Earnings call: Celcuity reports Q2 loss, progresses on gedatolisib trials

Celcuity (NASDAQ:) Inc. (CELZ), a clinical-stage biotechnology company, reported a net loss of $23.7 million for the second quarter of 2024, widening from a loss of $14.6 million during the same period last year. Despite the increased loss, the company has made significant strides in its clinical development programs, particularly with gedatolisib, which is being evaluated in two Phase III studies for the treatment of advanced breast cancer and metastatic castration-resistant prostate cancer. Celcuity also raised substantial funds through equity and debt offerings, totaling $129 million, to reinforce its financial position.

Key Takeaways

• Celcuity’s net loss increased to $23.7 million in Q2 2024 from $14.6 million in Q2 2023.
• Progress in gedatolisib’s clinical development, with Phase III VIKTORIA-1 study enrollment on track.
• Initiation of VIKTORIA-2, a Phase III study for gedatolisib as a first-line treatment in advanced breast cancer.
• Raised $129 million in gross proceeds to strengthen the balance sheet.
• Phase Ib/II trial of gedatolisib with darolutamide in metastatic castration-resistant prostate cancer is progressing well.
• Preliminary data from the prostate cancer trial expected in the first half of 2025.
• Non-clinical research findings on gedatolisib’s effectiveness published in leading journals.
• Company estimates an addition of over $1 billion to the net present value of potential revenue from financing.
• CEO Brian Sullivan addressed the impact of Roche’s inavolisib on Celcuity’s clinical and regulatory strategy, expressing confidence in their approach.

Company Outlook

• Celcuity ended the quarter with $283.1 million in cash, indicating a robust financial standing for ongoing and future clinical trials.
• The company’s strategic financing is expected to significantly enhance the net present value of potential revenue.

Bearish Highlights

• The company’s net loss widened in the second quarter, reflecting increased research and development expenses.

Bullish Highlights

• Advances in gedatolisib’s clinical trials are promising for the company’s future.
• The successful fundraise through equity and debt offerings demonstrates investor confidence and financial stability.

Misses

• There were no specific misses mentioned in the earnings call transcript summary provided.

Q&A Highlights

• CEO Brian Sullivan addressed concerns about the competitive landscape, specifically regarding Roche’s inavolisib, and maintained confidence in gedatolisib’s clinical trial design and its potential in the market.
• Sullivan highlighted that inavolisib’s limited patient evaluation might not affect Celcuity’s strategy, as their drug targets a broader patient population.

Celcuity’s second quarter of 2024 reflects a period of focused investment in its key drug candidate, gedatolisib, as it moves through critical late-stage clinical trials. With a strengthened financial position and a clear strategic direction, the company remains committed to advancing its pipeline and delivering on its mission to bring innovative treatments to patients with cancer.

CEO Brian Sullivan’s remarks during the earnings call underscored the company’s confidence in competing effectively in the market, despite the presence of other treatments like Roche’s inavolisib. As Celcuity looks ahead, the anticipated data from ongoing trials could prove to be a significant catalyst for the company’s trajectory in the biotechnology sector.

InvestingPro Insights

Celcuity Inc. (CELZ) continues to navigate the competitive biotechnology landscape with a focus on advancing its clinical programs. According to recent metrics from InvestingPro, Celcuity holds a market capitalization of $612.85 million and exhibits a significant return over the last year, with a 1 Year Price Total Return of 80.87%. This performance reflects investor optimism around the company’s clinical developments and strategic financing efforts.

InvestingPro Tips indicate that Celcuity holds more cash than debt on its balance sheet, which aligns with the company’s reported robust financial standing at the end of the second quarter. This financial health is critical as the company progresses with its clinical trials. Another notable InvestingPro Tip is that Celcuity’s liquid assets exceed its short-term obligations, further underscoring the company’s financial readiness to support ongoing and future clinical endeavors.

