Company Completes $6.28 Million Registered Direct Offering
Favorable Data Reported in Glioblastoma Multiforme Phase 3 Run-in Study
Phase 2 On-Ambulance TSC Clinical Trial for the Treatment of Stroke Ready to Enroll
Additional TSC Patent Protection Granted in Europe
CHARLOTTESVILLE, Va., Aug. 08, 2019 (GLOBE NEWSWIRE) -- Diffusion Pharmaceuticals Inc. (Nasdaq: DFFN), a cutting-edge biotechnology company developing new treatments for life-threatening medical conditions by improving the body’s ability to bring oxygen to the areas where it is needed most, today reported financial results for the three and six months ended June 30, 2019 and provided a business update.
During the second quarter of 2019, the Company completed a public offering of 1,317,060 shares of its common stock, par value $0.001 per share (the “Common Stock”) and a private placement of warrants to purchase 1,317,060 shares of Common Stock. The shares of Common Stock and warrants were sold for a combined purchase price of $4.895 per unit for total net proceeds of $5.6 million. The warrants are exercisable beginning on the date of their issuance until November 29, 2024 at an initial exercise price equal to $5.00.
Also during the second quarter, Diffusion announced that based on favorable safety data in a 19-patient dose-escalation run-in study, the Data Safety Monitoring Board (DSMB) has recommended the continuation of the Company’s Phase 3 clinical trial with trans sodium crocetinate (TSC) in inoperable glioblastoma multiforme (GBM) patients. The DSMB has recommended that the highest dose administered, 1.5 mg/kg of TSC, be used during the adjuvant treatment period of the Phase 3 INTACT trial. The INTACT (INvestigating Tsc Against Cancerous Tumors) trial is comparing standard of care (SOC) radiation therapy and chemotherapy plus TSC against SOC alone. In Phase 2 testing, TSC demonstrated a nearly four-fold improvement in overall survival at two years for the subset of inoperable GBM patients compared with the control group of GBM patients. Diffusion is seeking a partner to continue development of TSC in GBM.
The Company completed preparations to commence enrollment in its on-ambulance Phase 2 clinical trial testing TSC for the treatment of acute stroke. Enrollment is expected to begin in the third quarter of 2019. With close cooperation of researchers at the University of California Los Angeles (UCLA) and the University of Virginia (UVA), the 160-patient trial, named PHAST-TSC (Pre-Hospital Administration of Stroke Therapy-TSC), will involve 23 hospitals across urban, suburban and rural areas in Los Angeles County and Central Virginia. Results from the trial may be available in just under two years.
The Company continued to enhance its intellectual property position during the quarter, with receipt from the European Patent Office of a Notice of Intention to Grant a patent related to the use of TSC in combination with the leading thrombolytic, tissue plasminogen activator (tPA), in the treatment of ischemic stroke. The patent claim covers administration of TSC within three or four hours of the onset of stroke symptoms in combination with tPA administered within nine to 12 hours of the onset of stroke symptoms. The European Patent Office has also granted two additional patents to Diffusion related to the uses of TSC and methods of synthesizing the compound.
“The imminent commencement of enrollment in our PHAST-TSC Phase 2 study comes after extensive preparation,” said David Kalergis, chairman and chief executive officer of Diffusion. “It represents an exciting possibility to safely mitigate some of the devastating effects of a stroke through immediate, in-ambulance treatment. The Notice of Intention to Grant a patent from the European Patent Office for the use of TSC in combination with tPA – the only currently available drug for the treatment of ischemic stroke – further supports the commercial prospects of TSC.
“We were also pleased to complete a registered direct equity financing in May, at the market price, raising net proceeds of $5.6 million. These funds will largely be used to advance our clinical programs,” Mr. Kalergis added.
