Good day, and welcome to today's video webcast event, a fireside chat with Dr. David Perlin. Please note that today's call is being recorded. All participants will be in a listen-only mode for the duration of the call. If you would like to ask a question during today's event, please type it into the Ask a Question field below the video frame in your webcast window, and then click the Submit button. A replay will be made available following today's presentation. I would now like to turn today's call over to Scott Henry, Alliance Global Partners Managing Director and Senior Research Analyst. Please go ahead, sir. Thank you for the introduction. The purpose of today's discussion is to evaluate the potential of Matinas BioPharma's developmental oral antifungal, MAT2203. The ticker for the company is MTNB, market cap of approximately $40 million. Our guest speaker today is Dr. David Perlin. Further, I would mention if any of the listeners have questions, you should be able to enter them into the chat, or you can email me directly at shenry@allianceg.com. Let's get it started. As mentioned earlier, there will be a recording if someone wants to go back and view any of the segments. Dr. Perlin, please give us a short background on yourself, your experience, and how it relates to antifungals. So thanks very much, Scott. Pleasure to be with you. So I'm the Chief Scientific Officer for the Center for Discovery and Innovation. So I lead a research institute that focuses on creating solutions for patients with cancer and infectious diseases. I've worked for the last 30 years or so creating interventions, both diagnostic and therapeutic, against high-threat pathogens, including viral, bacterial, and, of course, fungal. On the fungal side, my group's been engaged in trying to understand mechanisms of drug resistance and creating both diagnostics and new therapies, and have worked probably with every major manufacturer over the past 25 years for new introductions of antifungals, both big pharma and biotech. We've been involved both in the preclinical space as well as in the post-market introductions. I should also mention that I'm the Editor- in- Chief of the Journal of Fungi, one of the leading publications on fungal infections. I serve on the Global Action Fund for Fungal Infections, GAFFI, which is the group that's worked very closely with the WHO to put antifungals or expand the antifungals on the essential medicines list and also help to create high-threat fungal pathogens as priority pathogens for the WHO. Okay, great. Certainly a deep background for what we're going to talk about today. We always like to start out, and it doesn't bar you from answering any questions, but we like to know, are there any financial interests or conflicts of interest that you'd want to disclose with relation to Matinas BioPharma? None at this time. Okay, great. So the way we're going to do this is we're going to go through a group of topics and hit on specific categories such as the antifungal market, amphotericin B, MAT2203. And when people have questions, which I can see one already in the queue, we'll fit them into this specific category. So we're going to start to talk about the antifungal market. MAT2203 is being developed as an oral antifungal for the treatment of invasive aspergillosis and other deadly invasive fungal infections. Can you talk a bit about the current treatment landscape and the challenges with treating these types of patients today? So for treating invasive fungal infections, we have relatively few options. For treating invasive pulmonary aspergillosis, first-line therapy involves triazole antifungal agents. They're effective, but there are drug-drug interactions. In some cases, like for example, with voriconazole, we may have photosensitization and other types of adverse events. And more recently, we've had this problem of environmentally developed azole resistance, which then creeps into the clinical population and that makes therapy very difficult. So often those patients are refractory to current therapy, and we need alternatives. And that's why amphotericin, which has been around since the late 1950s and is still around and still extremely effective, is really an attractive option. And I'll just say that for other types of invasive fungal infections, for example, due to Candida or especially for Candida, the echinocandins are first-line therapy. Even when we look at cryptococcal infections, it's amphotericin that we rely on to treat those infections. Okay. Of these patients with severe fungal infections, what percent of patients would you classify as difficult to treat? You don't just put them on a course of antifungals and they resolve, but it's more challenging. You have to go to second-line treatments. What percent of patients, if you see 100 patients, how many are challenging? Well, the reality is that the vast majority of them are challenging. When you're using agents, for example, if you have a patient with invasive pulmonary aspergillosis and your only option is to treat with conventional amphotericin, the deoxycholate formulation, 80% of those patients may suffer some type of renal involvement or insufficiency, which requires a change in therapy. Depending on where you are in the world, you may have Aspergillus infections, which are just azole resistant. So conventional amphotericin is probably the only reasonable option for you. You might have a liposomal version, but that's much more expensive in many parts of the world where it's just not reasonable. So depending on the nature of the invasive fungal infection, you could have a straight line therapy is not always so simple. Patients need to be monitored. With some drugs, even, for example, with the triazoles, you may need therapeutic drug monitoring depending on exposure levels. These are complications for these patients. The patients