HBP.TO: Third Quarter Fiscal Year 2021 Operational and Financial Results

By John Vandermosten, CFA

TSX:HBP.TO | OTC:HBPCF

READ THE FULL HBP.TO RESEARCH REPORT

Helix BioPharma Corp. (TSX:HBP.TO) (OTC:HBPCF) reported 3Q:21 financial and operational results and submitted its SEDAR filings on June 14, 2021. During 3Q:21, the three months ended April 30, 2021, Helix appointed Dr. Frank Gary Renshaw to the Scientific Advisory Board, and extended the exercise period for certain warrants among other activities. Following the end of the quarter, the company raised additional capital to support operations and the LDOS006 study.

Financial results for the three months ended April 30, 2021 compared to the three months ended April 30, 2020 included:1

➢ Research and development expenses were $1.9 million, up 27% from $1.5 million, reflecting an increase in collaborative research spend associated with ProMab CAR-T, slightly higher L-DOS47 clinical program cost and increased amounts for intellectual property expenditures. These increases were partially offset by lower contract manufacturing activity;

➢ Operating, general and administrative expenses were $651,000, down 24% from $862,000 on lower stock-based compensation and lower investor relations expenses partly offset by higher legal expenses;

➢ Income from finance items was $30,000 versus ($11,000), largely driven in both periods by fluctuations in foreign exchange;

➢ Loss from discontinued operations was $0 versus a gain of ($198,000);

➢ Net loss was ($2.6) million or ($0.02) per share vs. ($2.5) million and ($0.02) per share on a weighted average share count of 141.1 million shares and 130.6 million shares respectively.

As of April 30, 2021, cash stood at $2.3 million and there was no debt on the balance sheet. Cash levels do not include proceeds from the $3.5 million gross capital raise closed in mid-May. Cash burn for the three and nine months ending April 30, 2021 was ($1.8) million and ($7.5) million. Company management estimates that $25 million will be required to advance planned clinical and preclinical research and development activities until FY:23. The company plans to list on a new exchange in the United States and is in discussions with financers to conduct a capital raise in conjunction with the new listing.

Convertible Security Funding Agreement

On May 10, 2021, Helix entered into a convertible security funding agreement with Lind Global Macro Fund. The effort raised $3.5 million in the initial tranche of the agreement and another $6.5 million may be raised in a second round. The convertibles have a two year term and accrue interest at a rate of 8.75% per annum with interest added to the principle of the security, resulting in a maturity value of $4,112,500. Helix will pay an additional 3% commitment fee to Lind at the closing of each tranche.

Conversion of the securities may occur during its term at a conversion price equal to 85% of the average share price prior to conversion with a limit on the amount that may be converted every month. Two-thirds of the securities may be repurchased for cash by Helix if desired with no penalty. Other terms apply and are outlined in the agreement.

Approximately two million warrants will be issued to Lind with a four year duration and exercise price of ~$1.03. Additional warrants related to the second tranche may also be issued with the number calculated under a complex formula that would yield approximately 3.5 to 3.6 million warrants with an exercise price of $0.90 to $1.05 based on recent price moves and on the closing of the $6.5 million in additional funding.

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. Additional reports have been completed for pharmacokinetics and immunogenicity; tables, listings and figures are expected to be available in June 2021. The clinical study report is now being developed and should be available in 3Q:21. Below we provide a summary of the study results.

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 may be available in 2021; however, it has been delayed due to a disagreement between the company and clinical research organization (CRO).

Helix’ pancreatic cancer trial, LDOS006, was launched in December 2019. As of June 2021, nine patients have been dosed, six of whom were dosed under the original protocol where patients were initiated on L-DOS47 in combination with 20 mg/m2 doxorubicin. Three subjects 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 of the remaining three patients experienced a dose limiting toxicity (DLT) attributed to doxorubicin, which required a protocol amendment. The amendment required a reduction in the chemotherapy dose.

The amended protocol requires a reduced starting dose of 15 mg/m2 of doxorubicin and three patients were dosed under this regimen. One of three patients dosed under the 15 mg protocol experienced a serious adverse thromboembolic event. The investigator classified this as possibly related to L-DOS47 and alternatively related to the patient’s prior medical history of thromboembolic events and advanced stage of pancreatic cancer. The sponsor physician assessed the event as possibly related to doxorubicin chemotherapy, patient’s prior medical history, and uncontrolled pancreatic cancer state, although possible relationship to L-DOS47 in combination with doxorubicin could not be ruled out. As there were two DLTs, another cohort expansion of three patients is required. If a third DLT occurs, the current plan will stop and a study design revision will be required.

Due to slower enrollment related to challenges resulting from the pandemic, an additional two sites have been activated. On March 12, 2021, Helix added one new study site and one other at the end of April to achieve completion of targeted enrollment before 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 3Q: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 15 mg/m2 doxorubicin3 with tumor marker measurements and radiological assessments every two treatment cycles.

Corporate Milestones (Calendar Quarters Used)

➢ LDOS001 PK and immunogenicity reports – 2Q:21

➢ LDOS002 manuscript submitted to Journal of Thoracic Oncology – 2Q:21

➢ LDOS006 Phase Ib, last patient enrolled – 2H:21

➢ LDOS001 clinical study report – 2H:21

➢ Completion of LDOS003 clinical study report – 2021

➢ Capital raise of and uplisting OTC – 2021

➢ IND submission for L-DOS47 + chemo in lung cancer – December 2021

➢ Initiation of Phase II portion of LDOS006 – 2022

➢ NSCLC Phase II Clinical Study (L-DOS47 + immunotherapy) – 2021/2022

➢ LDOS006 Phase III Launch – 2022/2023

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

Summary

Since our second quarter update in March, Helix has raised additional capital, activated two new sites and dosed two additional patients under the new protocol in the LDOS006 trial. The company has also announced its intent to submit an IND to the FDA for L-DOS47 in combination with chemotherapy for lung cancer. Based on the current status of LDOS006, the last patient for the Phase Ib is expected to be enrolled in 2H:21 and the Phase II is anticipated to begin in calendar year 2022.

Helix raised additional capital to cover near term expenses while it is pursuing a listing on a US exchange in conjunction with a capital raise that would support the LDOS006 program and the move of the lung cancer program into the clinic if the proposed IND is cleared. With the additional capital and two new sites actively adding patients, we expect Helix to achieve its proposed timelines.

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1. All currency in this report is denominated in Canadian Dollars unless otherwise noted.

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

3. This was reduced from 20 mg/m2 as a result of the protocol change.

4. Source: Helix Biopharma January 2021 Corporate Presentation.

5. Source: Helix Biopharma 3Q:21 SEDAR Filing, Management Discussion and Analysis.

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