Virios Therapeutics, Inc. (NASDAQ:VIRI) Q2 2022 Earnings Conference Call August 11, 2022 8:30 AM ET
CompanyParticipants
Greg Duncan – CEO
Ralph Grosswald – SVP, Operations
Angela Walsh – SVP, Finance & Treasurer
Conference Call Participants
David Bautz – Zacks Small Cap Research
Sean Lee – H.C. Wainwright & Co., LLC
Operator
Good morning, and welcome to the Virios Therapeutics, Inc. Second Quarter 2022 Financial Results Conference Call. [Operator Instructions] Please be advised that today’s call is being recorded at the company’s request.
At this time, I’d like to turn the call over to Angela Walsh, Senior Vice President of Finance and Treasurer for Virios Therapeutics. Please proceed, Angela.
Angela Walsh
Thank you. Good morning, everyone, and thank you for joining us on today’s conference call. We are pleased to be with you today to discuss Virios Therapeutics second quarter 2022 financial results, as well as to provide you with an update on the operational progress we have made during the past six months. Please note that our financial results press release is now available on our website. We’ll start today’s call with our CEO, Greg Duncan, providing you with a brief update on our corporate progress during the past quarter, and then I will return to review our second quarter financial results. In addition, Ralph Grosswald, our Senior Vice President of Operations, is with us for the question-and-answer portion of the call.
Before we begin, I’d like to remind everyone that statements made during this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially from the information expressed or implied by these forward-looking statements. For more information regarding such risks and uncertainties, please see the risk factors outlined in the company’s filings with the SEC. Any forward-looking statements are made only as of today, and we disclaim any obligation to update these forward-looking statements other than as required by law. Please see the forward-looking statements section in our financial results release issued this morning for more information.
It is now my pleasure to turn the call over to our CEO, Greg Duncan. Greg?
Greg Duncan
Thank you very much, Angela, and good morning, everyone. The team and I are exceptionally excited to provide you with an update on the substantial operational progress Virios Therapeutics Incorporated has made over the past few months. First and foremost, I’m exceptionally pleased to report that under the expert leadership of our Chief Medical Officer, Dr. Mike Gendreau, in July 2022, just one month ago, our final patients completed their 16 weeks of treatment in our landmark 425-patient Phase 2b fibromyalgia clinical study. This study is also known as the FORTRESS Study. Now that all patients have completed their participation in this study, our clinical team and our vendors are working hard to enter final data into the electronic data system to resolve any outstanding inquiries, and to begin the cleaning process leading to database lock next month. Once the database is locked, the data will be transferred to our statistical vendor, along with the unblinding codes to allow the production of the unblinded Phase 2b topline results. We are really excited to maintain our projections to report Phase 2b fibromyalgia results next month. You’ll likely recall, the primary endpoint for this study will focus on the therapeutic effectiveness of our lead development candidate, IMC-1, which as I’m sure you know, is a fixed-dose combination of famciclovir and celecoxib, to reduce systemic fibromyalgia-related pain. IMC-1 pain reduction effectiveness will be measured using the very same endpoint that was used in our previously successful Phase 2a fibromyalgia study. This pain endpoint was also used to assess the effectiveness of the three drugs for the treatment of fibromyalgia The Food And Drug Administration has approved here in the US. We will also assess IMC-1’s effects on a host of other key secondary outcomes measures, related to both quality of care, as well as safety.
