Good afternoon, and welcome to Celcuity Second Quarter 2022 Financial Results Conference Call. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to your host, Robert Uhl. Please go ahead sir.

Thank you, operator. Good afternoon, everyone, and welcome to Celcuity's second quarter 2022 financial results and business update webcast and conference call. Thank you for joining us. Earlier today, Celcuity Inc. released financial results for the second quarter ended June 30, 2022. The press release can be found on the Investors section of the company website. Joining me on the call today are Brian Sullivan, Celcuity's Chief Executive Officer and Co-Founder; Vicki Hahne, Chief Financial Officer; as well as Igor Gorbatchevsky, Chief Medical Officer, who will be available during Q&A. Before we begin, I would like to remind investors that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, which are outlined in today's press release and in our reports and filings with the SEC. Actual events or results may differ materially from those projected in the forward-looking statements. Such forward-looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. On this call, we will also refer to non-GAAP financial measures. These non-GAAP measures are used by management to make strategic decisions, forecast future results and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the company's ongoing core operations and prospects for the future. You can find the table reconciling the non-GAAP financial measures to GAAP measures in today's press release. And with that, I'd like to turn the call over to Brian Sullivan, CEO of Celcuity.

Thanks, Robert, and good afternoon, everyone, and thank you for joining us today. As always, we really appreciate your continued support at Celcuity. I am happy to report that over the past few months our team has made significant progress on a variety of fronts to advance the development of gedatolisib. On this call we will review the regulatory status of gedatolisib’s clinical development program, our pivotal phase 3 trial on breast cancer and our recent financing activity. In July, the U.S. Food and Drug administration or FDA granted breakthrough therapy designation to Celcuity's lead drug product candidate gedatolisib, an investigational pan-PI3K/mTOR inhibitor, for the treatment of HR+/HER2- locally advanced, inoperable or metastatic breast cancer that has progressed after treatment with a CDK4/6 inhibitor in combination with a nonsteroidal aromatase inhibitor. Breakthrough therapy designation is intended to expedite the review of drugs that agency believes have significant potential in treating serious diseases with unmet medical needs and offers a potential to receive an accelerated review if relevant criteria are met. We look forward to collaborating closely with the agency as we seek to advance the therapy to the clinic as quickly as possible. Gedatolisib previously received fast track designation from the FDA in January, 2022. In our submission seeking breakthrough status, we provided detailed clinical safety and pharmacological data with a focus on our early phase study, evaluating gedatolisib in combination with palbociclib and fulvestrant in patients with advanced breast cancer whose disease progressed on a CDK4/6 inhibitor. This study reported very promising efficacy with a high objective response rate and extended progression free survival period and safety data that compared favorably to the currently available therapies for advanced breast cancer patients in the second line setting. The initial potential target patient population gedatolisib patients with HR positive versus negative,…

Thank you, Brian. And good afternoon, everybody. I'll provide a brief overview of our financial results for the second quarter of 2022. And I invite you to review our 10-Q, which will be filed tomorrow for a more detailed discussion. Our second quarter net loss was $10 million or $0.67 per share, compared to $14 million net loss or $1.11 per share for the second quarter of 2021. Because its quarterly net losses include significant non-cash items, including stock based compensation, issuance of common stock in 2021 and interest we also include in our press release non-GAAP adjusted net loss for the quarter ending June 30, 2022. Our non-GAAP adjusted net loss was $8.3 million or $0.55 per share for the second quarter of '22 compared to non-GAAP adjusted net loss of $8.3 million or $0.66 per share for the second quarter of 2021. R&D expenses were $8.4 million for the second quarter of 2022 compared to $13.1 million for the second quarter of 2021. The approximately $4.7 million decrease during the second quarter of 2022 compared to the second quarter of 2021 reflects a $10 million reduction in gedatolisib licensing related expenses, partially offset by increases of $5.3 million in other R&D expenses. Of the $5.3 million increase in R&D, $1.5 million was related to increased employee and consulting expenses, of which $0.5 million was in the form of non-cash stock based compensation. The remaining $3.8 million increase in R&D expenses is primarily related to costs for existing clinical trials and for activities supporting the initiation of the VICTORIA-1 pivotal trial. G&A expenses were $1.2 million for the second quarter of 2022 Compared to $0.6 million for the same period in 2021. The approximately $0.6 million increase in G&A during the second quarter of 2022 compared to the second quarter of 2021 arose primarily from approximately $0.5 million of non-cash stock based compensation. Net cash used in operating activities for the second quarter of 2022 was $11.3 million, compared to $7.6 million for the second quarter of 2021. This was a result of non-GAAP adjusted net loss of $8.3 million and working capital changes of approximately $3.1 million offset by depreciation expense of $0.1 million. We ended the quarter with approximately 66.9 million of cash and cash equivalents compared to cash and cash equivalents of $84.3 million on December 31, 2021. I will now hand the call back to the operator for questions.

Thank you ma'am. Ladies and gentlemen, at this time, we will be conducting a question and answer session. [Operator Instructions] The first question we have is from Maurice Raycroft from Jefferies.

