CHARLOTTESVILLE, Va., March 20, 2019 (GLOBE NEWSWIRE) -- Diffusion Pharmaceuticals Inc. (Nasdaq: DFFN), a cutting-edge biotechnology company developing new treatments for life-threatening medical conditions by improving the body’s ability to bring oxygen to the areas where it is needed most, today reported financial results for the year ended December 31, 2018 and provided a business update.
2018 was marked by significant developments related to the Company’s lead drug candidate, trans sodium crocetinate (TSC), for the treatment of stroke and cancer. During the third quarter Diffusion received approval from the U.S. Food and Drug Administration (FDA) to enroll patients in an ambulance-based Phase 2 clinical trial testing TSC for the treatment of acute stroke, while the in-ambulance trial design was presented at several important medical conferences. The trial, named PHAST-TSC (Pre-Hospital Administration of Stroke Therapy-TSC), will involve 23 hospitals across urban, suburban and rural areas in Los Angeles County and Central Virginia, working closely with approximately 150 emergency medical transport groups. PHAST-TSC will be led by researchers at the University of California Los Angeles (UCLA) and the University of Virginia (UVA). Diffusion is working to engage local ambulance companies and expects the first patients to be treated in the coming months. Results for the trial will potentially be available in just under two years, subject to Diffusion receiving the necessary funding.
The Company continues to screen and enroll patients in its Phase 3 INTACT (INvestigation of TSC Against Cancerous Tumors) program, using TSC to treat inoperable glioblastoma multiforme (GBM) brain cancer. In Phase 2 testing TSC demonstrated a nearly four-fold improvement in overall survival at two years for the subset of inoperable GBM patients compared with the control group of GBM patients.
Commenting on 2018 and plans for 2019, David Kalergis, chairman and chief executive officer of Diffusion, said, “In the coming weeks we expect to complete enrollment in the initial dose-escalation cohort of the INTACT trial. In addition, we expect to begin enrollment in PHAST-TSC during the second quarter of 2019. We continue to be excited about the potential for TSC to bring new hope to patients with life-threatening unmet medical needs and making TSC a commercial success.
Several patents were allowed and issued during the course of 2018, strengthening the Company’s intellectual property portfolio around broad uses of TSC in hypoxic conditions such as stroke, and as a treatment for solid cancerous tumors in conjunction with radiation and chemotherapy. Of note, a U.S. patent was issued for TSC in conjunction with tissue plasminogen activator (tPA) for the treatment of stroke. tPA is the only FDA-approved therapeutic for this indication. At the end of 2018, the company had 56 issued patents in the U.S. and abroad.
2018 Financial Results
Diffusion had cash and cash equivalents of $8.0 million as of December 31, 2018. The Company believes its cash and cash equivalents are sufficient to fund operations into July 2019.
Diffusion recognized $5.8 million in research and development expenses during 2018, compared with $5.1 million during 2017. This increase was primarily attributable to a $1.7 million increase in Phase 3 GBM trial expenses and to a $0.2 million increase in salary and wages expenses, partially offset by a $1.2 million decrease in manufacturing and other costs.
General and administrative expenses were $6.2 million during 2018, which were flat compared with 2017. Salaries and wages expense increased by $0.6 million, which was offset by a $0.6 million decrease in professional fees.
The Company recognized a non-cash goodwill impairment charge of $6.9 million during the year ended December 31, 2018 as a result of a sustained decrease in our market capitalization during the second half of 2018. There was no such charge in 2017.
Net cash used in operating activities for 2018 was $10.8 million, compared with $12.3 million during 2017.
About Diffusion Pharmaceuticals Inc.
Diffusion Pharmaceuticals Inc. is an innovative biotechnology company developing new treatments that improve the body’s ability to bring oxygen to the areas where it is needed most, offering new hope for the treatment of life-threatening medical conditions.
Diffusion’s lead drug TSC was originally developed in conjunction with the Office of Naval Research, which was seeking a way to treat hemorrhagic shock caused by massive blood loss on the battlefield.
Evolutions in research have led to Diffusion’s focus today: Fueling Life by taking on some of medicine’s most intractable and difficult-to-treat diseases, including stroke and GBM brain cancer. In each of these diseases, hypoxia – oxygen deprivation of essential tissue in the body – has proved to be a significant obstacle for medical providers and the target for TSC’s novel mechanism.
In 2018 the Company began enrolling patients in its Phase 3 INTACT program, using TSC to target inoperable GBM brain cancer. Its on-ambulance PHAST-TSC acute stroke protocol was granted FDA clearance to proceed in September 2018. Additional preclinical data supports the potential use of TSC as a treatment for other conditions where hypoxia plays a major role, such as myocardial infarction, respiratory diseases such as COPD, peripheral artery disease, and neurodegenerative conditions such as Alzheimer’s and Parkinson’s disease.
In addition, RES-529, the Company’s PI3K/AKT/mTOR pathway inhibitor that dissociates the mTORC1 and mTORC2 complexes, is in preclinical testing for GBM.
Diffusion is headquartered in Charlottesville, Virginia - a hub of advancement in the life science and biopharmaceutical industries - and is led by CEO David Kalergis, a 30-year industry veteran and company co-founder.
