Q4 2019 Earnings Call
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It's now my pleasure to turn the call over to Kindred Bio's CEO, Richard <unk> Dr. Chan. Please proceed.
Thank you operator, good afternoon, and welcome to our year end 2019 financial results call.
Joining me today from the management team of Kindred Bio art, Denise Bevers, our president and COO when do we our CFO.
Catch up your our VP of corporate development and Investor Relations.
[music] punching 19 was an extremely successful year.
Two approval multiple positive pilot study.
The commencement of two pivotal study.
As well as the development of our half life extension technology, we're very proud of the progress we made last year.
[music] today, we're very pleased to announce a transformative transactions ameritech.
We have agreed to sell Maritech to Dechra in exchange for $43 million upfront payment and global royalties.
We're excited about this partnership which places married tap into hands of a global leader into veterinary industry.
We anticipate that Mary test growth will accelerate with it and that we will stand to reap financial rewards from this great medication into your to come.
There was intense interest in the rights to merit task for multiple parties.
Besides that this transaction validates the value, we're creating given that it cost us approximately $5 million developed married that this will be an excellent return for us.
[music] concurrent with this transaction, we will be reducing our commercial footprint.
It does become clear that even with an excellent commercial organization with top people from at the Street, we just didn't have to scale necessary to maximize the potential for maritime.
When we decided to launch merits cats, we did it based on data we had extensive market research data.
That indicate itself commercialization with the right decision.
And while maritime has done extremely well given the economics, we're now able to get for it we it made commercial sense.
To find a partner.
We'd be part of good management to the ability and willingness to pivot when circumstances and data change and we're doing that today.
It's a gut wrenching action.
But as a management team, we're taking that necessary step.
We anticipate that we will look for larger commercial partners for our products going forward and a few more closely to the human biotech model, where smaller companies partner with larger company companies for the majority of drugs.
It's a successful validated model that we expect to replicate.
Hi, downsizing, our commercial organization and partnering on products, we expect substantially diminished requirement for additional diluted capital and we believe we will maximize value creation for our shareholders.
In parallel we had been an extensive discussions with potential partners on Ohio 31 antibody.
We believe that we will have an attractive transaction on that molecule that's about.
Given the high level of interest that other companies have shown on that asset.
I should note, though that I. All 31 is at a much earlier stage that merit has though we believe it has greater commercial potential.
So the upfront payment is going to reflect that reality.
The value of assets climbed exponentially after approval, that's compared to before approval.
Now turning to our pipeline, we have had seven positive pilot programs in a row from a biological pipeline.
In addition, we are investing efforts to advance new antibodies.
Incorporating the exciting half life technology that we recently announced.
We can't advance all of our candidates and therefore have to prioritize the most promising candidates.
So while our small molecule candidates are very attractive and while our equine candidates are tremendously exciting we have decided to prioritize biologics programs for a dog and cat.
We have great molecule and we have even greater molecule.
Got to focus on to even greater molecule molecules like I'll 31.
For our or think people CAD farber wires and so on.
The molecules that have the greatest blockbuster potential to maximize returns.
I should note that these programs are progressing very well we're on track for approval of Piper virus by ended this year or early next year as you said it before and other programs continue to look very promising as Denise will further discuss.
For the equine molecule, we believe there's a potential equine only business that can be very appealing. We are therefore studying ways that we could potentially fund those assets separately and or spin off the business.
We plan to come to decision on that in the near future.
So we will be restructuring, our workforce, which obviously, we hate to do but it's in the best interests.
This does not mean, we will stop adding talent in the areas of focus we're adjusting our workforce to align with the prioritization and we will continue to invest all bye.
Carefully.
Financially, we will be very prudent excluding our onetime restructuring charge our opex for this year will decrease and by next quarter. The run rate for Opex will drop significantly to approximately $54 million per year.
We will achieve our goal of turning off that's around those here.
So to summarize we have now validated the fact that we could monetize assets very profitably.
And that there's great demand for innovative products, the especially after they have been de risk.
We have multiple products that we expect could have an order of magnitude greater potential done merits has and we are within one to three years of approval on those products.
