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, today reported financial results for
the three and six months ended June 30, 2020 and provided a
business update.
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.
About Diffusion Pharmaceuticals
Inc.
Diffusion Pharmaceuticals Inc. is an innovative
biotechnology company developing new treatments that improve the
body’s ability to deliver oxygen to the areas where it is needed
most, offering new hope for the treatment of life-threatening
medical conditions. Diffusion’s lead drug trans sodium crocetinate
(TSC) was originally developed in conjunction with the U.S. Office
of Naval Research, which was seeking a way to treat multiple organ
failure and its resulting mortality caused by low oxygen levels
from blood loss on the battlefield. Evolutions in research have led
to Diffusion’s focus today on addressing some of medicine’s most
intractable and difficult-to-treat diseases, including multiple
organ failure from respiratory distress, stroke and glioblastoma
multiforme (GBM) brain cancer. In each of these diseases, lack of
available oxygen presents a significant obstacle for medical
providers and is the target for TSC’s novel mechanism. The Company
is currently partnering with both U.S. and European-based
institutions in an expedited research program to develop TSC as a
treatment for the low oxygen levels and associated multiple organ
failure in COVID-19 patients.
In 2019, the Company reported favorable safety
data in a 19-patient dose-escalation run-in to its Phase 3 INTACT
program using TSC to target inoperable GBM. That trial is currently
paused while the Company searches for a partner and prioritizes its
resources to address COVID-19. Diffusion’s in-ambulance PHAST-TSC
trial for acute stroke began enrolling patients last year. Given
the responsibilities of the Company’s participating emergency
medical services providers, enrollment in this trial, while not
officially paused, is expected to be minimal until the COVID-19
pandemic abates.
Preclinical data support the potential for TSC
as a treatment for other conditions where low oxygen availability
plays an important role, such as myocardial infarction, peripheral
artery disease, and neurodegenerative conditions such as
Alzheimer’s and Parkinson’s disease. In addition to the
development of TSC, 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, 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
uncertainty as to whether the FDA will approve the IND submission
for commencement of a trial in the U.S.; or that the FDA will not
require significant changes that might take significant time to
implement, if at all, or that any such required changes will be
financially feasible; there can be no assurance as to when the
program in the U.S. might be able to commence, if at all; the
uncertainty that as of yet the FDA has not approved a trial
evaluating TSC for the treatment of ARDS, or if approved, such a
trial possibly entailing significant additional time, effort and
expense, particularly in light of the difficulty of doing business
during the COVID-19 pandemic; the uncertainty as to whether the
protocol for the Romanian trial will be ultimately acceptable to
the Romanian healthcare regulatory authorities and local ethics
committees or that such regulators will not require significant
changes that might take significant time to implement, if at all,
or that any such required changes will be financially feasible;
moreover, if this or a revised protocol is acceptable to the
Romanian regulators, there can be no assurance as to when they
might provide such guidance or when the program might be able to
commence, if at all; the uncertainty that as of yet the Romanian
regulators have not approved a trial evaluating TSC for the
treatment of ARDS, or if approved, such a trial possibly entailing
