Diffusion Pharmaceuticals Inc. (NASDAQ:
DFFN) (“Diffusion” or the “Company”), a biopharmaceutical
company developing novel therapies that enhance the body’s ability
to deliver oxygen to areas where it is needed most, today announced
financial results for the third quarter of 2021 and provided a
business update.
“We believe this is an exciting time for Diffusion
Pharmaceuticals. The data we have obtained over the last year from
our TCOM and COVID-19 studies have enhanced our understanding of
TSC dosing and its mechanism of action, which we feel provides
support for the broad potential use of TSC as a treatment for
conditions complicated by hypoxia. As the next step in our efforts
to realize TSC’s broad potential, we have chosen to target the
treatment of hypoxic solid tumors as a first indication,” said
Robert Cobuzzi, Jr. Ph.D., President and CEO of Diffusion. Dr.
Cobuzzi continued, “We believe targeting hypoxic solid tumors is
right for TSC given the significant unmet medical need, the
compelling preclinical and clinical data accumulated to date, and
the current, intravenous formulation of TSC. As a prelude to
launching the first clinical study in the program, we plan to
obtain input from the U.S. Food and Drug Administration (“FDA”) on
its design in early 2022, and our study start date will be
dependent upon FDA feedback and the availability of clinical drug
supply. In the meantime, we will continue to execute on the final
two Oxygenation Trials. On that, I am happy to say we plan to dose
the first subject in the Altitude Trial within the next couple
weeks, and in parallel we are working to initiate the ILD-DLCO
Trial.”
TSC Development Plans for 2021 and 2022
The Oxygenation Trials
In June 2021, Diffusion reported a positive trend in oxygenation
from its Phase 1b TCOM Trial evaluating the effect of TSC versus
placebo on peripheral tissue oxygenation in healthy normal
volunteers using transcutaneous oxygen measurements. The data
obtained from the TCOM Trial have been used to guide dose selection
in the Company’s two additional Oxygenation Trials–the Altitude
Trial and the ILD-DLCO Trial.
- Altitude Trial:
This trial will be a double-blind, randomized, placebo-controlled
study to evaluate the effects of TSC on maximal oxygen consumption,
or VO2, and partial pressure of blood oxygen, or PaO2, in normal
healthy volunteers subjected to incremental levels of physical
exertion while exposed to hypoxic and hypobaric conditions (i.e.,
simulated altitude). The study is designed to evaluate the effect
of TSC versus placebo on maximal oxygen consumption and partial
pressure of blood oxygen. The Company expects dosing of the first
subject in the Altitude Trial in November 2021 and expects to
complete the study in late December 2021 or early January 2022. The
Company anticipates reporting topline results from the Altitude
Trial within two months of study completion.
- ILD - DLCO Trial:
This trial will be a double-blind, randomized, placebo-controlled
study which will evaluate the effects of TSC on the diffusion of
carbon monoxide through the lungs (“DLCO”) in patients with
previously diagnosed interstitial lung disease who have a baseline
DLCO test result that is abnormal. DLCO will act as a surrogate
measure of oxygen transfer efficiency, or uptake, from the alveoli
of the lungs, through the plasma, and onto hemoglobin within red
blood cells. The study will be statistically powered to evaluate
the difference in effect of TSC versus placebo on improvement in
DLCO as well as in a standard six-minute walk test. Diffusion
anticipates initiating the ILD-DLCO Trial late in the fourth
quarter of 2021 and completing the trial in the first quarter of
2022, with topline results reported within two months of study
completion.In addition, with the clearance of the Investigational
New Drug application (“IND”) to support the ILD-DLCO Trial from the
Pulmonary, Allergy, and Critical Care division of the FDA received
during the third quarter, Diffusion now has open INDs for TSC with
four FDA divisions: Pulmonary, Allergy, and Critical Care;
Cardiology and Nephrology, Neurology and Oncology.
The Company believes these Oxygenation Trials remain integral to
the overall development plan for TSC, as they are intended to
provide further information regarding TSC’s mechanism of action and
dose-response characteristics, as well as to support what the
Company believes is the broad therapeutic potential of TSC to treat
a variety of conditions complicated by hypoxia. More specifically,
the Altitude Trial is designed to provide information on TSC’s
effects on oxygen consumption, and the ILD-DLCO Trial is designed
to evaluate the effects of TSC on the uptake of oxygen through the
lungs.
Using TSC to Treat Hypoxic Solid Tumors
While the Company intends to continue developing data to support
TSC’s broad potential uses, it has announced that its near-term
focus will be the design and execution of a clinical program to
support the use of intravenously administered TSC as a treatment
for hypoxic solid tumors.
“Solid tumors comprise approximately 90% of all
adult cancers, and according to the American Cancer Society,
roughly 1.9 million new cancer cases will be diagnosed in the U.S.
alone during 2021. Hypoxia is a common complicating factor in
nearly all solid tumors, directly contributing to treatment
resistance and metastatic potential. Tumor hypoxia has been studied
for decades and continues to be an area of unmet need that
negatively influences treatment outcomes independent of modality,”
said Chris Galloway, M.D., Chief Medical Officer of Diffusion. Dr.
