Diffusion Pharmaceuticals Inc.
(Nasdaq: DFFN)
(“Diffusion” or the “Company”) today reported financial results for
the three and nine months ended September 30, 2020 and provided
certain updates on its development program for its lead product
candidate, trans sodium crocetinate (“TSC”), which 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.
Third quarter results, recent developments, and
anticipated next steps in the TSC development program include:
Third Quarter Results & Recent
Developments
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Strengthened leadership team with additions and appointments to key
management positions, including pharmaceutical industry veterans
Jane Hollingsworth, as director, Robert Cobuzzi, Ph.D., as
president and chief executive officer, and Chris Galloway, M.D., as
chief medical officer, as well as Bill Elder, J.D., as general
counsel. |
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Ended quarter with $21.9 million in cash and cash equivalents. |
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Announced dosing of first two patients in Phase 1b clinical trial
evaluating TSC in hospitalized COVID-19 patients (the “100-303
COVID Trial”) with primary endpoint of evaluating safety and
tolerability of TSC administered every six hours for up to 15 days,
a more frequent dosing regimen than has been used in the Company’s
previous clinical studies. |
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As of November 11, 2020, patient enrollment continues, and no
dose-limiting toxicities have been observed. |
Near-Term Strategy
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Ongoing review of existing TSC development program with plans to
modify the program and accomplish two principal strategic
objectives: |
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Optimize the clinical dose and dosing frequency for TSC. |
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Evaluate TSC in clinical models designed to establish proof of
concept for improvement in oxygenation following administration of
TSC. |
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Designing and initiating additional studies in effort to accomplish
strategic objectives: |
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Evaluating possibility of expanding 100-303 COVID Trial to include
additional doses administered on the same regimen, assuming
successful and timely completion of currently planned doses and
final regulatory approval of pending protocol amendment to effect
change. |
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Designing additional clinical studies intended to evaluate (i) the
effects of TSC using short-term experimental models of oxygenation
with the expected primary objective of establishing proof of
concept for improvement of tissue oxygen levels and certain other
clinical parameters and (ii) depending on whether or not the
Company decides to implement the expansion of the 100-303 COVID
Trial, additional doses of TSC on a more frequent dosing
regimen. |
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Diffusion expects to fully fund these studies with
cash-on-hand. |
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Diffusion intends to provide certain additional details regarding
the design of these new studies in January 2021 and to initiate the
studies during the first quarter of 2021. The Company also now
expects the 100-303 COVID Trial, whether or not the Company decides
to implement the expansion described above, to be completed with
topline data available by the end of first quarter of 2021. |
Other Events
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Diffusion currently intends to participate in two virtual,
biopharmaceutical and biotechnology industry conferences in
mid-January 2021 – Biotech Showcase and the H.C. Wainwright 2021
Bioconnect Conference – and to provide its next update regarding
its development program for TSC at that time. |
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Launched new website design at www.diffusionpharma.com. |
“Hypoxia can be a serious complication of a
multitude of acute and chronic disease processes in patients of all
ages and represents a continued area of unmet need that spans
multiple therapeutic areas. I am excited about our development
plans, which we believe will clarify TSC’s mechanism of action in
controlled human studies of oxygenation. We intend to use these
data to inform and evaluate our further development opportunities
for TSC, as well as potential patient populations and indications,”
said Chris Galloway, M.D., Chief Medical Officer of Diffusion.
“Diffusion has experienced a lot of changes over
the past few months. While we continue to refine our vision for the
Company, we are pleased with the progress we made during the third
quarter and we are excited to begin implementing our plans during
the coming months,” said Robert Cobuzzi, Ph.D., Chief Executive
Officer of Diffusion. “We believe our near-term strategy will
significantly improve the probability of development success for
TSC by providing the opportunity to optimize dosing and obtain a
clear clinical signal supporting the potential value of TSC’s
mechanism of action across a broad range of conditions in which
hypoxia remains a significant obstacle to effective treatment.”