Despite these positive indicators, it’s important to note that analysts, as per additional tips on InvestingPro, do not anticipate the company will be profitable this year, and net income is expected to drop. These projections should be considered by investors when evaluating the company’s near-term financial outlook.

For readers interested in a deeper analysis, InvestingPro offers a comprehensive list of additional tips, providing a more nuanced understanding of Celcuity’s financial and operational status.

Full transcript – Celcuity LLC (CELC) Q2 2024:

Operator: Good afternoon, ladies and gentlemen, and welcome to the Celcuity Second Quarter 2024 Financial Results Conference Call. At this time all lines are in listen-only mode. Following the presentation we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded today, August 14, 2024. I would now like to turn the conference over to Maria Yonkoski with ICR Westwick. Please go ahead.

Maria Yonkoski: Thank you and good afternoon to everyone on the call. Thank you for joining us to review Celcuity’s Second Quarter 2024 Financial Results and Business update. Earlier today, Celcuity released financial results for the second quarter ending June 30, 2024. The press release can be found on the Investors section of the website. Joining me on the call today are Brian Sullivan, Celcuity’s Chief Executive Officer and Co-Founder; Vicky Hahne, Chief Financial Officer; as well as Igor Gorbatchevsky, Chief Medical Officer, who will be available during Q&A. Before we begin, I’d like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, which are outlined in today’s press release and in our reports and filings with the SEC. Actual events or results may differ materially from those projected in the forward-looking statements. Such forward-looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. On this call, we will also refer to non-GAAP financial measures. These non-GAAP measures are used by management to make strategic decisions, forecast future results and evaluate the company’s current performance. Management believes the presentation of these non-GAAP financial measures is useful for investors’ understanding and assessment of the company’s ongoing core operations and prospects for the future. You can find the table reconciling the non-GAAP financial measures to GAAP measures in today’s press release. And with that, I would now like to turn the call over to Brian Sullivan, CEO of Celcuity. Please go ahead.