Galloway went on to state, “We believe TSC’s unique mechanism of
action along with its safety profile has the potential to improve
treatment success of solid tumors coincident with standard of care
therapy. Diffusion has existing pre-clinical and clinical evidence
of TSC’s potential positive effects in solid tumors, and now
further informative exposure-response data from recently completed
studies like the Oxygenation Trials and our COVID-19 trial.
Building upon this we are actively working to design a targeted
development plan in multiple solid tumor types and plan to submit a
briefing document to the FDA in early 2022. In parallel, data from
the upcoming Altitude and ILD-DLCO Trials will be used to refine
and enhance our understanding of TSC’s dose and effects that
conceivably translate into a multitude of oncology and non-oncology
indications.”
3Q21 Financial Results
- Research and development expenses in the third quarter were
$2.1 million compared to expenses of $3.1 million in the prior year
period, a decrease of $1.0 million. This decrease was attributable
to the completion of the Company’s clinical trial evaluating TSC in
COVID-19 patients in February and the wind-down of the Company’s
glioblastoma multiforme and stroke trials, and partially offset by
increased headcount and costs related to the startup of the
Altitude and ILD-DLCO Trials.
- General and administrative expenses were $1.9 million during
the third quarter of 2021 versus $2.1 million in the comparable
quarter last year. The decrease compared to the prior year period
was primarily attributable to executive separation payments in the
prior year period partially offset by increased salaries, wages,
stock-based compensation, and professional fees related to
increased headcount in 2021.
- The Company recognized a non-recurring, non-cash asset
impairment charge of $8.6 million during the third quarter of 2021
versus $0.0 in the comparable quarter last year. The charge was
related to the full impairment of the in-process research and
development asset associated with the Company’s DFN-529 product
candidate, which was acquired in January 2016 in connection with
the reverse merger of Diffusion Pharmaceuticals LLC and RestorGenex
Corporation.
- The Company’s third quarter 2021 operating loss was $12.6
million as compared with an operating loss of $5.2 million in the
third quarter of 2020, with the increase primarily attributable to
the $8.6 million non-cash asset impairment charge described above.
Excluding the asset impairment charge, the Company’s operating loss
decreased by $1.3 million.
- As of Sept 30, 2021, Diffusion had cash and cash equivalents of
approximately $40.3 million as compared to $18.5 million as of
December 31, 2020. The increase was primarily attributable to the
proceeds of the Company’s public offering of common stock in
February 2021. Diffusion estimates that it has sufficient cash to
fund operations and capital expenditures through 2023.
About Diffusion Pharmaceuticals
Inc.Diffusion Pharmaceuticals Inc. is an innovative
biopharmaceutical company developing novel therapies that enhance
the body’s ability to deliver oxygen to areas where it is needed
most. Diffusion’s lead product candidate, TSC, is being developed
to enhance the diffusion of oxygen to tissues with low oxygen
levels, also known as hypoxia, a serious complication of many of
medicine’s most intractable and difficult-to-treat conditions. For
more information, please visit us at www.diffusionpharma.com.
Forward-Looking StatementsThis
press release includes express and implied forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, as amended, including regarding the Company’s
anticipated cash runway, its near-term strategic priorities,
anticipated timelines for the initiation, completion, and
announcement of data from the Company’s planned Oxygenation Trials
and hypoxic solid tumor program, the relevance and significance of
any such data, and the potential therapeutic value of TSC. The
Company may, in some cases, use terms such as “believes,”
“estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,”
“could,” “might,” “will,” “should,” “approximately,” or other words
that convey uncertainty of future events or outcomes to identify
these forward-looking statements. Although the Company believes
that it has a reasonable basis for each forward-looking statement
contained herein, forward-looking statements by their nature
involve risks and uncertainties, known and unknown, many of which
are beyond the Company’s control and, as a result, the Company’s
actual results could differ materially from those expressed or
implied in any forward-looking statement. Particular risk and
uncertainties include, among other things, those related to: the
Company’s ability to design, initiate, enroll, execute, and
complete its planned studies evaluating TSC; the optimal doses and
dosing regimens of TSC in connection with the potential treatment
of any particular disease or indication, including solid tumors
complicated by hypoxia; the likelihood and timing of regulatory
approval of TSC, if any, for the treatment of solid tumors
complicated by hypoxia or any other indication, or the nature of
any feedback the Company may receive from the U.S. Food and Drug
Administration or other regulatory bodies; the impact of supply
chain and other supplier issues on the Company’s clinical
development program and associated timelines; the Company’s ability
to protect and expand its intellectual property portfolio; the
Company’s ability to maintain compliance with the continued listing
standards of Nasdaq; general economic, political, business,
industry, and market conditions, including the ongoing COVID-19
pandemic; and the other factors discussed under the heading “Risk
Factors” in the Company’s filings most recent Annual Report on Form
10-K and other filings with the U.S. Securities and Exchange
Commission. Any forward-looking statements in this press release
speak only as of the date hereof (or such earlier date as may be
identified) and, except as required by applicable law, rule, or
regulation, the Company undertakes no obligation to update any such
statements after the date hereof.