We have stepped back from spending a substantial someone commercialization efforts and this will allow us to reduce dependence on dilutive financing.
We have more products in our pipeline than we can pursue the so we're prioritizing those that are the most promising.
We have a proven team that can that has demonstrated that we can execute with to U.S. approval and non EU approval, we're hitting on all cylinders and we look forward to another successful year.
With that let me call turn the call over to Denise.
Thank you Richard.
When Richard and I first discuss starting a company developing innovative medicines for our pet family members and a number of you on this call will recall me count recounting the story, we agreed that biologics would need to be central to our approach. In fact, we were so convinced the biologics represented the future veterinary medicine, and we waited near.
Early a decade to start kindred bio until the cost of large molecules made sense for pet parents.
With this clear vision that biologics would one day dominate pet therapeutics, we said about building the capabilities that would make us a leader in this technically rigorous field.
We hired World class protein engineers responsible for some of the most successful human drugs approved and built a state of the art biologics manufacturing facility with virtually end to end capabilities all the while securing two small molecule approval to show the potential of our business model early on.
That is why I'm confident that prioritizing and accelerating our innovative biologics candidates, while transitioning to a more capital efficient model for commercialization will position us even more strongly for future success.
Turning to merits has as Richard said, we view today's announcement as further validation of the value. We have created in this product and as a company by commercializing. This product we have learned that a much larger infrastructure is needed to change practice patterns. When a generic is on the market that being said our team has done an outstanding job given.
Their resources.
In the quarter, we recorded Mirataz revenues of 1.3 million with market penetration, reaching 55% and the reorder rate among purchasing veterinarian veterinary clinics growing to 71% average order size continued to grow quarter over quarter.
Looking ahead, we are confident that dechra is the right strategic fit to deliver results for marriage has globally not only just decker have a sizable commercial infrastructure, what really makes him a great match for marriage has is they're focused on the sale of technical and value added specialty pharmaceuticals.
Decker has successfully developed market leading brands, particularly when in the field of chronic disease management and importantly, they have a complimentary feline product portfolio targeting diseases linked to feline weight loss.
Given the synergies between Mirant have and deckers existing product portfolio Mirataz will represent an important cross promotion promotional product for decker worldwide and being based in the UK. There also well position to launch merits has in the E mail.
We're working with Decker to complete the trans action expeditiously. So they can bring the product to market as soon as possible.
We're very pleased with the launch Zimeta I'd to date as well as the only equine drug to gain approval last year and with a lot of anticipation in the market. The response at the American Association of equine practitioners Convention in December was extremely encouraging the vast majority of people who stopped by our booth at this leading annual event.
Based in order. We've also found universities have been quick to implement say mehta into hospitals and the largest compounders have voluntarily taking it off their shelves and at times, even shared with us their customer list. This is you can imagine is quite unprecedented.
The cost of knowing that it is $30.60 per vial to veterinarians you may recall from the merits has launched that were unable to recognize revenue unless a reorder is placed within the same quarter.
Given we've received approval of Zimeta at the end of November I'm pleased with the revenue we were able to record in the quarter of $127000.
Turning to our core biologics programs as you saw in today's press release all of our pipeline candidates are advancing its plan regarding our I O 31 program for canine a topic dermatitis. The scale up process is proceeding and we expect to start the pivotal effectiveness study in the second half of this year, we remain in late stage discussions with the number.
<unk> parties regarding a commercial partnership.
For <unk> Al I'll start I O. Four slashed 13 think program. The in life portion of the pilot effectiveness study is complete and we are completing development of the PK assays to read out. The study. So you should expect a press release announcing the results in the coming week.
As you know back in December we unveiled positive.
Pilot results from a laboratory study of kind 032 are ideal for our monoclonal antibody well. The study was a single dose study designed primarily to assess safety and pharmacokinetics. We were very pleased to see evidence of positive efficacy and a dose response observed at week one.
Both the ideal for an ideal 13 pathways are key drivers of inflammation that underlies atopic dermatitis. The same molecule binds to both aisle for an iOS 13 circulating in the blood.