Brian Sullivan: Thank you, Maria, and good afternoon everyone. We appreciate your interest in Celcuity. We made significant strides advancing the clinical development of gedatolisib this quarter. Overall enrollment in VIKTORIA-1, our Phase III study evaluating gedatolisib plus fulvestrant with and without palbociclib as second-line treatment for patients with HR+/HER2- advanced breast cancer remains robust and on track. Our Phase Ib/II trial evaluating patients with metastatic castration resistant prostate cancer is also enrolling on schedule. And we further expanded the patient population eligible for gedatolisib, when we initiated efforts to launch VIKTORIA-2, a phase III study designed to evaluate gedatolisib, as a first-line treatment option for patients with HR+/HER2- advanced breast cancer. In our view, each of these three programs has the potential to generate blockbuster levels of revenue. If these three programs ultimately result in regulatory approvals, we estimate that nearly 200,000 late-stage cancer patients globally would be eligible to be treated with gedatolisib. We first announced our plans to conduct the VIKTORIA-1 study over two years ago in May 2022. At that time, we estimated that 65% of the patients enrolled would lack detectable PIK3CA mutations and were being signed to the study’s PIK3CA wild-type cohort. And this assumption was used to estimate enrollment by cohort and in turn, the timing of events for primary analysis. We estimated that the threshold number of events required to trigger the primary analysis for this PIK3CA wild-type cohort of patients would be reached in the second half of 2024. And while the study’s overall enrollment remains on track and robust relative to the estimate we made over two years ago, the total proportion of patients enrolled who have PIK3CA wild-type tumors has recently shifted lower. We now project that 60% of the patients enrolled in the study will be enrolled in the PIK3CA wild-type cohort rather than the 65% originally estimated. And this proportion while lower than our original estimate is within the reins reported in other studies. And thus we don’t believe this shift is study related but simply a result of normal sample variation within a population. Despite lower proportion of PIK3CA wild-type patients completed, enrollment for the PIK3CA wild-type cohort is over 80% complete. We expect to reach the enrollment target for the PIK3CA wild-type cohort during the fourth quarter rather than the end of the third quarter as we originally forecast. We now expect the primary analysis event threshold trigger for the PIK3CA wild-type cohort, will be reached sometime between late Q4 ’24 and the end of Q1 2025. Our guidance regarding the PIK3CA mutant patient subgroup remains unchanged, and we expect primary analysis for this cohort to be triggered during the first half of 2025. Turning now to our VIKTORIA-2 study. We announced our plans to initiate this Phase III clinical trial this past May. Study will evaluate gedatolisib plus a CDK4/6 inhibitor in fulvestrant as first-line treatment for patients with HR+/HER2- advanced breast cancer, whose disease recurs while receiving or within 12 months of completing adjuvant endocrine therapy. Now these patients are considered to have endocrine therapy resistant disease. They have a significantly poor prognosis than endocrine therapy sensitive patients whose disease recurs more than 12 months after completing their adjuvant endocrine therapy. Current standard of care first-line treatment for endocrine therapy resistant patients includes any of the three approved CDK4/6 inhibitors combined with fulvestrant. The limited efficacy of these regimens offer endocrine therapy-resistant patients, though, was not well understood until the INAVO-120 study, Phase III clinical trial for the PIK3CA — PI3K alpha inhibitor, inavolisib, reported results last December. As part of this trial, the efficacy of standard of care palbociclib and fulvestrant was evaluated as first-line treatment, in patients who were resistant to endocrine therapy. And for these patients, median PFS was only 7.3 months. And for those patients whose disease relapse within the first 2 years of their adjuvant endocrine therapy, the median PFS was only 3.7 months. And these results compare poorly to the median PFS of 27 months reported for patients who are sensitive to endocrine therapy and receive the same regimen, highlighting a significant need for more effective therapies for patients with advanced breast cancer that are resistant to endocrine therapy. We reported last year the preliminary clinical data from our Phase Ib trial for gedatolisib as first-line treatment in patients with advanced breast cancer. As you may recall, the median progressing free survival in endocrine-sensitive patients who are treatment naive and were treated with gedatolisib in combination with palbociclib and letrozole was 48.6 months and the objective response rate to 79%. And these results compare very favorably to the results reported for palbociclib plus letrozole in this population. Additionally, the INAVO-120 study that evaluated inavolisib combined with palbociclib and fulvestrant in the endocrine-resistant patients reported positive data. Now these patients had tumors with PIK3CA mutations and the patients were not prediabetic or diabetic. So the subgroup only represents about 20% of the total endocrine-resistant patient population. However, the results reported were positive relative to the control, providing further evidence of the critical role the PIK3CA pathway, plays as a driver of disease in treatment-naive patients. In the VIKTORIA-2 study, for the CDK4/6 inhibitor, investigators may choose either ribociclib or palbociclib. Safe profile of gedatolisib combined with fulvestrant and palbociclib is well described, but the investigational combination of gedatolisib with ribociclib has not yet been clinically tested. And therefore, a safety run-in of approximately 12 to 36 patients will evaluate the safety profile of gedatolisib combined with ribociclib and fulvestrant. Safety run-in will be completed and gedatolisib Phase III dose with ribociclib confirmed before enrolling patients in the Phase III portion of the study. For this study, approximately 638 subjects will be assigned to a cohort based on the PIK3CA mutation status. After the investigator selects the CDK4/6 inhibitor for a subject, subject will then be randomly assigned on a one-to-one basis to either be treated with gedatolisib, fulvestrant and either ribociclib and palbociclib or be assigned to an arm that treats patients with fulvestrant and either ribo or palbo. The clinical trial primary endpoints are progression-free survival, per RECIST 1.1 criteria as assessed by Blinded Independent Central Review. And the primary PFS endpoint for each of the two cohorts will be evaluated independently. Studies designed was reviewed and discussed with the US FDA during a type meeting in the first quarter, and then we have also just recently received feedback from the FDA on the study protocol. As part of a Type D meeting, so we can now focus on our feasibility and site selection activities. We expect to activate roughly 200 clinical sites across North America, Europe, Latin America and Asia, and we expect to enroll the first patient in the second quarter of 2025. We estimate that 15,000 to 20,000 patients with endocrine therapy resistant advanced breast cancer are diagnosed each year in the United States alone. Since this population does not overlap with the patient population we’re evaluating in our VIKTORIA-1 study, an approval to treat these patients would increase the size of the addressable US market potential for gedatolisib by up to $3 billion. Given the importance of developing a more efficacious therapeutic regimen for these patients and the scale of the financial opportunity, we decided that it was important to proceed as quickly as possible to initiate a Phase III study for this patient population. To accomplish this, we needed to strengthen our balance sheet which we did this quarter when we raised $129 million gross proceeds from equity and debt offerings. By initiating this trial now, 12 months earlier than we would have been able to do so without this financing, we estimate we added over $1 billion to the net present value of the potential revenue stream from this indication. I would like to turn now to our Phase Ib/II trial that’s evaluating the safety and efficacy of gedatolisib in combination with darolutamide, an androgen receptor inhibitor in patients with metastatic castration-resistant prostate cancer. Study dosed its first patient in February of this year and enrollment is on track. We continue to expect to report preliminary data in the first half of 2025. We are also pleased that our non-clinical research describing gedatolisib’s activity in different tumor types was recently published in two leading journals. In June, Nature Breast Cancer published results from various in vitro and in vivo studies we conducted that compared gedatolisib’s activity in several approved single-node PI3K, AKT, mTOR or PAM inhibitors in various breast cancer models. And in August, Molecular Oncology published results of similar studies in prostate cancer models. Both sets of studies demonstrated the gedatolisib exhibited more potent and cytotoxic effects compared to the single node PAM inhibitors regardless of the PAM pathway mutational status of the cell lines. And these results indicate that inhibition of multiple PAM pathway nodes by a PAM/PI3K/mTOR inhibitor like gedatolisib that’s more effective at inducing antitumor activity than single node PAM inhibitors in vitro and in animal models. Overall, it was a very busy and productive quarter. I’m very pleased of the progress we made. I’d like now to turn the call over to Vicky, who will review our finances.

