Diffusion Pharmaceuticals Reports Third Quarter 2019 Financial Results and Provides Business Update
November 11 2019 - 8:00AM
Diffusion Pharmaceuticals Inc. (Nasdaq: DFFN), a
cutting-edge biotechnology company developing new treatments for
life-threatening medical conditions by improving the body’s ability
to bring oxygen to the areas where it is needed most, today
reported financial results for the three and nine months ended
September 30, 2019 and provided a business update.
Recent business highlights include the
following:
- Reported news that based on
favorable safety data in the TSC dose-escalation run-in study, the
Data Safety Monitoring Board (DSMB) recommended continuation of the
INTACT trial using the highest dose administered, 1.5 mg/kg of TSC
during the adjuvant treatment period. The INTACT trial is comparing
SOC radiation therapy and chemotherapy plus TSC, against SOC alone.
In Phase 2 testing, TSC demonstrated a nearly four-fold improvement
in overall survival at two years for the subset of inoperable GBM
patients, compared with the control group of GBM patients.
Diffusion is seeking a partner to continue development of TSC in
GBM.
- During October, the Company
commenced enrollment in its on-ambulance Phase 2 clinical trial
testing TSC for the treatment of acute stroke. In cooperation
with researchers at the University of California Los Angeles (UCLA)
and the University of Virginia (UVA), the 160-patient trial, named
PHAST-TSC (Pre-Hospital Administration of Stroke Therapy-TSC), will
involve 23 hospitals across urban, suburban and rural areas in Los
Angeles County and Central Virginia. Results from the trial may be
available in just under two years. The first patients were
treated in Virginia. The Company is qualifying sites in Los
Angeles and expects the study to begin enrollment there in the
coming weeks.
“We are pleased with the progress during the
third quarter and recent weeks in developing our lead compound to
treat hypoxic conditions,” said David Kalergis, chairman and chief
executive officer of Diffusion. “A highlight was beginning patient
enrollment in our PHAST-TSC Phase 2 study after detailed
preparations to train the ambulance first responders and to certify
each site. We expect enrollment to accelerate in the three sites
participating in Virginia. Once the sites in Los Angeles are
brought on board, the trial should be in full swing with data
anticipated to be available in 18 to 24 months. The
administration of TSC to stroke patients is an exciting opportunity
to potentially safely mitigate some of the devastating effects of a
stroke through immediate treatment while the patient is in the
ambulance. In addition, the Notice of Intention to Grant a
patent earlier this year from the European Patent Office for the
use of TSC in combination with tPA – the only currently available
drug for the treatment of ischemic stroke – further supports the
commercial prospects of TSC.”
Third Quarter Financial
Results
Research and development expenses were $1.7
million for the third quarter of 2019, compared with $1.2 million
for the third quarter of 2018. The increase was mainly attributable
to a $0.6 million increase in expense related to the commencement
of the Phase 2 stroke trial and an increase in manufacturing
expense of $0.2 million, offset by a decrease of $0.2 million in
expense related to the Phase 3 GBM trial and a $0.1 million
decrease in salary and other expense.
General and administrative expenses were $1.3
million for the third quarter of 2019, compared with $1.6 million
for the third quarter of 2018. The decline was mainly due to lower
salaries and wages, along with lower stock compensation expense,
partially offset by an increase in insurance and other costs.
Net cash used in operating activities during the
first nine months of 2019 was $7.4 million, compared with $7.7
million used during the prior-year period.
Diffusion had cash and cash equivalents of $6.1
million as of September 30, 2019, compared with $8.0 million at
December 31, 2018.
About Diffusion Pharmaceuticals
Inc.
Diffusion Pharmaceuticals Inc. is an innovative
biotechnology company developing new treatments that improve the
body’s ability to bring oxygen to the areas where it is needed
most, offering new hope for the treatment of life-threatening
medical conditions.
Diffusion’s lead drug TSC was originally
developed in conjunction with the Office of Naval Research, which
was seeking a way to treat hemorrhagic shock caused by massive
blood loss on the battlefield.
