Diffusion Pharmaceuticals Inc. (Nasdaq: DFFN)
(“Diffusion” or “the Company”), a clinical-stage biotechnology
company focused on improving patient outcomes in unmet medical
needs using its novel small molecule trans sodium crocetinate
(TSC), reports financial results for the three months ended June
30, 2018 and provides a business update.
Commenting on the second quarter, David
Kalergis, Chairman and Chief Executive Officer, said, “We have
continued to screen and enroll patients with inoperable
glioblastoma multiforme (GBM) into our INTACT Phase 3 pivotal
trial. Following the dose escalation run-in portion, this
planned 236-patient study will enroll half the patients in the
treatment arm consisting of standard-of-care radiation and
chemotherapy plus TSC, and half in the control arm, which is
standard-of-care alone. We designed INTACT based on our Phase
2 study that demonstrated a nearly four-fold increase in overall
survival at two years in inoperable GBM patients.”
Mr. Kalergis continued, “During the quarter,
U.S. Patent 9,950,067 issued relating to methods of treating cancer
using bipolar trans carotenoids including TSC. European patent
2575487 was validated for oral formulations of bipolar trans
carotenoids and includes novel compositions in tablet, pill or
capsule form. Further, US Patent 10,016,384, also relating to oral
formulations of bipolar trans carotenoids, issued on July 10, 2018.
We believe TSC holds great promise in treating a number of diseases
in addition to cancer and are pleased to be able to protect a
patient-friendly oral formulation suitable for more chronic
uses. Our intellectual property protection further supports
the value of TSC as we discuss partnership opportunities in various
indications and geographies.”
Diffusion is continuing preparations for a Phase
2 randomized, double-blind, placebo-controlled trial with TSC in
acute stroke in cooperation with UCLA and the University of
Virginia, and is in discussions with potential partners. Financing
permitting, we expect to begin enrolling patients in early 2019
with data in about 18 months thereafter. The study calls for the
administration of TSC by specially-trained Emergency Medical
Technicians to ambulance-transported patients within two hours of
the onset of a suspected acute stroke. In-ambulance
administration could overcome the current severe timing delay in
administering therapy to stroke victims, serving a market of up to
800,000 patients a year who suffer acute stroke.
Financial Results for the Three Months
Ended June 30, 2018
We had cash and cash equivalents of $12.9
million as of June 30, 2018. We believe that our cash and cash
equivalents will enable us to fund our obligated operating expenses
and capital expenditure requirements into September 2019.
We recognized $1.4 million in research and
development expenses during the three months ended June 30, 2018,
compared with $1.2 million during the three months ended June 30,
2017. The increase was mainly attributable to a $0.8 million
increase in expenses related to our Phase 3 GBM trial, offset by a
$0.6 million decrease in expense associated with manufacturing
costs.
General and administrative expenses for the
three months ended June 30, 2018 were $1.7 million, compared with
$1.8 million for the three months ended June 30, 2017. The
decrease in general and administrative expense was primarily due to
a $0.3 million decrease in professional fees, partially offset by
an increase in salary and wages expense of $0.2 million.
Net cash used in operating activities for the
first half of 2018 was $5.8 million, compared with $6.2 million
during the same period in the prior year.
About Diffusion Pharmaceuticals
Inc.
Diffusion Pharmaceuticals Inc. is a
clinical-stage biotechnology company focused on improving patient
outcomes in unmet medical needs using its novel small molecule
trans sodium crocetinate (TSC). Diffusion is developing TSC for use
in conditions where hypoxia (oxygen deprivation) is known to
diminish the effectiveness of standard of care (SOC) treatments. In
oncology, TSC targets the cancer's hypoxic micro-environment,
re-oxygenating treatment-resistant tissue and making the cancer
cells more vulnerable to the therapeutic effects of SOC treatments
without the apparent occurrence of any serious side effects. In
non-oncology indications, therapeutic benefit would be achieved
directly through re-oxygenation of tissue threatened with cell
death from hypoxia.
