On April 28, 2021 Theralase Technologies Inc. ("Theralase" or the "Company") (TSXV:TLT)(OTCQB:TLTFF), a clinical stage pharmaceutical company dedicated to the research and development of light activated PhotoDynamic Compounds ("PDC") and their associated drug formulations intended to safely and effectively destroy various cancer reported its audited annual consolidated 2020 financial statements (Press release, Theralase, APR 28, 2021, View Source [SID1234578651]).
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Financial Highlights:
For the years ended December 31st:
(1) Other represents (Gain) Loss on foreign exchange, interest accretion on lease liabilities and interest income
Total revenue remained predominantly flat, year over year, and is primarily attributed to the COVID-19 pandemic as most health care practitioners elected to temporarily close their practices and place any purchasing decisions on temporary or permanent hold.
Cost of sales for the year ended December 31, 2020 was $659,442, which included a one-time write-down of inventory of $131,983, resulting in an adjusted cost of sales of $527,459 or 57% of revenue with an adjusted gross margin of $401,663 or 43% of revenue. In comparison cost of sales for the same period in 2019 was $903,296, which included a one-time provision for inventory of $277,896, resulting in an adjusted cost of sales of $625,400 or 65% revenue with an adjusted gross margin of $338,651 or 35% of revenue. The gross margin increase, as a percentage of sales, year over year, is attributed to a decrease in labour and material costs and a one-time inventory provision of $277,896 in 2019.
The decrease in selling expenses is primarily due to the restructuring of the Canadian and US sales and marketing departments, as a result of the COVID-19 pandemic, resulting in the resignation and/or termination of certain non-essential sales and marketing personnel and significantly reduced travel expenditures.
The decrease in administrative expenses is primarily attributed to decreased spending on general and administrative expenses (40%), director and advisory fees (45%) and administrative salaries (59%) due to the COVID-19 pandemic, resulting in the termination of certain non-essential administrative personnel.
The decrease in research and development expenses for the year ended December 31, 2020 is attributed primarily to the delay in patient enrollment and treatment in the Phase II NMIBC clinical study ("Study II") due to the COVID-19 pandemic. Research and development expenses represented 59% of the Company’s operating expenses and represents investment into the research and development of the Company’s ACT technology
The net loss for the year ended December 31, 2020 was $5,598,540 which included $1,202,017 of net non-cash expenses (i.e.: amortization, stock-based compensation expense and foreign exchange gain/loss). This compared to a net loss in 2019 of $7,413,914 which included $677,224 of net non-cash expenses. The ACT division represented $4,282,813 of this loss (76%) for the year ended December 31, 2020.
The decrease in net loss is primarily attributed to the following:
Delay in patient enrollment and treatment due to the COVID-19 pandemic, resulting in decreased research and development expenses in Study II.
Decreased salaries due to the COVID-19 pandemic, resulting in the termination of certain non-essential administrative, research and production personnel.
Operational Highlights:
FDA Fast Track. On November 23, 2020, the FDA granted Theralase Fast Track Designation ("FTD") for Study II. As a Fast Track designee, Theralase will have access to early and frequent communications with the FDA to discuss Theralase’s development plans and ensure timely collection of the appropriate clinical data to support the approval process. The accelerated communication with the FDA potentially allows, TLD-1433, in combination with TLC-3200, to be the first intravesical patient-specific Ruthenium-based PDC for the treatment of patients with Bacillus Calmette-Guerin ("BCG") – Unresponsive Non- Muscle Invasive Bladder Cancer ("NMIBC") Carcinoma In-Situ ("CIS"), with or without papillary Ta or T1 tumors. FTD can lead to an Accelerated Approval ("AA"), Break Through Designation ("BTD") and/or Priority Review, if certain criteria are met, which the FDA has previously defined to the Company for BTD to represent approximately 20 to 25 patients enrolled and treated, who demonstrate significant safety and efficacy clinical outcomes.
COVID-19 Pandemic Update. In the ACT division, all Canadian Clinical Study Sites ("CSS") have re-commenced new patient enrollment and treatment in Study II as of September 24, 2020. The CSSs placed themselves on temporary hold due to the COVID-19 between March 20, 2020 to August 12, 2020 and September 24, 2020. In the CLT division, the Company continues to experience variations in sales and the timing of these sales due to the ongoing COVID-19 pandemic and has taken actions to reduce expenses by eliminating non-essential personnel and imposing a temporary hiring freeze, to be lifted, subject to the Canadian and United States economies demonstrating recovery from COVID-19.
