Q4 2019 Earnings Call

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Good afternoon, ladies and gentlemen, and welcome to the T. S. Fab Pharmaceuticals 2019 financial results Conference call. As a reminder, this conference is being recorded I will now turn the call over to warehouse today Mr. Paul sake.

On a CFR pharmaceuticals Investor Relations you may begin your conference.

Well, thank you Jay well, everyone and welcome to the tier Pharmaceuticals, 2009, Chief financial and business results Conference call.

With me today is Glenn Madison, President and CEO of TFS Court Coleman, Chief Financial Officer, and Dr., Robert Williams, Professor and head at the University of Texas at Austin College of pharmacies.

Division of molecules pharmaceutics, a drug delivery.

The Williams as the inventor of the company's two years have technology and one of the world's leading experts in the field of drug delivery systems.

A press release announcing the 2019 result is available on the T.S. Pharmaceuticals website.

Let's take a moment to read the disclaimer about forward looking statements in the press release.

Your next release and this teleconference. Both include forward looking statements. These forward looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from the statements made.

Factors that could cause actual results to differ I described in the disclaimer and in our filings with the U.S. Securities and Exchange Commission.

Including the risk factors section of our 2019 annual report on form 10-K filed today with the FCC.

Now my pleasure to turn the call over to Mr. Glenda.

Thank you Paul Good afternoon, and thank you for joining us today to review the company's 2019 operations and recent highlights.

During this call I will provide an update on our clinical and corporate progress.

Well I ask our Chief Financial Officer Coleman to review the company's financials.

We're also very pleased to have Dr. Bill Williams with us today on the call.

Bill will talk about our breakthrough technology and some of the exciting applications. It has particularly in the field the vaccine medicine.

Then we'll open up the lines for questions.

We've made tremendous progress in a short period of time as a public company.

Since our IPO at the end of October 2019, we've been proceeding well in our clinical development programs and we've been leveraging our breakthrough, finishing freezing platform technology in collaboration with leading pharmaceutical and biopharmaceutical companies.

We've achieved important early milestones in the phase one clinical trial I've worked as all inhalation powder.

This is designed to treat the life threatening disease I've invasive pulmonary aspergillosis.

This is the first clinical study ever in healthy subjects have a direct to long thin film freezing dry powder formulation.

We're also making progress in our second program Tacrolimus inhalation powder, and then he'll dry powder version or Tacrolimus one of the most commonly administered immunosuppressive drugs used in solid organ transplants.

Importantly, our TFS technology is gaining considerable attention from potential industry partners as well as government agencies and because it could potentially mitigate the need for cold chain storage for vaccines, we've been seeing interest from some of the largest developers of vaccines and anti viral as as well.

We feel we have untapped potential in this technology, we're eager to further advances for drugs for chronic respiratory diseases and lung conditions.

As well as new chemical entities and existing therapies for a multitude of indications.

Dr wins will speak about this in more detail later in the call today.

Please allow me to take a few minutes to give a brief high level overview of our company and for our new shareholders and folks on the call today.

PFF isn't early stage biopharmaceutical company.

Focused on developing innovative drug products based on our patented thin film freezing or TFS technology platform.

We're targeting multiple billion dollar plus markets with this technology.

We expect and D.A. filings within 29 months for our two potential candidates and we are pursuing numerous strategic business development opportunities.

Our technology is protected by a robust IP estate, including 39 patents issued and who are pending.

The major problem. We are addressing is that many drugs intended for one, Oregon, especially therapeutics for lung conditions, often don't reach their target due to poor absorption or water solubility.

This can cause poor efficacy in serious safety concerns.

This is true not only for one conditions, but also applies to many therapeutic and medicinal categories.

Testing confirms that our T.F. platform can significantly improve the solubility a poorly water soluble drugs.

Class of drugs that makes up approximately 33% of the major pharmaceuticals worldwide.

And this can help improving the pharmacokinetic effect of those drugs.

We feel good this is a revolutionary platform for delivering drugs of all types.

It's been industry validated peer reviewed and extensively tested and clinical settings.

And Dr. Williams will discuss in detail some of the dozens of high value indications that had been tested with this technology.

We are initially focused on the development of inhaled drypowder drugs for the treatment of pulmonary diseases and conditions and we have two product candidates.

