Medicus Pharma 2026 Q3 Earnings Call

Hello and welcome. This is Anna Baran-Djokovic, Senior Vice President, Investor Relations at Medicus Pharma. Thank you for joining our financial performance and business update call for the third quarter and nine months ended September 30, 2026. Joining me today are Dr. Raza Bokhari, our Executive Chairman and Chief Executive Officer, Carolyn Bonner, our President and Chief Financial Officer, and Dr. Faisal Mehmud, our Chief Medical Officer. Before we begin, some of the matters discussed today contain forward-looking statements within the meaning of applicable securities laws, including statements about clinical development, regulatory plans, the Pfizer collaboration, potential partnerships, the proposed SkinJect business combination and related financing requirements, and Nasdaq compliance. These statements reflect management's current expectations as of today and are subject to risks and uncertainties that could cause actual results to differ materially.

Please review the risks described in our most recent annual report on Form 10-K, our quarterly report on Form 10-Q, and other SEC filings. Medicus undertakes no obligation to update forward-looking statements except as required by law. All financial amounts discussed are in USD. Our product candidates are investigational and have not been approved by the FDA or any other regulatory authority for commercial sale. With that, I would like to turn the call over to Dr. Raza Bokhari.

Dr. Bokhari? Thank you, Anna.

On behalf of the entire Medicus team, thank you all for joining us today. During the first nine months of 2026, Medicus took an important step in its transformation into a precision oncology-led biotechnology company, advancing a capital-efficient drug development strategy. Our agreement with Pfizer gives us worldwide rights to a clinical-stage antibody drug conjugate with a differentiated target and a substantial scientific and development foundation. We believe this creates an opportunity to build long-term shareholder value by advancing a potential new treatment for patients whose cancer resists existing therapies. We have also announced a non-binding letter of intent for a proposed business combination involving SkinJect at a $135 million pre-money enterprise valuation, with concurrent equity financing contemplated at closing of the business combination.

We believe a separately listed SkinJect company, in which Medicus seeks to retain majority economic and voting ownership, could unlock value for shareholders and support development in Gorlin syndrome while allowing Medicus to concentrate incremental investment on precision oncology. Now I will go in some relevant details of the Pfizer agreement. On September 2nd, through our wholly owned subsidiary, Medicus Pharma Inc., doing business as Medicus Oncology, we entered into a co-development and license agreement with Pfizer for PF-08046031, which we refer to as CD228V. Subject to the agreement's retained rights and other provisions, we hold an exclusive worldwide license to develop, manufacture, and commercialize the program. Medicus has authority over program execution, including development, manufacturing, regulatory approval, and commercialization. Pfizer remains involved under the co-development framework.

Pfizer also provided $2 million for development activities and retains the right, without an obligation, to elect to fund all or part of the development beginning with the first pivotal trial. CD228V is a second-generation construct originating from Seagen and subsequently advanced by Pfizer. The earlier molecule, SGN-CD228A, generated preliminary clinical observations and insights into the target, safety, and biomarkers. CD228V uses Pfizer's established vedotin linker payload platform, with changes to the linker and the amount of payload carried by each antibody. It is our understanding these refinements were designed to improve the balance between drug exposure, tolerability, and anti-tumor activity. Our decision to enter into the co-development and license agreement with Pfizer was informed by our review of the clinical data from Seagen's open-label phase I study of SGN-CD228A, which enrolled 88 patients with advanced solid tumors, including melanoma and non-small cell lung cancer.

Detailed findings from that study have not yet been publicly disclosed. Our review of those data, together with Pfizer's scientific rationale for reconstructing the linker payload using vedotin, gave us confidence in the therapeutic potential of CD228V. The vedotin linker payload technology has established clinical and regulatory precedent through its use in FDA-approved ADC therapies. Our initial focus is melanoma, particularly disease that has relapsed, become refractory, or resisted immunotherapy. We believe this is a compelling starting point based on CD228 biology and the available expression data. Concentrating on a defined patient population allows us to ask a focused clinical question and use the resulting evidence to guide future investment. Based on our assessment of the available clinical evidence from SGN-CD228A Seagen study and the potential benefit of Pfizer's linker payload reconstruction, we believe CD228V has the potential to achieve an objective response rate exceeding 30% in melanoma.