Evolutions in research have led to Diffusion’s
focus today: Fueling Life by taking on some of medicine’s most
intractable and difficult-to-treat diseases, including stroke and
GBM brain cancer. In each of these diseases, hypoxia – oxygen
deprivation of essential tissue in the body – has proved to be a
significant obstacle for medical providers and the target for TSC’s
novel mechanism.
In September 2018 its on-ambulance PHAST-TSC
acute stroke protocol was granted FDA clearance to proceed and the
Company began enrolling patients in this Phase 2 study in October
2019. In July 2019 the Company reported favorable safety data in a
19-patient dose-escalation run-in study to its Phase 3 INTACT
program, using TSC to target inoperable GBM brain cancer.
Additional preclinical data supports the potential use of TSC
as a treatment for other conditions where hypoxia plays a major
role, such as myocardial infarction, respiratory diseases such as
COPD, peripheral artery disease, and neurodegenerative conditions
such as Alzheimer’s and Parkinson’s disease.
In addition, RES-529, the Company’s
PI3K/AKT/mTOR pathway inhibitor that dissociates the mTORC1 and
mTORC2 complexes, is in preclinical testing for GBM.
Diffusion is headquartered in Charlottesville,
Virginia – a hub of advancement in the life science and
biopharmaceutical industries – and is led by CEO David Kalergis, a
30-year industry veteran and company co-founder.
Forward-Looking Statements
To the extent any statements made in this news
release deal with information that is not historical, these are
forward-looking statements under the Private Securities Litigation
Reform Act of 1995. Such statements include, but are not limited
to, statements about the company's plans, objectives,
expectations and intentions with respect to future operations
and products, the potential of the company's technology and product
candidates, the anticipated timing of future clinical trials, and
other statements that are not historical in nature, particularly
those that utilize terminology such as "would," "will," "plans,"
"possibility," "potential," "future," "expects," "anticipates,"
"believes," "intends," "continue," "expects," other words of
similar meaning, derivations of such words and the use of future
dates. Forward-looking statements by their nature address matters
that are, to different degrees, uncertain. Uncertainties and risks
may cause the Diffusion’s actual results to be materially different
than those expressed in or implied by such forward-looking
statements. Particular uncertainties and risks include: the
difficulty of developing pharmaceutical products, obtaining
regulatory and other approvals and achieving market acceptance;
general business and economic conditions; the company's need for
and ability to obtain additional financing or partnering
arrangements; and the various risk factors (many of which are
beyond Diffusion’s control) as described under the heading “Risk
Factors” in Diffusion’s filings with the United States Securities
and Exchange Commission. All forward-looking statements in this
news release speak only as of the date of this news release and are
based on management's current beliefs and expectations. Diffusion
undertakes no obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
Contacts:David Kalergis,
CEODiffusion Pharmaceuticals Inc.(434)
220-0718dkalergis@diffusionpharma.com
LHA Investor RelationsKim Sutton Golodetz(212)
838-3777kgolodetz@lhai.com
|
