On April 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 its audited annual consolidated 2021 financial statements (Press release, Theralase, APR 29, 2022, View Source [SID1234613460]).
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Financial Highlights:
For the years ended December 31st:
Total revenue decreased 16%, year over year, and is primarily attributed to the slower than anticipated Canadian and US economic recovery from the COVID-19 pandemic in 2021.
Cost of sales for the year ended December 31, 2021 was $470,698 or 60% of revenue resulting in a gross margin of $309,943 or 40% of revenue. In comparison, the cost of sales in 2020 was $659,442 or 71% of revenue resulting in a gross margin of $269,680 or 29% 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 year ended December 31, 2021, decreased to $363,886, from $447,882 in 2020, a 19% decrease. The decrease in selling expenses is primarily attributed to the COVID-19 pandemic, resulting in reduced advertising (43%), commissions (17%) and salaries (8%).
Administrative expenses for the year ended December 31, 2021, decreased to $1,562,867 from $2,070,261 in 2020, a 25% decrease. The decrease in administrative expenses is primarily attributed to decreased spending on director and advisory fees (37%) and general and administrative expenses (21%). Stock based compensation expense decreased 63% in 2021 due to a reduction in stock options granted.
Net research and development expenses for the year ended December 31, 2021, decreased to $2,924,733 from $3,448,243 in 2020, a 15% decrease. The decrease in research and development expenses for the year ended December 31, 2021, is primarily attributed to the significant 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 62% of the Company’s operating expenses and represents investment primarily into the research and development of the Company’s ACT technology.
The net loss for the year ended December 31, 2021 was $4,411,061 which included $618,586 of net non-cash expenses (i.e.: amortization, stock-based compensation expense and foreign exchange gain/loss).
This compared to a net loss in 2020 of $5,598,540 which included $1,202,017 of net non-cash expenses. The ACT division represented $3,426,488 of this loss (78%) for the year ended December 31, 2021.
The decrease in net loss is primarily attributed to the following:
Significant 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 resignation or termination of certain non-essential administrative, research and production personnel.
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 followed-up, 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 ("CSS") 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 ("US") 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 CSS in Canada and seven CSSs in the US that are open for patient enrollment and treatment for a total of 12 CSSs.
To date, the phase II NMIBC clinical study has enrolled and provided the primary study treatment for 35 patients (including three patients from Phase Ib study treated at the Therapeutic Dose) for a total of 38 patients.
The interim analysis of the Study II Evaluable Patient clinical data (with 3 patients from Study Ib) supports the following provisional conclusions:
Note: Evaluable Patients are defined as patients who have evaluable data; hence, have been evaluated by the principal investigator and thus excludes patients who have clinical data pending.
For evaluable patients, who completed Study II, who achieved a CR at 90 days, 78% continue to demonstrate that CR at 180 and 270 days, while 56% continue to demonstrate that CR at 360 and 450 days.
Note: The current interim analysis presented above, should be read with caution, as the reported clinical data is extremely interim in its presentation, as Study II is still ongoing and new clinical data collected may or may not continue to support the current trends.
Note: The data analysis is only a representation of the data accrued to date with and does not intend to represent a tendency or portray any conclusion as to the effectiveness, duration or safety of the investigational treatment. A significant number of treated patients are still pending assessments.
For a more comprehensive analysis of the interim data please refer to Managements Discussion and Analysis ("MD&A") for the year ended December 31, 2021.
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 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 in 2Q2022 and be completed by 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.