Q4 2019 Earnings Call

Good morning, Ladies and gentlemen, my name is Catherine and I'll be your.

Conference operator today.

Now I'd like to welcome everyone to the Liquidio technologies fourth quarter and full year 2019 financial results and corporate update conference call.

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

In the presentation, we will talk to question and answer session and instructions will be well be provided at the time for you to chew up for questions. If anyone has any difficulties here in the conference. Please press star zero for operators system.

Hi.

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

I will now him call over to Jason the Dare Feis personally corporate development strategy.

Thank you Catherine and good morning, welcome to the quickest fourth quarter full year 20, like Chief financial results, a corporate update conference call.

Today's call will include forward looking statements pursuant to the private Securities Litigation Reform Act like United spot based on current expectation.

Statements represent management's judgment as of today. It may involve significant risks and uncertainties that could cause actual results to differ materially from expected results.

Please refer to liquidity as filings with the FCC, which are available from the FCC Www Dot dot Gov.

Work from liquidity is website at <unk> dot com for information concerning factors that could cause such differences and otherwise it's like the company.

I'd now like turn the call over to Neal founder CEO, but do you.

Good morning to everyone. Thank you for joining us on the call with me today, our rich catch our Chief Financial Officer, Dr., Robert Cigna's Senior Vice President of product development and program lead for like you wait six one injury Thomas Senior Vice President of commercial.

This morning, I will summarize our recent accomplishments and provide an update on our two pipeline programs like you wait six one and like you wait six five.

Rich will provide a brief summary of financial results for the fourth quarter and for full year 2019, and then I'll conclude our prepared remarks and open the call for your questions.

2019 was a year or tremendous progress for the company and its lead program like you wait six one.

As a reminder, H one isn't inhaled dry powder formulation of Treprostinil prostacyclin analogue used to treat pulmonary arterial hypertension or p. age by targeting to pulmonary artery.

We believe that Eightsix, one has the potential to maximize the therapeutic benefits of treprostinil by safely delivering higher doses directly into the lungs, using a convenient palm sized drypowder inhaler.

Over the course of the year, we steadily executed on our clinical operational and regulatory activities ultimately leading to the company's first in D.A. submission in January of this year.

We believe that the clinical information included in India addresses the F D H guidance for potential approval under the father five D to pathway.

Specifically.

Our inspire trial enrolled more than 100 ph patients and clearly establish the safety and tolerability profile of our print enable dry powder formulation of Prost Anil.

Well I, including patients naive to prostacyclin under switching from tight Asia, we help establish the L. like you wait six one can be comfortably added at different stages of patients disease and treatment regimen.

We also collected safety data on a wide range of doses, including dose levels that are comparable to twice the amount in the maximum recommended dose and tight Asia.

We believe the convenience and dose range of 86, one will enable patients to easily initiate and maximize the length of treatment on inhaled therapy.

Secondly, we confirmed actual prostanoid exposure from L. psyche wait six one is comparable to tie. These are the reference listed drug.

We recently presented data at the 14th annual pulmonary Basket, where research Institute or PDR I Conference.

It demonstrates a 79.5 microgram dose of L. like you wait six one is comparable to nine bread some type of Asia.

This positive pharmacokinetic comparison in healthy human subjects may also be reflected in the high rate of sustained treatment that we observed in the tyvaso transition patients from inspire.

And finally, we included several exploratory endpoints to help inform the F.D.A. in the medical community on the potential treatment benefit using like you Eightsix one.

We saw positive trends in duration of treatment quality of life six minute walk distance and assessment of changes to New York Heart Association functional class, we will be sharing complete sets are these data at upcoming annual medical conferences and publish manuscripts later this year, including an oral presentation in April.

As a 40 of annual meeting of the International Society for heart and lung transplantation and a recently accepted late breaker poster at American Thoracic Society in May.

With the inspired data closed and the India submitted we will continue to actively treat U.S. patients in an open label extension study in European patients in a study to assess their hemodynamic dose response relationship to Eightsix one.