Vicky Hahne: Thank you, Brian and good afternoon, everyone. I’ll provide a brief overview of our financial results for the second quarter 2024. Our second quarter net loss was $23.7 million or $0.62 per share compared to $14.6 million net loss or $0.66 per share for the second quarter of 2023. Because these quarterly net losses include significant non-cash items, including stock-based compensation and interest, we also included in our press release non-GAAP adjusted net loss for the quarter ending June 30, 2024. Our non-GAAP adjusted net loss was $22.2 million or $0.58 per share for the second quarter of 2024 compared to non-GAAP adjusted net loss of $11.1 million or $0.51 per share for the second quarter of 2023. Research and development expenses were $22.5 million for the second quarter of 2024 compared to $13.8 million for the same period in 2023. Of the approximately $8.7 million increase in R&D expenses, $6.6 million primarily related to activities supporting the VIKTORIA-1 Phase III trial, and the initiation of the Phase Ib/II prostate trial and $2.1 million was related to increased employee and consulting expenses. General and administrative expenses were $1.8 million for the second quarter of 2024 compared to $1.3 million for the second quarter of ’23. Employee and consulting-related expenses accounted for $0.3 million of the increase. Professional fees and other administrative expenses accounted for the remaining increase of approximately $0.2 million. Net cash used in operating activities for the second quarter of ’24 was $18.1 million compared to $9.7 million for the second quarter of ’23. We ended the quarter with approximately $283.1 million in cash, cash equivalents and short-term investments compared to $180.6 million at December 31, 2023. The increase of approximately $102 million in cash and cash equivalents and short-term investments was the result of several financing activities that occurred in the first half of 2024 and yielded net proceeds of $137.5 million. We closed on two financing activities in May, resulting in gross proceeds of $122 million and net proceeds of $115.5 million. The first activity was an equity financing, resulting in $60 million of gross proceeds with net proceeds of $56.3 million. The second activity was a debt offering, resulting in gross proceeds of $61.7 million with net proceeds of $59.2 million. Additional financing activities in the first half of the year resulted from one exercises of $14.2 million, accessing our aftermarket offering of $7.3 million and stock option exercises and employee stock purchases of $0.5 million. The $137.5 million was offset by year-to-date operating cash used of $35.1 million. I will now hand the call back to Brian.