Hi, congrats on the progress. And thanks for taking my questions. I was going to ask one on the arm F addition, just if you can talk more about how that suggestion came about from EMA. And you have specific expectations for that Arm relative to Arm B where EMA seems to be focused and potentially compared to Arm E, which is the palbociclib plus fulvestrant combo.

Sure. So we’ve received the written feedback in response to requests for scientific advice. And that's a process that's laid out at companies used to get input about various clinical topics, including clinical trial design. And so we submitted that and receive that feedback in late May. And the feedback is written form and essentially recommended that we mirror the study design that we're using in the non-mutated patients. And so it's fairly straightforward. And in totality, then we'll have, 50 patients in mutated group 117, and the non-mutated group and that'll provide the sufficient data that the regulatory feedback was looking for. As far as the comparisons Arm F will actually and analysis in the mutated group will be Arm D versus Arm F, similar to an analysis or a comparison of Arm A versus Arm B. There won't be a comparison with formal tests for comparing palbociclib, fulvestrant versus Geta fulvestrant. There will be exploratory analysis, but that's not a formal endpoint.

Got it. Okay, that's helpful. And the other question I had was just with breakthrough therapy designation in hand, do you need to, do you plan on meeting with FDA soon? And what is your plan for interactions over the course of the phase three?

We expect to have ongoing discussions with the FDA. There is a variety of topics sponsors wants to get feedback from the agency on a range of a variety of topics from CNC topics, or pharmacology topics and you do all that anticipation of to help ensure that your preparation for what you hope to be in a new drug application is in order. And so with breakthrough the timelines to get those meetings or the frequency of those meetings is increased. And so we already have plans in place to get feedback, but it's really less about seeking specific direction and it's more about ensuring that what we've done to date aligns with what their expectations are.

Got it. Okay. And maybe last quick question. Just wondering if you can remind me where you're at with good gedatolisib drug supply? And are there any other gating factors that you can comment on prior to starting dosing for the phase three?

No. So the manufacturing's in place, and so the drug supply and logistics around that have been developed. And so the gating items really are just related to the work sites have to do. Once essentially, the protocol has been finalized central IRB has reviewed the protocol and provided approved approval of it. It's quite a complex undertaking at these sites. Smaller sites tend to be able to move more quickly. They may have fewer steps, but significant amount of training, logistical coordination has to be put in place. So those activities are ongoing now, a number of the sites that we've selected. And so you go from a phase that runs in parallel to your protocol finalization and your regulatory interaction of identifying sites and then begin qualifying them. And that's a formal process to ensure they can comply with GCP, good clinical practice guidelines, etc. And then you begin the specific process of engaging with them not least of which is negotiating contracts and budgets. And again, depending on the institution, those can be quick or take a long time. That's just part of the process. And we take all of those into account. Each site essentially has its own timeline, its budget, and we plan accordingly. And so those are the activities that we're focused on right now. And so we're on track with what we have been discussing. We've set, in effect initiated the trial and study activities with the sites and finalizing all of the operational aspects. And mostly it's the site on site shoulders to finalize, contracts and in be available for training.

Got it. Okay, that's helpful. Thanks for taking my questions.

You're welcome. Thank you.

The next question we have is from Boris Peaker from Cowen & Co.

Great. Thanks for taking my questions. First, I'd like to focus maybe on the CELsignia assay. Could you just remind us when you need to show in the FACT-1 and FACT-2 studies to gain approval, and maybe kind of more broadly, can you describe where in the course of therapy will with the CELsignia be administered to the patient?

Sure. So these studies are evaluating early stage patients who are receiving new adjuvant treatment. And with the goal of achieving a pathological complete response. That's the primary endpoint. And in this setting, pathological complete responses is associated with longer disease free recurrence periods. And so the study is designed to identify or to obtain a significant increase in that pathological complete response rate in the populations that we're studying. And if successful, if we meet the endpoint, at that point, we would engage with our collaborator, let's say, Genentech or Puma, to develop a more formal regulatory plan, which would involve both of us going to the agency since we would pursue a PMA process, they would pursue, essentially a label expansion process, SNDA supplement to expand the label, and that work is kind of subject to specific direction that you get from the agency. And so with the data we would have we hope to have, expect to have middle of next year, that would give us the basis for having those discussions.

Got it. And in terms of, I guess, you're partially answered in terms of when it would be administered in terms in course of therapy, it would be just to newly diagnosed patients?

Yes, so these, these are right for the FACT-1 and FACT-2 trials, these woman would receive the therapies that we're studying in the case of FACT-1 it's Herceptin, Perjeta, and chemotherapy, which is standard of care for HER2 positive patients in new adjuvant setting. And what we would be doing or what our test is doing is identifying patients who are HER2 negative they have normally expressed HER2 and non-amplified, and then we would be treating them with what is essentially the standard of care regimen that HER2 positive patients receive. Currently, these patients they receive a chemotherapy in new adjuvant with the goal of shrinking the tumor to make possible more successful surgery, or ideally eliminate the tumor completely which is a pathological complete response. In these patients who are HR positive, the typical or expected rate of pathologic complete response is only 10%. And so if we could double that rate that would be very significant, given the importance or the benefit to patients who do get a pathological complete response from chemotherapy.