The INvestigation of TSC Against Cancerous
Tumors (INTACT) Phase 3 randomized, controlled registration trial
with TSC and SOC chemotherapy and radiation, compared with SOC
alone in 236 patients who have been newly diagnosed with inoperable
glioblastoma multiforme (GBM) brain cancer, is underway. In this
study, TSC with concomitant temozolomide is being assigned to the
first 8 subjects enrolled, and these patients will undergo
radiation therapy plus temozolomide and TSC treatment through the
normal six-week RT treatment period. During the subsequent
temozolomide treatment period these subjects will be assigned TSC
at ascending doses and studied in parallel for 2 full 28-day
cycles. The Data Safety Monitoring Board will examine the resultant
data and based on their observations may recommend the continued
use of the starting TSC dose or another dose for those patients
remaining to be randomized into the study.
A Phase 2 TSC clinical trial was completed in
the second quarter of 2015 and evaluated 59 patients with newly
diagnosed GBM. This open-label, historically controlled study
demonstrated a favorable safety and efficacy profile for TSC
combined with SOC, including a 37% improvement in overall survival
compared with the control group at two years. A particularly
strong efficacy signal was seen in the subset of inoperable
patients where survival of TSC-treated patients at two years was
nearly four-fold higher compared with the controls.
Due to its novel mechanism of action, TSC has
safely re-oxygenated a range of tumor types in preclinical and
clinical studies. Diffusion believes the therapeutic
potential of TSC is not limited to specific tumors, thereby making
it potentially useful to improve SOC treatments of other
life-threatening cancers. Additional studies under
consideration include Phase 2 trials in pancreatic cancer and brain
metastases, with study initiation subject to receipt of additional
funding or collaborative partnering. The Company also believes that
TSC has potential application in other indications involving
hypoxia including stroke, where the Company recently announced its
Pre-Hospital Ambulance Stroke Trial - TSC (PHAST-T) study to be
conducted in co-operation with the University of California Los
Angeles (UCLA) and the University of Virginia (UVA) to test TSC in
stroke patients in an in-ambulance clinical trial setting.
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 company's actual results to be materially different
than those expressed in or implied by such forward-looking
statements. Particular uncertainties and risks include: general
business and economic conditions; the company's need for and
ability to obtain additional financing; and the difficulty of
developing pharmaceutical products, obtaining regulatory and other
approvals and achieving market acceptance, 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.comorLHA Investor RelationsKim
Sutton Golodetz(212) 838-3777kgolodetz@lhai.com
-Tables to follow-
Diffusion Pharmaceuticals
Inc.Consolidated Balance
Sheets(unaudited)
|
June 30, 2018 |
December 31, 2017 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
12,934,703 |
|
$ |
8,896,468 |
|
|
Prepaid
expenses, deposits and other current assets |
|
772,736 |
|
|
769,946 |
|
|
Total
current assets |
|
13,707,439 |
|
|
9,666,414 |
|
|
Property and equipment,
net |
|
405,925 |
|
|
460,652 |
|
|
Intangible asset |
|
8,639,000 |
|
|
8,639,000 |
|
|
Goodwill |
|
6,929,258 |
|
|
6,929,258 |
|
|
Other assets |
|
262,214 |
|
|
450,491 |
|
|
Total
assets |
$ |
29,943,836 |
|
$ |
26,145,815 |
|
|
Liabilities,
Convertible Preferred Stock and Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Current
portion of convertible debt |