Concurrent to these ongoing studies, we are diligently preparing for the F. Da's response to our India submission and successive interactions to support the approval of Eightsix one.

We feel well prepared to address the FDIC questions, having had the benefit of previous onsite interactions during their visit as part of the emerging technologies program as well as a clear responses to our questions in the pre in D.A. meeting correspondence.

Well, it's six one represents the near term value for Liquidio, we have continued to advance our pipeline.

And like you wait six finds a friendly formulation of the pit the king to treat local post operative pain for three to five days with a single administration.

During 2019, we completed our initial Nonclinical studies in soft tissues and bone healing.

Results were acceptable and not statistically different from controls and multiple soft tissue studies. However, as we reported last quarter. We're conducting additional studies to help determine a new adverse effect of level and bone healing.

Complete results an ongoing Nonclinical studies are expected during the second half of 2020.

And we'll inform our ability to initiate phase two proof of concept studies.

Additionally, we have recently initiated a new program to develop and inhaled products leveraging the proof of concept as demonstrated with like you wait six one.

In which each print particle has a precise uniform very dynamic size and shape for deep on delivery. We are evaluating multiple molecules in early stage formulation and will provide an update when a lead candidate has been identified.

I would now like to turn the call over to rich to review, our fourth quarter and full year financial summary, Thank you Neil I'll start with the our fourth quarter results revenues for the three months ended December 31st 29 team were zero that compared to <unk> point Sixmillion for the comparable period in the prior year.

The decrease I think everyone will remember we recognize fully the 8.1 million of deferred revenue in connection with our GSK collaboration during the second quarter.

29 team.

R&D expenses increased slightly to 8.2 from eight.

And that was primarily due to a modest increase in non clinical expenses related to 865.

DNA.

Increased significantly from 2.3 up to 5.8 and that was driven by commercial related spending for the age six one program.

So in summary, then or loss from ops was 14.

This quarter versus 9.8 in the comparable period last year again, mostly related to the commercial expenses from 861, and then some increase in Nonclinical expenses for matrix five.

Interest income was 0.1 and that compared to point to in the or a comparable period last year interest expense was 0.6 and that compared to point to on a comparable period in the prior year. So in total than net loss was 14.5 versus 9.7 as a result of the factors I mention.

In above we ended the year with cash and cash equivalents totaling 55.8 million.

And that reflected the completion of our ATM sales as well as or private placement towards the end of the year, which collectively I brought in just north of $30 million on a gross basis.

I'll turn now that the full year results, which I'll just recap briefly.

Revenues for the year were 8.1 and that compared to 2.7 for the prior year.

As I mentioned, we recognize the full remote remaining deferred balance of deferred revenue of 8.1 related to our GSK collaboration the second quarter of 2019.

And that then was reflecting the cost of sales line as well because we have license payments due to you and see.

So that number was 0.84 2019 as opposed to <unk> 0.1.

For 2018.

R&D expenses were 40.5 million for the year that compared to 28.7 for the prior year and that was driven primarily by 861 clinical program expenses as well some increase in the Eightsix ride program expenses, but predominantly age six one.

Gionee and for the year was 13.6 compared to 8.8 again, primarily related to commercial spending on 861.

Loss from Ops, then was 46.8 and that compared to 34.9 as a result, the factors that did I just mentioned.

Interest income 0.6 that compared to 0.3 in the prior year interest expense 1.4 that was compared to 19 million for 2018, but that 19 million was an anomaly.

It reflected in large part the conversion of 27.4 million of convertible notes into shares of series D preferred stock prior to the IPO.

So net loss then in total for 2019 decreased to 47.6 million from 53.1.

That was driven by the.

The interest expense.

Did I mentioned the increase in revenues.

And partially offset of course by increase expenses related to 861, both R&D and commercial as was an increase in non clinical expenses for 865.

In addition, I would just like to mentioned that looking ahead into 2020, we will seek to continue to strengthen the balance sheet by evaluating multiple funding options, including non dilutive financings.