Great. And my last question on the VICTORIA trial. The rationale if I understand it correctly for given palbociclib to patients that already progressed on a CDK4/6 inhibitor?

Yes. The rationale of that. I am sorry. The mechanistic rationale, I'm sorry, Boris, you cut out there?

Yes, no, that's what I was asking what is the mechanistic rationale for given [indiscernible].

Sure. So these patients well, step one back to what we think is the disease mechanism involved in these woman's cancer. 15 years ago the hypothesis was that this was solely estrogen driven. And that the development of better endocrine therapies was the prime focus of drug development. Work was done and discovered that the estrogen pathways are cooperative with cell cycle pathways. And that led to development of CDK4/6 inhibitors and those were eventually approved and proved to be fantastically beneficial to patients. But obviously, these patients aren't cured. Patients will eventually progress, the tumors will become resistant to these drugs. And so research has been done over the past 10-15 years to understand what that resistance mechanism is. And I think there's a reasonable consensus out there certainly recognition that the PI3K mTOR pathway is involved. And so with our early phase data, we studied early lines, first line patients and second line patients. In the first line setting, we showed that when you added gedatolisib to palbociclib and letrozole, we induced, we reported a higher rate objective response rate 85% than had been reported in the [indiscernible] the registrational study for palbociclib, letrozole. We interpreted those results. Again, those are different trials, not really non-comparative, but the numbers, the results are far enough apart that you can draw some inferences. And the inference we drew was that PI3K mTOR intrinsically involved in when you add data to this population that the PI3K mTOR pathway is involved. And then in the second line setting, what was compelling about the data, what we the inference we drew from that data was that even though the patients have progressed, most of them on palbociclib, because that's has 75% to 80% share of CDK4/6 marker. So even though these patients had…

Thank you very much for the detailed answer to my question.

Sorry.

No appreciate the detail. Great, thank you very much.

Okay. You're welcome.

Thank you. The next question we have is from Gil Blum from Needham.

Hey Gil.

Hi, yes. Hi, this is [Chen] for Gil, thank you for taking our questions. So we just want to ask if then new arm out offer any benefit on the regulatory perspective for gedatolisib and if the readout for arm out misses, does it affect any other pathways the under arms?

Thanks for your question. Well, since EMA recommended, we add the arm. We think it's helpful to add the arm and address a recommendation they had. It makes logical sense. We were not surprised by the requests. We felt the data in the non-mutated population for Geta fulvestrant was sufficient. EMA thought as supplementing that data with mutated patients would be useful. We agreed and so that's really the rationale for moving forward with that arm. As far as the test, there really has no formal test, or hurdle that that arm has to achieve. And so it's essentially part of a requirement that you demonstrate and allow the agency to see the individual contribution of different drugs to treatment benefit.

Thank you.

[Operator Instructions] The next question we have is from Alex Nowak from Craig Hallum.

Great, good afternoon, everyone. This is Connor on for Alex. Thanks for taking the questions. I guess first how is the team thinking about modeling clinical trial enrollment uptake? Like, how quickly do you think you can enroll these sites and start dosing? And then are there any internal goals the team has talked about for hitting those enrollment numbers?

Sure. As we've indicated, we expect to dose the first patient in the next few months. So we think it's imminent. As the activities are underway in a variety of sites, to get them going. As far as the enrollment path again, we think the number that we're driving towards is or the date we're driving towards, is when there's sufficient events that have occurred. And that would trigger the primary analysis. And that takes into account enrollment, number of patients, rate of enrollment, rate of events and that's ultimately how the statistical analysis plan is structured. It's not, it's less about the number of patients per se, as much as the number of patients that allow you to do this comparison between the progression free survival in the different arms that you're analyzing. And we're projecting to have that data available second half of '24 for the wild type population, first half of '25 in mutated population.

Perfect, that makes sense. Thank you. And then just another quick one. Are there any kind of like additional staffing needs, as you kind of ramp up phase three?

So over the past 15 months, we've built out our senior team, I think, I'm very happy, we're able to find such great people in a short period of time. They are doing a fantastic job. And in turn they've built a group of folks who perform specific functions that support the study, support the operations in general. And I would say that team has been built. And so there may be additional folks performing more, less senior functions, but we don't expect a dramatic increase in our headcount going forward. We think the team required to execute the VICTORIA-1 studies in place and working full steam ahead.

Yes, that's great. Thanks for the update. Congrats on the progress.

You're welcome. Thank you.

Thank you. Ladies and gentlemen we have reached the end of our question-and-answer session. I would like to turn the call back to Brian Sullivan for closing remarks. Sir?

Thank you for attending our call. We look forward to continuing to update you and I will say goodbye.

Thank you sir. Ladies and gentlemen, that does conclude today's conference. Thank you for joining us. You may now disconnect your lines.