The first I'll lead program for comments, all inhalation powder is inhaled dry powder drug intended to treat invasive pulmonary aspergers most is.

A very severe fungal pulmonary disease with a mortality rate that can reach 90% in some patient populations.

At the end of 2019, we began dosing subjects with this drug in our phase one clinical trial.

We successfully completed all four dosing cohorts in the single ascending dose phase of the trial ahead of schedule.

And enrollment of the first cohort in the multiple ascending dose portion of the study has also been completed.

The data safety monitoring board has approved escalation to the next dose level, we anticipate a phase one study database lock by the end of the second quarter of 2020 with six month toxicology studies complete by the ended the fourth quarter of 2020.

Yes, that's second clinical program Tacrolimus inhalation powder is inhaled dry powder version of Tacrolimus one of the most commonly administered immunosuppressive drugs used in solid organ transplants.

Because our dry powder version would provide for a high local lung concentration without the toxicity frequently experienced with oral immunosuppressants. We believe that tacrolimus inhalation powder should have a high likelihood of success and competing in the immunosuppressant market for lung and heart and lung transplants.

This program began some four months later than our work out as all installation program I was making excellent progress to date, but RCR O partner in Australia, we begin phase one trials informed US earlier this week that because of the spread of the covert 19 virus in Australia. They were.

Did delay in initiating the trial.

One contributing factor is that takreer limits inhalation powder is an immunosuppressant drugs.

Given the threat of the covert 19 virus concern exists, even though we were dosing healthy volunteers.

This is an unfortunate reality, but one that is being faced by many companies conducting clinical trials throughout the world.

We're currently looking to alternate trial sites and we'll keep you posted.

Importantly on the business development front, we're focused on the joint development of dry powder formulations are proprietary drugs owned or licensed by other pharmaceutical companies.

As we reported in today's release, we had various stages in a number of different feasibility studies of new chemical entity is owned by three international pharmaceutical companies.

In addition, we recently commenced preliminary analysis and testing of dry powder formulations of certain drugs in vaccines to topical ocular and nasal applications in connection with our submissions meet the government agencies.

For government contracts.

We're also engaging with several multinational pharma companies for feasibility projects, taking their product candidates to use our thin film freezing technology platform to deliver innovative products directly to the one.

These include small molecule large molecule biologics enzymes antibodies gene therapy, DNA derives therapies and particularly vaccines.

The T.F. platform technology also has an important application in botanical.

Dr. William has generated meaningful data when converting CBD to a T.F.F. version.

These data show, a very smooth and predictable absorption profile. We believe the T. If her version of CBD, you will have meaningful impact on that can happen with market.

And we're engaged with potential partners discussing the terms of a license agreement.

We're particularly focused in the light if the world wide covert 19 situation.

About our platform's ability to mitigate against the requirements of.

Of cold chain handling for potential vaccines.

Our thin film freezing platform technology enables the conversion of liquid vaccines into a dry powder.

This potential dry powder back seat would not be sensitive to inadvertent freezing I will not require cold chain handling.

It could be maintained at room temperature during shipment and extended storage.

You could also be readily reconstituted for injection into patients.

As it could be administered needle free by inhalation or intranasally.

In short the T.F.F. technique could allow for easing handling and storage of vaccines and it could offer the added advantage for an innovative route of immunization.

Dr. Williams is doing exciting work in this area and you will update you shortly on this call.

So to sum up I'm very proud of her entire team's commitment to the potential of tier pharmaceuticals.

We feel we are addressing real unmet needs in the market and then our technology and approach has tremendous untapped potential.

We deeply appreciate the support of our investors and partners as we look to further develop this potential and we look forward to updating you on our progress in the coming quarters.

And now I'd like to turn the call over to Kirk for a review of our financials.

Thank you very much Glenn good afternoon, everyone I'd like to begin the financial update by recapping, our very successful initial public offering accomplished during a time last year of challenging market conditions.

As you recall in October last year, the company close its public offering of 4.8 million shares of common stock, including the exercise by the underwriter of an over a lot of an option at a price of $5 per share.

TFS Pharmaceuticals began trading under the ticker symbol T. F. S. P. On October 25, 2019 on the NASDAQ capital market.

