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DFFN: Data from Altitude Trial Expected in June 2022…

05/20/2022

By David Bautz, PhD

NASDAQ:DFFN

READ THE FULL DFFN RESEARCH REPORT

Business Update

Topline Results from Altitude Trial in June 2022

In April 2022, Diffusion Pharmaceuticals, Inc. (NASDAQ:DFFN) announced that dosing was completed in the Altitude Trial. It is a double blind, randomized, placebo controlled trial to evaluate the effects of trans sodium crocetinate (TSC) on maximal oxygen consumption (VO2) and partial pressure of blood oxygen (PaO2) in normal healthy volunteers subjected to incremental levels of physical exertion while exposed to simulated altitude conditions that induce hypoxia. The study will be statistically powered to evaluate the difference in effect of TSC versus placebo on maximal oxygen consumption and partial pressure of blood oxygen. We anticipate topline results being reported in June 2022.

The company will also be presenting two abstracts based on blinded, aggregated (placebo and treatment), interim physiological data from a subset of study participants at the Undersea and Hyperbaric Medical Society’s Annual Scientific Meeting in Reno, NV, which is being held from May 22-26, 2022.

Diffusion is currently conducting the ILD-DLCO Trial, which began dosing patients in December 2021. DLCO is a pulmonary function test that measures gas diffusion (carbon monoxide, CO, as a surrogate for oxygen) from the lungs to the bloodstream and is a standard tool for examining pulmonary disease etiology. This trial is a double-blind, randomized, placebo-controlled study that will evaluate the effects of TSC on DLCO in patients with previously diagnosed interstitial lung disease (ILD) who have a baseline DLCO test result that is abnormal. The study will be statistically powered to evaluate the difference in effect of TSC versus placebo on improvement in DLCO as well as in a standard six-minute walk test. We anticipate dosing being completed in the second half of 2022 and for topline results to be presented within two months of study completion.

Developing TSC for Treatment of Hypoxic Solid Tumors

In November 2021, Diffusion announced that the company is intending to develop TSC for the treatment of hypoxic solid tumors. This is based on an increased understanding of the drug’s mechanism of action from the TCOM and COVID-19 studies, the positive preclinical and clinical data compiled thus far, and the fact that TSC is currently administered intravenously. Hypoxia is common to nearly all solid tumors and it contributes both to the difficulty in treating them as well as their metastatic potential. The company has previously reported positive results from the use of TSC in treating glioblastoma (GBM), a tumor type that is known to have significant oxygen diffusion restriction (Rong et al., 2006), which further supports its continued development in other hypoxic tumors.

The company is continuing to evaluate various options for the design of an appropriate clinical trial protocol, currently expected to be a Phase 2 study. While the start date for a trial will be dependent upon multiple factors, we currently anticipate a trial initiating in the second half of 2022.

In February 2022, Diffusion announced an expansion of its Scientific Advisory Board to include five prominent radiation and medical oncologists. These advisors will be instrumental in guiding the company’s new program in treating hypoxic solid tumors.

Addition to Management Team

On May 18, 2022, Diffusion announced the addition of Raven Jaeger as its Chief Regulatory Officer effective immediately. Ms. Jaeger will be responsible for development and implementation of regulatory and related strategies to support the development and commercialization of TSC. She was most recently, Senior Vice President, Regulatory Affairs at BridgeBio Pharma, Inc. and before that was head of Regulatory Affairs at Leadiant Biosciences, Inc.. Ms. Jaeger has 20 years of regulatory affairs experience and will be a valuable asset as the company implements its development strategy for TSC in hypoxic tumors.

Financial Update

On May 12, 2022, Diffusion announced financial results for the first quarter of 2022. As expected, the company did not report any revenues in the first quarter of 2022. R&D expenses for the three months ending March 31, 2022 were $2.4 million, compared to $2.9 million for the first quarter of 2021. The decrease was primarily due to the timing of clinical trials and drug manufacturing, offset by an increase in salaries and stock-based compensation. G&A expenses for the first quarter of 2022 were $2.1 million, compared to $1.7 million for the first quarter of 2021. The increase was primarily due to an increase in salaries and stock-based compensation along with an increase in professional fees.

As of March 31, 2022, Diffusion had approximately $32.6 million in cash and cash equivalents. We anticipate the company has sufficient capital to fund operations through the end of 2023. As of May 11, 2022, Diffusion had approximately 2.0 million shares outstanding and, when factoring in stock options and warrants, a fully diluted share count of approximately 2.3 million.

Conclusion

We look forward to results from the Altitude Trial in June 2022. In addition, we hope to soon get an update from the company regarding further details for the hypoxic tumor program, including indication(s), trial design, and timelines. The company recently enacted a 50:1 reverse stock split, and as we await word on the company’s plans for the hypoxic tumor program our valuation is now at $40 per share.

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