In parallel to our FORTRESS Phase 2b Study, our chronic toxicology studies in two species have now completed under the direction of our Senior Vice President Of Operations, Ralph Grosswald. The results of these studies will be required by regulatory authorities before we are permitted to dose-study participants with IMC-1 for intervals of one year or more, which we plan to do in our Phase 3 clinical study program. Results from these chronic toxicology studies are an important element of the package we intend to submit to FDA to facilitate our future Phase 3 program discussions. As a complement to our ongoing fibromyalgia Phase 2b research program, we recently announced that we will be progressing a second development program featuring a combination of valacyclovir and celecoxib into clinical development. This exciting new exploratory trial will assess the potential of this antiviral combination to reduce fatigue and other symptoms associated with long COVID sequelae. This program is being supported through an unrestricted investigational grant to the Bateman Horne Center, a nonprofit interdisciplinary center of excellence advancing the diagnosis and treatment of chronic fatigue disorders, fibromyalgia, post-viral syndromes, and related comorbidities. We project enrollment of patients for the balance of 2022 in this program, with results from the program presently projected for the first half of 2023. For context, long COVID can be very debilitating. It has been estimated to affect approximately 20% of patients who were previously infected with the COVID virus. This prevalence rate translates into well over 100 million long COVID patients on a global basis. Further research will help determine how many patients infected with new variants of COVID, will progress to develop long COVID sequelae. And finally, we want to convey that our current cash position is expected to provide the company with operational runway through the end of 2022.
With that brief update on our operational progress, let me turn it over to our Senior Vice President, Angela Walsh, to discuss our Q2 financials. Angela?
Angela Walsh
Thank you, Greg. As of June 30, 2022, we had $7.7 million in cash, as compared to $14 million as of December 31, 2021. As Greg just mentioned, we expect our current cash to be sufficient to fund the company’s operations through the end of 2022. With respect to our income statement, as a development stage biotechnology company, we did not generate revenue during the three months ended June 30, 2022, or during the three months ended June 30, 2021.
We reported research and development expenses of $2.4 million for the second quarter ended June 30, 2022, as compared to $3.2 million for the year ago quarter. The decrease in research and development expenses quarter-over-quarter, was primarily due to a decrease in clinical trial expenses for our FORTRESS Study of $0.1 million, a decrease in expenses related to our chronic toxicology program of $0.6 million, and a decrease in drug development and manufacturing costs of $0.1 million.
We reported general and administrative expenses of $1.3 million for the second quarter of 2022, as compared to $1.1 million for the year ago quarter. The increase quarter-over-quarter was primary related to an increase in accounting and legal fees of $0.1 million, and an increase in salaries and related costs of $0.1 million.
And finally, we reported a net loss of $3.7 million for the second quarter of 2022, as compared to a net loss of $4.3 million for the year ago quarter. The lower net loss was primarily due to the lower research and development costs I just mentioned.
I’ll now turn the call back over to Greg to moderate the question-and-answer portion of today’s call. Greg?
Greg Duncan
Thank you, once again, Angela. In closing, we believe the role of activated herpes virus as a potential catalyst in triggering diseases like fibromyalgia, fatigue-related disorders, and chronic GI disorders, represents an exciting new innovation paradigm. Virios combination antiviral development programs are supported by both mechanistic and clinical data. The novelty of our approach is further illustrated by the fast-track designation granted by the FDA to IMC-1 for the treatment of fibromyalgia, which, to the best of our knowledge, represents the first time a new drug candidate has been granted this important designation. If the forthcoming IMC-1 fibromyalgia Phase 2b FORTRESS data anticipated next month, are consistent with the data that emerged from our successful Phase 2a study, we believe our novel antiviral combination, IMC-1, could be a game changer for the millions of patients in the fibromyalgia community. I hope you’ll agree that it’s shaping up to be an exciting year at Virios Therapeutics, possibly our most exciting to date. As always, we remain committed to frequent and proactive outreach to the investment community, as well as the medical community, as we progress our journey to improve the treatment standards for hundreds of millions of fibromyalgia patients across the globe.
Operator, we are now ready for questions.
Question-and-Answer Session
Operator
[Operator Instructions] Your first question is coming from David Bautz from Zacks Small Cap Research. Your line is live.
David Bautz
Hey, good morning, everyone. So, Greg, assuming positive results in the FORTRESS trial, aside from meeting with the FDA, obviously, to discuss what the Phase 3 program is going to look like, what other things need to occur, such as maybe CMC issues, drug supply, those types of things?
