Q3 2019 Earnings Call

Good morning, Ladies and gentlemen, my name is Shannon and I'll be your conference operator today.

I would like to welcome everyone to the Liquidio technologies third quarter 2019 financial results in corporate update conference call.

At this time, all participants are in listen only mode.

The presentation, we will conduct a question answer session.

Instructions will be provided at that time for you to queue up for your questions. If anyone has any difficulties here into conference. Please press star zero for operator systems at any time I.

I would like to remind everyone that this conference call is being recorded.

I'll now hand, the call over to GE Senate, there Vice President corporate development strategy.

Thank you and good morning, welcome to Liquidio technologies third quarter 2019 financial result in corporate update conference call. Today's call will include forward looking statements pursuant to the private Securities Litigation Reform Act of 1995 based on current expectation such statements represent managements judgment as of today than me.

Involve significant risks and uncertainties that could cause actual results could differ materially from expected result.

Please refer to Liquidio filings with the FTC, which are available from the FTC Www <unk> as you see that go or from liquidity as website at <unk> Dot com.

For information concerning risk factors that could cause such differences and otherwise affect the company.

I would now like to turn the call over to New York Power CEO of Liquidio.

Good morning, everyone and thank you for joining us on the call with me today are rich cats, our chief Financial Officer, and Dr., Robert Signode Senior Vice President of product development and program lead for like Q 861.

This morning, I was will summarize our recent accomplishments and provide an update on our two pipeline programs like you wait six one and like you 865 rich will provide a brief summary of financial results for the third quarter of 19, and then I will wrap up with an update on our upcoming key milestones.

After our prepared remarks, we will open the call for your questions.

Important highlights include.

We completed the Registrational studies of 861 to support our India submission, including the comparable PK program.

We initiated clinical studies to evaluate long term safety tolerability and hemodynamic effects of 861.

We are engaged in pre Andy a meetings with FDA and preparation for the end da submission targeted for the first quarter of 2020.

And we continue the Tox studies for 865 with the goal of supporting a phase two clinical program.

With those highlights and mine I'd like to provide some additional details on our activity in the last quarter, starting with our lead program 861.

As a reminder, eightsix one is in inhaled dry powder formulation of Treprostinil, a prostacyclin analogue used to treat ph by targeting the pulmonary arteries. It combines the demonstrated benefits of inhaled prostacyclin therapy with fewer systemic toxicities than oral or in feedstock.

Options.

We believe that 861 has the potential to maximize the therapeutic benefits of treprostinil by safely delivering higher doses directly into the lungs, using a convenient palm size disposable dry powder inhaler.

Today, we have generated a robust set of information on the safety Tolerability and clinical benefit that 861, they provide ph patients transitioning from tyvaso or those naive to prostacyclin therapy.

As we evaluate the totality of the data collected I wanted to point out a few highlights from the program today.

Final enrollment in the pivotal inspire trial to assess safety and Tolerability three month to included a 121 ph patients into groups.

55 patients transition from a stable dose of tyvaso or transition patients.

And 66 patients who were processed cycle and naive and stable on less than two approved oral ph therapies.

Known as add on patients.

Consistent with preliminary data presented in the second quarter 2019, Eightsix, one was observed to be well tolerated.

Treatment emergent adverse events were mostly mild to moderate in nature, even at the highest dose studied the 150 microgram capital strength of 861.

Most patients remained on treatment throughout the study with 96% of transition patients and 91% of add on patients receiving treatment to month too.

More than 80% of add on patients tight traded to the 75 microgram capsule strength of Eightsix, one or higher within the first two months of treatment.

More than 90% of all patients who completed two months of treatment maintained or improved their New York Heart Association functional class.

And lastly, both patient group saw improvement and exploratory measures of six minute walk distance and quality of life as measured by the Minnesota living with heart failure questionnaire.

The primary endpoint of inspire was that the month to time point, we continued to treat patients who chose to remain on like you wait six one.

We were pleased to see that more than 80% of inspire patients remained on study drug at month for with no significant changes in safety or tolerability compared to month too.

In addition to completing the inspire study we were also pleased to complete a second supplemental PK study.

The results further confirmed the comparative bioavailability of the 75 microgram capsule strength of Eightsix one.

54, micrograms or nine breath of Tyvaso the reference listed drug.

We expect to present, the clinical data from inspire and the PK studies in greater detail at medical conferences and in publications during the course of 2020.

With the inspire study closed we are actively managing two clinical trials with 861.

First we have transitioned inspire patients who wish to continue eightsix one treatment into an open label extension study, which we plan to continue.

Until potential FDA approval.

