Richard Hantke: Hello everyone. My name's Richard Hantke. I'm with Zacks Small Cap Research, and welcome to the first in a new series of fireside chats. I am here with Greg Duncan, Chairman and CEO of Virios Therapeutics (NASDQ:VIRI). Hi Greg.
Greg Duncan: Very nice to see you Richard.
Richard Hantke: Zacks Small Cap Research is a division of Zacks Investment Research, and we focus on smaller and micro-cap companies. Our role as research analysts is to create awareness on companies with the intent to create a deeper understanding on what those companies are doing. Virios has been covered by our Senior Biotech Analyst, David Bautz, PhD since May of 2021. Greg, I've got a handful of questions for you, specific questions, but before we start, maybe could you just give me a little snapshot on Virios Therapeutics and what you guys are trying to accomplish?
Greg Duncan: Sure. So Virios Therapeutics is a development stage biotech company. We were founded by Dr. William Pridgen on the premise that there are many common viruses, and specifically the Herpes Simplex Type 1 virus that can become activated and when activated served as the bad actor, the catalyst if you will for many chronic diseases. And as a consequence, Virios Therapeutics is all about developing dual mechanism, antiviral therapies, to take an activated virus, get it back to a dormant state, and hopefully by doing so can deliver very significant clinical benefits for patients with chronic diseases, things like Fibromyalgia, Irritable Bowel Syndrome and fatigue-related disorders.
Richard Hantke: Excellent. Thank you. Alright. So let's get to my first question. I think your lead candidate is IMC-1, so can you give us an overview of IMC-1 and how it's differentiated from other approaches to treating Fibromyalgia?
Greg Duncan: Sure. So IMC-1 is evidence of Dr. Pridgen's thesis in action. Effectively, IMC-1 is a dual-mechanism antiviral therapy that has been designed to inhibit viral replication. The reason we do that is because we take that activated virus back into a dormant state, we allow the immune system to reset, and we can see clinical benefits in patients that have been diagnosed with diseases like Fibromyalgia, IBS, and other fatigue related disorders. Specifically, IMC-1 combines two existing therapies, Famiciclovir and Celecoxib into a dual mechanism therapy that inhibits the Herpes Simplex Type 1 virus. Our lead program is designed to improve outcomes for patients with Fibromyalgia, a disease that impacts between 2% and 8% of the worldwide population, and we've seen by using IMC-1 to treat Fibromyalgia very significant clinical benefits including reduction in pain, reduction in fatigue, improvement in patient functionality and overall global health outcomes.
Richard Hantke: Excellent. I think you previously conducted a phase 2A trial on IMC-1. Can you tell us what were the results and were they positive? Can you share a little insight on that, please?
Greg Duncan: Sure. So our phase 2A program included about 140 patients who were randomized to either IMC-1 or placebo, and the patients were studied over 16 weeks of therapy. What we saw on this particular trial was that IMC-1 reduced pain, reduced fatigue, and delivered very significant global improvement in patients' overall health. These are patients that were diagnosed with fibromyalgia. What's important about this research, albeit a relatively small trial, is the profound nature of what the endpoint analysis on primary endpoints and a whole host of secondary endpoints. Importantly, the drug worked well on parameters that are important to FDA to approve a new therapy. Specifically, there are three drugs approved to treat Fibromyalgia in the United States, and we use the endpoint that was used to approve all three of those drugs in the phase 2A trial.
Greg Duncan: What was truly distinguishing, however, was that IMC-1 was not only effective, but very well tolerated. It may surprise you to know, Richard, that in this particular trial, patients on active treatment with IMC-1 had a lower drop-out rate due to adverse events than even those treated with placebo. That's important because of those three approved therapies, while all effective, all three are CNS mediated in their mechanism of action, as a consequence come with significant side effect burden for many, many patients. In this particular trial, not only the IMC-1 work as well those therapies, but it was better tolerated albeit not head-to-head, but my view and the view of the team is, if the results we saw on phase 2A hold up in phase 2B and phase three, we have something that could truly be a game changer for patients diagnosed with Fibromyalgia.