Clinical study site status and update. The Company has successfully launched five CSSs in Canada and six CSSs in the US that are open for patient enrollment and treatment for a total of 11 CSSs.
To date, the phase II NMIBC clinical study has enrolled and provided the primary study treatment for 18 patients (including three patients from Phase Ib study treated at the Therapeutic Dose) for a total of 21 patients.
Additional cancer indications. The Company has demonstrated significant anti-cancer efficacy of Rutherrin, when activated by laser light or radiation treatment across numerous preclinical models; including: Glio Blastoma Multiforme ("GBM") and Non-Small Cell Lung Cancer ("NSCLC"). The Company has commenced Non – Good Laboratory Practices ("GLP") toxicology studies with Rutherrin in animals to help determine the maximum recommended human dose of the drug, when administered systemically into the human body, via intravenous injections. Theralase plans to commence GLP toxicology studies in animals in 2021.
COVID-19 Research Update. The Company’s PDC technology was proven to be effective in the destruction of Influenza H1N1 and Zika viruses at low nanomolar concentrations. These studies were expanded to include coronavirus Bio Safety Level ("BSL") 2. As a note, COVID-19 is caused by coronavirus (BSL-3), not coronavirus (BSL-2). A new assay was established to measure coronavirus destruction and using this new assay the Theralase PDC technology was able to destroy coronavirus (BSL-2) with drug doses 5 times lower than what was used to kill Influenza H1N1 and Zika viruses. These drug doses demonstrated a 99.995% destruction rate of the BSL-2 coronavirus and are significantly lower than those used by the Company to treat cancers; hence considered safe for human use. Coronaviruses are considered similar in their structure and these new results strongly suggest that Theralase’s PDC will be highly effective against the SARS-CoV-2 (BSL-3) virus responsible for COVID-19.
In April 2021, Theralase executed a Collaborative Research Agreement ("CRA") with the National Microbiology Laboratory, Public Health Agency of Canada ("PHAC") for the research and development of a Canadian-based SARS-CoV-2 ("COVID-19") vaccine. Under the terms of the agreement, Theralase and PHAC are collaborating on the development and optimization of a COVID-19 vaccine by treating the SARS-CoV-2 virus grown on cell lines with Theralase’s patented PDC and then light activating it with Theralase’s proprietary TLC-3000A light technology to inactivate the virus and create the fundamental building blocks of a COVID-19 vaccine. This inactivated virus would then be purified and used to inoculate naive animals followed by challenge with the SARS-CoV-2 virus, to ascertain the efficacy of the vaccine. The project is entitled, "Photo Dynamic Compound Inactivation of SARS-CoV-2 Vaccine" and commenced in mid-April 2021.
* The Company does not claim or profess that they have the ability to treat, cure or prevent the contraction of the COVID-19 Coronavirus.
About Study II
Study II utilizes the Therapeutic Dose (0.70 mg/cm2) of TLD-1433 and is focused on the enrollment and treatment of approximately 100 BCG-Unresponsive NMIBC CIS patients in up to 20 clinical study sites located in Canada and the US.
Study II has a:
Primary endpoint of efficacy (defined by Complete Response ("CR") at any point in time
Secondary endpoint of duration of CR at 360 days post-initial CR (approximately 450 days post initial Study treatment, assuming CR is achieved at the 90 day assessment)
Tertiary endpoint of safety measured by incidence and severity of Adverse Events ("AEs") grade 4 or higher that do not resolve within 450 days post-initial treatment
The FDA, in its 2018 guidance to industry has stated that, "For single-arm trials of patients with BCG-unresponsive disease, the FDA defines a CR as at least one of the following:
Negative cystoscopy and negative (including atypical) urine cytology
Positive cystoscopy with biopsy-proven benign or low-grade NMIBC and negative cytology
For intravesical therapies without systemic toxicity, the FDA includes, in the definition of a CR, negative cystoscopy with malignant urine cytology, if cancer is found in the upper tract or prostatic urethra and random bladder biopsies are negative.
Intravesical instillation does not deliver the investigational drug to the upper tract or prostatic urethra; therefore, the development of disease in these areas cannot be attributed to a lack of activity of the investigational drug. Thus, sponsors can consider patients with new malignant lesions of the upper tract or prostatic urethra, who have received intravesical therapy to have achieved a CR in the primary analysis; however, sponsors should record these lesions and conduct sensitivity analyses in which these patients are not considered to have achieved a CR."1