Leap Therapeutics, Inc.

For Q2 2015, research and development expense was $4.8 million versus $3.2 million a year ago, and general and administrative expense was $1.9 million versus $1.2 million a year ago. Net loss was $6.7 million, or $0.37 per share, compared with a net loss of $4.4 million, or $0.59 per share, in Q2 2014. For the first six months of 2015, R&D was $10.1 million versus $5.9 million, G&A was $3.5 million versus $1.8 million, and net loss was $13.6 million, or $0.74 per share, versus $7.8 million, or $1.05 per share, in the prior-year period. Cash and cash equivalents including short-term investments were $35.9 million at June 30, 2015, with no debt outstanding. Management reiterated expected 2015 operating expense cash burn of $21 million to $25 million, excluding anticipated CapEx for commercial manufacturing; the company had previously guided that CapEx for the facility could be up to $4 million this year and said total net investment between this year and next year would be less than $10 million, depending on incentives.

Nissim Mashiach emphasized that the company’s focus is on completing the Phase III program and preparing CureXcell for a potential broad wound-care launch. He said the team is “laser focused” on DFU and VLU, expects the DSMB’s fertility analysis to be favorable, and believes the product could transform wound care if the data continue to read well. His tone was confident and milestone-driven, with repeated comments that the company is on track and nearing a landmark moment.

Mark Page focused on the spending ramp tied to the clinical program and public-company costs. He cited Q2 R&D of $4.8 million and G&A of $1.9 million, plus six-month R&D of $10.1 million and G&A of $3.5 million, and said the higher costs were mainly due to ongoing DFU/VLU trial activity, payroll, stock compensation, recruiting, and public-company expenses. He also highlighted $35.9 million in cash and short-term investments, no debt, and reaffirmed 2015 cash burn guidance of $21 million to $25 million, excluding manufacturing CapEx.

Analysts pressed on how to interpret the fertility analysis, especially if results fall into the middle 31% to 45% band. Management said that zone would still indicate separation between treatment and control and that there would still be a chance of success as enrollment continues, but they expect to land in the 46% to 100% range; the DSMB will not provide deeper reasons beyond the zone itself. Questions also centered on commercialization and reimbursement timing: management said BLA filing is targeted for 2H16, FDA review could take about 10 months, and U.S. launch was discussed for early 2018, with CMS engagement starting once pivotal data are available. They added that reimbursement should resemble a pharmaceutical-style path rather than a long med-tech reimbursement cycle. Management also said manufacturing scale-up is designed to avoid scale-change risk because the commercial process will use the same 200 ml batch size and closed system as the clinical supply.