$ |
— |
|
$ |
550,000 |
|
|
Accounts
payable |
|
175,772 |
|
|
511,956 |
|
|
Accrued
expenses and other current liabilities |
|
512,246 |
|
|
1,628,851 |
|
|
Total
current liabilities |
|
688,018 |
|
|
2,690,807 |
|
|
Deferred income
taxes |
|
1,955,746 |
|
|
2,223,678 |
|
|
Other liabilities |
|
— |
|
|
1,386 |
|
|
Total
liabilities |
|
2,643,764 |
|
|
4,915,871 |
|
|
Commitments and
Contingencies |
|
|
|
Convertible preferred
stock, $0.001 par value: |
|
|
|
Series A
- 13,750,000 shares authorized at both June 30, 2018 and December
31, 2017. No shares and 12,376,329 shares issued at June 30, 2018
and December 31, 2017, respectively. No shares and 8,306,278
outstanding at June 30, 2018 and December 31, 2017,
respectively. |
|
— |
|
|
— |
|
|
Total
convertible preferred stock |
|
— |
|
|
— |
|
|
Stockholders’
Equity: |
|
|
|
Common
stock, $0.001 par value: |
|
|
|
1,000,000,000 shares authorized; 50,572,001 and 14,519,629 shares
issued and outstanding at June 30, 2018 and December 31, 2017,
respectively. |
|
50,571 |
|
|
14,520 |
|
|
Additional paid-in capital |
|
94,883,532 |
|
|
82,770,313 |
|
|
Accumulated deficit |
|
(67,634,031 |
) |
|
(61,554,889 |
) |
|
Total
stockholders' equity |
|
27,300,072 |
|
|
21,229,944 |
|
|
Total
liabilities, convertible preferred stock and stockholders'
equity |
$ |
29,943,836 |
|
$ |
26,145,815 |
|
|
|
|
|
|
Diffusion Pharmaceuticals
Inc.Consolidated Statements of
Operations(unaudited)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Research
and development |
|
$ |
1,391,113 |
|
|
$ |
1,179,544 |
|
|
$ |
3,216,681 |
|
|
$ |
2,187,115 |
|
|
General
and administrative |
|
|
1,660,630 |
|
|
|
1,795,886 |
|
|
|
3,158,469 |
|
|
|
3,349,025 |
|
|
Depreciation |
|
|
26,709 |
|
|
|
5,790 |
|
|
|
54,727 |
|
|
|
12,393 |
|
|
Loss from
operations |
|
|
3,078,452 |
|
|
|
2,981,220 |
|
|
|
6,429,877 |
|
|
|
5,548,533 |
|
|
Other
expense (income): |
|
|
|
|
|
|
|
|
|
Interest
(income) expense, net |
|
|
(45,339 |
) |
|
|
18,889 |
|
|
|
(82,803 |
) |
|
|
74,608 |
|
|
Change in
fair value of warrant liabilities |
|
|
— |
|
|
|
(23,387,850 |
) |
|
|
— |
|
|
|
(10,468,176 |
) |
|
Warrant
related expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,225,846 |
|
|
Other
financing expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,870,226 |
|
|
(Loss)
income from operations before income tax benefit |
|
|
(3,033,113 |
) |
|
|
20,387,741 |
|
|
|
(6,347,074 |
) |
|
|
(8,251,037 |
) |
|
Income
tax benefit |
|
|
(267,932 |
) |
|
|
— |
|
|
|
(267,932 |
) |
|
|
|
Net (loss) income |
|
$ |
(2,765,181 |
) |
|
$ |
20,387,741 |
|
|
$ |
(6,079,142 |
) |
|
$ |
(8,251,037 |
) |
|
Accretion of Series A
cumulative preferred dividends |
|
|
— |
|
|
|
(487,460 |
) |
|
|
(85,993 |
) |
|
|
(546,305 |
) |
|
Deemed dividend related
to the make-whole provision for the conversion of Series A
preferred stock into common |
|
|
— |
|
|
|
— |
|
|
|
(8,167,895 |
) |
|
|
— |
|
|
Net (loss) income
attributable to common stockholders |
|
$ |
(2,765,181 |
) |
|
$ |
19,900,281 |
|
|
$ |
(14,333,030 |
) |
|
$ |
(8,797,342 |
) |
|
Per share
information: |
|
|
|
|
|
|
|
|
|
Net (loss) income per
share of common stock, basic |
|
$ |
(0.05 |
) |
|
$ |
0.88 |
|
|
$ |
(0.31 |
) |
|
$ |
(0.83 |
) |
|
Net (loss) income per
share of common stock, diluted |
|
$ |
(0.05 |
) |
|
$ |
(1.00 |
) |
|
$ |
(0.31 |
) |
|
$ |
(1.56 |
) |
|
Weighted average shares
outstanding, basic |
|
|
50,546,021 |
|
|
|
10,828,063 |
|
|
|
46,357,478 |
|
|
|
10,582,521 |
|
|
Weighted average shares
outstanding, diluted |
|
|
50,546,021 |
|
|
|
13,872,632 |
|
|
|
46,357,478 |
|
|
|
12,339,386 |
|
|
|
|
|
|
|
|
|
|
|
|
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