. zero zero one one four maintains its activity across a range of stress induced conditions that are relevant in animal models.
And whereas the normal the small molecule CRF antagonist do not perform in chronic models, PT. zero zero one one four does. It blocks say to them. We found that both IPG. zero zero one four and direct CRF blockers work in animal models, as I've said, but the distinction is that we work in a client distress model and inpatient is to chronic stress conditions, not necessarily the acute stress to me the condition that drives the disorders and mental health like anxiety and depression.
This important difference that we have discovering the efficacy of PT. zero zero one one four compared with direct serious blocking has reassured us that we're bringing forward a very important new medicine. As we continue on this path, the strides we're making chemical characterization of the effect of the stage in selected mental disorders are pivotal.
They represent our commitment to reshaping the landscape of the treatment of anxiety, depression, PTSD as well as addiction. We thank you for your support and our belief in our mission. And together, we are stepping into a new era of mental health treatment marked by innovation, compassion, unwavering commitment to improving patients' lives.
With that I thank you and turn it over to Alex Arrow.

Alexander Arrow

Thank you very much, Andy. As you can see from our clinical trial status, the company made operational progress towards its primary objective of developing and commercializing PTGR. one and four during fiscal year 2023, particularly during the fourth quarter. Our financial results reflect an increase in R&D spending to pursue that goal.
In the fourth quarter of 2023, we spent $1.0 million on R&D, which is an increase of 301% over the $258,000 R&D that we spent in the fourth quarter of 2022. This significant increase in R&D expenditures was entirely due to the clinical trial that is now in programs in progress, which commenced just as Q4 was starting.
Our general and administrative spend for the fourth quarter 2023 was just $201,000, which is down 50% from our R&D spend in the comparable quarter a year ago, primarily because we issued no stock options during the quarter and we had no non-cash competition or minimal non-cash compensation expense during the quarter as we previously had in the fourth quarter of 2022.
As for sales and marketing, we spent none in either the fourth quarter of '23 or nor the fourth quarter 2022, as we're not in the market. And overall, our net loss for Q4 was $1.2 million compared to a net loss of $656,000 in the year-ago quarter.
For the full year 2023, we spent $3.3 million in R&D, which is a bit more than double up 109% from the $1.6 million we spent on R&D in the full year of 2022. Our full year G&A of $1.2 million was similar to the quarter. It was down almost 40% from the amount we spent in the year ago period, again primarily because we had only minimal stock-based compensation expense as nearly all of the issued stock options were fully vested at that point.
For the full year, net income, we lost $4.5 million, which is 27% more than we had lost in 2022, driven primarily by our higher R&D spend because of our clinical trial activities.
As for our cash, we ended the year with $4.1 million in cash and cash equivalents, which is down from the $8.0 million that we had as of December 31, 2022. We believe that our current cash reserves are sufficient to fund all of our Phase 1 clinical trial.
With that, I would like to turn the call back over to Garo.

Garo Armen

Thank you very much, Bob, Andy and Alex. In closing, I want to underscore the importance of having transitioned Progenics into a clinical stage biotech company. The novel mechanism of action of PT. zero zero one one four, which Bob and Andy described very nicely, coupled with the promising pharmacological and safety profile seen in preclinical studies, gives us a great deal of confidence in its potential therapeutic activity.
As we look ahead to 2024, our focus will be on efficiently executing the Phase 1 program and preparing for proof of concept efficacy studies in anxiety, depression and other stress related conditions. As you heard from Bob and Andy, we are committed to bringing this potential breakthrough treatment to patients as expeditiously as possible.
This is an exciting time for our company as well as for patients. Of course, the mental health tragedy has been exacerbated with the onset of COVID and other conditions globally. On behalf of the entire leadership team, I want to thank all of you for your ongoing support of our mission to get, I believe we can make a profound difference for patients and families affected by neuropsychiatric disorders.
We look forward to a further updates as we progress our programs. Our agent is progressing in the clinic as planned and our plans for advancing this promising drug candidate remain absolutely unwavering, as you heard. Thanks again for your time and your participation in today's call. And I think now we are ready for any questions that you may have.

