CYTO - Altamira Therapeutics Ltd. (CYTO) Special Call Transcript

2023-12-13 14:01:03 ET

Altamira Therapeutics Ltd. (CYTO)

Special Call

December 11, 2023, 08:30 AM ET

Company Participants

Thomas Meyer - Founder, Chairman and CEO

Conference Call Participants

Presentation

Operator

Good morning, and welcome to Altamira Therapeutics December 23, 2023 Investor Business Update Conference Call. On today's call is Thomas Meyer, Altamira Therapeutics' Founder, Chairman and Chief Executive Officer.

Earlier today, Altamira issued a news release providing a highlight of its business updates which we will be discussing on this call. The release is available on the company's website at ir.altenurtherapeutics.com and has been filed with the SEC.

During today's call, the company will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that address future operating, financial, business performance, strategies or expectations.

Forward-looking statements are based on the company's current expectations and beliefs and involve significant risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these statements. These risks and uncertainties include, but are not limited to, the timing and conduct of clinical trials, the clinical utility of product candidates, the timing or likelihood of regulatory filings and approvals, intellectual property positions and financial position as well as those described in the Risk Factors section of the company's annual report on Form 6-K and future filings with the Securities and Exchange Commission.

In addition, any forward-looking statements represent the company's views only as of today and should not be relied upon representing its views as of any subsequent date. While it may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so even if it means change.

With that, I will hand the call over to Altamira Therapeutics CEO, Thomas Meyer.

Thomas Meyer

Thank you, Deborah. Hello, everyone. Good morning, and thank you for joining us today as we discuss our recent developments, business highlights and provide insights into the future of Altamira Therapeutics.

We believe it's important to provide here some additional information and updates as our company is currently undergoing an important transition. As you know, our goal is to become a leading provider of technology and safe delivery of RNA. Deploying RNA for therapeutics or vaccines is one of the most exciting developments in human medicine, and we are very excited to have great technology for delivering it to targets beyond the liver and ensure strong release inside target cells.

As we are pivoting to RNA delivery, we have already initiated the process of partnering our assets. These are attractive assets, but overall, we see much greater potential in RNA delivery, and this is why we want to focus on that. We believe that the legacy assets will be better placed in other hands and that partnering will allow for unlocking their intrinsic value.

Proceeds from this process will be deployed to developing our RNA delivery business in a non-dilutive fashion. With the recently announced partial spin-off of our venture business, we took an important first step in this process. So as a reminder, Bentrio is a drug-free preservative-free nasal spray for the treatment of allergic rhinitis, which is also called Hay Fever. With the transaction, we sold 51% of the shares in our Altamira Medica subsidiary for a cash consideration of about $2.3 million to a Swiss private investor.

Apart from the non-dilutive proceeds the deal resulted in a financial gain of about US$5.2 million. Importantly, through our remaining participation of 49% in Altamira Medica, and a claim to 25% of future license income and of Medica's value appreciation in case of a sale, we have retained [60%] of the upside potential of the Bentrio business.

We and our new co-owner consider this upside potential to be substantial. In clinical trials, venture showed great efficacy close to what medicated nasal sprays offer with great tolerability close to what saline nasal sprays offer. The commercialization of Bentrio is done primarily through distributors. We expect sales to our growing network of distributors to increase significantly from 2024 onwards.

For China, one of the largest markets worldwide, we have a collaboration with Nuance Pharma, which began in 2022. Nuance is currently distributing the product successful in Hong Kong and is aiming for market approval in Mainland China and South Korea next year. Altamira Medica will initially supply Bentrio to Nuance and may receive development and commercial milestones of up to $3 million and up to $19.5 million, respectively. Once Nuance assumes local production of Bentrio, it will pay to Altamira Medica, a stagger royalty on net sales at a high single to low double-digit percentage.

