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 2019 and provided a business update.
Recent business highlights include the
following:
- Commenced enrollment in its
on-ambulance Phase 2 clinical trial testing TSC for the treatment
of acute stroke, with patients treated at sites affiliated with the
University of Virginia (UVA) and the University of California Los
Angeles (UCLA). This 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. The Company is continuing the process
of qualifying sites in Los Angeles in cooperation with researchers
at UCLA and is rapidly ramping up for increased patient
enrollment.
- Completed the 19-patient
open-label, dose-escalation lead-in portion of its Phase 3 INTACT
(INvestigating Tsc Against Cancerous Tumors) trial with Trans
Sodium Crocetinate (TSC) plus standard of care (SOC) for patients
with inoperable glioblastoma multiforme (GBM), and announced
encouraging results from patients who completed the study per
protocol. In addition, favorable safety data in the
dose-escalation run-in study supported the Data Safety Monitoring
Board’s recommendation to continue the Phase 3 study.
- Bolstered its global intellectual
property position with the issuance of two patents in Europe during
the year, for a total of 50 issued patents outside the U.S. and 16
patents issued in the U.S. These patents protect composition
of matter and uses of TSC in multiple indications, including in
combination with tissue plasminogen activator (tPA) to treat
ischemic stroke. tPA is the only treatment approved by the U.S.
Food and Drug Administration for the treatment of
stroke.
- Strengthened the Company’s board of
directors with the appointment of Robert Cobuzzi, Jr., Ph.D.
Dr. Cobuzzi is an accomplished life sciences professional with 25
years of cross-functional leadership experience including more than
a decade with Endo International, Plc.
“We achieved multiple important milestones
throughout 2019 and in particular during the fourth quarter, with
the start of enrollment in our PHAST-TSC Phase 2 study,” said David
Kalergis, chairman and chief executive officer of Diffusion.
“This trial start followed detailed preparations during the course
of the year to train the ambulance first responders and to certify
each site. Our UVA-affiliated site is up and enrolling, and
enrollment has also now begun at UCLA-affiliated sites. We expect
to complete the study and report topline data during 2022, subject
to receipt of adequate funding.
“A recent presentation of early data from our
Phase 3 GBM study was well received by conference attendees.
We presented data suggesting that adding 18 injections of TSC
during the post-radiation chemotherapy phase at doses up to
six-times higher than those received during radiation, per the
INTACT protocol, may be having a positive effect on survival
without adding increased safety risks. We are encouraged by
this data, and believe it enhances the prospects of attracting a
partner to continue advancing this much-needed option for patients.
Commencement of enrollment in the randomization portion of the
INTACT trial is contingent upon entering into a strategic
partnership,” Mr. Kalergis added.
“We look forward to achieving additional
milestones in 2020,” continued Mr. Kalergis. “We anticipate
enrollment in PHAST-TSC will continue during the year, with the
expectation of completing this study before mid-2021. We have
many patent applications pending worldwide and expect to further
solidify our global TSC intellectual property estate. Given the
early data from our GBM run-in study, we are hopeful we will secure
a partner to continue the trial.”
2019 Financial Results
Research and development expenses were $6.6
million for 2019, compared with $5.8 million for 2018. The increase
was attributable to a $1.9 million increase in expenses related to
the Company’s Phase 2 stroke trial and a $0.3 million increase in
manufacturing expense, partially offset by a $1.3 million decrease
in expense related to its Phase 3 GBM trial. The lead-in portion of
this trial was completed in the fourth quarter of 2019. The Company
expects higher R&D expenses during 2020 compared with 2019,
which will consist primarily of expenses associated with
PHAST-TSC.
General and administrative expenses were $4.8
million for 2019, compared with $6.2 million for 2018. The decrease
was primarily due to a $0.7 million decrease in stock-based
compensation expense, a $0.4 million decrease in salaries and
wages, and a $0.2 million decrease in professional fees and other
expenses.
Diffusion had cash and cash equivalents of $14.2
million as of December 31, 2019, compared with $8.0 million at
December 31, 2018. Net cash used in operating activities during
2019 was $9.9 million, compared with $10.8 million used during
2018. During 2019, the Company raised $16.2 million in gross
proceeds via three separate offerings of stock and warrants. The
Company believes it has adequate cash resources to continue
operations into January of 2021.
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 is prepared 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 Sheet |
|
|
|
|
|
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
14,177,349 |
|
|
$ |
7,991,172 |
|
Prepaid expenses, deposits and other current assets |
|
472,464 |
|
|
|
923,059 |
|
Total current assets |
|
14,649,813 |
|
|
|
8,914,231 |
|
Property and equipment,
net |
|
252,366 |
|
|
|
350,281 |
|
Intangible asset |
|
8,639,000 |
|
|
|
8,639,000 |
|
Right of use asset |
|
247,043 |
|
|
|
— |
|
Other assets |
|
322,301 |
|
|
|
298,480 |
|
Total assets |
$ |
24,110,523 |
|
|
$ |
18,201,992 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
1,251,412 |
|
|
$ |
198,818 |
|
Accrued expenses and other current liabilities |
|
358,532 |
|
|
|
605,226 |
|
Current operating lease liability |
|
111,477 |
|
|
|
— |
|
Total current liabilities |
|
1,721,421 |
|
|
|
804,044 |
|
Deferred income taxes |
|
2,119,274 |
|
|
|
1,786,389 |
|
Noncurrent operating lease
liability |
|
135,566 |
|
|
|
— |
|
Total liabilities |
|
3,976,261 |
|
|
|
2,590,433 |
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
Common stock, $0.001 par value: |
|
|
|
1,000,000,000 shares authorized; 33,480,365 and 3,376,230 issued
and outstanding at December 31, 2019 and December 31, 2018,
respectively |
|
33,481 |
|
|
|
3,377 |
|
Additional paid-in capital |
|
111,824,859 |
|
|
|
95,532,881 |
|
Accumulated deficit |
|
(91,724,078 |
) |
|
|
(79,924,699 |
) |
Total stockholders' equity |
|
20,134,262 |
|
|
|
15,611,559 |
|
Total liabilities and
stockholders' equity |
$ |
24,110,523 |
|
|
$ |
18,201,992 |
|
|
|
|
|
Diffusion Pharmaceuticals Inc. |
|
|
|
Consolidated Statement of Operations |
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
2019 |
|
|
|
2018 |
|
Operating expenses: |
|
|
|
Research and development |
$ |
6,619,597 |
|
|
$ |
5,751,940 |
|
General and administrative |
|
4,834,284 |
|
|
|
6,167,177 |
|
Goodwill impairment |
|
— |
|
|
|
6,929,258 |
|
Depreciation |
|
97,915 |
|
|
|
110,371 |
|
Loss from operations |
|
11,551,796 |
|
|
|
18,958,746 |
|
Other expense (income): |
|
|
|
Interest (income) expense, net |
|
(85,302 |
) |
|
|
(151,647 |
) |
Loss from operations before income tax benefit |
|
(11,466,494 |
) |
|
|
(18,807,099 |
) |
Income tax expense
(benefit) |
|
332,885 |
|
|
|
(437,289 |
) |
Net loss |
$ |
(11,799,379 |
) |
|
$ |
(18,369,810 |
) |
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 |
$ |
(11,799,379 |
) |
|
$ |
(26,623,698 |
) |
Per share information: |
|
|
|
Net loss per share of common
stock, basic and diluted |
$ |
(1.76 |
) |
|
$ |
(8.21 |
) |
Weighted average shares
outstanding, basic and diluted |
|
6,706,509 |
|
|
|
3,242,301 |
|
|
|
|
|
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