MM: Thank you. And I know you've done a lot of preclinical research on the efficacy of the Hemopurifier. What does your preclinical database look like?

SL: Sure. We have both a preclinical and a clinical database. On the clinical side, we have a safety database involving 38 patients who have been treated and 164 unique Hemopurifier sessions. The device has been widely tolerated quite well. To answer your question about the preclinical side of things, there are two aspects to preclinical testing. One is safety, and we've gone through all the standard preclinical testing, which includes genotoxicity, biocompatibility, and hemocompatibility. We have that database. The other part of preclinical data is the nonclinical performance of the device. I'll speak briefly about three areas, focusing lastly on oncology, the company's main focus. The first is in virology. As I said, we're in life-threatening viral infections. Most enveloped viruses are coated in a sugar substance, including mannose, which is the target for our device.

SL: We've tested a wide array of enveloped viruses against our device, utilizing a miniature version of the Hemopurifier you see there. We have seen a broad-spectrum removal of envelope viruses, including some timely important viruses that people are concerned about, such as dengue and other Flaviviruses and bird flu, which has been in the news lately. H5N1 has been removed in vitro. Dengue, which we're seeing cases domestically acquired in the US, has also been removed. SARS-CoV-2, both the spike protein and the many variants, has been removed. We have a broad panel of enveloped viruses. That's important because it's likely that if there's going to be another outbreak or pandemic, it's probably going to be with an enveloped virus. We would stand poised to test this new virus in vitro and then go to the next step of clinical trials if the preclinical data bore that out.

SL: That's important. I'll briefly mention our preclinical work in transplant organs. When they're recovered from a patient from donors, they are typically put on a machine perfusion circuit before going into recipients to maintain their viability. What's been noted is that extracellular vesicles are released from these organs and play a role in delayed graft function in the recipient. With that in mind, we did some in vitro work with perfusates following machine perfusion of organs, ran them over our Hemopurifier in our lab, and showed a reduction in both extracellular vesicles and their cargo microRNAs implicated in poor function. We just posted that on the preprint server bioRxiv. That's virology and transplant. Our focus is on oncology. I want to talk about preclinical data in oncology.

SL: Three main data sources have supported the clinical trials, which I'm sure we'll talk about. One is we have an experiment where we got preclinical samples from patients on a number of different tumor types, including breast, esophageal, head, and neck cancer. We took those samples, isolated the extracellular vesicles out of the samples, put them in a buffered solution, and ran them over a miniature version of our Hemopurifier. Regardless of the tumor type, we saw between 92 and 99% removal of the extracellular vesicles during that circuit. That data was presented in 2020 at the AACR meeting. We followed that up more recently. We thought it was important to demonstrate that we're removing extracellular vesicles directly from plasma since that's the most relevant to a clinical trial.

SL: We got plasma from a patient with non-small cell lung cancer, ran it over a miniature version, and confirmed that we can directly remove the EVs from plasma itself, not EVs in plasma. The third piece of information that helps support our trial is we did compassionate, use emergency use; we did eight treatments on a patient with severe COVID. Now, this patient didn't have malignancy, but what was important in this is that we were actually able to measure extracellular vesicle levels in that patient throughout the eight treatments and showed reliably that throughout the eight treatments, the extracellular vesicle concentration went down as well as microRNAs that were involved in organ function. Our first demonstration was that we could remove extracellular vesicles in the in vivo setting. With those three pieces of information, we were satisfied that we had good preclinical data to support going into the clinic.

Jim Frakes: Steve, we should define EVs and exosomes a bit.

SL: Great, great point. So, extracellular vesicles are small. They have a bilayer lipid structure. They're released from the apparent cell. They're released from all cell types. They're particularly released in large amounts from tumor cells, and those EVs tend to have more mannose on them. EVs are involved in cell-to-cell communication. They carry cargo and a payload, if you will, with a variety of structures, including microRNAs, that give a signal to the receiving cells. So why that's important in malignancy is that the cargo in the EVs from the tumor cells contributes to metastasis or spread of the tumor, growth of new blood vessels feeding the tumor, and microRNAs that suppress the body's immune system. The theory is that in cancers if you remove or debulk the body of those EVs from the tumor cells, you could improve responses to cancer therapy.

MM: Got it. That's the right way for us to think about it. These EVs can be harmful, and you believe the device can help remove them. Let's talk about the clinical trial you're about to embark on. If you want to give us some information about the trial, about how it's designed, that would be very helpful to the listeners.

SL: Sure. When thinking about going into, and again, this is our first foray into oncology, thinking about how to structure an intervention. This is an extracorporeal circuit, so it involves putting a vascular catheter in and putting somebody's circulation over a device. You want to go initially into a population that's not going just to be treated adequately with an oral drug or an IV drug. There has to be some potential additional benefit to the patient. With that in mind, we chose to go into a population receiving a checkpoint inhibitor agent. The drugs that you're probably most familiar with are Keytruda and OPDIVO. These immune checkpoint inhibitors block anti-PD-1, a suppressing molecule in cancer. These drugs have been revolutionary.