And secondly, we are also enrolling patients in a clinical study in Europe to characterize the hemodynamic dose response relationship to Eightsix one.

The company has now preparing to submit the India for 861.

To that end, we have actively engaged the FDA and pre India meetings during the third quarter, we hosted the FDA at our site as part of their emerging technologies program.

Their visit help facilitate the pre NDA CMC meeting a month later, where we confirmed no new CMC requirements for an end da submission.

Our pre NDA meeting to discuss clinical and Nonclinical matters of the India will be conducted later in the fourth quarter pending a successful meeting we continue to target in India submission in the first quarter of 2020.

With regard to like you 865.

Significant progress has been made.

With our lead program as I mentioned before and we continue to advance our second program 865, which is a print formulation to be pivot Kane to treat local post operative pain for three to five days with single administration.

In preparation for phase two studies were conducting a toxicology program to assess 865 and multiple nonclinical tissue models.

In one study to assess incision tensile strength after healing results were acceptable and not statistically significant from controls.

In a second study to assess bone fracture healing, we observe dose dependent delayed healing at the 2865 doses studied however, there were no adverse effects noted on the surrounding soft tissues.

We're planning to study lower doses of 8652, determinate no adverse effect level on bone healing.

And lastly, we expect results from an additional soft tissue toxicology study later in the fourth quarter.

Results from all of the toxicology studies will be reviewed and if supportive we intend to initiate phase two program in 2020.

I would like to turn the call over now to rich to review, our third quarter financial summary.

Thanks Neil.

Revenues there were no revenues that were recorded during the third quarter of 19.

Compared to 5.2 million for the third quarter of 18 that decrease you will recall.

Was related to the full recognition in the second COVID-19 of the 8.1 million of previously deferred revenue in connection with our collaboration with GSK.

R&D expenses were 10.9 that compared with 7.2 in the prior comparable quarter.

The increase was primarily due to the.

Continued development of 861.

Good day was 2.4 compared to 2.3, a slight increase.

Mostly employee related and professional fees.

Interest expense point $3 million versus point 6 million and the comparable quarter of 18.

And that was driven by a decrease in our in our debt outstanding.

In summary, then our net loss for the quarter was 13.4 that compared to 9.7 and again.

Difference was driven pretty much entirely by the increase in the R&D expenses related to 861.

I would also note that.

We're looking to bolster the balance sheet of course, as we move into 2020.

We are exploring all funding options, including a potential partnership around 861.

And we're pleased to be working with Jefferies on that effort.

I'll turn the call back to Neil.

Thanks, Rich 2019 has been an amazing year for liquidity, we've advanced our pipeline Weve further demonstrated the benefits of our print technology and in the process increase the potential for positively impacting patients' lives into the future.

With clear and meaningful progress against our goals in 2019 were very excited for the year ahead.

Specifically, we intend to submit the in India for 861 in the first quarter of 2020.

We will continue to present and published clinical data from the 861 program.

And complete our 865 toxicology studies with the goal of initiating our phase two program in 2020.

We look forward to updating you on our progress in the coming months, we thank everyone for their interest in continued support and I'll now turn the call over to the operator to take your questions.

Ladies and gentlemen to ask a question you will need to press star one of your telephone.

Try your question press the pound key please stand by only compiled acuity roster.

Our first question comes from Liana Moussatos with Wedbush Your line is open.

Thank you for taking my questions.

Can you tell us what steps are to submitting the NDA and if any or rate limiting and remind us. The FDA has 60 days to respond and.

I don't expect an AD com because it will probably be too.

Yes, Liana. Good morning. This is Neil yes, really our final remaining step in the process from here with regard to direct FDA contact will be.

A meeting that we have later in the quarter that will review, our clinical and Nonclinical Tox program.

And from that it's essentially an internal process of kind of the finishing up the final documents.

To submit the NDA in the first quarter.

And the FDA 60 days to respond ft Smith.

Yes, thats refuse to file period.

And we don't anticipate an advisory board.

Being conducted for our product that the spot.

And then remind us of your prelaunch commercial plans in the current status.

Yes. So you may recall Liana, we began to assemble a commercial team last year with regard to preparing ourselves for a launch that the program is right on track we're doing.

All of the necessary work to be commercial ready.

In particular, we've spent a lot of time this year.

Everything from from name of compound to working with payers to assessing all of the the requisite kind of sales and marketing efforts that will be needed there and we feel very good about where we are right now in process on that.

And our you talk.

Essential Chris commercial partners now.

That is correct to riches earlier point as as you would imagine in I've said this before when you begin to get to.

Much more advanced kind of further de risked phase three product thats.