Question and Answer Session

Operator

Thank you. (Operator Instructions)
William Wood, B. Riley Securities.

William Wood

Thank you so much for taking our questions and congratulations on a very nice quarter and year on year.
Garo just curious about two from us are curious about the time line for the readout of your SAD and MAD studies. If we should be expecting those together combined or apart? And then what are you what are the next regulatory steps that you have for moving forward into your Phase 2 studies?

Garo Armen

So I'll ask Alex to address the first question and Andy, perhaps you or Bob can address the second.

Alexander Arrow

Sure. So William really good to hear from you. So your first question is the time line for the readout of our SAD and MAD studies. So the SAD single ascending dose study is in progress now.
We plan to have enrollment in that study completed by the end of April and on as described in our last press release, we're planning to have a data readout on that come in within a couple of weeks of the completion of that. So it should be by mid-May.
As for MAD, we intend to start enrolling essentially immediately as soon, as I said, is complete and should have a data readout on that in early Q3, we had previously targeted July for that for the readout for MAD. And so I think that was the right guy to address all of your first question.

William Wood

Yeah. Yeah, thank you.

Garo Armen

And who would like to handle the second one and the additional steps we need on the regulatory front.

Alexander Arrow

You're saying the additional steps to start the Phase 2, William, is that the nature (multiple speakers)

Garo Armen

I think the second question was, what are the additional milestones on the regulatory program as we advance PT. zero zero one one four, I think, Bob, perhaps something.

Robert Stein

Yes, I can address that. We are in the process of finalizing our Phase 2 protocol and we'll have to submit that to the agency for approval. We're confident that we will have that because the compound is very safe and we've seen no safety signals so far.
I think we'll have been able to address an appropriate dose for those studies from some of the biomarker work that we are planning to conduct. And the format is very similar to studies that Dr. Fava has conducted with many other compounds in development for the treatment of anxiety and depression. He is really one of the world's leaders in the design such studies.

Andrew Slee

You may want to say this called a basket trial and has great acceptance with regulatory agencies.

Robert Stein

It's a good point, Andy, because we do believe that the compound will have activity across a variety of neuropsychiatric disorders. And the plan is to enroll patients with examples of each of those and then track along some of the signals that we see for efficacy to enrich for those indications where we see the strongest signals at least initially.

William Wood

Got it. I appreciate that. And then kind of building on that. Just one last question on you're evaluating the healthy individuals in your in your ongoing SAD and then going into your math on should we be expecting any biomarker data from these initial trials, maybe highlighting the neuroprotective effects of understanding that they're primarily safety. But just curious what additional data on possibly biomarker, we may be able to expect.

Andrew Slee

(multiple speakers) on biomarker data, but one of the things one needs to understand is when you do with healthy volunteers and here, we actually treat healthy volunteers. We make sure that everything is calm and so that there's no sort of setting up a stress or invasive condition amongst those.
But there are people who come in and maybe a little stressed. And we are making sure that we're collecting and sufficient amount of materials. So we can actually gauge a responsive biomarker.

Alexander Arrow

But as a biomarker that we plan to announce when we do plan to announce cortisol levels when we announce the both the SAD and MAD results. In each case, we will be have measured cortisol levels and tend to include those in the disclosures.

William Wood

Understood. And thank you for taking our questions. I appreciate and congratulations again on a very nice quarter and year.

Alexander Arrow

Thanks William.

Garo Armen

Thank you.

Operator

(Operator Instructions) It looks like we have no further questions in queue. I'd like to turn the call back over to management for closing remarks.

Garo Armen

Thank you very much, everybody, and thank you very much for your patience and participation through this journey. If you have additional questions, you can always feel free to call Alex and get to one of us. We welcome your engagement on a continuing basis. Thanks again.

Operator

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.