SL: There are many cancer types for which people would have their disease would've progressed, and they've died but are now living. The difficulty is that only about 30 to 40% of patients who receive these drugs have a lasting clinical response. This means there's an unfortunate 60 to 70% that are going to go on to salvage therapies of unproven efficacy and have a lot of toxicity. When we thought about structuring a trial, we said, let's pick a population for which they'll get their standard of care with their anti-PD-1 therapy, either Keytruda or OPDIVO. They'll get it as they normally would by their doctor for the first two months. We'll measure extracellular vesicles. We'll measure their body's T-cell ability to fight tumors while they're getting that. Then, they'll get checked at two months as part of the standard of care.

SL: If they're not improving, we would put them on the Hemopurifier and then see what happens to their extracellular vesicular levels in their body's T cell tumor-fighting ability. That's the way it's structured. It's structured as a safety and feasibility study. The first important thing is whether this patient population tolerates this therapy. That's the main focus. But built into the study is also, again, what is the device doing to the extracellular vesicle concentrations, the T-cell fighting ability, and how often do you have to administer such a therapy to have lasting responses on those two factors. The Hemopurifier phase of the study is done in three sequential cohorts. The first cohort gets a single Hemopurifier treatment during a given week. The second cohort gets two weekly Hemopurifier treatments, so, say, Monday and Friday.

SL: In the third cohort, they would get it three times a week, say, Monday, Wednesday, and Friday. There'll be a stop after each of those cohorts, where the data safety monitoring board will look to ensure there's no dose toxicity. However, we will also get readouts from our central lab on those extracellular vesicles and T-cells so we can start making some decisions. We'll follow those labs out for eight weeks after the Hemopurifier treatment. We'll also follow the patients out for a year to see their clinical performance. However, the trial is a small safety study. It won't give us the ultimate determination of clinical efficacy. Still, it will give us the biological signal and the safety to justify if we want to go on to a true efficacy trial.

MM: Got it. The hypothesis is that the Hemopurifier, in conjunction with Keytruda and other checkpoint inhibitors, can move the needle on that 60 to 70% of the population that does not respond long-term to the treatment.

SL: Yeah. To expand on that, you are removing extracellular vesicles that will likely play a role in resistance. I'll use the term resistance to those therapies and say that by removing these, you could resuscitate the response to those therapies. So, move the needle from 30-40% to something much better.

MM: Got it. Great. What stage are you in? You've had a lot of news flow recently. What stage are you at regarding the clinical trial, including today's news, which I don't know if everyone had a chance to see?

SL: Yeah, we've been very busy, which is good in the clinical trial and biotech. We're having a similar trial being done in two countries. One is in Australia, and one is in India. In Australia, we have identified three sites that are highly skilled at such trials and who we're interested in. We already have one site that has gone through the entire process and being open and active for enrollment. They could screen patients today and tomorrow, and when they find an eligible patient, they can enroll. That's at Royal Adelaide, the clinical trials unit with a long history of doing excellent work in this space. They're open. That's the study open for enrollment in that country with that site. On the heels of that, a second site, Pindara Hospital in Queensland, has also completed the whole ethics approval and governance process.

SL: In the next few weeks, there'll be a site initiation visit and formal training on the protocol procedures. We expect that that site will also be open for enrollment before the end of this month. Then, we have a third site in Sydney that will go through the same ethics committee as Pindara that I just mentioned, which is submitted to be added to the ethics committee approval for Pindara. That's going on right now. That will then be followed by governance. Right now, there is one open site, and there will soon be two open sites by the end of the month. Enrollment and screening can now occur in Australia.

SL: The other trial is in India. It's Medanta Medicity Hospital, which we'll probably talk about more, but it has a storied history in clinical trials and this space. Today, we announced that their ethics committee had approved the study. We will follow up shortly with completing our clinical trial agreement, budgeting, and the import and export licenses needed to ship samples and devices. We anticipate they will also come online before the end of the year. There has been a lot of activity in the last couple of months. It's very exciting.

MM: Right. Yes. A lot of activity. You are talking specifically about doing most of this activity in Australia and India. Why did you conduct the initial clinical trials in those two markets? Can you give us some color on that?

JF: Australia has a long history of doing important early-stage clinical trial work in drugs, medical devices, and world-class medical hospitals and physicians. They also have a very interesting and helpful life science tax credit arrangement for life science work because they want to build their industry in Australia. We are participating in that program. We can get up to 43 cents on the dollar back of dollars we spend in Australia on this clinical trial. That's not a tax credit; it's cash we would get back once a year. That's very helpful in keeping the costs down. These hospitals that Steve just mentioned are excellent.

JF: They've done a lot of clinical trials, and that's why we started there. That particular hospital, Medanta Medicity, is also a world-class institution in India. The physicians there are world-class as well. That group of nephrologists at Medanta Medicity has probably done 120 human treatments with the Hemopurifier. They're the world's experts in using our devices. They're big supporters, and we're supporters of theirs. It just made sense to work with that group once again. That's why we focus on these two countries internationally first, and then we'll turn to the US afterward.