Richard Hantke: That is important. Now, you're undertaking a phase 2B trial, can you talk a little bit about the design of the phase 2B trial, how it compares to the phase 2A, and what are the major differences between the two?
Greg Duncan: Sure. So what you want to see as an investor in a biotech company is concordance between the patients you're studying and the endpoint you're assessing. And the phase 2B builds on the success we've had in the phase 2A. So what's similar about the trial? The end point of pain reduction and the specific measure were used in the phase 2A is exactly the same endpoint we used in the phase 2B. The length of the trial is 16 weeks in nature, which is the same length of the trial that we saw in the phase 2A. So there are similarities and obviously we're using IMC-1 versus placebo again in this particular trial, and the patients are very similar, their background, their diagnoses are quite concordant between phase 2B and phase 2A. What's different in this trial is a couple of important things. One is the size of the trial. This trial has basically been designed, the phase 2B has been designed in concordance with many of the requirements of a phase 3 trial.
Greg Duncan: So while the phase 2A was about a 150 patients, this trial is actually 400-plus patients. So it's the size, the scale, the duration that's required for a registration quality trial. What's also different in this trial is that we're using a higher dose of the famciclovir component of the famciclovir celecoxib combination. The higher dose we think could potentially deliver even better outcomes for patients in this particular trial. Our strategy, presuming success, is to take the phase 2B trial, to discuss that trial with FDA and hopefully make the case. Albeit, we can't guarantee it, but we think we have a really cogent argument, that this trial should serve as one of the two required phase 3 programs. Ultimately, the outcomes, the endpoint, the dosage here will be the same doses that we take into phase 3, presuming success. So we're pretty excited to build on the phase 2A, to the larger, better sample size in the phase 2B, but again, using the same outcomes, the same duration and the same drug.
Richard Hantke: A lot of synergies there. Fantastic. Alright, let's just step back, or maybe bigger picture a little bit. Could you talk a little bit about the fibromyalgia market and where does IMC-1 fit in into the broader spectrum of things?
Greg Duncan: Sure. So this is a very significant opportunity for various therapeutics to really change the game, if you will, for patients diagnosed with fibromyalgia. Epidemiologic surveys suggest between 2% and 8% of the population across the globe meet the diagnostic criteria for fibromyalgia. Specifically in the US, using a number roughly in the middle of that range, we estimate there are 10 million unique individuals who meet the diagnostic criteria from the American College of Rheumatology for fibromyalgia as a diagnosis, a chronic condition, which is very debilitating. This is a condition that's with patients for the duration of their lives. Of the 10 million patients who meet these criteria, about a third of those patients, 3.6 million, are actually diagnosed. Of those 3.6 million who are diagnosed in the US, only about 2 million of those patients are treated.
Greg Duncan: We believe, and it's certainly my expertise, my experience, if you will, in this space, that the vast majority of those 3.6 million patients, who are diagnosed, have been on some form of therapy, either one of the approved therapies or other therapies to try and get better relief from their fibromyalgia symptoms. And so right now, of those 3.6 million patients, there's almost a million and a half of those patients who are looking for some form of new therapy and based on our experience, we would suggest that the vast majority of patients who are treated, are looking for something that's either more effective or better tolerating. We see that in our market research. Right now there's nothing really actively promoted in this space, so we believe that if IMC-1 can deliver benefits clinically, be as well tolerated as it has been in prior research, this could become a potential first-line therapy for those patients who are diagnosed to date, who are either on therapy or looking for better therapies. And we think that same model exists around the world in other countries, where fibromyalgia is diagnosed.
Richard Hantke: Excellent, excellent. Now, you recently announced that IMC-1 will be developed as a treatment for irritable bowel syndrome. Is that correct? What makes you think that it'll be successful along those lines?
Greg Duncan: Yeah, a great question. So we believe HSV-1, the virus, which is the target of our combination antiviral therapies, is a bad actor for a whole host of diseases. Diseases like fibromyalgia, IBS, as you referenced, and fatigue-related disorders. These are disorders that tend to wax and wane over time. The symptoms are always on, but there are times where they're really unbearable, and there are times when it's a little bit more bearable to have these symptoms but in both cases, it's quite debilitating. Our founder, Dr. Pridgen, is actually a gastric surgeon, and he started using this combination of famciclovir and celecoxib, or any form of antiviral and celecoxib, as a treatment for patients with chronic GI disorders and saw fantastic results, albeit open label, so these are not comparative trials. But utilizing it in his private practice delivered very significant outcomes for patients, not just with fibromyalgia, but for patients who had a specific chronic GI disorder.