For other key markets, notably the U.S., the largest OTC consumer health market worldwide, in Europe and elsewhere, discussions and negotiations with interested parties are ongoing. Bentrio was cleared by the FDA for marketing. However, this is currently not being marketed in the U.S., we keep receiving product inquiries from the U.S. but availability will have to wait until distribution is set up in the U.S. with a strong partner. We do expect major news flow here in 2024. Overall, we are confident to see our stake in Altamira Medica generate a growing revenue stream and result in significant value appreciation.

Now what about our other legacy assets, these comprise several development programs in inner ear therapeutics mostly in the late stages. Partnering discussions are also ongoing here with those around our AM-125 project being the most advanced. AM-125 is a nasal spray for the treatment of acute Vestibular syndrome, a very frequent type of dizziness. The product has been developed to help acutely dizzy patients get back on their feet more quickly. There is no comparable product in the U.S. and we could show a proof of concept in a Phase 2 clinical trial. To date, we have invested more than US$18 million and have initiated a partnering process earlier this year.

We have several interested parties on the CDA, and we expect to have major news flow here during the first half of 2024. Additionally, there are also programs in [indiscernible] AM-101, 102 AMS 103 as well as in hearing loss with AM-111. It's important to note that despite their significant potential, the inner year legacy assets currently carry zero value on our balance sheet, which means that any proceeds derived from potential partnerships will have a direct and positive impact on our bottom line.

With this, I'm turning now to our ambitions and plans for our future core business, RNA delivery. Over the past years, we have witnessed the advent of the first RNA-based therapeutics and then a massive burst of activity also around our mRNA vaccines.

Now this has been only the start. RNA is expected to fundamentally change important aspects of how we treat or prevent diseases. However, even the best and most powerful RNA sequence will be useless if it cannot be delivered to target cells. And if it is not released, they're in sufficient quantities. Great progress has already been achieved for delivering RNA therapeutics to the liver. Employing technologies such as lipid nano particles, LNPs, or so-called GalNAc conjugates.

In contrast, delivery to non-liver that is extrahepatic tissues, has been largely elusive so far and release rates within target sales have been quite poor. With our OligoPhore and SemaPhore platform, we can formulate basically any type of RNA into nanoparticles for intravenous delivery. The nanoparticles distribute within the body to disease tissues in particular to cancer cells or inflamed cells in inflammatory or autoimmune diseases. Within those target cells, the nanoparticles disassemble and released their RNA payload at a rate that represents about a tenfold increase over the current industry standard, which is LNPs.

The platform has been validated across more than 15 distinct animal disease models, utilizing both siRNA and mRNA and performed by various labs worldwide. Our business model for RNA delivery is characterized by a picks and shovel strategy, where we leverage our expertise by licensing out our technology platform to biotech and pharma partners that are developing their own RNA, which means that the development of the RNA drug product is on them, utilizing our platform. Under this model, we expect to generate revenue in the form of upfront and milestone payments as well as royalties on subsequent drug product revenues.

So where do we currently stand with the program? We are very busy advancing the platform through formulation, analytical and process development projects. In parallel, we are working on two flagship programs with OligoPhore to demonstrate the potential of the technology in two indications. With Project AM-41, we are targeting KRAS-driven cancer, such as colorectal cancer or pancreatic cancer. And with Project AM-411, we are targeting rheumatoid arthritis.

Preclinical data and animal models are very promising, and there is a high unmet medical need for both indications. We are aiming for an IND in early 2025, upon which we intend to outlicense the two programs or at the latest after Phase 1 clinical trial. As mentioned, it is not our strategy to develop drug products.

To present our picks and shovels our technology to potential customers in the pharma and biotech industry, we have been also quite business - busy with business development activities, including extensive presence at scientific congresses and industry business development events. I'm pleased to say that we keep seeing good momentum, and I'm confident that there will be interesting news flow in 2024 and around additional collaborations and on further study results.

We have been asked by investors about the commercial potential for the technology. At this point, it is difficult to put concrete numbers on that potential. Opportunities are just plentiful. If you just consider that oncology and rheumatoid arthritis are the two largest therapeutic indications worldwide in pharma and that these will be the two main areas for application of our technology.

