Zacks Small Cap Research – BIOR: Second Quarter Results – Technologist

By John Vandermosten, CFA

NASDAQ:BIOR

READ THE FULL BIOR RESEARCH REPORT

Biora Therapeutics, Inc. (NASDAQ:BIOR) reported second quarter results representing a period where the company continued refining its capital structure, announced results for its BT-600 trial, progressed with its BioJet partnership discussions and was awarded new patents. In conjunction with the 2Q:24 report, Biora announced a $16 million facility which will give the management team flexibility to negotiate potentially multiple BioJet partnerships.

Second Quarter Financial and Operational Results

Biora reported second quarter 2024 results in a press release and filing of Form 10-Q with the SEC on August 12th. A conference call was held to discuss results with investors following the release. For the quarter ending June 30, 2024 revenues of $318,000 were recognized. Net income for 2Q:24 totaled $6.5 million or $0.18 per share. However, when amounts related to non-cash derivative value changes were removed, net loss was a more representative ($16.4) million. Operational expenses rose 8% to $16.1 million on higher clinical trial expenses related to BT-600. For the second quarter 2024 versus the same prior year period:

➢ Revenues were $318,000 up from $2,000 the prior year due to an increase in collaboration revenue;

➢ Research and development expenses totaled $7.7 million, up 29% from $6.0 million on higher clinical trial expenses, salaries and benefits and laboratory supplies, partially offset by a small decrease in consulting and professional fees;

➢ General & Administrative expenses were $8.4 million, down 6% from $9.0 million due to lower spending on business insurance, salaries and benefits, and facilities costs, partially offset by an increase in consulting and professional fees;

➢ Interest expense was ($711,000) compared to ($2.7) million with the change attributable to a decrease in the balance of the 7.25% convertible senior notes due 2025 from note exchanges, offset by issuance of 2028 Convertible Notes;

➢ Other income was $22.9 million vs. ($166,000) with the increase almost entirely related to a gain on warrant liabilities and other derivative instruments resulting from mark to market and equity share price declines;

➢ Income tax was a benefit of ($67,000) vs. $0;

➢ Net income was $6.5 million vs. ($17.8) million or $0.18 and ($1.47) per share, respectively. After removing the gains on derivative instruments net loss was ($16.4) million or ($0.46) per share.

As of June 30, 2024, cash totaled $5.3 million. This amount compares to the $15.2 million cash balance held at the end of 2023. Multiple transactions took place in financing including contributions from issuance of common stock and convertible notes offset by offering costs and finance costs for insurance premiums. Debt is carried on the balance sheet at $45.7 million, which consists of multiple issues of convertible notes. Biora also monetized its interest in Enumera Molecular which contributed an additional $3 million to the cash pile. In August 2024, Biora entered into a note purchase agreement which provides an additional $16 million in funding to the company through the issuance of additional convertible notes. $4 million has been drawn so far and we expect another $4 million will be drawn later in the third quarter.

BT-600 Program

IND Clearance for BT-600

Following an investigational new drug (IND) submission in September 2023 for the NaviCap BT-600 program, the FDA cleared Biora’s IND application for BT-600 in November, allowing the study to begin. An announcement of the trial’s initiation was made in January. The study produced pharmacokinetic and pharmacodynamic data related to the effects of BT-600. In late February, Biora announced that the single ascending dose (SAD) cohorts had been completed and that the multiple ascending dose (MAD) cohorts would begin. The MAD portion is designed to enroll 24 participants to receive BT-600 tofacitinib at 5 and 10 mg or placebo. By the end of April 2024, the MAD cohorts had been completed and management guided towards a late June report of full study data. Preliminary data was provided on July 1st in a press release and additional data was given in a key opinion leader (KOL) event on July 17th.

BT-600 Trial Interim Readout – Single Ascending Dose

The BT-600 trial, listed under the NCT06275464 identifier, uses the NaviCap device to deliver a proprietary formulation of tofacitinib in either 5 mg, 10 mg dosages or placebo to healthy patients.