Second Quarter Financial Results
Research and development expenses were $1.5 million for the second quarter of 2019, compared with $1.4 million for the second quarter of 2018. The increase was mainly attributable to a $0.6 million increase related to the commencement of the Phase 2 stroke trial and a $0.1 million increase in salary and manufacturing, offset by a $0.6 million decrease in expenses related to the Company’s Phase 3 GBM trial.
General and administrative expenses were $1.1 million for the second quarter of 2019, compared with $1.7 million for the second quarter of 2018. The decline was due to lower salary and wages and stock-compensation expense.
Net cash used in operating activities during the first half of 2019 was $5.3 million, compared with $5.8 million used during the prior-year period.
Diffusion had cash and cash equivalents of $8.4 million as of June 30, 2019, compared with $8.0 million at December 31, 2018. During the quarter, the Company raised $5.6 million net proceeds from an offering of 1,317,060 shares of common stock and warrants to purchase up to 1,317,060 shares of common stocks.
About Diffusion Pharmaceuticals Inc.
Diffusion Pharmaceuticals Inc. is an innovative biotechnology company developing new treatments that improve the body’s ability to bring oxygen to the areas where it is needed most, offering new hope for the treatment of life-threatening medical conditions.
Diffusion’s lead drug TSC was originally developed in conjunction with the Office of Naval Research, which was seeking a way to treat hemorrhagic shock caused by massive blood loss on the battlefield.
Evolutions in research have led to Diffusion’s focus today: Fueling Life by taking on some of medicine’s most intractable and difficult-to-treat diseases, including stroke and GBM brain cancer. In each of these diseases, hypoxia – oxygen deprivation of essential tissue in the body – has proved to be a significant obstacle for medical providers and the target for TSC’s novel mechanism.
In September 2018 its on-ambulance PHAST-TSC acute stroke protocol was granted FDA clearance to proceed and the Company is prepared to enroll patients in this Phase 2 study in the third quarter 2019. In July 2019 the Company reported favorable safety data in a 19-patient dose-escalation run-in study to its Phase 3 INTACT program, using TSC to target inoperable GBM brain cancer. Additional preclinical data supports the potential use of TSC as a treatment for other conditions where hypoxia plays a major role, such as myocardial infarction, respiratory diseases such as COPD, peripheral artery disease, and neurodegenerative conditions such as Alzheimer’s and Parkinson’s disease.
In addition, RES-529, the Company’s PI3K/AKT/mTOR pathway inhibitor that dissociates the mTORC1 and mTORC2 complexes, is in preclinical testing for GBM.
Diffusion is headquartered in Charlottesville, Virginia – a hub of advancement in the life science and biopharmaceutical industries – and is led by CEO David Kalergis, a 30-year industry veteran and company co-founder.
Forward-Looking Statements
To the extent any statements made in this news release deal with information that is not historical, these are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the company's plans, objectives, expectations and intentions with respect to future operations and products, the potential of the company's technology and product candidates, the anticipated timing of future clinical trials, and other statements that are not historical in nature, particularly those that utilize terminology such as "would," "will," "plans," "possibility," "potential," "future," "expects," "anticipates," "believes," "intends," "continue," "expects," other words of similar meaning, derivations of such words and the use of future dates. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Uncertainties and risks may cause the Diffusion’s actual results to be materially different than those expressed in or implied by such forward-looking statements. Particular uncertainties and risks include: the difficulty of developing pharmaceutical products, obtaining regulatory and other approvals and achieving market acceptance; general business and economic conditions; the company's need for and ability to obtain additional financing or partnering arrangements; and the various risk factors (many of which are beyond Diffusion’s control) as described under the heading “Risk Factors” in Diffusion’s filings with the United States Securities and Exchange Commission. All forward-looking statements in this news release speak only as of the date of this news release and are based on management's current beliefs and expectations. Diffusion undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Contacts:
David Kalergis, CEO
Diffusion Pharmaceuticals Inc.
