Toronto, Ontario – May 28, 2021, Theralase® Technologies Inc. (“Theralase” or the “Company”) (TSXV: TLT) (OTCQB: TLTFF), a clinical stage pharmaceutical company dedicated to the research and development of light activated PhotoDynamic Compounds (“PDC”) and their associated drug formulations intended to safely and effectively destroy various cancers released its unaudited Q12021 condensed interim consolidated financial statements.
For the three-month periods ended March 31st:
|Audited Consolidated Statements of Operations |
In Canadian Dollars
|2021 $||2020 $||% Change|
|Cost of Sales||74,463||99,447||-25%|
|Gross Margin as a percentage of sales||60%||89%|
|Research and Development Expenses – CLT Division||54,616||138,141||-60%|
|Research and Development Expenses – ACT Division||534,951||909,141||-41%|
|Total Operating Expenses||969,413||1,655,952||–41%|
Total revenue remained predominantly flat, year over year, and is primarily attributed to the COVID-19 pandemic as most health care practitioners elected to temporarily close their practices and place any purchasing decisions on temporary or permanent hold.
Cost of sales for the three-month period ended March 31, 2021 was $74,463 or 60% of revenue resulting in a gross margin of $50,320 or 40% of revenue. In comparison cost of sales for the same period in 2020 was $99,447 or 60% of revenue resulting in a gross margin of $12,096 or 11% of revenue Cost of sales is represented by the following costs: raw materials, subcontracting, direct and indirect labour and the applicable share of manufacturing overhead. The gross margin increase, as a percentage of sales, year over year, is attributed to a decrease in labour and material costs.
The decrease in selling expenses is primarily due to the restructuring of the Canadian and US sales and marketing departments, as a result of the COVID-19 pandemic, resulting in the resignation or termination of certain non-essential sales and marketing personnel and reduced advertising and travel expenditures.
The decrease in administrative expenses is primarily attributed to decreased spending on director and advisory fees (50%) and administrative salaries (35%) due to the COVID-19 pandemic, resulting in the termination of certain non-essential administrative personnel. Stock based compensation expense decreased 54% in the three-month period ended March 31, 2021 due to a reduction in stock options granted.
The decrease in research and development expenses for the three-month period ended March 31, 2021 is attributed primarily to the delay in patient enrollment and treatment in Phase II NMIBC clinical study (“Study II”) due to the COVID-19 pandemic. Research and development expenses represented 61% of the Company’s operating expenses and represents investment into the research and development of the Company’s ACT technology.
The net loss for the three-month period ended March 31, 2021 was $919,093 which included $179,926 of net non-cash expenses (i.e.: amortization, stock-based compensation expense and foreign exchange gain/loss). This compared to a net loss in 2020 of $1,643,856 which included $327,921 of net non-cash expenses. The ACT division represented $706,435 of this loss (77%) for the three-month period ended March 31, 2021.
The decrease in net loss is primarily attributed to the following:
- Delay in patient enrollment and treatment due to the COVID-19 pandemic, resulting in decreased research and development expenses in Study II.
- Decreased salaries due to the COVID-19 pandemic, resulting in the resignation or termination of certain non-essential administrative, research and production personnel.
- Clinical study site status. Patient enrollment and treatment rates have been delayed due to the COVID-19 pandemic restrictions in place at various CSSs; however, they are expected to improve once Canada and the US recover from the COVID-19 pandemic. Canadian CSSs placed themselves on temporary hold commencing March 20, 2020 and resumed normal operations between August 12, 2020 and September 24, 2020. Although Canadian CSSs recruiting activities were re-commenced in 4Q2020; patient recruitment and treatment activities have been limited due to the second and third wave of COVID-19. With the addition of 6 additional US-based CSSs in 1Q2021, Theralase® is hopeful that patient recruitment and treatment activities will increase throughout 2021 to help achieve the Company’s strategic objectives.
- To date, Study II has enrolled and provided the primary study treatment for 19 patients (including three patients from Phase Ib study treated at the Therapeutic Dose) for a total of 22 patients.
- Theralase® is currently focused on working with its Canadian and US-based CSSs to enroll and provide the primary Study Treatment for up to 6 additional patients in 2Q2021 for a total of 20 to 25 patients enrolled and treated in Study II. Theralase® plans to compile progressively the 90, 180, 270, 360 and 450 day assessment data (urine cytology and cystoscopy) for these patients with the intent of submitting this interim data to the FDA for consideration of Breakthrough Designation (“BTD”) approval.
- Additional cancer indications. The Company has demonstrated significant anti-cancer efficacy of Rutherrin®, when activated by laser light or radiation treatment across numerous preclinical models; including: Glio Blastoma Multiforme (“GBM”) and Non-Small Cell Lung Cancer (“NSCLC”). The Company has commenced Non – Good Laboratory Practices (“GLP”) toxicology studies with Rutherrin® in animals to help determine the maximum recommended human dose of the drug, when administered systemically into the human body, via intravenous injections. Theralase plans to commence GLP toxicology studies in animals in 2021.