significant additional time, effort and expense, particularly in
light of the difficulty of doing business during the COVID-19
pandemic; whether addressing regulatory guidance now, while working
within the parameters of current regulatory processes, will enhance
the prospect of regulatory approvals upon program completion;
whether Diffusion can enroll and complete the trials and provide
data on the timelines indicated; whether Diffusion can efficiently
transition from the Romanian lead-in trial to the larger global
trial; whether the data from the Romanian trials can be combined
with data generated in any U.S. trials; whether Diffusion has
sufficient funding to complete the trials described; Diffusion’s
ability to maintain its Nasdaq listing, market conditions, 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 |
(unaudited) |
|
|
|
|
June 30, 2020 |
December 31, 2019 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
25,561,599 |
|
$ |
14,177,349 |
|
Prepaid expenses, deposits and other current assets |
|
1,147,174 |
|
|
472,464 |
|
Total current assets |
|
26,708,773 |
|
|
14,649,813 |
|
Property and equipment,
net |
|
198,325 |
|
|
252,366 |
|
Intangible asset |
|
8,639,000 |
|
|
8,639,000 |
|
Right of use asset |
|
194,879 |
|
|
247,043 |
|
Other assets |
|
252,149 |
|
|
322,301 |
|
Total assets |
$ |
35,993,126 |
|
$ |
24,110,523 |
|
Liabilities and
Stockholders’ Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ |
1,354,948 |
|
$ |
1,251,412 |
|
Accrued expenses and other current liabilities |
|
317,075 |
|
|
358,532 |
|
Current operating lease liability |
|
109,808 |
|
|
111,477 |
|
Total current liabilities |
|
1,781,831 |
|
|
1,721,421 |
|
Deferred income taxes |
|
1,249,569 |
|
|
2,119,274 |
|
Noncurrent operating lease
liability |
|
85,071 |
|
|
135,566 |
|
Total liabilities |
|
3,116,471 |
|
|
3,976,261 |
|
Stockholders’ Equity: |
|
|
Common stock, $0.001 par value: |
|
|
1,000,000,000 shares authorized; 63,998,298 and 33,480,365 issued
and outstanding at June 30, 2020 and December 31, 2019,
respectively |
|
63,999 |
|
|
33,481 |
|
Additional paid-in capital |
|
130,220,772 |
|
|
111,824,859 |
|
Accumulated deficit |
|
(97,408,116 |
) |
|
(91,724,078 |
) |
Total stockholders' equity |
|
32,876,655 |
|
|
20,134,262 |
|
Total liabilities and
stockholders' equity |
$ |
35,993,126 |
|
$ |
24,110,523 |
|
|
|
|
Diffusion Pharmaceuticals Inc. |
Consolidated Statement of Operations |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
$ |
2,173,183 |
|
|
$ |
1,518,381 |
|
|
$ |
3,707,650 |
|
|
$ |
3,218,226 |
|
General and administrative |
|
|
1,458,257 |
|
|
|
1,068,452 |
|
|
|
2,852,065 |
|
|
|
2,269,180 |
|
Depreciation |
|
|
27,021 |
|
|
|
34,390 |
|
|
|
54,041 |
|
|
|
52,662 |
|
Loss from operations |
|
|
3,658,461 |
|
|
|
2,621,223 |
|
|
|
6,613,756 |
|
|
|
5,540,068 |
|
Other income: |
|
|
|
|
|
|
|
|
Interest income |
|
|
(25,913 |
) |
|
|
(16,921 |
) |
|
|
(60,013 |
) |
|
|
(37,605 |
) |
Loss from operations before
income tax benefit |
|
|
(3,632,548 |
) |
|
|
(2,604,302 |
) |
|
|
(6,553,743 |
) |
|
|
(5,502,463 |
) |
Income tax benefit |
|
|
(507,325 |
) |
|
|
(108,904 |
) |
|
|
(869,705 |
) |
|
|
(259,256 |
) |
Net loss |
|
$ |
(3,125,223 |
) |
|
$ |
(2,495,398 |
) |
|
$ |
(5,684,038 |
) |
|
$ |
(5,243,207 |
) |
Deemed dividend arising from
warrant exchange |
|
|
(1,950,378 |
) |
|
|
— |
|
|
|
(1,950,378 |
) |
|
|
— |
|
Net loss attributable to
common stockholders |
|
$ |
(5,075,601 |
) |
|
$ |
(2,495,398 |
) |
|
$ |
(7,634,416 |
) |
|
$ |
(5,243,207 |
) |
Per share information: |
|
|
|
|
|
|
|
|
Net loss per share of common
stock, basic and diluted |
|
$ |
(0.10 |
) |
|
$ |
(0.63 |
) |
|
$ |
(0.18 |
) |
|
$ |
(1.43 |
) |
Weighted average shares
outstanding, basic and diluted |
|
|
51,978,286 |
|
|
|
3,940,684 |
|
|
|
43,242,891 |
|
|
|
3,658,457 |
|
|
|
|
|
|
|
|
|
|
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