On August 10, 2020 Diffusion Pharmaceuticals Inc. (Nasdaq: DFFN) ("Diffusion" or "the Company"), a cutting-edge biotechnology company developing new treatments for life-threatening medical conditions by improving the body’s ability to deliver oxygen to the areas where it is needed most, reported financial results for the three and six months ended June 30, 2020 and provided a business update (Press release, Diffusion Pharmaceuticals, AUG 10, 2020, View Source [SID1234568922]).
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Highlights from the second quarter of 2020 and recent weeks include:
Initiation of an international clinical development program in hospitalized patients with COVID-19. Low oxygen levels occur as a consequence of damage to the lungs from COVID-19, often resulting in mechanical ventilation and, if that is ineffective, multiple organ failure – the leading cause of death from COVID-19. Diffusion believes that the oxygen-enhancing mechanism of action of TSC could benefit such patients.
The TSC/Covid-19 clinical development program will begin with an open-label lead-in trial which, if successful, will be followed by one or more randomized double-blinded clinical trials. The lead-in trial will test TSC in 24 hospitalized COVID-19 patients at the Romanian National Institute of Infectious Diseases (NIID). Diffusion expects to begin dosing in this study in the third quarter, with data read-out in the fourth quarter of 2020. In addition to safety, the lead-in trial will collect data on possible increased oxygenation, thereby helping the Company determine TSC dosing for follow-on studies.
Following the recent successful completion of the 19-patient open-label, dose-escalation lead-in safety portion of the trial, the Company has continued pursuit of partnership efforts for its Phase 3 INTACT (INvestigating Tsc Against Cancerous Tumors) program with TSC plus standard of care (SOC) for patients newly diagnosed with inoperable glioblastoma multiforme (GBM).
The Company’s Phase 2 160-patient on-ambulance clinical trial testing TSC for the treatment of acute stroke continues, but on a limited basis because of the on-going pandemic. This program, featuring the PHAST-TSC (Pre-Hospital Administration of Stroke Therapy-TSC) trial, will ultimately involve a total of 23 hospitals across urban, suburban and rural areas in Los Angeles County and Central Virginia when conditions permit more robust operations.
On May 29, 2020 the Company") announced that it received written notice from the Nasdaq Listing Qualifications Staff of the NASDAQ Stock Market LLC ("Nasdaq") stating that the Company regained compliance with the applicable Nasdaq minimum bid price continued listing standard and the matter was now closed.
During the quarter, the Company sold common stock raising $10.3 million and also raised $7.6 million from the exercise of outstanding warrants, for net proceeds of $17.9 million during the reporting period.
"This is an exciting time for Diffusion as we prepare for first enrollment in our global clinical trial program using TSC for the treatment of hospitalized COVID-19 patients," said David Kalergis, chairman and chief executive officer of Diffusion. "Given the severity of the worldwide pandemic, regulatory authorities in the U.S. and Europe have put in place measures to expedite the testing of therapeutics and have been generous in their guidance in light of emerging knowledge. Protocol changes based on this guidance have been incorporated into the development program so that data from any patient, wherever located, can be included to help support planned future regulatory filings in both the U.S. and Europe.
"We also raised funds during the quarter, which will largely be used to advance our TSC clinical development plan, with an emphasis on the COVID-19 program," Mr. Kalergis continued. "At quarter-close we had more than $25 million in cash, the largest cash balance on hand since becoming a public company. In addition, to better help our investors, potential partners and the public stay informed, we are currently revamping our website to reflect the impact of our COVID-19 program on TSC’s development, with the revised website launch targeted for later this quarter."
Second Quarter Financial Results
Research and development expenses were $2.2 million for the second quarter of 2020, compared with $1.5 million for second quarter of 2019. The increase was attributable to a $0.6 million increase in costs associated with follow on work for our 19 patient run-in Phase 3 trial for GBM, a $0.3 million increase in expense related to our open-label Phase 1b lead-in trial for TSC in COVID-19 patients, and a $0.3 million increase in associated manufacturing costs as we ramp up the trial. These increases were offset in part by a $0.5 million decrease in costs associated with the delay in our Phase 2 stroke trial due to the COVID-19 pandemic
General and administrative expenses were $1.5 million for the second quarter of 2020, compared with $1.1 million for the second quarter of 2019. The increase was mainly due to higher professional fees, salaries and wages.
Diffusion had cash and cash equivalents of $25.6 million as of June 30, 2020, compared with $14.2 million as of December 31, 2019. During the second quarter the Company completed an offering of 11.4 million shares of common stock for net proceeds of $10.3 million. In addition, the Company received proceeds of $7.6 million from the exercise of 13.0 million warrants and the exchange and exercise of a further 5.0 million warrants. Diffusion believes its cash and cash equivalents as of June 30, 2020 are sufficient to fund operating expenses and capital expenditures, including clinical trials, into the fourth quarter of 2021.