NASDAQ:FBLG

Hello and welcome to Virtual Investor Conferences. On behalf of the Life Sciences Investor Forum and our co-host, Zacks Small Cap Research, we're very pleased you joined us for our quarterly conference. Our next live presentation is from FibroBiologics. FibroBiologics is a cell therapy regenerative medicine company developing a pipeline of treatments and potential cures for chronic diseases. Please note that you may submit questions for the presenter in the box on the left of the slides. You also may view a company's availability for one-on-one meetings by clicking Book Meeting in the top toolbar. At this point, I'm very pleased to welcome Peter O'Heeron. He's the founder and chief executive officer. David Bautz is a senior analyst with Zacks Small Cap Research. FibroBiologics trades on NASDAQ under the symbol FBLG. Welcome, Pete and David.

Pete O'Heeron: Thank you for having me. Appreciate it.

David Bautz: Thanks, and thanks, Pete, for being here today. This is our general overview. What exactly are fibroblasts? Why develop them as therapeutics? And what qualities do those cells have that lend themselves to being suitable for therapeutic use?

PO: There are two cells in the human body that you can use to regenerate tissue and cure chronic disease. There's a stem cell that everybody's heard about. Then there's a fibroblast, which most people haven't heard about. The irony is that fibroblasts are the most common cell in the human body. They outnumber stem cells 5,000 to 1. We like them better than stem cells. They're a more stable platform than stem cells, are easier to harvest stem cells, they have higher immune modulation, higher therapeutic capabilities. Stem cells want to be anything other than a stem cell. They're an inherently unstable cell source. They are a fantastic cell source, and as we've seen, a number of companies have formed around those are developing therapies. But compared to fibroblasts, they are a much more unstable cell source, and much more difficult to work with. Fibroblasts are already fully differentiated into what they're going to be and stem cells want to be anything other than a stem cell. Fibroblasts can turn into almost any other type of cell, but you have to talk them into it. It’s a more stable platform. Being the most common cell in the human body, they will always be a less costly alternative to stem cells.

DB: Why do you believe that fibroblasts are the key to treating chronic diseases?

PO: We’ve done the research and looked at the last 60 years of big pharma. No chronic disease has ever been cured. Think about the trillions of dollars spent trying to find cures for chronic diseases. We believe a man-made external chemical compound will never cure a chronic disease. If it were to cure one, it would have done it by now. A biologic defect in the body is where you get your chronic disease from. We believe it will take a positive biologic process created through fibroblast or a stem cell through immunotherapy or gene therapy. The three ways we think you'll be able to cure chronic diseases going forward are cell therapy, where we are; gene therapy, which is CRISPR, and immunotherapy, which companies like Bristol Myers and those guys are involved with. Oddly enough, the last three large Nobel Prize-winning technologies were originally, in 2012, stem cells won for induced pluripotent stem cells. That's taking one cell source and turning it into another. The second hour of the story used a fibroblast to do that.

PO: FibroBlast created the stem cell revolution. After that, you saw Dr. Jim Allison at MD Anderson in Houston develop immunotherapy for cancer, and he won the Nobel Prize. Then, more recently, Jennifer Doudna and Emmanuel Charpentier won for CRISPR. You saw that, and they just launched and got approved for their sickle cell anemia therapy last December. You'll see the cures for chronic diseases come through those three platforms.

DB: Where are the fibroblasts derived from for the company's purposes?

PO: They're skin cells. They're human dermal fibroblasts. We can pull them right out of your skin. It takes a small dermal punch. If you went to your dermatologist and had a mole taken out, it would be about the size of that, about the size of a number two pencil eraser. We can deliver over 200,000 doses of fibroblasts. You could almost regrow the whole human body with fibroblasts.

DB: Are these cells derived from each patient, or is this more of an off-the-shelf therapy?

PO: This is off-the-shelf therapy. When cell therapy started, deriving it from the patient, which is considered autologous, was the pathway that everybody took, and they were heading down that pathway. But when you think about it, there's only one location where they make Tylenol and only one location where they make Advil. They do that because they want to ensure the safety and quality of each run. You don't charge 200 facilities across the country for making those particular pills. Well, it's the same thing with cell therapy. If everything you did was from that patient, you would end up with 200 facilities trying to come up with the same type of cell therapy. You can imagine the clinical conditions are different; the people and equipment are different, and ambient conditions are different. I think you're going to see allogenic, an off-the-shelf donor from one donor to another individual. What we see with fibroblasts by using that allogenic is that my fibroblasts work in your body the same as your fibroblasts work in your own body. That's unusual, and that's unique to fibroblasts.