The single dose data is consistent with PK and safety data generated in previous studies. The product was deemed to be well tolerated and functioned as intended and designed with drug release as predicted. Devices carrying drug demonstrated corresponding systemic absorption and delivery to the colonic tissue. Measurable tofacitinib in the blood was observed at approximately 6 hours and maximum concentration at 8 hours. This is in contrast to the conventionally orally delivered tofacitinib which reaches its maximum concentration within the first hour. Based on measurements taken during the study, delivery to the colon vs. the upper gastrointestinal tract was confirmed. Dose proportional PK was observed between the 5 mg and 10 mg doses. NaviCap’s goal is to achieve higher concentrations of drug in the target tissue and lower levels systemically throughout the body compared with conventional administration. Further studies later this year are expected to extract biopsies to confirm tissue concentration.

SAD Interim Results from BT-600

Biora provided additional data for its BT-600 study in an April 4th press release. Clinical data indicated that all pharmacokinetic endpoints were met by all study participants. The drug-device combination was well tolerated with no serious adverse events and all devices performed as intended. All participants showed systemic drug absorption. Six hours after administration, tofacitinib was detected in subject plasma and TMAX was achieved 8-10 hours after first administration of BT-600.¹ Tofacitinib was measured in fecal samples of all subjects, further confirming delivery of drug to the colon.

Importantly, delivery of tofacitinib with BT-600 resulted in a 65% to 75% reduction in systemic absorption of the Janus kinase (JAK) inhibitor. Maximum plasma concentration was 26 ng/mL for BT-600 at the 10 mg dose of tofacitinib compared with 88 ng/mL for 10 mg of conventionally administered oral tofacitinib.

The MAD portion of the study began after the SAD and was conducted to confirm study results. Patients received one daily dose of 5 mg, 10 mg or placebo. The dose was one-half the amount administered as per the drug label for tofacitinib. The MAD portion of the trial evaluated daily doses of BT-600 for seven days at 5 mg and 10 mg tofacitinib or placebo, in healthy adult participants. In the second half of the year, another study is planned that will evaluate the use of NaviCap tofacitinib in UC patients to further confirm plasma and tissue PK and PD and to further inform subsequent trials.

Select Results from SAD and MAD Studies

Biora reported select results from its BT-600 trial on July 1st confirming and expanding upon the favorable findings in the interim update provided in April. All pharmacokinetic endpoints were achieved and drug delivery and absorption in the colon, including distal portions, was biopsy confirmed. NaviCap devices performed as intended and were well tolerated, producing no safety signals. The results support the advance of BT-600 into a Phase Ib clinical trial in patients with ulcerative colitis (UC).

BT-600 Phase I trial results reported evidence of systemic absorption of tofacitinib at six hours consistent with NaviCap’s expected delivery profile. NaviCap maximum blood serum levels of tofacitinib occurred at eight to ten hours compared to the 30 minutes observed in other conventional oral tofacitinib trials. Systemic drug exposure for BT-600 was from one quarter to one third the levels of those observed with conventional oral tofacitinib.

The clinical trial protocol required biopsy of treated colonic tissue including the distal colon to produce evidence of drug exposure. Biopsy results showed evidence of drug delivery throughout the colon and at common sites of ulcerative colitis-related inflammation and ulcers. In the multiple NaviCap deliveries to the 48 healthy participants in the trial, 100% of the SAD subjects and 98% of the MAD subjects had confirmed NaviCap device delivery.

Key Opinion Leader (KOL) Event and Further BT-600 Readout Details

Following the report of BT-600 topline results, Biora held a key opinion leader (KOL) event on July 17th. hosted by LifeSci Events and Biora CEO Adi Mohanty. Experts featured were Bruce Sands, MD, MS, from the Icahn School of Medicine at Mount Sinai, Ariella Kelman, MD the Chief Medical Officer of Biora and Brian Feagan, MD, FRCPC from the University of Western Ontario. The featured guests provided a summary of the unmet needs in ulcerative colitis (UC), reviewed the BT-600 Phase I trial, and addressed the challenges of medicine delivery to the colon.

