On November 30, 2020Theralase Technologies Inc. ("Theralase" or the "Company") (TSXV: TLT) (OTCQB: TLTFF), a clinical stage pharmaceutical company dedicated to the research and development of light activated PhotoDynamicCompounds ("PDC") and their associated drug formulations intended to safely and effectively destroy various cancers released its audited annual consolidated 3Q2020 financial statement (Press release, Theralase, NOV 30, 2020, View Source [SID1234571971]).
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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 nine-month period ended September 30, 2020 was $383,990 which included a one-time provision for inventory of $77,075 resulting in an adjusted cost of sales of $306,915 or 58% of revenue with an adjusted gross margin of $220,559 or 42% of revenue. The gross margin increase, as a percentage of sales, year over year, is attributed to eliminating non-essential personnel leading to decreased production salaries, attributed to the COVID-19 pandemic for the TLC-1000 and TLC-2000 product lines
The decrease in selling expenses year over year is primarily due to the restructuring of the Canadian and US sales and marketing departments, resulting in the resignation and/or termination of certain non-essential sales and marketing personnel and significantly reduced travel expenditures due to the COVID-19 pandemic.
The decrease in administrative expenses year over year is primarily attributed to decreased spending on general and administrative expenses, director and advisory fees and administrative salaries due to the COVID-19 pandemic, resulting in the termination of certain non-essential administrative personnel.
Net research and development expenses increased year over year primarily due to increased expenses for operating Study II. Research and development expenses represented 64% of the Company’s operating expenses for the nine-month period ended September 30, 2020 and represent investment into the research and development of the Company’s ACT technology.
The net loss for the nine-month period ended September 30, 2020 was $4,715,771 which included $921,448 of net non-cash expenses (i.e.: amortization, stock-based compensation expense and foreign exchange gain/loss). This compared to a net loss for the same period in 2019 of $4,399,045 which included $341,548 of net non-cash expenses. The ACT division represented $3,641,470 of this loss (77%) for the nine-month period ended September 30, 2020.
The increase in net loss is primarily attributed to the following:
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. The Company has successfully launched four CSSs and is preparing to launch a fifth Canadian CSS later in the year. The Company is in advanced discussions to launch a number of U.S. based CSS, subject to the United States economy recovering from the COVID-19 pandemic. The U.S. based Trial Management Organization is supporting the of launch 4 to 5 CSSs in 4Q2020 with potential to commence Study II patient enrollment and treatment as early as 1Q2021.
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. Theralase plans to commence an in-vivo small animal study later this year at another facility equipped to handle SARS-CoV-2 viruses (BSL-3) and if successful commence human clinical studies in 2021, subject to the availability of suitable financing.*
* 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