PO: They are a bit hidden from the immune system. They allow us to have a very easy off-the-shelf solution using fibroblasts.

DB: Can you talk about some of the challenges, obviously aside from getting positive clinical trial results, that need to be overcome to make fibroblast therapy become a reality?

PO: The challenge we are dealing with is first-time technology. I tell our scientists everything they do is the first time anyone has ever done it. When we go to Mars and take that first footstep on Mars, it will be the first time any humans ever done that. We do that every single day in the lab because nobody has pursued fibroblast therapeutically. Everything we do is the first time. Creating science from scratch is really interesting. It's really challenging. Educating the capital markets about what we're doing compared to stem cells and having that access to capital are the normal challenges of being a small public company.

DB: Yeah. I know you talked before about the company's IP and maybe you can talk a little bit about why having such a robust IP portfolio is so important.

PO: Yeah. We've spent a lot of time, commitment, and treasure on our intellectual property. We have more intellectual property with fibroblasts than the rest of the world combined. It's a really important component of what we're doing. While we were early on patenting methods to treat certain diseases, we are now adding to that our manufacturing process to create a more efficient, effective, and consistent product. For example, we started off with single cells, and now we use spheroids, a collection of fibroblasts into one droplet. There could be up to 3,000 fibroblasts. We like that because it tends to have more staying power in the therapeutic area. We have more time on target in our wound care program. That spheroid has a very predictable biologic time release, and it dissolves into the wound, so it has much more time on target. As we are developing working on our existing IP, we're also developing new IP around the manufacturing process, different delivery systems, and looking over the over the horizon and where we're going with those.

DB: Okay, sounds good. I will dig into the products you're developing a bit specifically. I know we're starting with diabetic foot ulcers. The real question is, why start there?

PO: It's a great question. Fibroblasts are involved in every aspect of wound healing. If you looked at a wound, you would see a lot of fibroblasts. We can take those fibroblasts, concentrate them, and have them on that target for a lot longer. We think we can have a really excellent result with diabetic foot ulcers. We tested ourselves against the number one product in the market, GRAFIX by Smith and Nephew, and we saw almost a 50% reduction in the amount of time it took to close that wound compared to the number one on the market. That's very exciting for us. What we want to do is to show the capability of fibroblasts early, such as diabetic foot ulcers, so we can get the market aware of the capabilities of fibroblasts. We started with something that we believed was going to be successful. It has a short endpoint of 12 weeks instead of some other chronic diseases, which might have an endpoint of 12 months. We're going to have some really good results in short order.

DB: Speaking of the results from that study, what outcome will be most important? Is it how quickly does the wound heal? Is it what percentage of each wound? What are you going to be looking at specifically?

PO: What percentage of the wound closes over what period of time. Also, the quality of that wound closure is important because we don't want it to reappear. Those are the big elements. You want to see those sides coming together on that wound. You want it to close quicker than what you would get with another therapy. But you also don't want that patient to be readmitted with another wound at the same spot. It's the quality of the closure as well.

DB: You mentioned the pre-clinical results that you looked at with GRAFIX. For the clinical trials, will you have to have a comparator in that trial as well?

PO: We don't. We will compare against existing therapies that have already done their clinical trial.

DB: Assuming you get positive results from this initial study, what are the next steps for the program, and what would be the time frame for those steps?

PO: We are planning to issue results on that this calendar year. Then, right after that, we'll move into phase three commercialization for the diabetic foot ulcer early next year. You'll see psoriasis coming right behind that.

DB: You will finish the study this year, and then you can go straight into phase three?

PO: When we show our data to the FDA, that's what we'll request. Yes.

DB: You just mentioned psoriasis, which is a good segue because I was going to ask you why psoriasis is amenable to treatment with fibroblast-based therapy.