Brian Sullivan: Thank you, Vicky. Operator, could you please open the call for questions?

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Maury Raycroft from Jefferies. Your line is now open.

Maury Raycroft: Hi, thanks for taking my question. Just checking on the enrollment, I appreciate that the time line is moving a little bit. Based on the shift in proportion of wild-type and mutant populations, is it possible that the wild-type and mutant readouts could happen at the same time? Or are you confident that the wild-type and mutant readouts will be staggered? And secondly, is it fair to assume you’ll do another update on enrollment in fourth quarter and provide more specifics on the plan for the readout at that point?

Brian Sullivan: Thanks, Maury and thanks for your question. As far as the timing of announcement of results for mutated, we are maintaining our guidance that we would expect to have those results available sometime in the first half. We’re enrolling the same number of patients in each cohort of the studies, wild-type versus mutant and 40% of the patients are mutated. So that enrollment period will take longer to complete, albeit a little bit sooner than we originally planned because of the higher proportion of mutated patients. But we are not changing our guidance at this time. And as far as updating enrollment, we will continue to update guidance as we have every quarter on when we expect to report top-line results.

Maury Raycroft: Okay. Makes sense. And then for VIKTORIA-2 in the frontline setting, can you talk more about the safety run-in with the 12 to 36 patients. Why is there a range of patients that you could enroll? And are you assessing any variations with dosing strategy? And how long will you have to treat these patients?

Brian Sullivan: I’ll give you an initial high-level summary and then Igor could maybe fill in blanks. Essentially, the study is designed to evaluate, if needed various dose levels of gedatolisib to find the Phase III dose. If we don’t need to reduce the dose of gedatolisib in the first cohort of patients that we are evaluating, then we’ll be able to proceed with the data from that group of 12 patients. And then subsequently, if we find that we need to dose reduce geda, we would enroll another 12 patients and do the same thing again if we had to and enroll another 12 patients. So essentially depending on what results and the outcome of that — of each cohort or one cohort will or may or may not lead you to enroll additional patients. As far as the thresholds, I mean it’s a standard safety run-in design. Igor, maybe you could provide a little bit more color on that question.

Igor Gorbatchevsky: Thank you, Brian. As Brian pointed, it’s very straightforward, safety run-in, three dose level will be tested 12 subjects per each dose level. DLT will be assessed after 1 cycle of treatment is completed. It’s very safe and straightforward event that has been discussed with the regulators and agreed upon. And to Brian’s point, decision about initiation of randomized Phase III study could be done as early as completion of initial cohort’s 12 subjects.

Maury Raycroft: Got it. Okay. Thanks for taking my questions.

Operator: Your next question comes from the line of Tara Bancroft from TD Cowen. Your line is now open.

Tara Bancroft: Hi, good afternoon. I was hoping you could tell us exactly what you are seeing now for the percentage of the split of wild-type versus mutant that you think you’re observing now versus what your previous expectations were? And also just a point of clarification. By target enrollment, you mean completion, right?