already have underlying diseases, which put them at high risk, not only for these types of infections, but for other types of infections. You're dealing with a pretty sick patient population. With these difficult-to-treat patients, what can the prognosis lead to? Is it a duration of treatment, meaning you just roll through it, treatment courses over and over again, or can it even be fatal? Within that idea, would you think about new fungal treatments as an unmet clinical need that would have significant demand? Well, a hallmark of invasive fungal infections, whether it's Aspergillus or Candida or cryptococcal infections, is that they have a high mortality. For Candida infections, the crude mortality may be 40%-50%, depending on the patient population, especially for patients who are immunocompromised, let's say, because of transplantation. The same thing would apply for invasive pulmonary aspergillosis. If patients secondary to their immunosuppression, let's say, for a transplant recipient who develops invasive pulmonary aspergillosis, the prognosis is not great because there is a high likelihood for mortality. You have to be able to initiate therapy early, and then what you're hoping for is sufficient exposure and that the organism is going to be susceptible enough to clear. It's a challenge. High mortality is, in fact, a hallmark of any invasive fungal infection. Okay, thank you, Dr. Perlin. We're going to go into our next segment. I should have mentioned earlier, but we have about 30 minutes for the discussion to get a sense of how we're going to move through this relatively quickly, but we're going to go in depth when we can. Amphotericin B, so intravenous administered AmBisome or amphotericin B, often used as a standard of care for severe and deadly fungal infections. Tell us about the positives and negatives of this drug. So amphotericin, as I mentioned, has been around since the late 1950s, and there's a good reason for it. Well, there is nephrotoxicity because it can accumulate. You get high exposures in the kidney. And mechanistically for amphotericin, it's binding to ergosterol. It's a fungal sterol which is comparable to cholesterol, and it will bind somewhat to cholesterol. And so it'll accumulate, and that's where you start to see nephrotoxicity and accumulation in humans. And so from that standpoint, it's a problem. You have infusion-related issues related to the use of IV amphotericin. It's an IV-only drug, so there is no oral bioavailability of the drug. And so it has to be closely monitored. And there are some drug-drug interactions, but not extensive. Now, some of these effects can be mitigated by the type of formulation. So the formulation that was used for decades, which was a detergent version of it called the deoxycholate-solubilized amphotericin B, that's what led to very high renal toxicity, and patients often became intolerant of that type of therapy. The positives of amphotericin, it's very broad spectrum. It's active against almost every known drug-resistant organism, except those where you develop amphotericin resistance, which is an extremely rare event. And very few organisms actually have inherent drug resistance to amphotericin. There are some, but not many and certainly not in high prevalence. So the advantages of using amphotericin is that it's active against molds, against yeast. It's active against the most difficult-to-treat organisms, and especially against, now more recently, against drug-resistant organisms, organisms that are resistant to triazoles, like some of the Aspergillus strains or yeast strains, or even to some of the echinocandin drugs which develop during therapy. So there's a lot of advantages to that, as I said, few drug-drug interactions, but really broad spectrum effective activity with a low probability of developing resistance and certainly overcoming existing resistance. So there's a lot of attractive features to it. The flip side is that it has to be monitored properly because there is this nephrotoxicity issue related to, and has been for decades related to amphotericin and all related to its formulation. Thank you. That's one of the things I hear a lot about AmBisome, is that physicians will only treat it for a limited amount of time, whether it be 14 days or whatever the case may be. Based on your background, a little more in the trenches than I am, how long do you see physicians treating with AmBisome or amphotericin B? Well, they're going to treat it as they're going to treat until cure if they can, as long as the patient will tolerate it. I mean, often it's not uncommon to see patients who are started on a liposomal product like AmBisome and then have to switch because they become renally intolerant. And then hopefully you can switch them to an azole if the infecting organism is still susceptible. If it's not, you might have to go to an echinocandin. Often they'll come back to it if they need to because of the effectiveness of the drug. So it's going to vary by patient and whether they'll tolerate it. But the liposomal formulations are better, certainly, than what classically we'd use with the deoxycholate detergent version of amphotericin. Improved, decreased toxicity, so improved therapeutic index, but fundamentally still have this issue of a lot of amphotericin winding up in the wrong place, doing the wrong thing. So that's what you worry about. Okay. So it sounds like physicians are treating the resolution, whether it be good from a cure or bad from the side effects being intolerable, as opposed to following a specific letter of the label type of situation. It's patient by patient, sounds like the process. Well, you have a life-threatening infection, and you want to be able to treat it, and you want to be able to help the patient. So you do whatever you can. You're going to push the limits of the toxicity to be able to get a cure. In