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CytoDyn Inc.
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News You Might Actually Find Useful ...The Q&A part of the Investment Mtg.
Again, courtesy of MGK_2 on the Reddit board ;;;

Investment Meeting 11/21/23 Question & Answer
00:26:56 Marta:

Thank you, Jay. So before we go into questions, I believe that all participants on this call have received offering documents for the small convertible note bridge financing that we're doing for CytoDyn right now. So Antonio, do you want to step in and summarize the terms?



00:27:22 Antonio Migliarese:

Sure. Thanks, Marta. So the terms for this current offering is a principal amount for the convertible note of up to $1 million. It's an unsecured convertible note. The interest is... 10% per year, and with the note issuance comes one warrant for each dollar of principal invested at $0.35, and there's a mandatory conversion feature at which the note will be converted into a future pipe offering at the first closing of that at a 20% discount to that pipe.



00:28:02 Marta:

All right, so let's start with questions from the audience now. What is the trade-off between chasing bigger markets like Nash and Cancer versus faster potential past revenue in a smaller market like HIV?



Dr. Jacob Lalezari:

Well, I'll just start by saying there is no treatment for immune activation in HIV, so it's actually considered a very large market. All patients with HIV are having to deal with some level of immune activation and inflammation, which is the driver of their increased mortality. I think that NASH and cancer are very appealing markets, but way beyond the can of CytoDyn at this stage to really make inroads in on their own. They're going to have to partner. And I think it will be a lot easier to partner when leronlimab has a proven role in reducing immune activation, the inflammation, proven role in affecting the biology of CCR5.



Marta:

Thank you. Can you please explain the internal nature of your role and what is your expectation for what you can accomplish in a shorter time frame like this?



Dr. Jacob Lalezari:

Yeah. Well, I think that's pretty ambiguous. Again, I have no experience as a publicly traded company CEO. I'm happy to come in here, I said, and offer some oversight around the decisions that are being made, particularly in the coming weeks as we hear from the FDA in coming weeks, as we roll out a critical next protocol. I am, like I said, I'm running Quest, I'm launching a non-profit, I run those HIV clinics. So for me, I'm trying to figure out how easily I can meet the expectations of being the CEO of CytoDyn as well as carry on the rest of my obligations. On the CytoDyn side, I think they're evaluating me to see how someone without an MBA who's not really dealt with markets before can provide some leadership during what is clearly a critical transition period for the company and the ask was, for me as an interim, I won't be offended if that's all it leads to, but I think we're both looking to evaluate and understand whether this is a good fit or not and what makes sense and a lot of that's gonna depend on what the FDA has to say in the next two weeks and how CytoDyn rolls out in the next two months.



00:31:10 Marta:

Thank you. So the next question ties to your response directly. What is the timeline to hear back from the FDA regarding the lift, and what are the next steps if the hold is not lifted?



Dr. Jacob Lalezari:

Yeah. Well, that's a question I've been dreading. And I fully expect them to approve this protocol. There's no reason for them not to. There are no safety issues in the ambulatory HIV population. There's a completely unmet medical need. And so I don't see a reason why they would reject this. And I am not really prepared to discuss what Plan B looks like. CytoDyn does have some options under that scenario. But I prefer to think positively and think that this is giving FDA the very thing they wanted to get CytoDyn off hold. They asked CytoDyn to identify an HIV population to use leronlimab in that was not multi-drug resistant. resistant where there was no unmet need. So I think CytoDyn has done a good job identifying this population and getting it to FDA. I don't see any reason why they have to reject it.



00:32:37 Marta:

Thank you. With the safety history being so good, how can the clinical hold have been so difficult to actually get to the point of lift? Lalezari: I'm sorry, I didn't quite understand the beginning part of that question. Marta:Sure. With the safety history being so good with leronlimab, why? I guess the question is around the reasoning why the clinical hold has been so difficult to be lifted?



Dr. Jacob Lalezari:

Well, you know, I think that during the years of HIV monotherapy, a foundation was laid of mistrust and misunderstanding. I think that during COVID, passions ran high. And I think that when the FDA discovered that there were regulatory issues and shortcomings, that it wasn't so much a safety issue as it was all of the regulatory filings that were deficient. And I think they used a couple of safety events, two patients in Brazil on the COVID ICU study, and one patient of mine in HIV. Well, my patient had an overdose with fentanyl, and she'd been on leronlimab for a couple of years already. And so I think the FDA used those three cardiac events as an excuse to say, or to cover, in addition to these unique safety events, which were clustered, there are a lot of regulatory deficiencies that need to be addressed.



Marta:

Thank you. What is the status of a manufacturing partner and their relationship with Samsung?



Dr. Jacob Lalezari:

I'll just say that one of the things I've been working on is to make sure leronlimab has enough drug to do the study that we're proposing. It would be a good problem to launch this study, enroll it, and have enough positive outcomes that we need more drug. But that is not going to be. Antonio, do you want to speak to that?