Issuances, new equity and potential partnerships with companies that could offer strategic in commercial synergies with Eightsix one.

I'll turn the call now back to Neil.

Thanks, Rich I'm, having reflected on the major accomplishments in 2019. The company is laser focused on our task at hand in 2020, which is to seek FDA approval of 861 as the first dry powder inhaler for the treatment of ph.

We're very excited for the year ahead, and look forward to sharing more details the progress specifically, we intend to first she kept the acceptance and filing of the Eightsix one in D.A. submission.

Present, and published full datasets from the inspired trial throughout 2020.

Prepare for commercialization of 861.

And advance our pipeline programs to their individual key stage gates.

So with those objectives in mind I'll now turn the call over to the operator, and we're happy to take your questions.

Thank you.

If you would like to ask a question.

Please press star one on your telephone to withdraw your question press the pound key again, if you would like to ask a question press Star one.

Our first question comes from.

[noise] Leon.

So with Wedbush Your line is open.

Thank you for taking my questions and congratulations on your progress.

Thanks <unk>.

For the 79.5 microgram of eighth one how many how many inhalation does it take to get to that level.

[noise], Rob you want to.

Take that this question.

Yes, good morning Liana.

And our in our studies, we advise wanted to breast per.

Capsules ventilation.

Okay, and then the patients that had been on it for 18 months I'm have they plateaued and their response or do they continue to improve.

We continue to analyze that data as it comes in and right now we believe the patients who are on 861 chronically are receiving clinical benefit.

Okay.

And then where the European Trail mentioned in the press release.

Can you estimate the time to data.

Yes, Rob again, so we are actively enrolling patients in both France, and Germany, and we're targeting completion by the end of 2021 for the chronic portion of the study and the acute portion or having to be completed in the first half of 2021.

Okay and then.

How should we think about.

In 2020 versus 2019.

In.

2020, he can expect operating expenses to increase somewhat we will be doing some work.

Work on the commercial side as it is I alluded to.

And so that will that will drive up DNA somewhat R&D will be.

It depends on exactly what studies, we undertake exactly what times, but right now the out I think it's safe to assume you know maybe somewhat down, but but ballpark roughly even.

Okay and then my last question is.

For the preclinical deep lung candidate what's your purpose for that what kind of did these are you looking for.

Well liana somewhat consistent with on with what we've done with Eightsix one needs with the five of the side be too high value candidates and so where we want to build off of expertise, we built with eightsix, one and capitalize on that we're looking at several candidates and we'll keep you posted as we continue to make advancements there.

So you're thinking that's almost every hypertension.

That and other areas. So it's not specific to any one area that we're looking at what we consider a high unmet need areas that potentially can change the landscape with our technology like we're doing with HX one.

Okay. Thank you very much.

Thank you.

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

Hi, guys. Congrats on all the progress real exciting you're coming up I. Just was wondering if you could help frame for us what it would take for you all to bring it six one to market on your own in terms of sales force size could we do have real official launch here could be do things a little bit differently, so that you're able to forget to market with or without partnering and then.

It also is that its therapeutics does seem to be continuing to study type based so it had some interesting results in the interstitial lung disease population and that seems like to someone like me a good opportunity potentially for you all as well. So can you talk about what do we take to be able to piggyback on that type of data.

Could you get your label expanded or what kind of study would you have to do to be able to.

Capitalize on that opportunity as well thanks, so much.

Hey, Ken Hey, good morning, its Neil I'll I'll take the first a question you popped out there and I'll on I'll kind of segue into what Rob handle on the second one.

Let's start out with we're very excited about the commercial opportunity here ahead of us where they takes one from the beginning in as you know one of the things that's been intriguing as you stack. This up against other formal launches this would be.

In the realm of what we would call a commercially efficient watch.

Depending on who you benchmark and how you do that this looks like on order, a 50 or less kind of sales representatives.