Well kind zero three to bind to the ideal for receptor on the surface of immune cells.
Once we have the think study results, we will be able to determine if there is a difference in the clinical profile of both program and whether to move forward with both or with one.
As we mentioned in the past, while we don't develop all of our well we want develop all of our atopic dermatitis programs, we will likely bring several to market to take advantage of heterogeneity among patients rotation between different drug classes and the potential for combination therapy.
Our people can't pivotal study is ongoing and portable remains on track for approval by the end of this year or early 2021.
In short, we're really pleased with the progress of our Biologics program I am confident this industry, leading pipeline, which address a significant market opportunity provides greater potential for value creation with that I'll hand, the call over to Wendy for a discussion of our financial results.
Thanks Denise.
Transition to a biologics only company that leverages, the commercial capability self multinational partners to Maximise product value will result in a more capital efficient business model with less reliance upon dilutive sources like.
By focusing on our highest value biologics programs and realizing partnering capital, we expect to reduce operating expenditures and extend runway through the launch of key biologics candidates.
Proceeds from the sale of memory test to Dechra alone together with the workforce and operational reduction announced today are expected to prolong runway through 2022, while maintaining a focused research engine.
Richard mentioned, we will remain in late stage discussions with a number all parties regarding the commercial partnership for our <unk> 31 antibody for a topic dermatitis.
2020, we anticipate operating expenditures of 58 to 61 million, which includes a one time restructuring charge up approximately 1.7 million in first quarter expenditures consistent with a full organizational structure.
Excluding first quarter expenditures the annualized run rate is expected to be between 50 456 million this year.
It is important to note here that the success of our development model and lower than expected attrition rate. The continuation of small molecule candidate would have resulted in a much higher operating base.
As part of the strategic realignment, we plan to eliminate approximately 53 positions, which primarily relate to the companion animal sales force and research and development for small molecule programs.
The associated restructuring charge of approximately 1.7 million include severance and the extended health care benefits in recognition of the current external environment.
The reduction.
And workforce is expected to lower compensation and benefits cost by approximately 7.1 million annually.
In the coming here, we intend to hire additional staff to enhance our biologics manufacturing capability, but still expect net reduction in headcount.
And lower year over year operating expense from 2021 onwards, as we seek additional opportunities for savings.
Under a partnership model, we expect a combination of upfront payment milestones and royalty.
Turning to wall to wall financial be self.
In the fourth quarter, we reported a net loss of 15.7 million or 40 cents per share compared to a net loss all pumping 54 million or 46 cents per share for the same period in 2018.
Well the full year net loss was 61.4 million or dollar 59 per share as compared to a net loss of 49.7 million or adults 60 per share in 2018.
No that's brought up on the news totaled 1.4 million in the final quarter out the year, whereas this 1.3 million in a year ago period.
2019, net product revenues were 4.3 million compared with 2 million for the prior year.
Keep in mind never test became commercially available in July 2018 wells. So I met I became commercially available in December 2819.
Global sales my memory test by Deborah will be recorded by Kindred bio S. royalty revenue.
Well, so product sales totaled 0.2 million for the fourth quarter, resulting in a gross margin of 87%.
And 0.6 million 40 years, leading to a gross margin up 86%.
Research and development expenses were 7.1 million for the fourth quarter compared to 70 compared to 7.8 million for the same period in 2018, well the full year 2019.
Research and development expenses would 28.3 million versus 26.4 million in 2018.
Stock based compensation expense related to research and development was 1.8 million compared with 1.7 million in 2018.
The 1.9 million increase in full year R&D expenses was primarily due to higher headcount and related expenses as we advance biologics programs Hyatt consulting expenses for the quality assurance programs and increased capital equipment depreciation expense.
Selling general and administrative expenses totaled 9.6 million for the quarter.
Compared with 9.2 million for the same period in 2018.
Full year 2019, SGN <unk> expenses were 37.9 million versus 26.5 million for 2018.