Brian Sullivan: Right, right. There is always variation. You may have patients in screening at the end of a period and enroll additional patients just because you can’t — not enroll patients that you’ve potentially already approved to screen once you hit that target, but completed enrollment is correct. So we were at 65% at the end of ’23. And so over the course of ’23, you would see fluctuations month-to-month, which is kind of expected fluctuations are normal. So again, we were cautious in interpreting variation, but because we ended the year at the target number we had set in May ’22, nearly 18 months prior, we thought that — that estimate was solid and what we would continue. Once we hit 80% enrollment, which we did recently, the wild-type cohort, and we are at 60%. We just decided that we should update our forecast to the current ratio — cumulative ratio, which is 60%.

Tara Bancroft: Okay. Great. And then — so I guess, late Q4 for potentially meeting the event time-line. That would potentially fit into the San Antonio conference time line. Is this still maybe what you are primarily hoping for? Because I know that the abstract deadline it passed early to mid-July. So did you submit an abstract or plan on presenting there?

Brian Sullivan: So we haven’t — yes, we are going to — until we get — have an announcement to make about the data. We aren’t really going to go into details about what venue we’ll be reporting that data. And it’s going to be very situational, depending on the timing and relative to the next most relevant meeting. And so once the data is available, we’ll report the top line as soon as we have it, and then we’ll provide guidance on when we would go into more detail at a meeting or go into some detail in the announcement press release.

Tara Bancroft: Okay, great. Thanks so much for taking the questions.

Brian Sullivan: You’re welcome.

Operator: [Operator Instructions] Your next question comes from the line of Brad Canino from Stifel. Your line is now open.

Brad Canino: Thanks for taking my question. Brian, I just wondered, can you talk about how the potential forthcoming approval of Roche’s interval also factors into your clinical and regulatory strategy for frontline, at least for the proportion who will have the mutation? And also, how important is the ultimate label outcome around the metabolic parameter eligibility as you think about this? Thank you.

Brian Sullivan: I’m not sure I understand your question regarding inavolisib as it relates to us. Are you asking that question about how that might affect our first-line study, Brad?

Brad Canino: Yes.

Brian Sullivan: We don’t think it will because they’re only evaluated patients who, a, had the PIK3CA mutation; but b, were — didn’t have — we’re not prediabetic or diabetic, which, depending on the estimates, you can narrow that indication down to 50% of the mutated population. So it really is not a drug that could fully treat the indicated population, which is women who have endocrine-resistant disease. And as a result, we’re — when we’ve reviewed this information with the FDA in several settings. So we are confident in our design and that’s what we’ll be evaluating. So we don’t think that data will affect us. It provides, we think, validation of what we’re doing. They showed in that population that the pathway is involved and inhibition of that pathway can do some meaningful treatment benefit. As far as what’s on the label, the drug had been tested in patients without the strict limitations used in this most recent study, INAVO-120. I think the eligibility criteria were informed by the results in that study. And if I recall correctly, from data they reported, I think in 2021, where patients may have had a cutoff of A1c similar to alpelisib, I think in one of the cohorts they treated were roughly 40% grade 3 hyperglycemia. So I think it would be unlikely that the label wouldn’t address the hyperglycemia risk and the fact that the drug has not been evaluated in patients who are prediabetic or diabetic. And to the extent doctors decide they want to ignore that based on the results that at least were reported on a preliminary basis in these other studies, it would seem that the likelihood of inducing Grade 3 hyperglycemia would be pretty significant. So I think that drug is a similar profile in some ways as alpelisib. They just narrowed their patient population, as a way to avoid inducing high levels of Grade 3 hyperglycemia.

Brad Canino: Appreciate it. Thank you.

Brian Sullivan: You’re welcome.

Operator: There are no further questions at this time. I would now like to turn the call over to Brian Sullivan, CEO of Celcuity for closing remarks.

Brian Sullivan: Thank you very much for attending our call. We appreciate your interest in our company, and I look forward to reporting to you next quarter. Good evening.

Operator: Ladies and gentlemen, this concludes today’s conference. Thank you very much for your participation. You may now disconnect.

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