00:35:25 Tyler Blok:

Then I can actually... Yeah, yeah, yeah. So, Hi Marta. Tyler here again, company counsel. Tyler Block. I imagine this question somewhat came up due to the recent AK filing disclosure about the relationship with Samsung. So, the long and the short of it is we're in prolonged negotiations with Samsung. It represents a significant and substantial past due balance rate. It's a very large financial commitment if and when we're able to resolve it with Samsung. So, what we're evaluating in our approach to the Samsung relationship is we're considering a couple of variables, but one of which is that we do, in fact, currently hold enough leronlimab to complete the contemplated clinical trials in both the short and the long term short and mid-term that the company would have. So with that in mind, we are evaluating, okay, what's the perspective future manufacturing needs and which third parties make sense to work with. Because at the end of the day, we don't exclusively manufacture with Samsung and we have options in that regard. So while we have a vested interest in resolving the situation with Samsung, we're going to do it if and when it makes sense for the company to reach a resolution with Samsung. And then as Jay alluded to earlier, in the short term, we do have enough leronlimab to complete the contemplated trial. So while Samsung recently notified us that they intend to terminate the agreement in January, that is viewed, for the most part, as a negotiating tactic and really trying to get us to the table. So we're working with their counsel. We intend to continue the negotiations. But for right now, we're not in a panic as it relates to Samsung.



Marta:

All right. Thank you. Can you discuss the status of your IP?



Tyler Blok:

Yeah, I can take this one. as well. So the two most common questions that we get when people ask about IP, and I'm just going to assume this is what people would want to hear by way of an update, is what exactly started to expire by way of IP in 2023, and then generally they want an assurance that the company has some sort of plan, right, or an idea or is monitoring IP. So as to the first, in terms of what started to expire in 2023, the company is very cognizant of what expires and when. Needless to say, we are a pre-revenue biotech company developing a single molecule at this point, right, or some there are varieties of that molecule. So we view that as our only asset and the most valuable asset, and we invest time, energy, and resources ensuring adequate protection. So where the questions arise as to what expires is primarily related to our exposures, and I imagine our 10k. So the underlying molecule of the leronlimab antibody itself started to expire in 2023. So that is the foundational leronlimab. You heard Jay speak earlier about how long he's been working with the antibody, right? There's IP tied to that. So, as the longer the random at itself has been out in, the IP can only last so long as to the underlying antibodies. Now, what the company does to build out the next levels of protection is we've gotten IP around the concentrated protein formulation and those don't start to expire until 2031. We've gotten levels of IP protection surrounding the use of leronlimab and the treatment of HIV. That won't start to expire until 2035. We have methods of action associated with cancer indications and methods of use associated with cancer indications and those don't start to expire in 2040. And then COVID-19, we have certain protections that again would start to expire in 2040. And then the most recently developed IP surrounding NASH would not even start to expire in 2043. So, our approach to that IP and what technically started to expire would allow people to use leronlimab antibody for research purposes. But the practical reality is we've built up adequate protections around the applications of leronlimab and HIV, COVID-19, NASH, and then there's also some certain methods of action. IP that would prevent anybody from substantially competing with us while using the wrong amount of antibodies.

The second part that we get and the question we get frequently about IP is, okay, what's the plan? So something that we're currently excited about internally, and you would have seen disclosures about this, is the third-party generative AI company that we've been working with. In early 2023, we entered into a partnership directed towards developing a long-acting therapeutic, and instead of me talking like an attorney, I'll actually hand it off to Jay here maybe to finish off this concept, but we're very excited about the prospects of a long-acting therapeutic and what it could mean to the marketability of leronlimab as a whole. So I'll stop, and I don't know, Jay, if you wanted to add anything about the long-acting molecule.



00:40:38 Dr. Jacob Lalezari:

Well, what I try to paint a picture of is how leronlimab has been wandering in the HIV treatment landscape for two decades, trying to figure out where it fits in, and as a once-a-week therapy, I've had had conversations with Merck and Gilead and VIIV and they uniformly rejected a once a week sub-Q. A feeling that a once a week regimen needed to be all oral, but that once a month sub-Q was acceptable. So if we had or CytoDyn had a longer acting formulation, I think they immediately become competitive in the treatment landscape. Moreover, I think the whole world of PrEP, pre-exposure prophylaxis, with a once a month patient self-administered regimen would be very appealing. So I think having a once a month treatment opens up several doors which are not currently open to CytoDyn.



00:41:40 Marta:

Thank you. What is the status of the Amarex litigation?