The good news is it brings folks to into conversation with you about that we have begun entertaining conversations around that.

I want to give guidance that we're definitely going to do a commercial partnership by any means but we're looking at alternatives here.

Part of that to richest point has to do with our balance sheet. So we want to be smart about thinking about the opportunities there, but also as you would imagine the very attuned to making sure that we optimize eightsix one for its commercial success with the right partner that together, we can optimize what the product does.

And how many patients transition to the open label extension.

Yes, the majority of the inspire patients transition to the extension study.

We're not really commenting on enrollment as right now we're just collecting long term safety data from that study.

And you would view those is low hanging fruit for commercialization.

Those patients are eligible at the time of.

It's six one approval to transition to commercial patients.

Okay. My last question.

The manufacturing status in inventory that you anticipated launch.

Yes, so Leon I guess, what I would just say to that as we are in great shape with regard to commercial readiness on the manufacturing piece.

We don't stipulate exactly.

What type of scale, we have.

On supply on that but suffice it to say, we're well ahead of where we would need to be with regard to that and supplying the commercial markets not an issue here.

Thank you very much.

Thank you. Our next question comes from Ken Cacciatore Cowen and company. Your line is open.

Hey, good morning, guys. Congrats on all the progress just wanted to see if you could put some perspective around the discontinuation rates that you saw two months in four months so maybe.

Some of the reasons, if they're kind of standard and what it would look like compared to tight base. So so that would.

The question, one and then in terms of the potential.

Apart.

Can you just try to frame for us what would be of interest to do you want to retain a little bit of a smaller salesforce. So would you like a bit of an upfront to be able to also participate in market can you can you try to I know you're in the middle of having conversations but.

So would you like to see.

The outcome of some of these types of discussions thank you.

Sure Ken This is Neal thanks, a lot I'll, let Rob handle your first question and I'll come back end on the second so we're up hi, Ken. So we were really encouraged by.

The high rate of continuation greater than 80% month for.

Really.

The adverse events were not really that different that we've seen at month to verse month for on the reasons for discontinuation come in a number of buckets.

Some adverse events, some patient request or physician decision and these are pretty common in all studies with process cycle studies with ph as you know these patients do progressive disease.

We have not seen too many disease progression of month for which is important and also the primary endpoint of this study was a two months so for various reasons patients.

At this continued after that point.

As far as it compares with type visa.

Hi, visa was in a different age the types of a ease or similar obviously, but would tyvaso patients where either on oral one oral background therapy in the next stop if you will in their treatment regimen was parental oral prostacyclin in today's world. There's a lot more options for patients to so it's a difficult comparison.

To make.

And Ken with regard to your second question.

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Not to be vague, but it's somewhat depends I mean were fielding.

An array of opportunities here and what I would say is in general on deal structure as you would imagine the more control kind of quote unquote you give up.

With that is going to require more of an upfront. So it's a little bit of hydraulics exercise and in the amount of the upfront kind of threaded with the downstream that comes with that and so we're assessing that again I don't want to give guidance that we're going to take one model or the other because.

Everything's on the table with regard to that we've got to look at we've got.

The enviable issue here of a really great opportunity in our pipeline and so we're trying to way through what the right thing to do for 865 is in terms of.

Involvement in control as well as kind of the future in terms of all the opportunities that we have and it's going to its going to take US few weeks kind of kind of go through that process, but were we'll obviously keep you guys posted as we come to conclusions on that.

It takes six one I'm, sorry that said as a six I'm sorry about that eight yeah, sorry, M&A takes one Kent.

Thank you.

Sure.

Thank you. Our next question comes from search Salinger with Needham Your line is open.

Hi, good morning.

Hi service.

A couple of questions on it six one first can you just.

I just talked about how you addressed.

The comparative UK sub study I think during your last update you had talked about potentially.

Putting all of it are part of it.

And then should we expect any.

An additional launch its longitudinal.

Data before year end here and the last question is a talk a little bit more about the CMO dynamic response trial that you are initiating in Europe , and how that could play in either with.

Labeling here in the U.S. or.

Maybe European regulatory plant.

Sure surge. This is Rob I was just taken some notes on that so with the PK. If you recall we did.

Previously state that we.

We did repeat the PK study in healthy volunteers and it confirmed the comparative bioavailability of 75 microgram capsule strength of 861, when compared to the 54 microgram dose or nine breasted type visa looking at comparable Treprostinil systemic exposures. We believe that this does.

Port the requirements for a PK bridging our five of five to submission and we intend to presented data at upcoming medical conference.

So thats the PK.

With regard to.

Yeah.