- COVID-19 Research Update. The Company’s PDC technology was proven to be effective in the destruction of Influenza H1N1 and Zika viruses at low nanomolar concentrations. These studies were expanded to include coronavirus Bio Safety Level (“BSL”) 2. As a note, COVID-19 is caused by coronavirus (BSL-3), not coronavirus (BSL-2). A new assay was established to measure coronavirus destruction and using this new assay the Theralase® PDC technology was able to destroy coronavirus (BSL-2) with drug doses 5 times lower than what was used to kill Influenza H1N1 and Zika viruses. These drug doses demonstrated a 99.995% destruction rate of the BSL-2 coronavirus and are significantly lower than those used by the Company to treat cancers; hence considered safe for human use. Coronaviruses are considered similar in their structure and these new results strongly suggest that Theralase®’s PDC will be highly effective against the SARS-CoV-2 (BSL-3) virus responsible for COVID-19.
In April 2021, Theralase® executed a Collaborative Research Agreement (“CRA”) with the National Microbiology Laboratory, Public Health Agency of Canada (“PHAC”) for the research and development of a Canadian-based SARS-CoV-2 (“COVID-19”) vaccine. Under the terms of the agreement, Theralase® and PHAC are collaborating on the development and optimization of a COVID-19 vaccine by treating the SARS-CoV-2 virus grown on cell lines with Theralase®’s patented PDC and then light activating it with Theralase®’s proprietary TLC-3000A light technology to inactivate the virus and create the fundamental building blocks of a COVID-19 vaccine. This inactivated virus would then be purified and used to inoculate naive animals followed by challenge with the SARS-CoV-2 virus, to ascertain the efficacy of the vaccine. The project is entitled, “Photo Dynamic Compound Inactivation of SARS-CoV-2 Vaccine” and commenced in mid-April 2021.
* The Company does not claim or profess that they have the ability to treat, cure or prevent the contraction of the COVID-19 Coronavirus.
About Study II
Study II utilizes the Therapeutic Dose (0.70 mg/cm2) of TLD-1433 and is focused on the enrollment and treatment of approximately 100 BCG-Unresponsive NMIBC CIS patients in up to 20 clinical study sites located in Canada and the US.
Study II has a:
- Primary endpoint of efficacy (defined by Complete Response (“CR”) at any point in time
- Secondary endpoint of duration of CR at 360 days post-initial CR (approximately 450 days post initial Study treatment, assuming CR is achieved at the 90 day assessment)
- Tertiary endpoint of safety measured by incidence and severity of Adverse Events (“AEs”) grade 4 or higher that do not resolve within 450 days post-initial treatment
The FDA, in its 2018 guidance to industry has stated that, “For single-arm trials of patients with BCG-unresponsive disease, the FDA defines a CR as at least one of the following:
- Negative cystoscopy and negative (including atypical) urine cytology
- Positive cystoscopy with biopsy-proven benign or low-grade NMIBC and negative cytology
- For intravesical therapies without systemic toxicity, the FDA includes, in the definition of a CR, negative cystoscopy with malignant urine cytology, if cancer is found in the upper tract or prostatic urethra and random bladder biopsies are negative.
Intravesical instillation does not deliver the investigational drug to the upper tract or prostatic urethra; therefore, the development of disease in these areas cannot be attributed to a lack of activity of the investigational drug. Thus, sponsors can consider patients with new malignant lesions of the upper tract or prostatic urethra, who have received intravesical therapy to have achieved a CR in the primary analysis; however, sponsors should record these lesions and conduct sensitivity analyses in which these patients are not considered to have achieved a CR.“1
About Theralase® Technologies Inc.
Theralase® is a clinical stage pharmaceutical company dedicated to the research and development of light activated compounds and their associated drug formulations with a primary objective of efficacy and a secondary objective of safety in the destruction of various cancers, bacteria and viruses.
This news release contains “forward-looking statements” which reflect the current expectations of Company’s management for future growth, results of operations, performance and business prospects and opportunities. Such statements include, but are not limited to, statements regarding the Company’s proposed development plans with respect to Photo Dynamic Compounds and their drug formulations. Wherever possible, words such as “may“, “would“, “could“, “should”, “will“, “anticipate“, “believe“, “plan“, “expect“, “intend“, “estimate“, “potential for” and similar expressions have been used to identify these forward-looking statements. These statements reflect management’s current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant risks, uncertainties and assumptions including with respect to the ability of the Company to: adequately fund, secure the requisite regulatory approvals to commence and successfully complete a Phase II NMIBC clinical study in a timely fashion and implement its development plans. Many factors could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements; including, without limitation, those listed in the filings made by the Company with the Canadian securities regulatory authorities (which may be viewed at www.sedar.com). Should one or more of these risks or uncertainties materialize or should assumptions underlying the forward looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by the forward-looking statements contained in this news release. These factors should be considered carefully and prospective investors should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in the press release are based upon what management currently believes to be reasonable assumptions, the Company cannot assure prospective investors that actual results, performance or achievements will be consistent with these forward-looking statements. The Company disclaims any intention or obligation to revise forward-looking statements whether as a result of new information, future developments or otherwise except as required by law. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchanges) accepts responsibility for the adequacy or accuracy of this release.
For More Information:
Kristina Hachey CPA, Chief Financial Officer