the current forms of amphotericin, you may want to just think about a range, but what percent of patients that reach a severe fungal infection that's difficult to treat, you bring in IV amphotericin B, about what percent have a positive resolution within a reasonable time period? It's going to depend, again, on the underlying conditions of the patient. I mean, that's going to dictate how they perform. I think for patients who are severely neutropenic, who develop, for example, invasive pulmonary aspergillosis, you might see 60% - 70% failure. It used to be much higher. It's been better today in some populations. Some of those populations, if you can start it early, you may have 80% resolution. You're not going to have to have 100%, most likely, but it's going to vary by center. It's going to vary by the patient population and their underlying disease. Okay, great. So that will take us to our next section, which is MAT2203, which is a new version of amphotericin B. It's oral as opposed to intravenous, and it should be much more tolerable, even beyond just being more convenient. Could you tell us about your experience with MAT2203, how it could differ from AmBisome or amphotericin B, just kind of compare and contrast what we're looking for in this new compound? Yeah. Well, largely because of the way it's been formulated in this encochleated form, where you've basically created a crystalline lipid shell around it, the body sees it a bit differently. First of all, it's protected, and you can use it for oral delivery, which is really quite extraordinary for a drug that for decades and decades was an IV-only drug and had basically no bioavailability. And so the first real positive is that you can use it for oral delivery, which is great. So you can deliver amphotericin through the oral route, and that allows you to use it for primary therapy, for prophylaxis, as well as for step-down therapy. And that's really quite exceptional. I think the second aspect of it is that largely because it's oral now, you get a slower infusion, and a lot of the renal toxicity that we see is related to a very high loading of amphotericin as an IV drug. So concentration dependent, the so-called Cmax, the maximum concentration of amphotericin that we get, that's often related to the incidence of nephrotoxicity. And with a slower uptake, you don't tend to see that, certainly. And amphotericin is largely unchanged by the kidneys, and so it gets excreted, but we don't see huge amounts of accumulation, and so you have far less toxicity in the kidneys. So not only do you have an oral drug, now you have one that's safer, can be used longer, but delivers the antifungal component, which is highly effective. And that's what we saw in preclinical models, and certainly that's what's being observed clinically. Okay. Now, the oral version, I'm trying to get a sense of how important that is from the standpoint of a patient's improving. Perhaps they can go to outpatient therapy with an oral version because the intravenous, can you talk about how often you have to dose with AmBisome? And I would think that would require sort of in-hospital treatment. Well, that's absolutely right. I mean, you're going to have to dose at least once a day. And the pharmacokinetics, both products have good pharmacokinetics, but that means that for a patient who needs to be treated for some period of time, and these infections do not clear very quickly. So you're going to need to put them on therapy for at least 10 days, probably several weeks. And that means you're going to need daily therapy, maybe more, and infusions and IV infusions. And that's just not something you're going to do certainly in a step-down clinic or in the home environment. It's just not conducive to that. And so to have a step-down drug, the same antifungal drug, which, for example, you may have a good response, but do you want to keep your patient in the hospital, or do you want to transfer them to an infusion center? None of these are great options for the patient. Certainly adds to healthcare costs. And so if you could send them home with a step-down agent that's an oral drug, which is delivering the same effective antifungal, that's a significant advantage to the patient and certainly the healthcare provider. And obviously, the longer we can treat these patients with a powerful antifungal, the better chance we have at positive resolution. Based on what you've seen and read about MAT2203, how long would you expect patients to be treated on this compound relative to your experience with AmBisome or amphotericin B in the IV- form? Well, you can go considerably longer with this product because it's considerably safer. You could go weeks, if not months. And certainly with some of the compassionate use studies, it's pretty clear that patients tolerated it extremely well. And often they were put on this drug after they became intolerant to the more conventional amphotericin formulations. So right now, the data looks pretty strong that there's a nice safety window, safety profile, and patients tolerate the drug quite well. Okay, great. So we've talked a lot about this compound, its benefits, not a lot of risks that we've—I mean, every pharmaceutical has risks, but relative to its predecessor. How would you think about MAT2203 replacing AmBisome? Do you think it would be a fit for most patients, or would you use it in a niche group of patients? Just trying to think about how this product would fit if both were available. Well, I think you still want both products. I mean, there are patients where, in fact, it's desirable to have an IV anti-infective depending on the nature of the patient. So you might want to start with an IV drug and then follow that up with an oral agent. I think that early on in therapy, and I would point out that sometimes getting that concentration of drug very high