One can already imagine a very substantial commercial potential and other opportunities may abound in inflammatory or autoimmune conditions; and yes, count obesity among them or in targeted vaccines.

We are truly enthusiastic about this technology as it has the ingredients to be a game changer. In discussions with institutional investors, we see a strong appetite for investments in the RNA field. We got their message that they clearly prefer a pure-play RNA delivery company, which is one more reason why the repositioning of Altamira is so important.

Now turning to our financials. In 2023, we made great progress in aligning our cost structure with the strategic pivot to the RNA delivery business thus strengthening our capital structure. We successfully concluded our last clinical trials within the legacy business, which were the key spending drivers, expensive items over the past three years. We reduced headcount by approximately 25% and downsized our office space because we need less space.

In addition, we reduced spending on legacy assets, pending partnering and with the partial spinoff of the venture business, additional costs have been removed. We anticipate realizing the full impact of these reductions in 2024 with significantly lower operating expenses and cash burn. As for our capital structure, we have been able to strengthen our balance sheet despite truly challenging capital market conditions in the biotech sector.

In July 2023, we raised $5 million in equity through a public offering. The last prefunded warrants from this transaction were exercised in mid-November 2023. We also repaid the convertible loan from 5G investment management ahead of schedule. So this is news today. The loan of about US$2.7 million was granted in May 2023 and had the 22-month term. As of today, the loan has been amortized in full through a combination of cash amortizations and conversion into shares and all financial debt has been removed as we transition into 2024.

Last but not least, as previously mentioned, the partial spin-off of Bentrio has resulted in a cash inflow above about $2.3 million and in a financial gain of about $5.2 million in accordance with IFRS accounting rules. The significant improvement in equity allowed us to recently regain compliance with the minimum equity requirements for continued listing on NASDAQ. We have a very large number of shareholders, and we know that maintaining this listing is important for them, for us as well as for the company.

As a reminder, our equity had turned negative by the end of 2022, minus CHF8.3 million due to a onetime noncash write-off impairment of capitalized development expenditures for the AM-125 project based on impairment testing under IFRS.

On November 21, we could announce that our shareholders' equity exceeded again the minimum of US$2.5 million. As of now, we still have another continued listing requirement to fulfill the $1 minimum bid price rule. NASDAQ granted us 180 days to regain compliance by December 26. We recently got much closer again to the $1 threshold. However, the stock, unfortunately, did not cross that threshold.

The Board has therefore decided to affect a 20-for-1 reverse stock split on December 13. Apart from becoming fully compliant again, we expect this measure to make the stock also more attractive for institutional investors.

With this, let me conclude with a brief summary and some perspectives. I often get asked why Altamira Therapeutics, why now? I think the answer is ever more relevant given as we have gone through a period that has been painful for quite some time, especially for long-term investors to which I also happen to belong. With our OligoPhore SemaPhore platform, we have a very exciting technology for a very exciting field in human medicine. The platform is very versatile and can be scaled across many different uses.

The picks and shovels model means that cash flows are smaller cash - sorry, cash outflows are smaller and cash inflows come earlier. We anticipate entering into a growing number of collaborations based on our development progress and business development activities.

Last but not least, we have a great, highly motivated team in place to move our RNA delivery projects forward. The partnering of our legacy assets has admittedly taken longer than expected. But now we have locked down the venture deal, and we expect to take further steps with the inner year assets so that the pivot will be completed in 2024.

Proceeds from the partnering are expected to contribute to the funding of the RNA delivery business at the time of the initial transaction through future revenue streams. By the close of 2023, we expect to regain compliance with NASDAQ's listing rules and will have a clean balance sheet, free of financial debt.

Finally, our cost structure looks much different from what it was 12 months ago. Looking forward, 2024 promises to be an interesting and exciting year with multiple milestone events and news flow. I believe I have covered all the highlights thoroughly today so I will simply thank everyone for attending this morning's call.

This concludes our call for today. If you have any questions, please reach out to us at here at alpamiratherapeutics.com. Thank you very much, and have a great day.

Question-and-Answer Session

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