PO: Psoriasis looks like a skin condition, and it certainly is that, but it's actually an immune system condition. We have tremendous efficacy against the immune system with fibroblasts. We saw it, leading to psoriasis during our multiple sclerosis trials. We did a small human trial for safety with five patients. What we saw in all five patients, while it was only five patients because we're the first people that have ever injected fibroblasts intravenously into another human, was that we stopped the progression of the disease in all five patients. We have something in multiple sclerosis, and psoriasis is an immune condition. We have seen psoriasis in the lab and in our extensive animal trials, and the results we're getting from that are really remarkable. In multiple sclerosis, we've seen remyelination. I don't know if anyone's claiming that that's repairing the damage to that myelin sheath. With multiple sclerosis, you get fatigue in that myelin sheath; you get breakage in that. And we've shown that we can repair that myelin sheath. So very exciting.

DB: This question is for both psoriasis and multiple sclerosis indications. There are successful treatments for both indications. But what advantages do you think a fibroblast-based therapy has over those currently available therapies for each indication?

PO: When we look at the existing therapies that are out there, they either overstimulate the immune system or deplete the immune system. Those are really the two different ends of the spectrum that those treatments work on. What you see in psoriasis and multiple sclerosis is a depletion of the immune system, a suppressing of the immune system so that the body can heal itself. What fibroblasts do is they do it without suppressing the immune system. You don't have any of the complications you get or any of the risk factors you see when you suppress the immune system. Of course, you get a long list of side effects and risk factors that come along with that. With fibroblast, we bring you right back to homeostasis, right back to the middle, and allow the body to heal without overstimulating or suppressing the immune system.

PO: During COVID, I heard many people say, wow, we need to engage the immune system. For COVID, I heard a lot of people on TV saying that, and I used to think, be careful what you ask for. An over-engaged immune system starts to attack things around it that you may not want.

DB: That's very true. Where do you think fibroblast-based therapy would fit in the treatment paradigm with what's currently available?

PO: Well, you would see it effective against the similar treatments you see with stem cells only. I think it will be more effective and have quicker results. I think it will be much less expensive than what you're seeing with some stem cell therapies, but you'll see it in all chronic diseases. We'll see good results in everything we're working on.

DB: Do you foresee head-to-head trials necessary for either indication with what's currently available?

PO: We do. We did a head-to-head trial for diabetic foot ulcers with the number one player in the market, GRAFIX. We compare stem cells and everything we do in the lab. We always run a comparator using stem cells, and we have outperformed stem cells on every test we've done.

DB: Related to psoriasis, do you see any applicability of fibroblasts in treating eczema?

PO: We haven't worked in that area. We have to look at it and do some testing in that area. But we haven't worked there. You would see results. I think the top one out there is DUPIXENT that's used for eczema, and that has a depletion function to that. I think you would see some benefit from it.

DB: You previously mentioned that you had results from a small phase-one trial for the multiple sclerosis indication. Just talk a little bit about it. More about those results and then, more importantly, what's the next step for that program?

PO: What was exciting was that we saw no further disease progression during that trial. We felt like we had seen remyelination, but it's very difficult to see that in a human. We went back into the lab and we've done extensive animal work and we have seen full remyelination with those. Now, we can't tell you the exact mode of action. We believe it could be some paracrine effect, or it could be that we're able to take the immune system back to homeostasis and allow the other healing areas of the brain to take over. We're still working on the mode of action, but we saw it in all five patients, and we had no adverse events reported for that study. It's really exciting. The fact that we were able to take allogenic fibroblasts, inject them into another human intravenously, and get that kind of results was really a game changer for us.

DB: Yeah, absolutely. Turning to some of the earlier stage programs, one of the ones you've mentioned before is an extension of life through thymus regeneration. So, can you discuss exactly what that is? What's the theory behind it? How close is the company to potentially getting something into the clinic?

PO: It is a very exciting program. I like sometimes to say that it's exotic. The thymus gland is your teaching center for the immune system. You've heard of T-cells, the thymic cells. As you get older, the thymus gland starts to shut down. By the time you're in your 60s and 70s, you almost have a nonfunctioning thymus gland. You don't have more cancer in your 70s than you do in your 40s. It's just that your thymus gland stops teaching the immune system. Our original theory was that if we could stimulate the thymus gland to regenerate its capabilities, we could allow humans to live for another 15 or 20 years. What we've done in that process is develop an organoid. An organoid is a collection of cells that function very similar to the larger organ itself. And so we've been able to develop an organoid of thymic cells. We have injected it sub-Q. It's remained durably fixated for over 62 days, and it developed T-cells during that process. It's really exciting. If we could determine the thymic function and then base our dosage of organoids on that, we could theoretically inject sub-Q organoids to make up for that thymic loss.