This would represent a clinically meaningful efficacy benchmark that could support a future FDA monotherapy registration strategy, subject to demonstration of durable responses, an acceptable safety profile, and applicable regulatory requirements. This potential remains to be demonstrated in clinical trials of CD228V. We see Medicus as part of an emerging group of approximately 30 clinical-stage ADC developers across the globe. At one end of this field are established companies with approved products and extensive development capabilities. At the other end are companies with programs still in clinical research and development. Through CD228V, Medicus has a clinical-stage asset built on an established ADC platform. Our agreement with Pfizer also places Medicus amongst a list of handful companies advancing Seagen-linked ADC assets through Pfizer collaborations. The rights, economics, and clinical maturity of those relationships differ.

For our shareholders, we believe the opportunity lies in the combination of our worldwide rights, the clinical evidence that we already have, and the clinical evidence we intend to generate, which could support a broader development program and inform future licensing, co-development, or other strategic discussions. We intend to earn that opportunity through our clinical progress while directing capital towards the milestones most likely to improve our understanding of the asset. I will turn to relevant progress for our SkinJect asset and proposed business combination. I am excited to share that we announced on November 4th that SkinJect has entered into a non-binding letter of intent with an undisclosed SPAC. The proposed business combination contemplates a $135 million pre-money enterprise valuation for SkinJect, with concurrent equity financing at closing to support SKNJCT-005 study in Gorlin syndrome and preparation and submission of a potential new drug application.

Our projected estimate for this program is approximately $3 million spread over the next two years. Under the proposed terms, the SPAC would acquire 100% of SkinJect in exchange for newly issued common shares of the combined company. Our objective is for Medicus to retain majority economic and voting ownership of the combined company. We believe a separately listed company with its own public market access and dedicated financing platform could help unlock SkinJect's value while preserving Medicus shareholders' participation in its potential future growth. We will continue allocating essential resources to maintain program readiness as the proposed transaction progresses. We currently anticipate completing the proposed business combination during the first half of 2027. There can be no assurance that definitive agreements will be signed, that financing will be secured, or that transaction will close within the time frame or at all.

I will move to our Teverelix with relevant updates. As we advance our transformation into precision oncology-led biotechnology company, we increasingly view Teverelix as offering partner-ready opportunities in acute urinary retention relapse prevention, advanced prostate cancer, and women's health. Our optimized prostate cancer protocol remains subject to FDA feedback. We are maintaining program readiness while seeking partners with the capability and resources to advance these opportunities. Across the portfolio, our priority is to concentrate incremental development investment on CD228V, pursue the proposed SkinJect transaction, and preserve Teverelix partnering readiness. Our financial results reflect the cost of establishing our portfolio of assets, including the recently completed co-development and licensing agreement with Pfizer for CD228V. I will now turn the call over to our President and Chief Financial Officer, Carolyn Bonner, for the financial review.

Thank you, Raza. During the nine months ended September 30th, 2026, we raised approximately $42.2 million. Net cash provided by the financing activities was $36.2 million. This capital was instrumental in supporting Medicus' transformation into a precision oncology-led biotechnology company. It enabled us to secure the worldwide CD228V license from Pfizer and supported capital-efficient development across our portfolio. For the first nine months, operating expenses were $34.5 million compared with $26.6 million a year earlier. This included $15 million of general and administrative expense, $9.6 million of R&D expense, and a $10 million acquired IPR&D charge for CD228V, which reflects the $12 million upfront payment to Pfizer net of the $2 million development funding payment we received from Pfizer. Net loss was $35.9 million compared with $27.3 million.

For the third quarter, operating expenses were $14.5 million compared with $15.4 million, and net loss was $15.2 million compared with $16 million. On September 30th, we held $13.1 million in combined cash equivalents, and restricted cash. This consisted of $5 million in cash and cash equivalents and $8.1 million in restricted cash. Cash and cash equivalents on December 31st, 2025 were $8.7 million. On September 30th, our total liabilities were $25 million, primarily due to Streeterville Capital debenture executed on May 27th, 2026. Our liabilities on December 31st, 2025 were $10 million. I refer you to our Form 10-Q for additional details regarding the company's finances. Our financial priority is to direct incremental capital towards CD228V while allocating essential resources to maintain the value and partnering readiness of Teverelix and pursue the proposed SkinJect transaction. We anticipate a substantial reduction in our operating expenses in the coming quarters.