(Tables to
follow) |
|
|
Diffusion
Pharmaceuticals Inc. |
Consolidated
Balance Sheets |
|
September 30,2019 |
December 31,2018 |
|
(unaudited) |
|
Assets |
|
|
Current
assets: |
|
|
Cash and cash equivalents |
$ |
6,139,770 |
|
$ |
7,991,172 |
|
Subscription receivable |
|
|
— |
|
Prepaid expenses, deposits and other current assets |
|
578,613 |
|
|
923,059 |
|
Total current assets |
|
6,718,383 |
|
|
8,914,231 |
|
Property and
equipment, net |
|
279,441 |
|
|
350,281 |
|
Intangible
asset |
|
8,639,000 |
|
|
8,639,000 |
|
Right of use
asset |
|
269,716 |
|
|
— |
|
Other
assets |
|
290,674 |
|
|
298,480 |
|
Total assets |
$ |
16,197,214 |
|
$ |
18,201,992 |
|
Liabilities and Stockholders’ Equity |
|
|
Current
liabilities: |
|
|
Accounts payable |
$ |
502,473 |
|
$ |
198,818 |
|
Accrued expenses and other current liabilities |
|
605,037 |
|
|
605,226 |
|
Current operating lease liability |
|
110,969 |
|
|
— |
|
Total current liabilities |
|
1,218,479 |
|
|
804,044 |
|
Deferred
income taxes |
|
1,301,173 |
|
|
1,786,389 |
|
Noncurrent
operating lease liability |
|
158,747 |
|
|
— |
|
Total liabilities |
|
2,678,399 |
|
|
2,590,433 |
|
|
|
|
Stockholders’ Equity: |
|
|
Common stock, $0.001 par value: |
|
|
1,000,000,000 shares authorized; 4,693,290 and 3,376,230 issued and
outstanding at September 30, 2019 and December 31, 2018,
respectively |
|
4,694 |
|
|
3,377 |
|
Additional paid-in capital |
|
101,486,119 |
|
|
95,532,881 |
|
Accumulated deficit |
|
(87,971,998 |
) |
|
(79,924,699 |
) |
Total stockholders' equity |
|
13,518,815 |
|
|
15,611,559 |
|
Total
liabilities and stockholders' equity |
$ |
16,197,214 |
|
$ |
18,201,992 |
|
|
|
|
Diffusion
Pharmaceuticals Inc. |
Consolidated
Statements of Operations |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
$ |
1,743,494 |
|
|
$ |
1,169,810 |
|
|
$ |
4,961,720 |
|
|
$ |
4,386,491 |
|
General and administrative |
|
|
1,290,371 |
|
|
|
1,589,621 |
|
|
|
3,559,551 |
|
|
|
4,748,090 |
|
Goodwill impairment |
|
|
— |
|
|
|
4,186,050 |
|
|
|
— |
|
|
|
4,186,050 |
|
Depreciation |
|
|
18,178 |
|
|
|
26,723 |
|
|
|
70,840 |
|
|
|
81,450 |
|
Loss from operations |
|
|
3,052,043 |
|
|
|
6,972,204 |
|
|
|
8,592,111 |
|
|
|
13,402,081 |
|
Other
income: |
|
|
|
|
|
|
|
|
Interest income |
|
|
(21,991 |
) |
|
|
(37,981 |
) |
|
|
(59,596 |
) |
|
|
(120,784 |
) |
Loss from
operations before income tax benefit |
|
|
(3,030,052 |
) |
|
|
(6,934,223 |
) |
|
|
(8,532,515 |
) |
|
|
(13,281,297 |
) |
Income tax benefit |
|
|
(225,960 |
) |
|
|
(214,493 |
) |
|
|
(485,216 |
) |
|
|
(482,425 |
) |
Net
loss |
|
$ |
(2,804,092 |
) |
|
$ |
(6,719,730 |
) |
|
$ |
(8,047,299 |
) |
|
$ |
(12,798,872 |
) |
Series A
cumulative preferred dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(85,993 |
) |
Deemed
dividend related to the make-whole provision for the conversion of
Series A convertible preferred stock into common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,167,895 |
) |
Net loss
attributable to common stockholders |
|
$ |
(2,804,092 |
) |
|
$ |
(6,719,730 |
) |
|
$ |
(8,047,299 |
) |
|
$ |
(21,052,760 |
) |
Per share
information: |
|
|
|
|
|
|
|
|
Net loss per
share of common stock, basic and diluted |
|
$ |
(0.60 |
) |
|
$ |
(1.99 |
) |
|
$ |
(2.01 |
) |
|
$ |
(6.61 |
) |
Weighted
average shares outstanding, basic and diluted |
|
|
4,693,290 |
|
|
|
3,371,468 |
|
|
|
4,005,919 |
|
|
|
3,185,865 |
|
|
|
|
|
|
|
|
|
|
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