Dr. Sands began with a review of the clinical presentation of UC noting the relative prevalence of each type of disease and its features. He reviewed the histology of UC, comparing the presentation of a normal colon to inactive chronic colitis to severely active chronic colitis. The impact of UC on patient lives was given, showing evidence that patients felt more impact on their lives from UC than patients with other diseases such as asthma, migraine and rheumatoid arthritis. One of the shortcomings of the most effective class of medicines for UC, the JAK inhibitors, is the side effect profile that comes from systematic exposure to the drug. Tolerability prevents the optimal therapeutic dose from being used, highlighting a second shortcoming which is difficulty delivering sufficient drug to the site of disease.

Dr. Kelman summarized the results from the Phase I BT-600 trial evaluating NaviCap and tofacitinib drug delivery in healthy patients. 48 subjects, evenly split between the single ascending dose (SAD) and multiple ascending dose (MAD) cohorts measured the safety, tolerability and pharmacokinetics of BT-600. The randomized, double-blind, placebo-controlled trial achieved all trial objectives with tofacitinib first detected in the blood at 6 hours and maximum blood levels at 1/4^th to 1/3^rd Xeljanz levels.² Tofacitinib was detected throughout the colon with drug tissue levels at or above the estimated IC90 threshold across three biopsy sites in the colon. NaviCap drug delivery was accurate with no early releases and 95% of devices successfully detecting colon entry.

There was a positive correlation between tissue and plasma levels of drug throughout all measured parts of the colon. Projected tofacitinib levels were estimated to be above IC90 levels for at least 16 hours following administration and above IC50 levels at 24 hours after dosing. The PK study demonstrated that NaviCap can achieve tissue concentrations associated with improved efficacy with lower systemic exposure. Tofacitinib tissue concentrations have been shown to correlate with endoscopic response, with responders having a median tissue concentration above the estimated IC90.

Now that the Phase I is complete, Biora is looking ahead to a Phase Ib which will confirm the PK profile in UC patients. This next step will target the enrollment of 15 UC patients at a single center and evaluate safety and tolerability, PK and pharmacodynamics, and device function. It is scheduled to start in 4Q:24 and last six months. If results continue to be favorable, a Phase II will be launched as a proof-of-concept trial that will enroll 150 UC patients. The trial will be global and evaluate additional endpoints including clinical and endoscopic response, mucosal healing, patient reported outcomes (PROs) and biomarkers. The trial is planned for 4Q:25 with further details forthcoming.

The third featured speaker for the KOL event, Dr. Feagan, provided a review of approved treatments for UC and some of their deficiencies. The speaker highlighted drug toxicity (which constrains administration to subtherapeutic doses) and lack of precise delivery of drug to the site of disease as two of the primary weaknesses. He also noted, in a similar vein to other presenters, that tissue drug exposure and activity correlate with endoscopic outcomes. With respect to NaviCap, Dr. Feagan observed that it achieved a higher tissue to plasma concentration ratio at a lower dose than conventional tofacitinib. In Dr. Feagan’s opinion, NaviCap provides consistent PK, precision release and tissue exposure along the length of the colon which have been demonstrated in the Phase I BT-600 study.

The event closed with a summary by the CEO and an opportunity for participants to ask questions. Click on the highlights for a link to the webcast and slide deck.

Summary

Biora has demonstrated NaviCap’s accurate drug delivery of tofacitinib to the colon with low systemic exposure. This may allow therapeutic levels of the drug to be administered while avoiding common side effects of the JAK inhibitor, such as infections. Using biopsy, drug delivery was measured throughout the colon in the BT-600 Phase I trial with systematic exposure at one-third to one-quarter the level associated with conventional oral tofacitinib. Literature on the subject shows that there is a correlation between the presence of tofacitinib in the colonic tissue and alleviation of UC symptoms, stimulating keen interest in advancing NaviCap further along the regulatory route to approval. The next step is to conduct a Phase Ib study in UC patients which will be continue to evaluate if this relationship holds true. The Phase Ib study is expected to start towards the end of 2024.

Animal studies for Biora’s other product, BioJet, have been completed and several of the company’s collaborators are now considering whether or not to move forward. Management has indicated that we are close to executing a deal with one or more of the big pharmas. In support of this effort, Biora entered into a note purchase agreement with existing investors to provide the financial flexibility necessary to get the best deal possible. We think an upfront amount will be part of a partnership deal which can help alleviate some of the capital needs that we see related to launching the Phase Ib later this year.

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