initially is really beneficial. We see that, for example, with cryptococcal meningitis infections. Yet having an oral version of this drug just gives you much more flexibility to treat a wide variety of invasive fungal infections, not just Aspergillus, but other difficult-to-treat mold infections, other yeast infections, infections that are drug-resistant. If you know you're in an endemic region where you have a lot of azole-resistant Aspergillus, this would be a good agent even to potentially prophylax with, but more likely to start initial therapy if the patient can take it orally and then to follow it out. So I think it's an old drug, but it's been essentially in this formulation, it's being reborn. It's being reborn because it has such attractive properties. From a clinical standpoint, it's why clinicians keep going back to it. Even though there's toxicity related to the older formulations, it just has superior antifungal properties. They can rely on it. Now with a new formulation, which is orally bioavailable, less toxic, and all of this really speaks to the rebirth of this very old drug in a new form, which I think will be enormously beneficial to patients and providers. Thank you for that color. One of the questions that came in from the audience has to do with a lot of the clinical trials are designed to start with IV amphotericin B and step- down to 2203. Do you think that's more of a clinical design issue, or do you think that may be how it will be done in the real world, or do they need to be a patient-by-patient approach because IV can give you a little more control upfront to start therapy? Well, I think initially it's a clinical design decision. I suspect that the FDA would want this. You want standard of care, which would be the liposomal amphotericin. And then as you step- down, the question is, do you continue with the IV liposomal product where you have intolerance, you may have to change, and then you switch, and in one arm, you're going to use the MAT2203. And I think that's a very reasonable design. It's, in my view, a rather conservative one. And you're delivering to the patient standard of care and then the step-down, and then you're looking for a whole series of outcomes, primary and secondary outcomes, related to all-cause mortality and so forth. So I think that's a very reasonable design. Once it gets through this phase, if it does well, which I'm assuming it probably will based on some of the initial work that's been done, how will it be used? Well, again, it's going to depend on the patient. If the patient initially you need to go to a very high level of amphotericin, you're more likely to do an infusion-related product. So you get that very high initial level of drug up, then followed by a step-down oral. Or if it's warranted in the patient, you could start them right off in primary therapy. It'll be patient-by-patient decisions. Okay. Now, I've seen a lot of drug launches through the years, and I've seen a lot of antibiotics launch. And one of the issues with antibiotics is drug resistance, such that some physicians would ration a new antibiotic because they don't want resistance to build up. And I would assume that resistance can be an issue with antifungals as well. Can you talk about what you would expect as far as drug resistance with MAT2203? Well, you're going to get resistance to the amphotericin as an antifungal, and that's where it would occur, but it's a very, very low probability event. I mean, we just don't see much resistance develop to amphotericin. And that may relate somewhat to the nature of the way it works as both a pore former. It seems to have potentially two mechanisms of action. One is it binds to ergosterol, forms pores, which then sort of deplete the inner contents, the integrity of the cell. But in addition, it also can form a layer on the cell, which then draws out sterols. So it weakens the cell in a couple of different ways. So we just, certainly for the molds, it's pretty rare if at all that you'll see breakthrough infections as we see routinely with azoles, with Aspergillus. So that's not likely to be a problem. Other than organisms like, for example, Candida auris, which have the potential to develop amphotericin resistance, it's still a pretty low probability event. Even when we see, let's say, reduced susceptibility to amphotericin, there still seems to be a therapeutic response at some level. You might be able to push the dosage on that. For me, and we've been studying drug resistance for 25 years and resistance mechanisms, azoles, echinocandins, polyenes, and other drugs, the amphotericin has the lowest probability for developing resistance. Okay, great. That's valuable input. We appreciate that. So the final section, and we may go about 5 or maybe 10 minutes over our time limit here, but I just want to talk about the MAT2203 clinical program. The phase II data was the EnACT trial to treat cryptococcal meningitis. The upcoming phase III trial will be the ORALTO trial in invasive aspergillosis. Can you talk a bit about the phase II EnACT trial, at least as familiar as you are with it, and how relevant the takeaways in cryptococcal meningitis could be for invasive aspergillosis? Yeah. So I mean, cryptococcal meningitis is a major disease. I mean, it kills hundreds of thousands of people each year, principally related to HIV/AIDS, but not exclusively. I mean, we see it in transplant populations and other types of immunosuppressed patients. It's a difficult-to-treat disease. It's one that it's very difficult to cure. But what we have learned through the years is that you need to deliver, and you need to deliver antifungals effectively into the central nervous system. And that's where amphotericin has been especially effective. And so for that phase II trial, to be able to deliver orally amphotericin at a sufficient level where it crossed