Greg Duncan
Yes. Good morning, David, and thank you for joining us for today’s call. As you correctly mentioned, job one will be to organize submission to FDA to catalyze forward discussions about exactly what’s required for the Phase 3 program. In the meantime, under Ralph Grosswald’s expert direction, we have already commenced work on CMC preparation to supply a drug for what we anticipate to be one or two Phase 3 studies, depending on where we land with the FDA. So, those activities have actually started from a process perspective. We will then commence manufacturer, if you will, of supply for those studies shortly thereafter. We’re obviously waiting for the data, the Phase 2b data, which we expect to read out next month. And we will then also contemplate the talent we need to hire to bring in to the organization to run what will likely be a larger program in the program we just ran. So, we’ll need extra capabilities, if you will, from a research perspective, from an operational perspective, as we transit over to Phase 3. So, those would be the short-term priorities, in addition to raising additional capital to run the Phase 3, which I don’t think is a secret to anybody. We’ve made that pretty clear through the course of our journey. We will also need to capital scale to fund the Phase 3 program. Does that answer your question?
David Bautz
Yes. Thank you. And turning to the long COVID trial, I’m just curious, what kind of input did Virios have in kind of setting up that trial? And or if there wasn’t necessarily input there, what are you hearing back about how that trial is being run?
Greg Duncan
So, the long COVID program is an exciting opportunity. This is an exploratory program assessing patients that will be treated with a different antiviral combination, valacyclovir and celecoxib. So, a little bit different than IMC-1. The program is funded, as we referenced, historically through an unrestricted investigational grant through the Bateman Horne Center. Ultimately, it is their program to run. They have been cooperative with us and sought our input relative to the different outcomes measures we would assess. So, things like pain, fatigue, mental health complications, will all be assessed as part of that program. We expect the Bateman Horne Center to begin dosing this quarter. Stay tuned. We will announce as soon as that happens. So, that program, based on current projections, should enroll through the balance of this year. And we would expect data from the program to read out some time in the first half, hopefully quarter one, but certainly possible since we don’t control the pace of the recruitment here, could be quarter two of next year, and hopefully with good news there, that could catalyze a second very important program, one that could be, frankly, as large as the existing fibromyalgia program. As you’re probably well aware, David, there’s a great study out of the UK that estimates about 20% of people who have COVID go on to develop long COVID symptoms. A University of Michigan study estimated there’s probably about 100 million patients worldwide, if you believe their epidemiologic data. And that is a number that certainly is larger in fact than the current fibromyalgia community. So, if there’s good news there, we would rapidly progress into a more formal program. And those data, as I mentioned, are projected to be sometime first half of next year.
David Bautz
All right, great. Sounds good. Thanks for taking the questions this morning.
Operator
Thank you. Your next question is coming from Sean Lee from H.C. Wainwright. Your line is live.
Sean Lee
Good morning, Greg, and thanks for taking my questions. My first question is on the fibromyalgia program. Assuming that the FORTRESS rates are positive and you have a meeting with FDA, what’s the kind of Phase 3 study that you imagine right now? I know some of it’s going to be based on the exact data you get and also the feedback from the agency, but in your opinion, what’s the type of Phase 3 study that you would like to run?
Greg Duncan
Yes. Thank you, Sean, and appreciate you joining for this morning’s call. So, if the data from the Phase 2b are positive, we will certainly make the case to do one additional Phase 3 program, inclusive of an extension trial. I think that’s an absolute guarantee, and that one trial could be a multifactorial trial. We’ll reassess IMC-1, placebo, and then the independent components to characterize a relative contribution of both components. Recall, as we’ve mentioned, historically, NSAIDs and COX-2 inhibitors have actually failed in fibromyalgia trials, and a fairly decent trial of an antiviral as a monotherapy failed as well. So, that trial doesn’t scare us, but as part of the fixed-dose combination approach, we will likely have to execute a multifactorial trial, followed by the extension drop. We will make the case that given the size, the scope, the end points of the Phase 2b that should be part of our registration package. We can never guarantee that. And obviously, the data will dictate the robustness of the response in that trial. But in a perfect world, ideally, we would do one Phase 3 trial, but obviously that is subject to further discussion with FDA, based on the quality of our Phase 2b program. So, I think that’s the base of the Phase 3 program. There’ll be other ancillary programs that are probably required, potentially some drug-drug interaction studies, et cetera. But I think at a minimum, we should be focused on a one multifactorial trial and extension trial to glean safety data over the long term. And that will be plus or minus the second Phase 3 program. I think that’s as much clarity at this point as we can proffer in lieu of those Phase 2b data.