But you know we're looking at that very closely to see what would be optimal there. Obviously, it's the thread the needle approach of making sure. We're doing what we need to do from a sales and marketing standpoint, a and that same time watching our expenses, but Jerry Thomas and her team, but then on this for quite some time.

And we feel very well prepared as we move down the spike were not as you would imagine already had extensive.

Market research and execution types of discussions on as we moved into this year and are really looking forward to next year.

We are very encourage all kinda segue into your second question very encouraged by the work that just recently came out from United on degree three population. We think that's a step forward for patients based on on what we know and I'll, let Rob I'll speak to that in a little more detail.

Good morning, Ken.

Yes.

Echo Neal the first when we heard the topline data the first thing I thought about what a great day for patients and.

The topline data supporting benefit in this very difficult to treat form of pulmonary hypertension, and we are encouraged because we believe this this suggests that inhale delivery tree process. All the local inhale delivery of tree profitable you know is showing benefit where other drugs have failed in the past.

I am and the companies interested in seeing the detailed data, obviously, especially you know how they dose than what kind of adverse events were seen and you know the details of the data and as far as liquidity as Karen will discuss this with the FDA.

Once we complete our current route one and be a review right now we're focused on getting 861 approved for group one ph.

Thanks, so much.

Thank you again, if you would like to ask a question. Please press star one.

We have a question from search Belcher with Needham Your line is open.

Hi, good morning, Thanks for taking my questions.

Can you talk a little bit more about the extension study for the inspired trial.

Many patients have moved on to that part of the trial.

And what you're tracking besides a sanction.

Sure. This is Rob again, a good morning surge. So as you know most of our patients continued you chose to can bring new treatment would 861 and the extension study.

We assume they're pleased with the benefit every snubbing the ease of administration and also.

There are continued their continued maintenance.

As we reported earlier, 80% of our inspire patients remain on drugs to be on my poor.

And in fact, some as Neil mentioned earlier past 18 months.

This data will be a shared as we report data out later in the year as and we do.

You know these patients continue to do well I just want to emphasize that.

Okay and.

And then.

Can you just talked about I.

I guess a continuation of the.

Of the park Kens question on that type. They so just a credit mark market opportunity.

Hi vehicle sales have been pretty stable for the last years, how do you think its six one can disrupt that market and how do you approach that.

Yeah, Hey, good morning, Surgeons, Neil Yep, So obviously we.

Continue to look at you know kind of the same thing you are there and it's been encouraging to see the stability of time. They say three time, we see each six one is a big step forward for patients I kinda on two fronts. One obviously convenience the ability to use a simple to use dropped out or inhaler versus a nebulizer today.

Day is a real step forward for patients, but I think really encouraging to us is it's not only that whole treatment paradigm as demonstrated by the inspire study.

You know we've had really robust data showed that.

Patients are willing to use a dry powder inhaler earlier in the disease process. When you think about trying to get and inhaled prostacyclin locally into the long, which is ideally where you want and need to begin with as Rob shared does that add on segment of patients and the data that came from that were very encouraging us to show you know earlier use and then maybe.

What a patient would consider where the nebulizer and obviously the down the downstream impact is tremendous too we feel a based on our ability to dose higher so from a quality of life is as we demonstrated some of our exploratory endpoints patients can continue forward with a simple to use dry powder inhaler to deliver.

Her prostacyclin for a longer period of time before having to be tethered to some form of parental medication. In later stage disease. So we see it is it's not just kind of a static opportunity today that we see with the sales were looking at but also an ability to expand beyond that with clinical use based on data that we.

From inspire.

<unk>.

Thank you.

Thank you and I'm showing no further questions at this time I'd like to turn the call back to Mr. Neal follow for any closing remarks.

Thanks, very much to everyone for joining us on the call today. We appreciate everyone's continued interest in investment in Liquidio and.

We will update you on our progress throughout the year. So I hope everyone has a great day and thanks again.

Ladies and gentlemen, this concludes todays conference call. Thank you for participating you may now disconnect everyone have a great day.

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