OTCQB: ARTH FASTER, SAFER, SIMPLER SURGERY - Terrence Norchi, M.D. President - CEO - Equisolve
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FA S T E R , S A F E R , S I M P L E R S U RG E RY
Terrence Norchi, M.D.
President - CEO
OTCQB: ARTH
28
Cautionary Statement Regarding Forward-Looking
Statements
This presentation includes forward-looking statements. We make forward-looking statements, as defined by the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995, and in some cases, you can identify these statements by forward-
looking words such as “if,” “shall,” “may,” “might,” “will likely result,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”
“project,” “intend,” “goal,” “objective,” “predict,” “potential” or “continue,” or the negative of these terms and other comparable
terminology. These include statements regarding: our ability to leverage our technology platform in the development of our lead and
potential pipeline product candidates; our ability to design and conduct development activities and studies and clinical trials for our
lead and potential pipeline product candidates; the potential timing and results of any such clinical trials we may conduct; our ability to
obtain regulatory approvals, our ability to produce commercial quantities of our products within projected timeframes in order to
market any planned products; our ability to achieve financial projections; and our ability to achieve milestones. The forward-looking
statements in this presentation are based on management’s current expectations, estimates, forecasts and projections about the
Company and its business, all of which could prove to wrong. Because such statements deal with future events, they are subject to
various risks and uncertainties and actual results for our current and future fiscal years could differ materially from the Company's
current expectations. Factors that could cause the Company's results to differ materially from those expressed in forward-looking
statements include, without limitation, the following risks: we have estimated that we will have sufficient cash to operate our business
for the near future, and we may not be able to obtain sufficient financing and/or establish necessary relationships with third parties to
continue to pursue our business plan; the stockholder dilution that may result from future capital raising efforts and the exercise or
conversion, as applicable of Arch’s outstanding options and warrants; anti-dilution protection afforded investors in prior financing
transactions that may restrict or prohibit Arch’s ability to raise capital on terms favorable to the Company and its current stockholders;
any development activities or clinical trials we may conduct may not produce favorable results; regulatory agencies may require that
we undertake additional or more costly studies or clinical trials than we presently anticipate; we may never gain regulatory approval for
any of our product candidates; we may not be able to protect our intellectual property rights; the intellectual property of others and any
asserted claims of infringement; general business and economic conditions may limit our ability to obtain necessary capital; the
consequences of competitive factors in the industry in which we operate may restrict the success of any product candidate we are
able to commercialize, and we may not be able to attract or retain key personnel. More detailed information about us and the risk
factors that may affect the realization of any forward-looking statements is set forth in our filings with the Securities and Exchange
Commission, including our Annual Report on Form 10-K filed on November 15, 2017 and subsequent filings with the SEC. Such
documents may be read free of charge on the SEC’s internet site at http://www.sec.gov. You are cautioned not to place undue
reliance on any forward-looking statements we make in this presentation given these risks and uncertainties, and all such statements
are qualified in their entirety by this cautionary statement. All forward-looking statements speak only as of the date hereof, and we
undertake no obligation to revise or update any forward-looking statement to reflect events or circumstances after the date hereof,
except as otherwise required by law.
2
Our Purpose?
Arch Therapeutics is developing innovative self-
assembling barrier technologies to improve wound
care outcomes, enhance the quality of patient care by
healthcare personnel, and offer compelling options to
healthcare institutions facing limited resources.
Arch Therapeutics—transforming the landscape of
advanced interventional wound care.
3
How are we reaching our goals?
With solid experienced leadership
Terrence W. Norchi, MD, MBA Chairman, President, CEO, Founder
NEO Medical Univ, MIT, Tufts School of Med, Sanford Bernstein, Citigroup, Putnam
James Sulat Director
Momenta, Valneva (Intercell), AMAG, Diadexus, Chiron
Punit Dhillon Director
Oncosec, Inovio, Emerald Health Therapeutics
Richard E. Davis Chief Financial Officer
NMT Medical, Rolling Management, TJX Companies, Wang Laboratories
Chirag Shah, PhD VP of R&D Engineering and Quality
Covidien, Biolink, Bard
Steve Kates, PhD VP of Technology
Brandeis, Millipore, Surface Logix, Ischemix, Northeastern, NIH, Am Chem Soc, Am Peptide Soc
4
Details available at http://www.archtherapeutics.com/about/leadership
How are we reaching our goals?
