PolarityTE, Inc. (NASDAQ:PTE) Q2 2022 Earnings Conference Call August 11, 2022 4:30 PM ET
Company Participants
Richard Hague – President & CEO
Jacob Patterson – CFO
Conference Call Participants
Operator
Good day, and welcome to the PolarityTE Second Quarter 2022 Business Update and Financial Results Conference Call. Today’s conference is being recorded.
At this time, I would like to turn the conference over to Jacob Patterson, Chief Financial Officer. Please go ahead.
Jacob Patterson
Thank you, operator. Good morning, and thank you for joining PolarityTE’s call to discuss second quarter 2022 results. I’m Jacob Patterson, Chief Financial Officer. On the call today are members of the Executive Team, which includes myself and Richard Hague, Chief Executive Officer and President.
Before we begin, I would like to remind everyone that today’s discussion will include statements about the company’s future expectations, plans and prospects, including but not limited to, statements about our financial resources, operations, our open IND and related clinical trials, and INDs and clinical trials for other SkinTE indications, which constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.
We caution that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated. These forward-looking statements are based on our current expectations and may differ materially from actual results due to a variety of factors, including but not limited to those detailed under the caption of Risk Factors that are described in our annual report on Form 10-K for the year ended December 31, 2021, and subsequent reports filed with the SEC.
Any forward-looking statements made on this call speak only as of today’s date, Thursday, August 11, 2022, and we disclaim any obligation to update such statements to reflect events or circumstances that occur after today’s call, except as required by law.
I’d like to highlight to participants that the call is being recorded. A replay of the recorded call will be available on our website in the Investor Relations section shortly following the conclusion of the call. Additionally, it is the property of PolarityTE and any redistribution, retransmission, or rebroadcast of the call in any form without PolarityTE’s expressed written consent is strictly prohibited.
I would now like to turn the call over to Richard Hague, CEO.
Richard Hague
Thank you, Jake, and good afternoon, and welcome everyone. I have three important topics to discuss today. First is an update on our current Phase 3 cover DFU trial. Second is an update on our recent Type B RMAT meeting with FDA. And third is our plan of operation for advancing the development of SkinTE.
Our 100 subject Phase 3 pivotal covered DFU trial began enrolling in late April with three active sites. As of today, we now have 10 subjects enrolled and 11 active sites, with the goal of having up to 20 active sites by the end of Q3. We expect to have the first 50 of the 100 total subjects enrolled by the end of Q1 and 2023 and be in position to read out interim data approximately six months later. We are targeting full enrollment by year end 2023 with follow-up on all subjects completed by late Q2 or early Q3 in 2024.
As a result of the RMAT designation, we were able to engage in an expedited dialogue with the FDA on various topics related to the steps needed to support a biologics licensing application or BLA for SkinTE. Based on that dialogue, the company plans to pursue a broad indication for diabetic foot ulcer wound types and will run a second multicenter, randomized controlled trial under its current IND to support the submission of the BLA.
We plan to work closely with FDA regarding the design and implementation of the second clinical trial. With the plan to start that trial in early 2023. Based on the clinical development plan outlined in our approved IND, and the RMAT designation granted to SkinTE for both DFU and VLU. We had anticipated that we could run a second trial in VLU in combination with our covered DFU trial to potentially get a multi wound type indication. However, FDA would not provide the commitment we felt we needed to support that approach.
After considering FDA’s feedback, we determined that pursuing a broad indication for all Wagner grade DFUs would be highly advantageous given that these wounds clearly represent the largest market opportunity within the category of chronic cutaneous ulcers and for the fact that there are very limited treatment options for advanced grade DFUs. This approach should also allow us to use many of our current clinical trial sites. And as a result, it has the potential to be faster and less expensive to complete than the VLU trial considered under our previous plan.
If we are successful in gaining alignment with FDA on our second trial, we believe that it will be possible to generate the necessary data from both trials who will offer BLA submission in the first half of 2025. Additionally, FDA indicated that data generated from these trials could potentially be leveraged to support an expedited submission pathway for other wound types in the future. We plan to further engage with FDA to fully define our development plan for other wound indications in the coming months.
Lastly, I would like to briefly share our thoughts related to our plan of operation and corporate strategy. Because we believe SkinTE has the potential to be a game changing treatment for a range of complex hard to heal wounds. Our objective is to get SkinTE back on the market in the most efficient and effective manner possible. We have been highly encouraged with the amount of recent interest we’ve received from others in the industry since reporting on the excellent progress we’ve made in 2022 with the IND approval to kick off of our Phase 3 covered trial and the RMAT designation.
While we have been successful raising capital in the past and we’ll continue to seek opportunities to raise capital to fund the development plan for SkinTE. It is important to note that we are firmly committed to exploring strategic and synergistic opportunities that would support our business plan and subsequently enhance shareholder value.
I would now like to turn the call over to Jake for financial update. Jake?
Jacob Patterson
Thank you, Richard. Operating costs and expenses decreased $3.6 million or 35% for the three months period ended June 30, 2022 compared to the three month period ended June 30, 2021. For the three months period ended June 30, 2022, cash used in operating activities was $8.2 million, which includes $2.1 million of professional fees incurred in connection with our pursuit of a strategic transit action that did not materialize. $0.5 million of costs related to our June offering and $0.6 million of clinical trial related expenses.
Excluding these items, our base operating cash used in operating activities was $5 million or an average of $1.7 million per month, compared to $4.1 million of cash used in operating activities or an average of $1.4 million per month for the three month period ended June 30, 2021. As of June 30, 2022, we had $20.5 million in cash and cash equivalents and working capital of approximately $19.4 million. We believe cash and cash equivalents on our balance sheet will fund our business activities into the first quarter of 2023.
Our goal continues to be maintaining a base operational cash burn, which excludes costs associated with clinical trials and BLA related activities well below $2 million per month on average.
I’d now like to turn the call back over to Richard for additional operational remarks. Rich?
Richard Hague
Thank you, Jake. In closing, I’d like to reiterate how encouraged we are by the progress we’ve made year to-date. With the ramp up of our first pivotal trial and with the additional access we have to FDA through the RMAT designation, we are well positioned to execute on the steps leading to the submission of our first BLA for SkinTE. I’d like to thank the entire PolarityTE team for the dedication and hard work that allowed us to get to this point. I would also like to thank our investors for their continued support of the company.
Operator, I’d now like to open the call for Q&A.
Question-and-Answer Session
Operator
[Operator Instructions] And it appears there are no questions. Therefore, that concludes the PolarityTE second quarter 2022 business update and financial results conference call. We thank you all for your participation.
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