into the blood-brain barrier and could effectively treat cryptococcal infections is really important. It's important for initial therapy, but even probably more important for step-down because these patients need to be on therapy for a very long period of time, if not for their entire lives. So to have the ability to now have an oral agent and not an IV infusion, as we spoke about before, I think that's really, really important. You also have to recognize where these patients are. For cryptococcal meningitis, we're still looking at low and middle-income countries. Sub-Saharan Africa is still a hotbed for HIV/AIDS and for cryptococcal meningitis. We need to be able to deliver these agents in a reasonable way, at a reasonable cost, to be able to provide care for these patients. Okay, great. And based on my experience, antibiotics, antifungals tend to be pretty predictable through the drug development pathway. You usually have a good idea how it works if it works pretty early, and then you're just duplicating that process. In this situation with MAT2203, we know amphotericin B works. That's an approved product. We've got the EnACT trial suggesting good efficacy in cryptococcal meningitis. We also have a compassionate use trial where we're getting data of real-world evidence treating multiple fungal infections, including invasive aspergillosis. So my question is, given this background, in your opinion, does it seem like the mechanism of delivery for amphotericin B within MAT2203 is working as expected? Based on everything you've seen, the phase II data, the compassionate use data, some of the earlier clinical work, how comfortable are you that this delivery mechanism is getting the job done in the way we would want it done? Well, certainly from the preclinical work that we were involved with and many other people have worked on and the clinical data that's come through, it's rare that you take a formulation from concept into practical application, and it performs exactly as you had hoped. And from the earliest inception of the whole concept for cochleates, for oral bioavailability, for then distribution of this product in a safe way where its clearance, metabolism, and so forth is different than other formulations of the drug, it's pretty extraordinary. So it does appear to be behaving in the clinical studies exactly as it was sort of drawn up. And I don't see any data to the contrary. Right now, it needs probably broader studies, which are ongoing. And certainly, the phase III invasive aspergillosis study is an important one and a really good one. I don't see anything that's any barriers in the way right now to move this product forward. Okay. And are you familiar with the pending ORALTO phase III clinical trial? It It should be underway later this year treating invasive aspergillosis. Any thoughts on that design? Any sources of variance that we should be thinking about going into a trial like that? Well, again, I think that you're looking at a step-down trial design that's perfectly reasonable. I think that it's the way it's designed, I think it's conservative, and it should lead to a very conclusive outcome one way or another. I mean, based on the initial trials, it looks like it'll do very, very well, certainly much better than the conventional formulations for amphotericin. Okay, great. We're starting to wrap up. I think I hear music in the background, but I do have time for a couple of final questions. And these are, obviously, we take all this, try to model it into, trying to figure out how much a drug like this can sell. And some of the things we think about are what share can MAT2203 have of the amphotericin market. Is it unreasonable to think that this could have a 50% share or higher, given we have an oral attribute in a drug with less side effects that can treat longer? I think if you can convince clinicians that this is a safe product, it's not unreasonable to believe that you could be more than 50%. I think the only reluctance for clinicians is this 50-60-year history of renal toxicity that they've always worried about, especially with very ill patients. And so if you can convince them that you can deliver this drug effectively, safely, and their patients are not going to suffer ill effects from the drug, I think you're going to have much better uptake than you think for this product. Well, that's good feedback. We're obviously in the business of making forecasts. You're not. We think this could be a $500 million year peak sales drug if we can get that kind of share and if these positive attributes can be duplicated in the larger clinical studies. We're just about out of time, but anything else you would want to mention, anything we didn't cover that you think is interesting with regards to MAT2203, or do you think we hit on everything? Well, I think we've hit on a lot. I think I just want to reiterate that because amphotericin is so broad spectrum, I mean, you can treat a wide variety of invasive fungal infections. And so while we typically think about the major fungal infections due to, let's say, Candida species or Aspergillus or Cryptococcus, there's a wide variety of other yeasts and molds out there that cause infections. And you saw some of them in the compassionate use case. And in different body sites, you have bone infections, you have abscesses, and this is where amphotericin really shines. And so I think that's something to keep in mind, and I think it'll add to the value of the product. Okay, great. Well, Dr. Perlin, that's been fantastic. I really thank you for your time. And as I mentioned earlier, this will be recorded. If someone wants to go back and look at any parts of it as well, they can reach out to myself at Alliance Global Partners. But I think we're going to wrap it up there. Thank you again. And I hope everyone has a good evening. Yep, my pleasure. Thank you.