Sean Lee
Thanks for that. Just a quick add-on on that then, do you expect the Phase 3 to run mostly or entirely in the US, or do you expect that to be international arms as well?
Greg Duncan
TBD. We would certainly expect at least one trial here in the US. I think between – Ralph was on the call today, and our Chief Medical Officer, Mike Gendreau. We have a really good working, productive working relationship with the US-based fibromyalgia community, and would certainly avail ourselves at executing with those sites again. The question becomes, what do we do for the ex-US markets? Could we run a second program in Europe, part Asia? That is TBD, and as you probably would surmise, Sean, I think there’ll be significant interest in this asset if we are successful in the Phase 2b program. So, partnership, some form of collaboration, is certainly a potential, and partnership ex-US is certainly an attractive way to expand both the research program and also the potential commercial opportunity for IMC-1 in the fibromyalgia vertical.
Sean Lee
Great. That’s all the questions I have. Thanks.
Greg Duncan
Thank you, Sean. Appreciate your participation this morning.
Operator
Thank you. That concludes our Q&A session. I’ll now hand the conference back to Greg Duncan for closing remarks. Please go ahead.
Greg Duncan
Thank you for attending. Thank you, Matt. It’s a really exciting time for Virios Therapeutics, as I referenced in our earlier remarks. As you know, we’re focused on two very significant commercial opportunities, a very large, but unfortunately dissatisfied fibromyalgia opportunity, which represents 2%, if not more, of the worldwide population. And that dissatisfaction in that large market is really anchored to two facts. One, there’s only three FDA-approved drugs to treat fibromyalgia. And unfortunately, all three are CNS-mediated in the mechanism of action perspective. And as a consequence, come with significant side effects, things like sedation. You do have some weight gain associated, increased heart rate, with the available therapies. So, while all three therapies are effective, they are not optimal for many, many patients. And we think a safe and effective new fibromyalgia medicine could have very significant potential to change treatment standards and garner significant reward for the company that gets there.
As we referenced in our remarks log COVID is an exciting opportunity, a bit behind the fibroma opportunity in that it’s exploratory, but we think could also provide much needed relief for the millions of patients that are, unfortunately, suffering the long-term sequelae that are associated with COVID infection. As I’m sure you’re aware, our first-in-class antiviral combination oral IMC-1 has already demonstrated significant pain reduction, reduction in fatigue, improvement in patient functionality, and tolerability better than placebo in that completed trial. And that’s quite important, given the dissatisfaction, at least from our market research, is primarily resident in the side effects associated – the tolerabilities associated with the three approved therapies. This unique approach has gone to the first ever FDA fast-track review designation. I think as evidence of the novelty of that approach, IMC-1, as well as our stable of other antiviral combination therapies, have Composition Of Matter Intellectual Property protection To 2033. And most excitingly, the Phase 2b fibromyalgia results are expected in September of this year.
Our team and Board Of Directors have led development and commercialization of many category-leading drugs, including two of the three FDA-approved fibromyalgia medicines. And I truly believe that experience has enabled us to stay on schedule to deliver topline results from the FORTRESS trial this September. This is clearly important to Virios shareholders, but it is most important to millions of people who suffer from the pain, fatigue, and mental health-related complications of fibromyalgia. In short, we hope to change the standard of care for fibromyalgia patients worldwide if the data from our ongoing Phase 2b FORTRESS trial are consistent with the data we’ve already generated from our previously completed Phase 2a program. Stay tuned as we are roughly one month away from this very important milestone. Thank you all for attending today’s call.
Operator
Thank you. Ladies and gentlemen, this concludes today’s event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
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