Third Quarter Financial Results
Research and development (“R&D”) expenses
were $3.1 million during the third quarter of 2020, compared with
$1.7 million during the third quarter of 2019. A significant
portion of the increase, $1.4 million, was attributable to expenses
related to the initiation of the Company’s ongoing clinical trial
evaluating TSC in COVID-19 patients. In addition, R&D expenses
included $0.1 million related to winding down the Company’s Phase 2
stroke trial.
General and administrative (“G&A”) expenses
were $2.1 million during the third quarter of 2020, compared with
$1.3 million during the third quarter of 2019. The increase was
primarily due to a $0.2 million increase in professional fees and a
$0.6 million increase in salaries, wages and stock-based
compensation expenses, including non-recurring expenses related to
the retirement, resignation and separation of the Company’s former
Chief Executive Officer in September 2020.
The Company recognized income tax benefits of
$0.8 million and $0.2 million during the third quarters of 2020 and
2019, respectively. In both periods, the recognized benefit
reflects the Company’s utilization of indefinite deferred tax
liabilities as a source of income against indefinite lived portions
of its deferred tax assets.
Diffusion had cash and cash equivalents of $21.9
million as of September 30, 2020, compared with $14.2 million as of
December 31, 2019, and believes its cash and cash equivalents are
sufficient to fund operating expenses and capital expenditures into
the fourth quarter of 2022.
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 the areas where it is
needed most. The Company’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 on the web at
www.diffusionpharma.com.
Forward-Looking Statements
This press release includes express and implied
forward-looking statements including, without limitation,
statements regarding the Company’s ongoing clinical trials and
development plans for its product candidates and the Company’s
financial condition, liquidity, and capital resources. By their
nature, forward-looking statements involve risks and uncertainties
because they relate to and depend on, among other things, events,
competitive dynamics, and industry change. 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, as a
result of certain risks and uncertainties, known and unknown, the
Company’s actual results could differ materially from any
intentions, beliefs, projections, outlook, analyses, or
expectations expressed herein. Particular risk and uncertainties
include, among other things, those related to: the Company’s
ability to design, initiate, execute, and complete its ongoing and
planned studies evaluating TSC; the Company’s ability to achieve
its near-term strategic objectives, in the near-term or at all; the
Company’s ability to obtain additional financing; the success and
timing of the Company’s clinical trials and preclinical studies,
including its ability to enroll subjects in such trials and studies
at anticipated rates; the Company’s ability to develop and
commercialize TSC or any other product candidate; the ongoing
COVID-19 pandemic; general economic, political, business, industry,
and market conditions, including the recent United States (“U.S.”)
presidential election; and the other factors discussed under the
heading “Risk Factors” in the Company’s filings with the U.S.
Securities and Exchange Commission (“SEC”). 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.