MM: Okay. Understood. Everything is moving along very quickly toward clinical research very shortly. Are there other companies you know in the overall medical device space that currently have other devices or cartridges under development? If you are aware, can you tell us how you see those competitively versus what you try to do?

JF: Sure. Several smaller publicly held medical device companies have extracorporeal cartridges like ours. None of them are focused on cancer. However, the companies often mentioned by our investors and potential investors that track are CytoSorbents Corporation are their tickers, CTSO, whose market cap is about 66 million. SeaStar Medical has about 21 million in market cap, and Spectral Medical is a Canadian company with about 142 million in market cap. They're largely focused on inflammation reduction and sepsis. We're not aware of any work they're doing in oncology. There are several other small, privately held companies. In terms of the public potential comps, even though they're not comps because their mechanism of action differs from ours, those three companies are Cytosorbents, SeaStar, and Spectral Medical.

MM: Based on what you just said, it's fair to say that nothing out there would directly compete with the Hemopurifier.

JF: There are no publicly held companies that do it. We're aware of one privately held company that's, again, the product's different than ours. It has a different mechanism of action but we know of one private company that may be venturing into the oncology space. But we're not aware of much of a competitive field.

MM: Got it. Now that you're ramping up your R&D activities with the pending launch of these clinical trials, can you talk a little bit about what your position is in terms of your supply of the device, your supply of Hemopurifiers, your access to Hemopurifiers, production of them and is if that's something we should be looking at?

JF: We believe we have sufficient inventory for these trials. I should mention that the trials are designed to be between nine and 18 patients in both countries, partially because they have different standards of care in those countries—different regimens periods of time between OPDIVO and Keytruda doses. The people's demographics and backgrounds might also be different. As we recruit patients and start to treat that, that's important information, and we'll make that known via press releases and/or AKs. Down the road, we'll start getting data sets from each of these tranches of patients that Steve mentioned.

JF: Once that analysis is done by the lab doing all of this work for us, we'll make that public. Many people, including us, are quite interested in that data. We see a series of milestones over the next year plus, and we didn't discuss the market size. We know everybody knows many people, unfortunately, with cancer. I know my sister died of it a few years ago. It's a large market. We've done some research on it. If we may, Marla, can we touch on that?

MM: Please do.

JF: Steve, do you want to cover that?

SL: Yeah. As I mentioned, immunotherapy agents and these checkpoint inhibitors have been game changers. One recent piece of information is that of all cancers, about 40% of people are eligible for an immune checkpoint inhibitor. Let's take one of the two agents I mentioned that will be in the clinical trial, Keytruda from Merck. Based on their own company's data, they estimate that by 2024 this year, 2 million patients will be on Keytruda. If you use the information I gave you, only 30 to 40% will have a lasting response, which means about 1.2 to 1.4 million patients do not have a lasting response. That's just with that agent alone. That's a very large population. Then you, Nivolumab, have a smaller market share, OPDIVO, but again, it is still a very large population with a similar response rate.

JF: The number of tumor types being approved is close to 30 now for Keytruda. Those are very successful drugs even though they only, in the end, help 30 to 40% of cancer patients. We'll have achieved our dream if we can improve that by 30 to 40%.

MM: Based on what you just said, Jim, about several different tumor types, your trial is designed to look at a range of different tumor types. Is that correct?

SL: Yeah, I should have mentioned that. It's called a basket trial. We're agnostic. We're not looking at one specific tumor type. We're looking for at least a. I believe we have eight or nine different tumor types with very common tumors, including non-small cell lung cancer, which is one of the most common cancers that people unfortunately suffer from. Melanoma, again, is a big problem. Mesotheliomas are included. Gastrointestinal tumors both at the upper GI tract as well as the colon, as well as urothelial cancers, bladder, and renal cancer. It is a basket trial. In a rather small trial, we'll be able to glean what our biological signal is in various tumors. We hope exosome removal results in a similar response regardless of the tumor type. We are casting a wide net.

MM: To make sure I understood one thing you just said, each patient will basically be his or her control group. Will you be monitoring the patient's exosome and EV level versus pretreatment with the Hemopurifier?

SL: Yeah. The way it was designed is this run-in period. These people are getting these drugs as their standard of care, but they're consenting when they come in to have blood draws during their two months of anti-PD-1 therapy alone. We can see their extracellular vesicle, exosome levels, and T-cells’ ability to fight tumors before they fail. We'll have a profile of the EVs and T-cells look like before the drug's failure. Then does the Hemopurifier change that? They're their own control of the before and after Hemopurifier.

MM: Right. Thanks very much. This was very interesting and informative, and if anyone's interested in following up, please reach out directly to the company, OTC markets, or us at Zacks. Thanks, everyone, for participating. This ends our presentation. Thank you.

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