Forward-Looking Statements
To the extent any statements made in this news release deal with information that is not historical, these are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the company's plans, objectives, expectations and intentions with respect to future operations and products, the potential of the company's technology and product candidates, the anticipated timing of future clinical trials, and other statements that are not historical in nature, particularly those that utilize terminology such as "would," "will," "plans," "possibility," "potential," "future," "expects," "anticipates," "believes," "intends," "continue," "expects," other words of similar meaning, derivations of such words and the use of future dates. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Uncertainties and risks may cause the Diffusion’s actual results to be materially different than those expressed in or implied by such forward-looking statements. Particular uncertainties and risks include: the difficulty of developing pharmaceutical products, obtaining regulatory and other approvals and achieving market acceptance; general business and economic conditions; the company's need for and ability to obtain additional financing or partnering arrangements; and the various risk factors (many of which are beyond Diffusion’s control) as described under the heading “Risk Factors” in Diffusion’s filings with the United States Securities and Exchange Commission. All forward-looking statements in this news release speak only as of the date of this news release and are based on management's current beliefs and expectations. Diffusion undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Contacts:
David Kalergis, CEO
Diffusion Pharmaceuticals Inc.
(434) 220-0718
dkalergis@diffusionpharma.com
LHA Investor Relations
Kim Sutton Golodetz
(212) 838-3777
kgolodetz@lhai.com
(Tables to follow)
Diffusion Pharmaceuticals Inc.
Consolidated Balance Sheets
| December 31, | |||||||
| 2018 | 2017 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 7,991,172 | $ | 8,896,468 | |||
| Prepaid expenses, deposits and other current assets | 923,059 | 769,946 | |||||
| Total current assets | 8,914,231 | 9,666,414 | |||||
| Property and equipment, net | 350,281 | 460,652 | |||||
| Intangible asset | 8,639,000 | 8,639,000 | |||||
| Goodwill | — | 6,929,258 | |||||
| Other assets | 298,480 | 450,491 | |||||
| Total assets | $ | 18,201,992 | $ | 26,145,815 | |||
| Liabilities, Convertible Preferred Stock and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Current portion of convertible debt | $ | — | $ | 550,000 | |||
| Accounts payable | 198,818 | 511,956 | |||||
| Accrued expenses and other current liabilities | 605,226 | 1,628,851 | |||||
| Total current liabilities | 804,044 | 2,690,807 | |||||
| Deferred income taxes | 1,786,389 | 2,223,678 | |||||
| Other liabilities | — | 1,386 | |||||
| Total liabilities | 2,590,433 | 4,915,871 | |||||
| Commitments and Contingencies | |||||||
| Convertible preferred stock, $0.001 par value: | — | — | |||||
| Series A - No shares authorized, issued or outstanding at December 31, 2018. 13,750,000 shares authorized, 12,376,329 shares issued and 8,306,278 shares outstanding at December 31, 2017 | — | — | |||||
| Stockholders’ Equity: | |||||||
| Common stock, $0.001 par value: | |||||||
| 1,000,000,000 shares authorized; 3,376,230 and 967,976 shares issued and outstanding at December 31, 2018 and 2017, respectively | 3,377 | 968 | |||||
| Additional paid-in capital | 95,532,881 | 82,783,865 | |||||
| Accumulated deficit | (79,924,699 | ) | (61,554,889 | ) | |||
| Total stockholders' equity | 15,611,559 | 21,229,944 | |||||
| Total liabilities, convertible preferred stock and stockholders' equity | $ | 18,201,992 | $ | 26,145,815 | |||
Diffusion Pharmaceuticals Inc.
Consolidated Statements of Operations
| Year Ended December 31, | |||||||
| 2018 | 2017 | ||||||
| Operating expenses: | |||||||
| Research and development | $ | 5,751,940 | $ | 5,088,621 | |||
| General and administrative | 6,167,177 | 6,191,845 | |||||
| Goodwill impairment | 6,929,258 | — | |||||
| Depreciation | 110,371 | 67,981 | |||||
| Loss from operations | 18,958,746 | 11,348,447 | |||||
| Interest (income) expense, net | (151,647 | ) | 48,006 | ||||
| Change in fair value of warrant liability | — | (22,072,322 | ) | ||||
| Warrant related expenses | — | 10,225,846 | |||||
| Other financing expenses | — | 2,870,226 | |||||
| Loss from operations before income tax benefit | (18,807,099 | ) | (2,420,203 | ) | |||
| Income tax benefit | (437,289 | ) | (1,055,685 | ) | |||
| Net loss | $ | (18,369,810 | ) | $ | (1,364,518 | ) | |
| Accretion of Series A cumulative preferred dividends | (85,993 | ) | (1,252,394 | ) | |||
| Deemed dividend related to the make-whole provision for the conversion of Series A convertible preferred stock into common stock | (8,167,895 | ) | — | ||||
| Net loss attributable to common stockholders | $ | (26,623,698 | ) | $ | (2,616,912 | ) | |
| Per share information: | |||||||
| Net loss per share of common stock, basic | $ | (8.21 | ) | $ | (3.16 | ) | |
| Net loss per share of common stock, diluted | $ | (8.21 | ) | $ | (29.11 | ) | |
| Weighted average shares outstanding, basic | 3,242,301 | 827,575 | |||||
| Weighted average shares outstanding, diluted | 3,242,301 | 848,090 | |||||