Contacts
Investors:Tiberend Strategic Advisors,
Inc.Maureen McEnroe, CFA/ Lisa Shermmcenroe@tiberend.com/
lsher@tiberend.com
Media:Kate
BarretteRooneyPartnersKbarrette@rooneyco.com
DIFFUSION PHARMACEUTICALS,
INC.UNAUDITED CONDENSED STATEMENTS OF
OPERATIONS(in thousands, except share and per
share amounts)
|
|
Three Months ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
$ |
2,105,815 |
|
|
$ |
3,137,553 |
|
|
$ |
6,994,866 |
|
|
$ |
6,845,203 |
|
In-process research and development impairment charge |
|
|
8,639,000 |
|
|
|
— |
|
|
|
8,639,000 |
|
|
|
— |
|
General and administrative |
|
|
1,930,082 |
|
|
|
2,112,375 |
|
|
|
5,510,365 |
|
|
|
4,964,440 |
|
Depreciation |
|
|
19,100 |
|
|
|
24,192 |
|
|
|
67,302 |
|
|
|
78,233 |
|
Loss from operations |
|
|
12,693,997 |
|
|
|
5,274,120 |
|
|
|
21,211,533 |
|
|
|
11,887,876 |
|
Other income: |
|
|
|
|
|
|
|
|
Interest income |
|
|
(50,710 |
) |
|
|
(29,233 |
) |
|
|
(146,354 |
) |
|
|
(89,246 |
) |
Loss from operations before income tax benefit |
|
|
(12,643,287 |
) |
|
|
(5,244,887 |
) |
|
|
(21,065,179 |
) |
|
|
(11,798,630 |
) |
Income tax benefit |
|
|
(443,893 |
) |
|
|
(805,676 |
) |
|
|
(443,893 |
) |
|
|
(1,675,381 |
) |
Net loss |
|
$ |
(12,199,394 |
) |
|
$ |
(4,439,211 |
) |
|
$ |
(20,621,286 |
) |
|
$ |
(10,123,249 |
) |
Deemed dividend arising from warrant exchange |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,950,378 |
) |
Net loss attributable to common stockholders |
|
$ |
(12,199,394 |
) |
|
$ |
(4,439,211 |
) |
|
$ |
(20,621,286 |
) |
|
$ |
(12,073,627 |
) |
Per share information: |
|
|
|
|
|
|
|
|
Net loss per share of common stock, basic and diluted |
|
$ |
(0.12 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.24 |
) |
Weighted average shares outstanding, basic and diluted |
|
|
101,903,979 |
|
|
|
64,011,342 |
|
|
|
98,810,420 |
|
|
|
50,216,239 |
|
DIFFUSION PHARMACEUTICALS,
INC.CONDENSED BALANCE SHEETS(in
thousands, except share and par value amounts)
|
September 30, 2021 |
December 31, 2020 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
40,335,045 |
|
$ |
18,515,595 |
|
Prepaid expenses, deposits and other current assets |
|
380,097 |
|
|
260,825 |
|
Total current assets |
|
40,715,142 |
|
|
18,776,420 |
|
Property and equipment, net |
|
81,896 |
|
|
149,198 |
|
Intangible asset |
|
— |
|
|
8,639,000 |
|
Right of use asset |
|
67,886 |
|
|
149,162 |
|
Other assets |
|
15,579 |
|
|
15,771 |
|
Total assets |
$ |
40,880,503 |
|
$ |
27,729,551 |
|
Liabilities and Stockholders’ Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ |
678,036 |
|
$ |
545,844 |
|
Accrued expenses and other current liabilities |
|
2,002,981 |
|
|
1,776,470 |
|
Current operating lease liability |
|
67,886 |
|
|
113,469 |
|
Total current liabilities |
|
2,748,903 |
|
|
2,435,783 |
|
Deferred income taxes |
|
— |
|
|
443,893 |
|
Noncurrent operating lease liability |
|
— |
|
|
35,693 |
|
Total liabilities |
|
2,748,903 |
|
|
2,915,369 |
|
Stockholders’ Equity: |
|
|
Common stock, $0.001 par value: |
|
|
1,000,000,000 shares authorized; 101,903,979 and 64,015,441 issued
and outstanding at September 30, 2021 and December 31, 2020,
respectively |
|
101,904 |
|
|
64,016 |
|
Additional paid-in capital |
|
164,560,366 |
|
|
130,659,550 |
|
Accumulated deficit |
|
(126,530,670 |
) |
|
(105,909,384 |
) |
Total stockholders' equity |
|
38,131,600 |
|
|
24,814,182 |
|
Total liabilities and stockholders' equity |
$ |
40,880,503 |
|
$ |
27,729,551 |
|
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