Processa Pharmaceuticals, Inc. Q4 FY2022 earnings call

• Processa prioritized development of three next-generation oncology drugs (next-generation capecitabine, gemcitabine, irinotecan) instead of its broader portfolio. - Next-generation chemotherapy drugs aim to have less severe side effects and better response rates than existing drugs. - For next-generation capecitabine, Phase 1b trial data showed it alters metabolism/distribution, no adverse events from catabolites, and identified dose-limiting toxicities. Plan to meet with FDA in mid-April 2023 for Phase 2b trial discussion. - For next-generation irinotecan, analyzed response exposure relationships and determined Project Optimus principles are needed. - In 2022, key accomplishments included determining capecitabine dose-limiting side effects, defining gemcitabine targeted populations, and analyzing irinotecan exposure relationships. Non-oncology drug 12852 had positive effects on gastric emptying, while 499 trial was discontinued due to enrollment issues. - 2023 milestones include meeting with FDA for capecitabine Phase 2b trial, completing Phase 1b for capecitabine, initiating Phase 2b sites for capecitabine, meeting with FDA for gemcitabine Phase 2b trial, and initiating IND-enabling studies for irinotecan.

Processa Pharmaceuticals is a pre-revenue company. As of December 31, 2022, the cash balance was $6.5 billion. Subsequent to year end, it raised $6.4 million from selling shares. The GAAP net loss for the year ended December 31, 2022 was $27.4 million (or $1.70 per share) compared to $11.4 million (or $0.75 per share) in 2021. Research and development costs in 2022 were $11.5 million, an increase of $4.6 million from 2021. General and administrative expenses in 2022 totaled $8.8 million, up from $4.7 million in 2021. Cash used for clinical trials and operations in 2022 was $9.6 million, an increase of $800,000 from 2021.

• For next-generation capecitabine: Expect to meet with FDA in mid-April 2023 to discuss Phase 2b safety efficacy trial, complete Phase 1b trial, and initiate Phase 2b study sites in 2023 with interim analysis mid-2024 and enrollment completed by end of 2024. - For next-generation gemcitabine: Expect to meet with FDA in mid-2023 for Phase 2b trial, submit Phase 2b protocol to IND in Q4 2023, and initiate trial in 2024. - For next-generation irinotecan: Hope to initiate IND-enabling studies in 2023 with studies completed by end of 2024. - Working on licensing/partnering non-oncology drugs and considering monetizing next-generation chemotherapy drugs. Expanding visibility via IR/PR group and interacting with oncology community.

• Actual results may differ materially from forward-looking statements due to various risks and uncertainties. - Risks detailed in the annual report on Form 10-K, including risks related to clinical trials, regulatory approval, and market acceptance of next-generation drugs.

Q: Given the alignment of trials to Project Optimus, how should we be thinking about dosage levels and what are the goals for the mid-April FDA meeting regarding next-generation capecitabine?

A: The goal of the mid-April FDA meeting is to discuss Project Optimus view on next-generation capecitabine and negotiate the best dosage regimen/study design for the Phase 2b trial. Dosage levels are being monitored via Phase 1b trial to determine exposure and adverse event relationships, with the Phase 2b trial to evaluate efficacy and safety across patients.

Q: Could you comment on what gives confidence in completing enrollment in the 300-milligram patient cohort for next-gen capecitabine by mid-2023 and when to expect data from that cohort?

A: Some patients are already enrolled, and sites are being pushed to enroll more quickly. Confident of completing enrollment in next month or two. Data from that cohort will help determine next steps like proceeding to the next cohort or finalizing dosage regimen, but exact data timing depends on safety profile and FDA discussions.

Q: Could you provide color on the Phase 2b protocol design for next-gen capecitabine and what the Phase 2b might look like?

A: Prefer not to discuss specifics yet until negotiations with FDA, but it will be a typical efficacy safety study with potentially three to four dosing regimens and a control group. Will align with FDA's Project Optimus views to optimize study design for Phase 3 and address FDA questions.

Q: Are the biomarkers for 11T irinotecan blood based or biopsy based?

A: Cannot comment on that at present due to intellectual property and ongoing discussions.

Q: Could you give more color on the dosing regimen for next-gen irinotecan, including if it involves changing frequency or formulation?

A: Kept the dosing regimen and timing the same, but changed the amount of the active molecule. It's a prodrug where the active molecule (SN-38) is modified to preferentially target cancer cells over normal cells. Selectivity and bioavailability details exist but cannot be shared currently, with more information to be released soon.