The 11.4 million increase in full your expenses is the result of being a commercial company as well as increase expenses incurred by the Elwood, Kansas plant in the lead up to it commissioning.
In addition.
Hi, its corporate infrastructure costs and stock based compensation expense also contributed to the increase in expenses.
Stock based compensation expense included in S. DNA was 5.5 million in 2019 of course is 4.5 million in 2018.
Net cash used in operating activities in 2019 was approximately 56.3 million. We also invested approximately 8.4 million and capital expenditures for the build out of our oldest Kansas manufacturing facility, including equipment purchases.
As I mentioned earlier, we expect operating expenses to range between 58 million and 61 million. This year that is excluding the impact of stock based compensation expense and in fact, all acquisitions if any.
It is important to note here that excluding the onetime restructuring charge of one point.
1.7 million and first quarter expenditures consistent with the full August an organizational structure.
Our annualized run rate would be between 50 456 million this year.
Additionally, we plan to invest 46 million in capital expenditures on lap and manufacturing equipment <unk> biologics programs.
As of December 31st.
2019, we had 73.5 million in cash cash equivalents and investments compared to 73.9 million at December 30, plus 2018.
Upon close you're all familiar Merrychef transaction, which is expected in the second quarter, we will receive a cash payment of 43 million of which customary 10% will be held in escrow and pay that paid out beginning in 12 months, assuming no ESCO. Please.
In closing I want to emphasize that we advanced our R&D efforts with an incredibly talented team is fully that's it is this strategy at the future off the company.
And we look forward to updating you at all progress next quarter.
I'll now turn the call back over to Richard.
Thank you Andy operator, we're ready for questions.
Thank you.
And as a reminder to ask a question do we need to press star one on your telephone and to withdraw your question. Please press the pound key please stand by what we can post acute when a roster.
And our first question comes from a lot of Brendan folks with Cantor Fitzgerald. Your line is now open.
Hi, Thanks, very much questions and congratulations on the announcement today.
Could you just elaborate in terms of how are you thinking about taking these products that you had the biologic aren't buying through development and what Verizon development of these drugs would you seek partners. This is there going to frame screw that just any color to help us think about that.
And then maybe if you could just update us on I know you we talked about going partnering with our 31, but is this something that Hawkins I'm looking to partner on I'll City, one as well its thing and any color of how to think about that would be great. Thank you.
Sure absolutely so the partnering strategy will depend on the molecule. So it'll be molecule by molecule. There's some molecules such as the atopic dermatitis molecules, where the market is fully validated and there's a lot of interest even at an earlier stage and then there are a molecule where we anticipate the.
Value maximization will be.
Towards the later end of the development.
So our preference would be to partner later, rather than earlier because number one it doesn't cost.
Very much developed the molecule that these compared to the human.
Industry and number two we've seen from Mary task that devalue could go up.
Our next or more.
Once we it's been de risk so it'll be molecule by molecule in terms of bio 31, there are certain partners, who are interested primarily an IL 31, and then there are partners who are interested in a broader dermatitis franchise.
So we are having discussions on.
Both types of partnership.
Okay. Thanks, so much and maybe just one follow up to find my.
How should we think about the investment in the Kansas facilities going forward with regards to the partnership model and would you be looking to manufacture products out of there should we think of it would have it CDMO <unk> type business as well just any color there would be great. Thank you.
Sure. So we expect to manufacture most or all of our products from Kansas because right now there is a shortage of manufacturing capacity.
Most of the partners, we're talking to do not have the capacity to manufacture.
Even if they have a human parent that has manufacturing capabilities.
Those are usually.
Completely book.
So that's number one and number two we have been getting inbound inquiries about contract manufacturing and as Kansas, The Kansas Fine.
We don't have plans to expand capacity solely for contract manufacturing, but.
In areas, where we have excess capacity.
And thats into failing line in Kansas and capacity in the road we're certainly.
Having discussions with potential partners.
Right. Thank you very much.
Sure.
Thank you.
Our next question comes from the line of Jon Block with Stifel. Your line is now open.
Thanks, guys good afternoon.
