HBP.TO: LDOS006 New Sites Open

By John Vandermosten, CFA

TSX:HBP.TO | OTC:HBPCF

READ THE FULL HBP.TO RESEARCH REPORT

Second Quarter Fiscal Year 2021 Operational and Financial Results

Helix BioPharma Corp. (TSX:HBP.TO) (OTC:HBPCF) reported 2Q:21 financial and operational results and submitted its SEDAR filings on March 16, 2021. During fiscal 2Q:21, the three months ended January 31, 2021, Helix executed a definitive agreement to divest Helix Immuno-Oncology (HIO), raised gross proceeds of $3 million (1) through private placement and reported voting results from its Annual General Meeting (AGM). Following the reported period, BDO Canada LLP resigned as Helix’ auditors, was replaced by Marcum LLP, and Helix appointed Dr. Frank Gary Renshaw to its Scientific Advisory Board.

Financial results for the three months ended January 31, 2021 compared to the three months ended January 31, 2020 included:

➢ R&D expenses were $1.09 million, down 32% from $1.59 million, reflecting the wind down of two clinical trials and reduction in IP maintenance costs related to the divestiture of HIO;

➢ Operating, G&A expenses were $818,000, up 25% from $654,000 due to higher stock-based compensation expense with the vesting of stock options granted to Helix directors over vesting periods, and higher legal costs and auditor fees;

➢ Income from finance items was $38,000 versus ($13,000), largely driven in both periods by fluctuations in foreign exchange;

➢ Loss from discontinued operations was ($626,000) verses $0;

➢ Net loss was ($2.5) million or ($0.02) per share vs. ($2.2) million and ($0.02) per share on a weighted average share count that increased 8.7%.

Divestiture of HIO yielded a gain of $2.2 million in first quarter fiscal year 2021, and a loss of $626,000 in the second quarter as expenses related to the transaction were recognized. As of January 31, 2021, cash stood at $4.1 million and no debt appears on the balance sheet. Burn for the six months elapsed in FY:21 was, including discontinued operations, ($5.7 million). Excluding discontinued operations, Helix consumed ($4.7 million). The company plans to list on the NASDAQ market next year and is in discussions with financiers to conduct a capital raise in conjunction with the new listing.

Polish Subsidiary

On June 26, 2020, Helix announced that it would be divesting its remaining ownership in its Polish subsidiary, Helix Immuno-Oncology S.A. (HIO). At the time of the announcement, Helix held a 51% interest in the entity following the sale earlier in the year of a 15.5% ownership stake. HIO had been developing V-DOS47, an antibody protein conjugate that targets vascular endothelial growth factor 2 receptor (VEGFR2) that is expressed in many carcinomas and lymphomas. In June 2020, Helix cancelled approximately $2.7 million in intercompany debt owed to it by HIO. Assets related to Biphasix and V-DOS47 were transferred back to Helix. An increase in share capital was approved for HIO in early July, which allowed for 2.2 million shares to be issued raising gross proceeds of approximately 3 million Polish zloty. This action reduced Helix’ interest in HIO to 42.5%. The company also accepted a non-binding offer to purchase the remaining interest for 6.7 million Polish zloty, equivalent to $2.3 million with CAIAC Fund Management AG. The transaction was originally scheduled to close on August 31, 2020 but was delayed due to coronavirus related issues. On November 9th, Helix announced that it had signed a definitive agreement to fully divest the subsidiary. On December 22, 2020, Helix disposed of its remaining interest in HIO for gross proceeds of $2.3 million.

Private Placement

On December 7, 2020, Helix announced the closing of a private placement with gross proceeds of $1.1 million. The terms of the placement were for the purchase of units at $0.50 per unit, each unit comprising one common share and one common share purchase warrant. Each common share purchase warrant will be exercisable at $0.70 with expiration in five years.

In another round of private placement, on December 30, 2020, Helix raised another $3 million in a private placement of units at $0.50 per unit, with each unit comprising one common share and one common share purchase warrant exercisable at $0.70 with an expiry of five years. ACM Alpha Consulting Management AG provided financial advisory services in connection with the placement.

In total for the quarter, Helix raised gross proceeds of $4.1 million, and net $3.6 million, excluding proceeds from the divestiture of HIO.

As part of the increased Operating and G&A costs, Helix has been in discussions with both US and Canadian financing groups as part of Helix’ objective to raise the additional capital needed to qualify for listing on the NASDAQ or other US stock exchange.