PO: And you could keep people alive in quality of life, too, because continuing to teach the immune system would have a systemic impact.

DB: Recently, you put out a press release about using fibroblasts to modulate mitochondrial activity against probably earlier-stage stuff potentially. I'm curious if you could talk a little about how that would work and what's the mechanism behind that?

PO: That's very, very early stage. We're just beginning our proof of concept in that area. We'll probably have more to say on that in the fourth quarter of this year. But it's very exciting to use the thought that we could use fibroblast to increase mitochondrial performance in the cell. It has a lot of implications across multiple platforms.

DB: Okay, so looking at the pipeline as a whole, what program do you see potentially making it across the finish line first, assuming positive results, of course?

PO: I think you're going to see wound care. I think you'll see diabetic foot ulcers. We'll see approval of that first. I think you'll see psoriasis probably right after that. We're expanding our wound care and beginning work with burn victims. You'll see surgical post-wound treatment for that, and then eventually, it is possible to have a retail component associated with our wound care. That is a platform inside of a platform.

DB: Okay, so a little bit company-specific. What is the company's current cash position, and how long will that cash run?

PO: Well, we reported 8 million at the last quarter, and we're working on our 10k now. We'll be reporting that in. I believe it's next month. Year end, though we added an additional $10 million through a placement facility with D. Boral in Yorkville. We added that cash position, but we haven't reported our year-end cash position for another month.

DB: Can you talk a little about the finances surrounding fibroblast therapies? I'm looking more into the cost of goods, that type of thing.

PO: Well, we like to say I can't imagine any cell therapy being less expensive than fibroblasts. You're taking a small dermal punch. Stem cells are difficult to harvest, especially if you're using autologous stem cells. You either get them through liposuction or you get them through bone marrow aspirate. It is very difficult to harvest, keep alive, work with, and expand. Fibroblast, you can literally use a dermal punch. You can pull out a core from the skin and pull out all the fibroblasts you need. It will always be a much less expensive harvesting technique.

DB: For you personally, how did you become interested in fibroblast therapy? What was your aha moment when you said, okay, this is going to be big and something that I want to be a part of?

PO: We originally had worked with a French dermatologist, who came up with the idea of using a fibroblast in degenerative disc disease. You inject it into the disc, and the intermittent hydrostatic pressure applied on that fibroblast by the vertebrae above and below it would force that fibroblast to turn into a chondrocyte and regrow the disc. That was the original provisional patent that they had filed. We acquired that from them. We were fascinated because we've worked on other technologies, but they were improved technologies. And this one was, if it worked, was a game changer. We put that with Rice University and they developed this tabletop unit that would mimic the force of the spine. And it worked. It worked the first time, and it worked every time. Then we went to Rush University in Chicago, where we did extensive animal studies using that principle and succeeded in those animal studies. While that was going on, we began looking at other areas, and I started challenging our scientists. I said this might have a broader impact on other diseases. And it became an explosion of discovery.

PO: We were filing three, four patents a week. In every area we looked at, we saw an impact using fibroblasts. We began to develop a theory that we've evolved with fibroblast being the most common cell in the human body because it's involved in every biologic process in the human body. While everybody was chasing stem cells, we were chasing fibroblasts, and we couldn't find anything that it didn't have a positive impact on.

DB: In the last couple of minutes that we have here, let's go over why you believe that FibroBiologics is an interesting investment opportunity right now.

PO: Well, I think that we're the only company in the world that uses fibroblasts therapeutically. This is a space that we have the most intellectual patents. We have more patents in this space than the rest of the world combined for fibroblasts. We have a first-mover advantage. We have high protection around the products that we're developing. We have a very energetic, creative scientific team and a relatively small market cap at this point for people to get involved, and be a part of our growth.

DB: Okay, and we did have a question about the milestone. What should investors look for, say, for the rest of 2025? What are the milestones?

PO: You're going to see our diabetic foot ulcer trial begin. We're doing that in Australia. That will begin in a May, June timeframe. You'll see interim results from that. You'll see an early safety results from that, and our endpoint report from that this year. You'll also see at least one, maybe two IND filings this year. That's exciting. And you'll see an expansion of our human longevity program this year. We're very busy.

DB: All right, sounds good. So, Pete, thanks for joining us today. This is great.

PO: Thank you for having me. I appreciate it.

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