On August 29, 2022 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 cancers reported that it has released the Company’s unaudited 2Q2022 condensed interim consolidated Financial Statements ("Financial Statements") (Press release, Theralase, AUG 29, 2022, View Source [SID1234618799]).
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Financial Highlights:
For the six-month period ended June 30th:
(1) Other represents gain from legal settlement, (gain) loss on foreign exchange, interest accretion on lease liabilities and interest income
Total revenue increased 28%, year over year, and is primarily attributed to the anticipated Canadian and US economic recovery from the COVID-19 pandemic in 2020 and 2021.
Cost of sales for the six-month period ended June 30, 2022 was $271,656 or 49% of revenue resulting in a gross margin of $280,786 or 51% of revenue. In comparison, the cost of sales in 2021 was $230,370 or 54% of revenue resulting in a gross margin of $199,629 or 46% of revenue. The gross margin increase, as a percentage of sales, year over year, is primarily attributed to a decrease in labour and material costs.
Selling expenses for the six-month period ended June 30, 2022, decreased to $167,139, from $197,400 in 2021, a 15% decrease. The decrease in selling expenses is primarily attributed to the COVID-19 pandemic, resulting in reduced advertising (52%), and salaries (15%).
Administrative expenses for the six-month period ended June 30, 2022, decreased to $734,0 from $802,271 in 2021, a 9% decrease. The decrease in administrative expenses is primarily attributed to decreased spending in professional fees (5%) and insurance expenses (17%). Stock based compensation expense decreased 60% in 2022 due to a reduction in stock options granted.
Net research and development expenses for the six-month period ended June 30, 2022, increased to $2,338,855 from $1,393,578 in 2021, a 68% increase. The increase in research and development expenses is primarily attributed to the costs related to Study II. Research and development expenses represented 72% 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 six-month period ended June 30, 2022 was $2,947,168, which included $254,616 of net non-cash expenses (i.e.: amortization, stock-based compensation expense and foreign exchange gain/loss). This compared to a net loss in 2021 of $2,062,276, which included $365,690 of net non-cash expenses. The ACT division represented $2,552,720 of this loss (87%) for the six-month period ended June 30, 2022.
The increase in net loss is primarily attributed to increased spending in research and development expenses in Study II.
Operational Highlights:
1. Break Through Designation Update. In 2020, the FDA granted Theralase Fast Track Designation ("FTD") for Study II. As a Fast Track designee, Theralase has access to early and frequent communications with the FDA to discuss Theralase’s development plans and ensure the timely collection of clinical data to support the approval process. FTD can also lead to Break Through Designation ("BTD"), Accelerated Approval ("AA") and/or Priority Review, if certain criteria are met, which the FDA has previously defined to the Company for BTD to represent a complete clinical dataset on approximately 20 to 25 patients enrolled, treated and assessed, who demonstrate significant safety and efficacy clinical outcomes.
In 2021, Theralase completed its first significant milestone of Study II by enrolling and treating 25 patients. The Company will compile a clinical data report for submission to the FDA in support of the grant of a BTD approval after completion of the 450 day assessment for 25 patients, expected in 4Q2022, subject to the Clinical Study Sites ("CSSs") availability to complete all required assessments.
2. COVID-19 Pandemic Update. In the ACT division, the Company continues to experience delays in patient enrollment and treatment rates in Study II due to the ongoing COVID-19 pandemic; however, these rates have improved as Canada and the US commence their recovery from the business and economic impacts of the COVID-19 pandemic.
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 minimize expenses by eliminating non-essential personnel and imposing a temporary hiring freeze, commencing in March 2020. The Company lifted the temporary hiring freeze in 4Q2021, now that the Canadian and United States economies have started to demonstrate a sustainable business and economic recovery from COVID-19.
3. Clinical study site status and update. The Company has successfully launched five CSSs in Canada and seven CSSs in the US that are open for patient enrollment and treatment for a total of 12 CSSs.
To date, Study II has provided the primary study treatment for 42 patients; including, three patients from the Phase Ib NMIBC Clinical Study treated at the Therapeutic Dose for a total of 45 patients.
An analysis of Evaluable Patients (defined as patients who have been evaluated by the principal investigator and thus excludes data pending), in Study II provides the following interim analysis (including three patients from the Phase Ib NMIBC Clinical Study treated at the Therapeutic Dose):
The clinical data to date demonstrates a strong initial CR (50%) and a strong duration of that response for 450 days (21%).
For a more comprehensive analysis of the interim data please refer to Management’s Discussion and Analysis ("MD&A") for the six-month period ended June 30, 2022.
Dr. Vera Madzarevic, Ph.D. has left the employ of the Company and Dr Arkady Mandel, M.D., Ph.D., D.Sc., will continue in his role as lead for the Phase II Non-Muscle Invasive Bladder Cancer ("NMIBC") clinical study as the Interim Chief Executive Officer and Chief Scientific Officer.
4. 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 4Q2022.
5. COVID-19 Research Update. 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 wholly 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.
In February, 2022 Theralase reported that PHAC had demonstrated that light-activated TLD-1433, was effective in rapidly inactivating the SARS-CoV-2 virus by up to 99.99%, compared to control in an in vitro study. Further research is required to confirm these findings.
These results have now laid the groundwork for the next phase of the CRA, which is evaluating the Theralase COVID-19 vaccine in the ability to prevent animals from contracting COVID-19, when exposed to the virus, which is expected to commence and be completed in 4Q2022.
Note: 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 of TLD-1433 (0.70 mg/cm2) activated by the proprietary TLC-3200 medical laser system. Study II is focused on enrolling and treating approximately 100 to 125 BCG-Unresponsive NMIBC Carcinoma In-Situ ("CIS") patients in up to 15 Clinical Study Sites ("CSS") located in Canada and the United States.
About TLD-1433
TLD-1433 is a patented PDC with over 10 years of published peer reviewed preclinical research and is currently under investigation in Study II.