Just first Fortunately build on on the other prior questions, but I did you talk about starting a pivotal for all 31 of the back half in 2020, I think you didn't Jewish holiday. So Richard if you you know now with the cash runway extended with the sale of Merit has you're talking about the more favorable terms. A further I can you go are you guys, giving any thought on sort of waiting longer to secure.
Our partnership.
Until you have the oil 31 results the positive results in hand in order to call it sort of maximize those terms just would love your thoughts there.
No that's an excellent question.
We were at one point, we're thinking maybe the terminal on the veterinary side, we're not at favorable is on the human side, but it just turns out that.
You just have to wait a little bit longer before you can get those kinds of terms. So that is certainly something we're looking out you know with their new model it changes our burn rate.
And.
We would not rule that possibility out.
Okay, and then maybe just a pivotal mirrored has I think you mentioned you don't try to dig in a little bit into the agreement with Deckers or I think you mentioned a world you now it's our world doesn't roll do you know differ here in the U.S. versus your options just a little bit more established here in the U.S. and then do you follow on to that would just be isn't world.
Oh stoner strictly world, Thanks for talking to us.
Yeah. So it's it's strictly royalty and the royalty just not different it's a global right.
Are you want to ballpark for us on what that rate maybe.
I think where you can say low double digits.
Low double digits, okay perfect. Thank you guys sure.
Thank you.
Next question comes from the line of velocity precise with Barclays. Your line is now open.
Thank you.
Good afternoon.
No mostly glad to see so.
Narrow focus on biologic Snow falls divestments.
Well fuel blade positioning so.
That said you just Baltimore.
[laughter] also.
Thanks.
Queen subsidiary.
Okay and Doug.
Sure. So we're exploring that I mean, we find the I find space very interesting you know, it's almost a specialty area. If you will so we have a very talented small team and we have an exciting pipeline as you know so we will be.
Clustering all that into the equine franchise and at the same time looking at whether to spend that out to stand on its own or to divest of those assets and will work closely with our equine team to make that determination.
Dennis I was second question basically tying up your cash flow.
And your thoughts on were 2020 and 2021 Oh.
Right now often the details.
Looks like you have in Opex Netscape takes off around 67, maybe I'm concoction, Sony form and then you've got 43 million more and 7 million off walked ones production. So if I back all of this and left with approximately 60 million enough gosh 2000, funny, how would that be sufficient.
21, 20 brands as well is there something on this.
Well, let Wendy.
Take you through that calculation.
Well we have.
Yes, we have 73 million at the end of the year and on top of that you at.
The 43 million.
We.
We.
Oh, well, reducing our operating expenditures and two.
Well run rate Oh.
Roughly.
53 to 50, 40 56 million.
<unk> quoted and there are depreciation expense. So if you backed out you know depreciation expense Oh gosh, you find that we should all cash would last this until the end up 2022.
Got it getting also kind of caught up.
They still want people need for your pipeline Donaldson's now what is going to be party.
Turning 2022.
Yes, so we.
We will be advancing our atopic dermatitis candidates as well it's more of a virus.
And then the repositioning allows us to start moving ahead with some of the biologics that we had not been able to and we will focus on validated commercial market.
Or less validated market.
There are a handful of markets like.
Pain dry eye and few others, where the.
Potential for the commercial potential has been proven.
And since we are.
Queuing more closely to the human model, we think that will attract more partners.
So that's a decision that we'll be making over the coming couple of months.
Okay. Thank you Hello.
Sure.
Thank you and our next question comes from a line of David Westenberg with Guggenheim Securities. Your line is now.
Thank you for taking the questions. So I think part Ranalli I think you you have the timelines of that ended 2021 is that the next major approval you expected and why did cargo come so much faster than maybe some of the other compounds.
Sure. So we expect the approval the end of this year early 2021.
And the reason is we have a very streamlined development program because as you can imagine per BOE is highly contagious I'm. So the agency has agreed to a laboratory studies and so it's very can find very controls we have control over the timeline and so we believe given how collaboratively we've been working with a U.S.
Okay that we should see an approval by the end of this year or early next year, assuming that the studies are positive.