And a “deep bench” of advisors
Avtar Dhillon, MD Steve Schwaitzberg, MD, FACS
MDS Capital Corp (Lumira), Protox (Sophiris Jacobs School of Medicine (U Buffalo SUNY),
Bio), BC Advantage Funds, Inovio, Oncosec Cambridge Health Alliance, Tufts, Harvard
Medical School, SAGES (past president)
John Richards, DPhil William Denman, MBChB, FRCA
Massachusetts General, Harvard Medical
The Medicines Company (President Global
School, Covidien (past Chief Medical Officer),
Pharmaceutical Development), ImmuLogic,
GE Healthcare
ICI Pharmaceuticals, Oxford
Roger Gregory, PhD
Rutledge Ellis-Behnke, PhD Kent State University (past Chairman of
Medical Faculty Mannheim, Univ of Heidelberg
Department of Chemistry), University of
(Germany), MIT, Univ of Hong Kong, Int’l Soc Sheffield, England, University of Minnesota
of Nanomedicine, Glaucoma Foundation
Robert Williams, PhD Arthur Rosenthal, PhD
Boston Scientific (former Chief Scientific
Colorado State University (University
Officer), JNJ, Boston University
Distinguished Professor), Harvard University
Details available at http://www.archtherapeutics.com/about/advisors 5
Key Statistics
OTCQB: ARTH
Shares Outstanding (as of June 30, 2018) ~164 million
Shares / Options Held by Mgmt. (~13%) ~22 million
Stock Options – Outstanding and Available ~15 million
Trading Volume (90 day average) ~250,000
Cash (as of June 30, 2018) ~$6.5M
Current Cash Burn/Qtr. ~$1.6M
Debt ---
6
Milestones
Ø √ Publish clinical trial manuscript
Ø √ File 510(k) pre-submission for AC5TM Topical Gel (external use)
Ø √ Initiate (Q2 ‘18) and complete (Q3 ‘18) human sensitization study
Ø √ Expand IP portfolio
Ø Self-assembling compositions for the treatment of eye disease
Ø Self-assembling compositions for the treatment of inflammation
Ø √ Raise capital (Q2 ‘18)
Ø √ Develop manufacturing process for early commercial scale quantities
Ø √ Present scientific data showing potential new applications (Q3 ‘18)
Ø √ File 510(k) premarket notification for AC5TM Topical Gel (Q3 ‘18)
Ø √ File CE Mark application for AC5TM Topical Hemostat Gel (H2 ‘18)
Ø Receive 510(k) clearance for AC5TM Topical Gel (H2 ‘18)
Ø Submit clinical study IDE pre-submission for internal use (biosurgery)
Ø Initiate process to expand label for AC5TM Topical Gel in US (H1 ‘19)
Ø Establish commercialization strategy
√ = achieved; date references are in calendar terms
7Ideal Product Features
Simple Effective Versatile Safe
Easy to use Rapid Broad tissue applicability Biocompatible
Easy to prepare Works in presence of Open & closed procedures Permits normal healing
Easy to understand blood thinners Natural amino acids,
Prophylactic effects
Assembles on Wound non-animal sourced
Avoid
Slow onset of action
Preparation challenges, handling restrictions
Adhesions, foreign body reaction, infection, granuloma
Animal/human sourcing, antibody formation
Inflammatory responses, pain
Need for intact clotting cascade
Source: Arch Therapeutics, data on file 8Solution: AC5 (Self-Assembling Peptide)
First product from Arch’s technology platform
Synthetic peptide
Clear liquid*, squirted or sprayed
Physical mechanical barrier
Bleeding stops promptly
Permits normal healing
Blood thinner agnostic
Can see and operate through it
Bioasborbable
Hydrating
* Varies by formulation
Investigational device. Limited by Federal law to investigational use. 9
AC5 is presently not commercially available.Mechanism of Action: Self-Assembly
Novel platform technology
Dissolve in Water AC5 Fills Voids
Apply to Wound Interacts with Ions
Creates Barrier
Arch Therapeutics, Inc.© 2018
Arch Therapeutics, Inc.© 2018
Arch Therapeutics, Inc.© 2016
Local Charges Promote Assembly into Biocompatible Nanofiber Network
Arch Therapeutics, Inc.© 2018 Arch Therapeutics, Inc.© 2018
Investigational device. Limited by Federal law to investigational use. 10
AC5 is presently not commercially available.Comparative Profiles
Topical agents for wound application
AC5™ Biological Physical
Platform* Fibrin Thrombin Gels Cellulose Collagen
Consistent, rapid barrier formation ✔ ✖ ✖ ✔ ✔ ✔
Hemostatic action ✔✔ ✔ ✔ ✖ ✖ ✔
Performs despite
✔ ✔ ✖ ✖ ✖ ✖
coagulation/antithrombotic status
Clear seal on wound ✔ ✖ ✖ ✖ ✖ ✖
Synthetic source limits animal
✔ ✖ ✖ ✖ ✔ ✖
protein/virus transmission
Consistent and low cost manufacturing ✔ ✖ ✖ ✔ ✔ ✖
Non-immunogenic ✔ ✔ ✖ ✔ ✖ ✖
Non-irritating/ non-pyrogenic ✔ ✔ ✔ ✔ ✖ ✔
Biocompatible (resorbable) ✔ ✔ ✔ ✔ ✔ ✔
Non-swelling (vasoconstriction or
✔ ✔ ✔ ✖ ✖ ✖
secondary tissue damage not seen)
* Arch Therapeutics, data on file; Howe, J Am Acad Dermatol 2013;69:659.e1-17.