Greg Duncan: So we think this is a potential second program or third research program in the life cycle management efforts for IMC-1. Importantly, in a collaboration with the University of Alabama, we have seen using patients' GI tissue, that patients with chronic GI disorders have evidence of chronic, activated, replicating HSV-1 infection, which we believe ties in the mechanistic thesis with the disease. So based on the open label data and the mechanistic research, we think IBS is an excellent opportunity for future research for the IMC-1.
Richard Hantke: Yeah, I see the synergies there. Okay, excellent, thank you. Alright, I've got one final specific question, let's move off the science a little bit, move off what you're trying to develop, and let's talk capital markets, finances, just a little bit. And the magic question everybody wants to know is, "Alright, how much cash do you have, and how long is it going to last?" Can you expand on that a little bit?
Greg Duncan: So, well, we're reporting out our full-year results, coming up in the next couple of weeks here in 2022. But I can tell you as of the third quarter in 2021, we had $19 million in cash on the balance sheet. That cash gets us through quarter one of 2023 and into quarter two, in fact, of 2023. Why is that important? The results from our ongoing Phase 2B trial will be harvested in September of this year of 2022. So we actually have six months of runway beyond the outcome from our pivotal phase 2B trial on fibromyalgia, to get down to FDA, scope out what phase 3 looks like, specifically, and then decide whether we want to raise additional capital as a standalone entity or consider some form of partnership with other entities that might be interested in partnering with Virios Therapeutics to continue the development of IMC-1 in both fibromyalgia, IBS and other fatigue-related disorders.
Richard Hantke: Excellent. Okay, good, thank you for that. Okay, now everyone stay with us here, because I'm going to come back to Greg for one final thing that I want to ask him about. But first, again, our senior biotech analyst, David Bautz, has a $22 price target on the company using a DCF model. As David points out, it is dependent on the continued success of IMC-1. Greg, for the magic question, why should people invest in Virios Therapeutics? What is the investment thesis that they should be looking at?
Greg Duncan: Sure, so, great question Richard. Effectively, we're pursuing a large market of opportunity. The fibromyalgia marketplace is large, but unfortunately very dissatisfied, largely due to very poor tolerability of the existing three approved medications. And so, there's a very significant commercial opportunity for a new safe and effective fibromyalgia treatment. We have a very novel approach that supported by data, we've seen evidence of IMC-1 effectiveness on the phase 2A trial, and we're progressing it into phase 2B. Evidence of this novelty can be seen in the FDA's first ever fast-track review designation for a new fibromyalgia development candidate. It's a very large market of opportunity, unique approach, validated by the fast-track review designation.
Greg Duncan: And we've got a team that's done this before. Between myself, the executive team, and the board of directors, it may surprise you to know that we've been involved in the development and commercialization of two of the three approved fibromyalgia medications, so we know the space well. In fact, our chief medical officer, Dr. Mike Gendreau, serve as a consultant to the FDA to help them scope out the process that's used to this very day to approve new therapies, so we've seen this market before, it is a relative green field, we have experience unsurpassed in the space. And as I mentioned earlier, this program is fully funded, we do not need to raise capital until we actually harvest the data in September of this year.
Greg Duncan: So thank you very much for your time and attention, and we hope to change the world, not just for fibromyalgia patients, for Virios shareholders as well.
Richard Hantke: Excellent. And if anybody wants to contact the company directly, then just go to their IR website and some contact information will be in there, is that correct?
Greg Duncan: That is exactly correct, Richard. They can reach us at information or info at Virios.com, and we'll respond accordingly.
Richard Hantke: Okay, thank you, Greg, and thank you everyone for tuning in. That concludes our chat today, and stay tuned for the next one. Again, thank you Greg, thank you everyone. Bye now.
Greg Duncan: Thank you.
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