(434) 220-0718
dkalergis@diffusionpharma.com
LHA Investor Relations
Kim Sutton Golodetz
(212) 838-3777
kgolodetz@lhai.com
(Tables to follow)
| Diffusion Pharmaceuticals, Inc. | ||||||
| Condensed Consolidate Balance Sheets | ||||||
| (unaudited) | ||||||
| June 30, 2019 | December 31, 2018 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 8,372,741 | $ | 7,991,172 | ||
| Prepaid expenses, deposits and other current assets | 1,036,753 | 923,059 | ||||
| Total current assets | 9,409,494 | 8,914,231 | ||||
| Property and equipment, net | 297,619 | 350,281 | ||||
| Intangible asset | 8,639,000 | 8,639,000 | ||||
| Right of use asset | 291,849 | — | ||||
| Other assets | 291,176 | 298,480 | ||||
| Total assets | $ | 18,929,138 | $ | 18,201,992 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 489,133 | $ | 198,818 | ||
| Accrued expenses and other current liabilities | 443,437 | 605,226 | ||||
| Current operating lease liability | 110,473 | — | ||||
| Total current liabilities | 1,043,043 | 804,044 | ||||
| Deferred income taxes | 1,527,133 | 1,786,389 | ||||
| Noncurrent operating lease liability | 181,376 | — | ||||
| Total liabilities | 2,751,552 | 2,590,433 | ||||
| Stockholders’ Equity: | ||||||
| Common stock, $0.001 par value: | ||||||
| 1,000,000,000 shares authorized; 4,693,290 and 3,376,230 issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 4,694 | 3,377 | ||||
| Additional paid-in capital | 101,340,798 | 95,532,881 | ||||
| Accumulated deficit | (85,167,906 | ) | (79,924,699 | ) | ||
| Total stockholders' equity | 16,177,586 | 15,611,559 | ||||
| Total liabilities and stockholders' equity | $ | 18,929,138 | $ | 18,201,992 | ||
| Diffusion Pharmaceuticals, Inc. | |||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||
| Three Months ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Operating expenses: | |||||||||||||||
| Research and development | $ | 1,518,381 | $ | 1,391,113 | $ | 3,218,226 | $ | 3,216,681 | |||||||
| General and administrative | 1,068,452 | 1,660,630 | 2,269,180 | 3,158,469 | |||||||||||
| Depreciation | 34,390 | 26,709 | 52,662 | 54,727 | |||||||||||
| Loss from operations | 2,621,223 | 3,078,452 | 5,540,068 | 6,429,877 | |||||||||||
| Other income: | |||||||||||||||
| Interest income | (16,921 | ) | (45,339 | ) | (37,605 | ) | (82,803 | ) | |||||||
| Loss from operations before income tax benefit | (2,604,302 | ) | (3,033,113 | ) | (5,502,463 | ) | (6,347,074 | ) | |||||||
| Income tax benefit | (108,904 | ) | (267,932 | ) | (259,256 | ) | (267,932 | ) | |||||||
| Net loss | $ | (2,495,398 | ) | $ | (2,765,181 | ) | $ | (5,243,207 | ) | $ | (6,079,142 | ) | |||
| Accretion of Series A cumulative preferred dividends | — | — | — | (85,993 | ) | ||||||||||
| Deemed dividend related to the make-whole provision for the conversion of Series A preferred stock into common | — | — | — | (8,167,895 | ) | ||||||||||
| Net loss attributable to common stockholders | $ | (2,495,398 | ) | $ | (2,765,181 | ) | $ | (5,243,207 | ) | $ | (14,333,030 | ) | |||
| Per share information: | |||||||||||||||
| Net loss per share of common stock, basic and diluted | $ | (0.63 | ) | $ | (0.82 | ) | $ | (1.43 | ) | $ | (4.64 | ) | |||
| Weighted average shares outstanding, basic and diluted | 3,940,684 | 3,369,770 | 3,658,457 | 3,092,043 | |||||||||||