11External Wounds
Hard to heal skin wounds: a chronic public health burden
Pressure ulcers: 2.5M patients/year
Examples (US) Diabetic foot ulcers: 1-1.5M patients/year
Burns
Prevalence: ~2% of population (~6-7M)
Afflicts ~15% of elderly
US Figures
Annual costs surpass $50B
Annual spend on wound care products surpasses $15B
Aging population
Growth Drivers
Prevalence of underlying conditions, including diabetes, vascular disease, obesity
Morbidity, including amputation, and co-morbidities
Mortality
Problems
Hospital length of stay and re-hospitalization
long term use of expensive resources and medical infrastructure
Organic biocompatible barrier to lessen bleeding/leaking, protect, promote moist
Needs
environment, enable healing
12AC5 in Wounds
Pig skin models
Study of healing in partial thickness wounds after hemostasis
• Wounds closed normally with complete re-epithelialization
• Histological tissue response
• normal collagen organization
• normal healing
• minimal inflammation
• AC5 resorbed as expected
• 28 day study confirms prior data
Study of healing in burn wounds after application as barrier
• Favorable wound closure rates and histological results
• Favorable impact on burn progression, which can alter course of healing
• 28 day study
13
Data source: Arch Therapeutics, data on fileClinical Cutaneous Wound Care Trial of AC5
Safety and performance evaluation after lesion excision
Human trial performed in Ireland
46 patients
2 skin lesions removed from each patient
Each patient served as own control
10 patients on therapeutic dose of aspirin as antiplatelet therapy (blood thinner)
Safe
Comparable outcomes between AC5 and control groups
Effective
41% improvement in median TTH vs control
Time to hemostasis (TTH) for AC5 treated groups was 24 seconds
TTH for AC5 treated groups was the same whether or not taking aspirin
Published manuscript
“First Safety and Performance Evaluation of T45K, a Self-Assembling Peptide Barrier Hemostatic
Device, After Skin Lesion Excision”
Rahmani G et al. Dermatologic Surgery, July 2018
14
T45K = AC5AC5 Skin Study to Assess Irritation/Sensitization
Data provide favorable support for safety profile
Topline results of study found
• No evidence of irritation
• No evidence of allergic reaction or immunogenic response
• No product related adverse events in any enrollee
• No rechallenge was required
Study Design
• Single-center, prospective, clinical investigation in ~50 healthy subjects
• Induction phase
• AC5 applied 3 times weekly over 21 days (9 applications)
• Skin beneath patch evaluated with each reapplication and scored per protocol
• Rest period (14 days)
• Challenge phase
• Subjects received 1 more application of AC5 and re-evaluated over 48 hour period
• Designed to address a request by FDA
15
Data source: Arch Therapeutics, data on fileHemostasis
Bleeding: common, costly, and challenging
Bleeding is common and poses problems in surgical procedures and trauma
Issues for surgeons
Considerable time/resources to control bleeding during / after procedures
Visual field loss and increased error risk
Increased risks and morbidity for patients
Abnormal healing and adhesions
Hematomas and seromas
Patient population contributes to increased risk
Patients on ‘lifetime’ anticoagulant, antiplatelet agents
Increased risk in patients with co-morbidities (diabetes, renal disease, etc.)
Bleeding is costly
Increased length of stay
Use of expensive resources include OR time, transfusion risks, etc.