Got it okay. Thank you and then can you talk about your decision about wind to partner I think you just mentioned that you.
You found an animal health, it's maybe you want to partner a little bit later on so yeah, just any kind of color in terms of when we're looking at your you're on the market comp I mean, you're in development compounds, because you know right now.
The new business model I mean, all these it would likely be partner. So I mean are we going to be seeing the vast majority of your partnerships now after approval. Thank you.
It's going to depend on the molecule on our capital requirements and the.
Amount that partners, who are willing to pay at different stages for certain indications like atopic dermatitis for let's say pain, we think that the amount that partners are willing to pay earlier in the development program could.
Be quite attractive for certain other molecule we may wait until later on.
So as I said, our preference would be delay if we can but having said that part of our business model is to rely on upfront payments more going forward than.
Additional financing where possible.
It'll be a balance.
Okay. Thank you very much.
Thank you.
Our next question comes from a lot of RK with H.C. Wainwright. Your line is now open.
Thank you.
Congratulations richer than than is and Wendy. Thank you for me this time.
Most of my questions I've been asked but a couple of them.
Number one.
Things through the.
Equine business, you know either as a separate entity or the divestiture.
Hi, how are you going to start counting for that business as a separate business HM.
Financials and would that happen from.
From the first quarter of second quarter off this year.
I'll answer and then I think when you can add to it we eventually will.
Hey, we haven't decided exactly one to.
Well the segregated.
Right, So right now up and then.
Right now often angels do include equine activity in it.
But right now there's we have a move assets into it yeah. That's right that's correct. So.
Thank you and Richard and then you and I talked a little bit about Haas life extension technology.
Then you initially announced about this.
Suddenly it's an exciting piece of technology that you know you and your team of do look how do you plan to too that's forward I'm also.
I would think the folks on the other side of the island the human health business would be interested in this sort of technology do you see any interest there.
You know do.
Do you want to make any comments you at all about this.
Sure so.
We plan to incorporate that into much of our portfolio going forward because.
Almost every molecule we have can benefit from longer half life or lower cost to goods both of those things.
But competitive advantage so for the molecules do you have in the pipeline already will continue developing them for but for many of them. We'll have a follow on molecule and then for new molecule, we will likely incorporate the technology.
In addition.
Other companies seem very very interested in this and we think that there's licensing opportunity for the technology now turning to the human side. It's very interesting question, yes, because under human side.
Our technology side extended half life, an entire company have been built solely on half life extension.
We have developed our own technology, because the human technology does not work very well for other species and that's why we've had developed our own.
So.
What I can say, it's a very valuable technology on the human side, it doesn't quite a crossover across DC.
Thank you thanks for taking my question.
Sure.
Thank you.
Our next question comes from a lot of Ben Haynor mice Global your line is no.
Good afternoon, guys can you hear me.
We can.
Excellent. So just push for me it was part of the reason to do the mirror Taz deal.
It's a kind of sort of marker saying.
Hey, look we've got 43 million I'll, probably close worldwide royalties for it and you know the atopic dermatitis market is at least as you said an order of magnitude larger you don't hey, how about a little something for the effort give us an order of magnitude higher economics on.
Some of these other programs that were working on.
Oh, I don't think I'm thinking was directly does but if you'd like to draw the conclusion [laughter] yeah. That's.
Fine, but really you know it see a business decision the difficult one but.
Clearly the.
The scale of commercial efforts needed to maximize the.
The potential for Meritized.
Was larger than what we could provide so rather than.
Spending more.
Cash on pursuing that we recognize that we needed to make a pivot now having said that once we started discussing term we realize what we said which is that for a.
Hi, an asset that's approved.
Theres market demand.
Companies are willing to pay.
Okay that makes sense.
What the questions have already asked me I did over think that a little bit.
Yeah, Yeah, perhaps this next question too, but it with a statement you just made in in that you're seeing companies that are willing to pay but in getting rid of the commercial organization switching to the new model do you worry that you have less leverage with would be partners and you won't be able to say you know Gopal palm sand.