Additional data before year end, we've actually prepared and plan on.

Presenting this data at upcoming medical conferences. So as they are accepted we will we will clarify.

For you guys, when they're coming out but that both the three one data and the PK data our plan is to present as excepted.

Finally, with regards to the hemodynamic study I'm glad you asked me that question.

So that study has started were enrolling patients in that study. We're excited because this will show us that.

Impact of Eightsix, one on right heart function as a sense by both acute and chronic hemodynamic measurements now that data is not required or expected to be and the end da submission that we're putting in shortly but that data will be very useful to support the therapeutic benefits of 86, one theres all.

These opportunity potentially for that study to be included in the late later and label update.

We do look at this study as a first study outside the U.S. and while we're not focused on pursuing European approval now Thats study will lay a good drew groundwork for for future development work.

Okay and then.

One quick one on eight six fives.

I guess what are you looking to see in these next.

Toxicology studies and assuming you initiate a phase two program next year would that entail soft tissue procedures study as well as a.

Bone procedure studies.

Yes surge.

Thanks for the question so.

So they are kind of two pieces that are still kind of out there for us on the Tox pieces indicated one of those were still waiting to get the soft tissue tox data in we didn't we need to do a little additional.

Bone work with regard to dosing. So we want to look at that we're going to look at lower doses. We went in at high doses, we want to look at lower doses, there and see what that response effect would be and as it pertains to phase two.

What we're not giving guidance about which studies exactly in that kind of thing is I think we're still working through that too we want to be informed by the data. If we just look at a roadmap of what's been out there with regard to.

To the Pacira inherent development stories, it would indicate that most likely it would be.

A bone in a soft tissue study at some point in our horizon in exactly the timing and sequencing of that we'll all be led by the Tox data.

Okay. Thank you.

Sure.

Thank you. Our next question comes from Roger Stone with Jefferies. Your line is open.

Hey.

Thank you for taking the question and maybe just a few quick ones from from US. So first of all for the.

The.

Them open label extension study.

Do you expect how much do you expect the Longtan Bob.

You did for the approval.

So for approval Roger Hi. This is this is Robert again.

FDA if you recall only ask for two weeks of safety data two weeks of exposure the primary endpoint of inspire which is.

The main clinical study in our NDA package shows a two month endpoint.

Open label extension was provided for those patients who may be benefiting from 861 that would give them the opportunity to stand Eightsix, one long term and allow us to collect longitudinal data not so much for FDA, but more for the clinician the medical community to understand the long term safety profile as well as potential benefits of 86.

And those patients would be eligible to stay on eightsix on all the way through potential FDA approval.

Got it.

Thank you so maybe.

Next question related to that.

Editor, so we notice mankind and.

I just had a period they just did launch the face phase three faced one.

Today for key.

And the day very interesting they focused on the Tyvaso suite, you're all transition.

And and so first of all what's your view on their program and.

How do you think the.

Six one well have very differentiated enable all potential profile.

Compared to.

Okay.

So we don't want to speak any way shape or form on behalf on behalf of mankind or United about their program.

Now what we have seen from their data in terms of their pharmacokinetics was limited in their phase one and as you recall in our.

Our our earlier study phase when we actually dose to 150 micrograms, which was approximately double of the recommended dose of Tyvaso. So.

We can't really say too much about their program, they're focusing on one population. We're focused on both the traditional inhaled population space were Tyvaso is the main drug of choice, but also because we're looking at add on patients were looking at patients who are upstream and patients who are less sick and if they can start ups.

Products, such as Eightsix, one earlier than we could potentially be an alternative not only to than health therapies, but also some of the oral therapies.

Yeah got it. Thank you maybe just one last question regarding HCT five so are you surprised about a delayed a bone healing at all.

Related to print technology or kind of became kind of demonic per se.

Yeah, I think Roger thanks.

We're not surprise per se I mean, there has been some evidence that that would be pivot cane is out there and we want to understand that that's that's an essence why we want to kind of go in and look at some of the the dosing data on that so I think it's too early to draw any conclusions. That's why we want to do some additional work.

And look at that and obviously, we'll keep you guys informed as that goes forward.

Got it. Thank you that's all from mature thank you.

Thank you.

This does the question at this time. Please press Star then one.

Our next question is follow.

With Wedbush Your line is open.

Thank you My question was just asked and answered.

Thanks Liana.

Thank you currently showing no further questions turn call back over to follow for closing remarks.

Thank you very much I just want to thank everyone again briefly for your time. This morning, and your interest as always and we look forward to the months ahead, and we'll keep you guys informed as as progress continues. So thanks again and everyone have a good day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.