Pipeline

The LDOS001 trial in the United States investigated L-DOS47 in combination with carboplatin and pemetrexed for non-small cell lung cancer (NSCLC). Topline data were presented at the American Society of Clinical Oncology (ASCO) conference this year. The clinical study report is now being developed and should be available in the first part of 2021. Below we provide a summary of the study results.

Exhibit I – LDOS001 Summary Presentation at ASCO (2)

The LDOS003 trial investigating the benefit of L-DOS47 with a combination of vinorelbine and cisplatin for non-small cell lung cancer (NSCLC) patients has been completed, pending close out activities. This trial will not progress unless a partner is found. A report is being developed for the study that will likely be available in 2021.

Helix’ pancreatic cancer trial, LDOS006, was launched in December 2019. As of December 2020, seven patients have been dosed, three of whom withdrew due to disease progression prior to completing the required 4-week cycle in order to be included in the evaluation for dose escalation. One patient experienced a chemotherapy-related dose limiting toxicity and as a result, three additional patients will need to be enrolled to close the first cohort. Due to slower enrollment related to challenges resulting from the pandemic, an additional two sites are engaged in study start-up activities, with plans to be open for patient recruitment in 1H:21. A protocol amendment is also planned for submission to FDA in December 2020. On March 12, 2021, Helix added one new study site and expects to open one other by the end of April to achieve completion of targeted enrollment by year end 2021.

Most of the patients initially considered for the Phase Ib did not complete the safety cycle due to the late stage of their illness. Following enrollment in the Phase Ib portion, which is expected to complete in 2Q:21, Helix will progress to the 11-patient Phase II segment of the study. The Phase II portion of the study will focus on anti-tumor activity in the anticipated 11 patients. The subjects will be dosed with L-DOS47 in combination with 20 mg/m2 doxorubicin with tumor marker measurements and radiological assessments every two treatment cycles.

Exhibit II – DOS47 Product Development Pipeline (3)

Annual General Meeting

Helix held its Annual General Meeting (AGM), on January 28, 2021, reporting voting results the following day. Included in the voting agenda was the election of directors, appointment of auditor, share consolidation and a quorum increase resolution. All votes were passed unanimously. All incumbent directors were re-elected. BDO Canada LLP was appointed Helix’ auditor, days before resignation on January 31, 2021. Share consolidation was approved up to a 35:1 ratio and quorum was increased from 10% of outstanding common shares to 33.33%.

Corporate Milestones (Calendar Quarters Used)

➢ IND clearance by FDA for LDOS006 – August 2019

➢ Launch of LDOS006 study – December 2019

➢ Full divestiture of HIO – November 2020

➢ $1.1 million private placement – December 2020

Finalization of HIO divestiture – December 2020

➢ $3.0 million private placement – December 2020

➢ Availability of additional supply of L-DOS47 – 2H:20

➢ Anticipated enrollment completion of LDOS006 Phase Ib – 2Q:21

➢ LSDOS001 Phase I finalized clinical study report – April 2021

➢ LDOS001 PK and immunogenicity reports – 2Q:21

➢ Capital raise of and uplisting to NASDAQ – 2021

➢ LDOS006 Phase II last patient enrolled – November 2021

➢ Completion of LDOS003 clinical study report – 2021

➢ LDOS006 Phase III Launch – 2H:22

➢ Target pancreatic cancer with L-DOS47 in combination therapy – 2023

Exhibit III – Product Timeline (4)

Summary

Helix has streamlined its operations with the successful divestiture of the HIO asset which generated cash that can be used to advance the LDOS006 trial. Helix also closed a $1.1 million private placement in December and continues talks with capital market firms targeting potential uplisting to the NASDAQ. With the additional capital and the two new sites planned for the LDOS006 trial, we see an acceleration in enrollment by in the next months and continued advancement of the pancreatic indication. The opportunity for L-DOS47 extends beyond the US and Europe and other programs in development provide additional opportunities to produce value.

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1. Amounts are denominated in Canadian dollars unless otherwise stated.

2. Source: Helix Biopharma 1Q:21 SEDAR Filing, Management Discussion and Analysis.

3. Source: Helix Biopharma January 2021 Corporate Presentation.

4. Source: Helix Biopharma 2Q:21 SEDAR Filing, Management Discussion and Analysis.

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