We'll go commercialize it ourselves.
You know.
That is a possibility.
But given how much interest there one we had enough competitive tension among the bidders.
So I don't think that.
What's going to happen.
If we only had one or two fitters.
Than we might run into that situation, but when you have multiple multiple bidders.
There really bidding against each other less than they are bidding again sell commercialization.
Okay. That's fair enough and then lastly for the over thinking questions. You know what proportion of the economics do you think was attributable to the a package inserts accolades that you've gotten with me are tassels. It half two thirds, what do you think there.
Oh I love this [laughter] for those of you on the phone who I've no idea with its about them at our last conference. There was a regulatory discussion at Western Veterinary conference and Mirataz was used as an example of an excellent package insert and I think you know right. There I mean, that's just a testament to our team and I you know we've had we have an hour.
Outstanding team they made us an incredible footprint for marriage has and as Richard said I mean, this was a gut wrenching decision because we've hired the best talent and and they were entrepreneurial folks and unfortunately, we just couldn't quite sustainable at this point, but yeah. Thank you for that question and you know I went.
I want to echoed that the.
Package insert and promotional material our logistics are.
All right outside and inside sales reps.
Our reps who handled the corporate accounts.
Executed perfectly off executed perfectly so.
It was it was fantastic team doing a fantastic job, which made the decision difficult.
So it's really comes down to scale and the amount of capital that is available to.
Oh absorb the initial cost.
Okay, great. Thanks, that's it for me and I appreciate you, taking the trifecta of overwrought questions [laughter].
Thank you.
Our next question comes from on a Brooks O'neil with Lake Street Capital. Your line is now open.
Good afternoon, I was just curious I have said so did these whose primary role as related to the commercial side of the business do you guys invasion her role evolving.
Under the new approach.
I don't think so I mean I had my role span you know clinical development regulatory.
Commercial manufacturing you know all of the operations. So yeah. There's plenty of we you know we have an outstanding team that supports me I've I've hired exceptional leaders, which is why I think the scope of my responsibility has been able to be so great, but we will be focusing now certainly on.
You know the biologics the equine subsidiary of which you know there is still a commercial team certainly as well as you know business development. So there's there's quite a bit to do.
Go from wearing or has the three.
[laughter] 800, [laughter] as you all think about the discontinued airports would the small molecule do you see any opportunity arpus any value. There you just going to shut everything down.
Oh, no well we will.
Look into Outlicensing those molecules many of those are very promising.
And.
If we didnt have the top priority.
Molecules that we are focusing on those would be those would be excellent candidates.
Great. Thank you very much.
Thanks, Brett her.
Thank you.
Next question comes from the line of Nathan Weinstein with Aegis capital. Your line is now.
Hey, guys. Congrats on the news and thanks for taking my question just firstly, a broad based macro question on current events I was coated any anecdotal comments on what you're seeing some.
Oh that channel in terms of traffic and then if you could certainly give us an update I'm on remind us what the most recent update was on Epo Cat and then finally with Decker do you ever system in place just to make sure that there's no supply interruptions on merits has in the channel.
Sure. So I'll take all of those Nathan so for coated 'em, we haven't seen any disruption just yet. However, we are preparing that it may impact some of our clinical trial enrollment you know and certainly potential potentially some temporary sales with a owners you know sequestering, you're not going to the VAT is often so we we hope that show.
It live, but we are preparing for that certainly.
On people Cats I think your question was around timeline, we are enrolling in the pivotal study as we said we expect that to take about 18 months. So you know, we'll we'll continue to give any update if there are any and then as far as channel disruption I'm I can tell you that dechra has been exceptional our teams have been working together.
We're way ahead of the curbs. So we really don't anticipate any issue not to mention the are our CMO has been terrific a in working with both companies to make sure. That's the case.
Thanks, so much appreciated that sure.
Thank you.
And there are no further questions at this time of knowledge to turn the call back to Dr., Richard Chen CEO for any further in March.
Thank you operator.
I'd like to thank our listeners for your support as we continued to advance the promising pipeline and execute on the strategy we laid out today.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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