16Hemostatic Agents & Sealants
No ideal solutions for bleeding or leaking tissue
Product Classes Limitations
Cautery Unreliable, slow onset of action
Gelatin Difficult to prepare and use
Foreign body reaction, infection, granuloma
Collagen
Inflammatory responses / pain
Cellulose
Adhesions
Polymers
Intact clotting cascade required
Thrombin
Animal/human sourcing (possible infectious
agents, variable & costly manufacturing)
Fibrin sealants
Handling restrictions
Antibody formation (proteins)
17Hemostasis Video: Animal Models
Femoral artery bleeding in swine
18Hemostasis Video: Animal Models
Challenging organs
19Hemostasis: Pig Studies
Arterial models
Bleeding AC5 Applied Hemostasis
Pig Femoral Artery
AC5 stopped bleeding after suture
removal
Arch Therapeutics, Inc. © 21018 Arch Therapeutics, Inc. © 2018 Arch Therapeutics, Inc. © 2018
Pig Femoral Artery
AC5 stopped bleeding after suture
removal
Arch Therapeutics, Inc. © 21018 Arch Therapeutics, Inc. © 2018 Arch Therapeutics, Inc. © 2018
Pig Carotid Artery Graft
Anastomosis
AC5 stopped bleeding
after suture removal
Arch Therapeutics,
Arch Therapeutics, Inc. © 21018
Inc. © 2018 Arch Therapeutics, Inc. © 2018 Arch Therapeutics, Inc. © 2018 20AC5 +/- Blood Thinner
TTH comparable +/- heparin
Rat Liver Model Rat Liver Punch Biopsy, Heparin
(4mm full thickness penetrating wound)
Before treatment Core removed, wound treated with AC5
Arch Therapeutics, Inc. © 2017
*
saline saline nothing AC5-H AC5-H AC5-L AC5-L
no HEP HEP HEP no HEP HEP no HEP HEP
n=6 n=5 n=4 n=9 n=6 n=5 n=5
Randomized treatment groups: AC5-H, AC5-L = high or low concentration formulations, HEP = heparin treated animal
*pAC5 vs Other Hemostatic Agents
Hemostasis and adhesion profile best with AC5
Profiling TTH and Adhesion Rat Liver Punch Biopsy
(4mm full thickness penetrating wound)
1 day after AC5 treatment
n = 5 / group
TTH (seconds)
SALINE
ORC1
1 day after fibrin sealant treatment
FG
FGT
ORC2
FbS
adhesion severity profile ventral aspect dorsal aspect
AC5 = AC5TM
I=ischemic areas
ORC1, ORC2 = oxidized regenerated cellulose type 1 or type 2
FG, FGT = flowable gelatin, flowable gelatin plus thrombin
A=adhesions
FbS = fibrin sealant
TTH = Time to Hemostasis
22
Source: Arch Therapeutics, data on fileEffect of AC5 on Eye Inflammation
Results suggest AC5 use reduces ocular inflammation
Inflammation markers were
• similar among AC5+LPS, saline control and normal eyes
• significantly in LPS-only vs control groups
• significantly for AC5+LPS vs LPS-only groups
Immunohistochemical Stained Retinal Sections
(LPS alone vs LPS+AC5 and Controls)
LPS only: Microglia
LPS + AC5: AC5
(red and yellow) and
almost completely
infiltrating macrophages
arrests inflammation
(green) are labeled with
activation markers
Rat eyes (40) were blindly assessed/scored for microglia activation (indicates inflammation).
LPS = lipopolysaccharide
Controls = saline or no injections
23
Ellis-Behnke R, et al. Presented at MHSRS August 22, 2018Medical Device Clinical-Regulatory Strategy
Two regulatory filings in calendar H2 ‘18
US 510(k) for AC5TM Topical Gel
Filed Q3 ’18 as external dressing for partial and full-thickness wounds
Sensitization study incorporating FDA pre-submission feedback completed
Initiate label expansion process
EU CE Mark for AC5TM Topical Hemostat
Filed Q4 ’18
US filing for AC5TM Surgical Hemostat (biosurgery)
Planning IDE pre-submission
24Broad Pipeline Potential
Pre-clinical studies initiated in these and other areas
2.5M patients/year in US
Form after 70-90% of major abdominal surgery & in 50-100% of women after pelvic surgery
Adhesions Market growing ~ 15%
Need: Cover, protect, promote moist environment, enable healing
Opportunity: ~$1-2B
~2-15% leak rate in anastomoses
Significant morbidity and mortality
GI Sealant
Significant reoperation rate with added expenses
Opportunity: ~$0.5-1B, and potentially greater
500K patients/year in US
Long term expensive treatment
Burns
Need: Barrier to cover, protect, mitigate infection, lessen scarring, enable healing
Opportunity: ~$1B
Enables use in varied settings
Pre-filled & Access to more patients
Solid Forms Line extensions
Initial stability testing promising for pre-filled form 25Broad Intellectual Property Portfolio
Value creation from range of protected uses/compositions
EXCLUSIVE
Licensed by Arch (Arch Is Sole Licensee Worldwide)
Assigned to: Two patent families cover compositions and methods for hemostasis
Massachusetts and controlling movement of bodily substances
Institute of Expected expiry 2026 – 2028
Technology
& NON-EXCLUSIVE
Versitech Ltd/
U. of Hong Kong 5 patent families providing freedom to operate
Expected expiry to 2030
Treatment of damaged tight junctions and enhancing extracellular matrix
Expected expiry 2029
Assigned to:
Compositions for prevention of adhesions and other barrier applications
Expected expiry 2026
Arch Therapeutics
Composition of matter and methods of use for solid forms of SAP products
Expected expiry 2034
26Contact Information
235 Walnut Street, Suite 6
Framingham, MA 01702 USA
Investor Relations
Tel: 1.855.340.ARTH (2784)
investors@archtherapeutics.com
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