Tyler Blok:

Oh, excuse me. It's Tyler again, counsel for the company. I'm sure everybody wanted to hear from the attorney as much as possible today, but I'll field this one as well. So what people want to know... know about the Amarex arbitration, of course, is the timeline. And by way of pertinent dates that we have currently, and these have been disclosed, and then obviously happy to field some follow-up questions if there are any. But what we have is a final hearing date set, and that's set to commence on August 12, 2024. So what that means is both parties go present to an arbitrator their evidence, their cases. Sometimes that process can last one to two weeks. That process is starting in August, on August 12, 2024. After that hearing, that two-week hearing, perhaps maybe one week, an arbitrator typically has 30 days to issue an award. And what that award is, is that's the arbitrator's findings as that proceeding. So, of course, in this instance we anticipate getting a favorable award to us, and we would anticipate having that in hand should this matter go to a hearing sometime in September 2024. Some people ask, when would it be resolved, or when will it be settled? Well, the answer to that question is: it could happen anytime between now and the hearing. Um, parties sometimes reach a settlement after one to two days of a hearing because one party really doesn't like how the proceeding went. The long and the short of it is, is that I think the most prudent approach, uh, that the company could take to this proceeding, and I speak from a position of I was in insurance defense litigation for the better part of the last decade. So, fortunately, this is what I did and I feel comfortable with, is insurance defense litigation, and specifically in arbitration. And I'm working with Sidley Austin right now, and our approach to this case is to get very pointed discoveries, attempt to locate and identify insurance policies in play as to Amarex, and then get those insurance companies, get Amarex potentially in a room to mediate, um, from a position of power on behalf of CytoDyn, and see if they have an offer that makes sense to the company and then if they don't, then proceed to the arbitration and hold them accountable. Because again, we're working with Sidley Austin in this case. They've been familiar with the fact pattern. We've been reviewing and preparing our case for the better part of the last 12 to 18 months, and we feel very comfortable proceeding and getting the awards. going to hold them accountable if we have to.



00:44:31 Marta:

Thank you, Assuming the clinical holds lifting, how much money and on what time frame will the company need to raise to execute going forward? Dr. Jay Lalezari: Antonio, can you speak to that?



Antonio Migliarese:

Yeah, I think we're still in the process of evaluating next steps and where we're going to head. So I don't think we're in a position quite yet to answer that, but we're in the middle of the process of going through that and as I think Jay kind of alluded to earlier, we've kind of through this clinical hold process and the new group of consultants that we brought in in the May-June time frame did a great job of identifying this new potential HIV trial, which is quite interesting. And what I can say is that this proposed trial requires significantly less capital investment than the NASH trial that we've been... looking at doing within the NASH space. And I think some of the other things we've also been evaluating is, are some other what I'll call micro or less capital-intensive investments that we could make that could lead to some sort of near-term potential catalyst? So, for example, in the NASH space, as I just mentioned, a NASH clinical trial on humans is quite expensive. You're probably looking at the $100 million range. However, could we perform some sort of preclinical trial combination therapy with another drug, such as Madrigal or one of the other players out there that's further ahead than us in the game? And so I think what we're getting at is identifying these preclinical studies, which are significantly cheaper in the $200,000 to $300,000 range could lead to some potential partnerships and credibility with some of the other larger pharmas, which could then help propel us within these other spaces with well-investing limited funds. So just saying that, I think help people understand as we've been going through this clinical hold process and the process that we're in the middle of right now is coming up with a judicious plan, which we think we can utilize the least amount of capital to create the greatest number of catalysts for the company, which we're very much in need of as we've been working through the hold.



00:47:30 Dr. Jay Lalezari:

Marta, can I just add to that? When I listed some of my, what I see as my responsibilities as interim CEO, I listed oversight and accountability, and where I see that coming into play specifically is this issue, that in the past, CytoDyn has run studies, as we all know, that have generated provocative signals, but nothing definitive that you can go to the bank on. When I think of the next clinical study for CytoDyn, not only do I think it's got to be something that the FDA buys into, but it's got to be designed in a way that there is a clear answer at the end. Now that answer may be no, but I don't think CytoDyn can afford to scrimp on dollars and do another study that leads them to yet another ambiguous place. However long I'm here, I want to make sure that happens.



Marta:

Great, thank you. What are your estimates of the size of the market out there that CytoDyn can go after?



00:49:00 Dr. Jay Lalezari:

I haven't done a market analysis, but the HIV population is aging. When I started as a young man with Pro140, the average age in clinical studies is around 38 years old. Twenty years later, it's still the same, you know, it's 20 years later. And those older individuals with HIV who have had the virus now for several decades, their risk is cardiovascular inflammation, immune activation. So even though I can't give you a number, I know that it's significant. And that's something that we probably need to be prepared to answer the next time we do one of these calls.



00:49:45 Marta:

Excellent. All right. So those were all of the questions from the audience at this time. We appreciate you providing this time and answering all of the questions extensively. If anyone has any additional questions, please reach out to your host and representative and we'll gladly assist. And with that said, Jay, Antonio, Tyler, thank you so much and have a pleasant afternoon, everyone. Thank you all. Thank you. Thanks.

Noobie


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