Comparisons of current and any prior period results are not
intended to express any ongoing or future trends or indications of
future performance, unless explicitly expressed as such, and should
only be viewed as historical data. For all forward-looking
statements, the Company claims the protection of the safe harbor
for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
Investor Contact:LHA Investor
RelationsKim Sutton Golodetz(212) 838-3777kgolodetz@lhai.com
Media Contact:Jeffrey
FreedmanRooneyPartners(646) 432-0191jfreedman@rooneyco.com
(Tables to follow)
|
Diffusion Pharmaceuticals Inc. |
Consolidated Balance Sheet |
(unaudited) |
|
|
September 30, 2020 |
December 31, 2019 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
21,910,183 |
|
$ |
14,177,349 |
|
Prepaid expenses, deposits and other current assets |
|
766,932 |
|
|
472,464 |
|
Total current assets |
|
22,677,115 |
|
|
14,649,813 |
|
Property and equipment, net |
|
174,133 |
|
|
252,366 |
|
Intangible asset |
|
8,639,000 |
|
|
8,639,000 |
|
Right of use asset |
|
174,668 |
|
|
247,043 |
|
Other assets |
|
252,057 |
|
|
322,301 |
|
Total assets |
$ |
31,916,973 |
|
$ |
24,110,523 |
|
Liabilities and Stockholders’ Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ |
1,411,717 |
|
$ |
1,251,412 |
|
Accrued expenses and other current liabilities |
|
1,162,278 |
|
|
358,532 |
|
Current operating lease liability |
|
112,953 |
|
|
111,477 |
|
Total current liabilities |
|
2,686,948 |
|
|
1,721,421 |
|
Deferred income taxes |
|
443,893 |
|
|
2,119,274 |
|
Noncurrent operating lease liability |
|
61,715 |
|
|
135,566 |
|
Total liabilities |
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3,192,556 |
|
|
3,976,261 |
|
Stockholders’ Equity: |
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Common stock, $0.001 par value: |
|
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1,000,000,000 shares authorized; 64,015,441 and 33,480,365 issued
and outstanding at September 30, 2020 and December 31, 2019,
respectively |
|
64,016 |
|
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33,481 |
|
Additional paid-in capital |
|
130,507,728 |
|
|
111,824,859 |
|
Accumulated deficit |
|
(101,847,327 |
) |
|
(91,724,078 |
) |
Total stockholders' equity |
|
28,724,417 |
|
|
20,134,262 |
|
Total liabilities and stockholders' equity |
$ |
31,916,973 |
|
$ |
24,110,523 |
|
|
|
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Diffusion Pharmaceuticals Inc. |
Consolidated Statement of Operations |
(unaudited) |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
|
2020 |
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2019 |
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2020 |
|
2019 |
Operating expenses: |
|
|
|
|
|
|
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Research and development |
$ |
3,137,553 |
|
|
$ |
1,743,494 |
|
|
$ |
6,845,203 |
|
|
$ |
4,961,720 |
|
General and administrative |
|
2,112,375 |
|
|
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1,290,371 |
|
|
|
4,964,440 |
|
|
|
3,559,551 |
|
Depreciation |
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24,192 |
|
|
|
18,178 |
|
|
|
78,233 |
|
|
|
70,840 |
|
Loss from operations |
|
(5,274,120 |
) |
|
|
(3,052,043 |
) |
|
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(11,887,876 |
) |
|
|
(8,592,111 |
) |
Other income: |
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|
|
|
|
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Interest income |
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29,233 |
|
|
|
21,991 |
|
|
|
89,246 |
|
|
|
59,596 |
|
Loss from operations before income tax benefit |
|
(5,244,887 |
) |
|
|
(3,030,052 |
) |
|
|
(11,798,630 |
) |
|
|
(8,532,515 |
) |
Income tax benefit |
|
805,676 |
|
|
|
225,960 |
|
|
|
1,675,381 |
|
|
|
485,216 |
|
Net loss |
$ |
(4,439,211 |
) |
|
$ |
(2,804,092 |
) |
|
$ |
(10,123,249 |
) |
|
$ |
(8,047,299 |
) |
Deemed dividend arising from warrant exchange |
|
— |
|
|
|
— |
|
|
|
(1,950,378 |
) |
|
|
— |
|
Net loss attributable to common stockholders |
$ |
(4,439,211 |
) |
|
$ |
(2,804,092 |
) |
|
$ |
(12,073,627 |
) |
|
$ |
(8,047,299 |
) |
Per share information: |
|
|
|
|
|
|
|
Net loss per share of common stock, basic and diluted |
$ |
(0.07 |
) |
|
$ |
(0.60 |
) |
|
$ |
(0.24 |
) |
|
$ |
(2.01 |
) |
Weighted average shares outstanding, basic and diluted |
|
64,011,342 |
|
|
|
4,693,290 |
|
|
|
50,216,239 |
|
|
|
4,005,919 |
|
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