Scinai Immunotherapeutics Ltd. Q2 FY2024 earnings call

• Scinai is a biotechnology company in Jerusalem, Israel, with a mission to develop inflammation and immunology biological products. It has two business units: R&D (discovering novel VHH antibodies under a research agreement with Max Planck Society) and CDMO (providing drug development services).
• Financial results for Q2 2024: R&D expenses decreased to $2.79 million from $3.45 million in 2023; marketing and G&A expenses dropped to $1 million from $2.3 million; financial expenses decreased to $0.53 million from $1.5 million in 2023. Net loss for first six months of 2024 was $4.48 million vs $7.28 million in 2023.
• EIB loan to equity deal: $26.6 million debt (including interest) converted to 1,000 preferred shares; new principal of EUR250,000 matures in 2031 with no interest; preferred shares have specific conversion and voting rights limitations.
• NASDAQ compliance plan: Received extension, prepared white paper, signed loan restructuring deal, and expects to regain compliance by August 23rd.
• Positive regulatory feedback from Paul Erlich Institute for anti-IL-17 AF nanoAb program for Phase 1/2a clinical trial in plaque psoriasis; accepted using pigs for toxicology studies and direct comparison to placebo in patients.
• CDMO business unit: Generated $600,000 in work orders since January 2024, with targeted sales of $1.25 million in 2024; pursuing marketing activities at conferences.

Scinai Immunotherapeutics has two business units. The R&D unit's Q2 2024 R&D expenses were approximately $2.79 million, a decrease from $3.45 million in Q2 2023, mainly due to reduced salaries and subcontractors. The CDMO business unit generated work orders valued at $600,000 from five clients since January 2024, with 2024 guidance to target sales of $1.25 million. The CDMO unit owns equipped labs and a cGMP facility, and has been pursuing marketing activities to acquire new clients.

• CDMO business unit guidance: Target sales of $1.25 million in 2024.
• R&D strategic guidelines: Fast track IL-17 development to toxicology studies; progress assets from Max Planck collaboration to in-licensing; ramp up CDMO to $1.25 million sales; hedge R&D risks by partnering with pharma companies; careful spending; ensure sufficient capital for R&D.

• Large liability on balance sheet previously negatively impacting shareholder equity.
• Limitations on preferred share conversion to ADSs (e.g., holder can't convert to exceed 4.99% of shares in 12 months, and no conversion for first 12 months after closing).
• Regulatory approval risks for clinical trials, such as meeting PEI requirements for data submission.

Q: What do you see as the long term future and share price of Scinai? And will there be continued growth of this company?

A: Scinai is seen as undervalued. It has a deep pipeline, derisked targets, and a CDMO business unit. The main hurdle was a large liability on the balance sheet, but the EIB deal cleared concerns. Comparable companies show potential, and the company has multiple nanobody targets with derisked strategies.

Q: Can you remind us of what total shareholders' equity will be after the EIB restructuring?

A: After EIB restructuring, 1,000 preferred shares will be received. If converted in full to ADSs, it will add 364,000 ADSs to the outstanding. Fully diluted including warrants, there will be 1.865 million shares. Preferred shares can only convert up to 4.99% of share capital in any given year.

Q: What are some of the key regulatory considerations and strategies Scinai is employing to navigate the approval process for its nanoAb candidate?

A: Working with top regulatory affairs agencies, developing a robust package for regulatory agencies, arguing for accelerated paths like going directly to Phase 1/2a with patients instead of healthy volunteers, and using pigs for toxicology studies to save time and cost.

Q: As a CEO, what is your long term vision for Scinai and how do you envision the company shaping the future of immunotherapy and disease management?

A: Focus on taking patented technology through preclinical to Phase 2, partnering with larger pharma companies for commercialization. The CDMO business unit serves as a value buffer, understanding early stage biotech needs and leveraging knowledge for internal R&D acceleration. The company aims to diversify risks and generate cash inflows through partnerships, with potential to engage in commercial sales in the future.