After the payment of underwriter discounts in operating expenses and after giving effect to the underwriters exercise of its overallotment option on November Twentyth 2019 to purchase an additional 479300 shares of our common stock at the offering price of $5 per share. We received net proceeds of approximately 21.8.

Million dollars.

For the year ended December 30, Onest 29 chain research and development expenses for the company were $8.8 million compared to 848008 or nine in 2018.

The increase in research and development expenses. During 2019 was due to the ramp up of R&D activities. Following the completion of our series a funding in May of 2019.

General and administrative expenses for 2019 were $3.165 million compared to 3.049 million in 2018.

The company reported a net loss for 2019 of $11.87 million compared to a net loss of 3.84 million in 2018.

As of December 30, Onest 2019, we had total assets of approximately $29.2 million working capital of approximately $28.8 million.

At December 31st 20, United team, our liquidity included approximately $28.1 million of cash and cash equivalents.

We believe that our cash on hand as of the date of this report sufficient to fund our propose operating plan for at least the next 12 months and beyond.

And with that I'd like to turn the call back to Cohen.

Thank you Kirk.

Thin film freezing is a disruptive enabling technology and the drug delivery field that gives us the ability to evaluate potentially improve a wide variety of compounds for a number of therapeutic indications, there's absolutely nothing equivalent to it in the industry and we feel that gives us real strategic advantage.

Okay.

We're happy to have with us on the call today, the inventor of this technology Dr. Bill Williams or the University of Texas at Austin.

It was the best person to speak about what makes this technology, so special and some other potentially groundbreaking applications that are being worked on.

Bill.

Thank you Glen very much and I'm happy to have this chance to speak with everyone today.

As Glenn mentioned earlier in the call one of the key problems that we are trying to address with dark them film freezing technology.

Solubility of drugs.

This is an issue that must be addressed with a significant portion of drugs in the contemporary drug development pipeline.

No matter how active the new drug is against a particular molecular targets. If the drug is not available in solution that the size of action. It is most likely not viable development candidate.

Now roughly 40% marketed drugs and 90% of drugs in development have little or no water solubility, which in most cases will prohibit their development.

And the drug with poor water solubility that eventually makes a ton market can show performance limitations, such as erratic absorption poor bioavailability and slow onset of action.

Therapeutic effectiveness can vary from patients patients and there can be a strong affect the food and drug absorption.

Finally, it may be necessary increased the double poorly soluble drug could obtain.

The efficacy required.

Which can lead to adverse side effects toxicity issues and increased cost.

And certain drugs at target lung diseases have poor solubility that prevents them from being delivered by way of an halo and they can only be given orally or by injection.

Now the primary benefit of delivering to drive by inhaler is that we can administer a greater portion of the dosage of the Gerard directly to the targets site the lungs.

Dosing directly to the long has been shown to allow for battery effect with fewer adverse events.

Now while the TFS platform was designed to improve solubility a poorly water soluble drugs generally we have found that then film breeding technology is particularly useful in generating dry powder particles that are highly suitable for installation delivery, especially to the deep won an area of extra.

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The extensively patented technology that we have developed for ultra rapid freezing results in what we call. It brittle matrix powder that you can see in the photograph on the right.

This powder form of the drug is highly pores and has an incredibly large surface area ideal properties when contact in the target slight such as lung tissue.

The brittle matrix powder also has desirable aerosolization properties, meaning that the powder can be administered to a patient using a conventional dry powder inhaler.

Indeed, the properties of the particles are such that the portion of drug deposited in the deepwater may reached its highest 75% or greater I'd be administered does compared to 10% or less will give an orderly or intravenously.

We believe our T.F. platform is a breakthrough platform technology for making dry powders from drugs or previously we're not candidates for dry powder installation.

This opens the way for direct to long delivery, a dozens of pharmaceuticals, including the reformulations and repurchasing of existing approved drugs into a more targeted safe and convenient Intel dry powder product.

This technology can be used what drugs of all types and works with existing and off the shelf dry powder inhalers without the need for any additional equipment or devices.

One area, where we are particularly focused in light of the world that that is in the field that vaccine reformulations, particularly applying dumped on preserving the development of vaccines.

The vast majority about 97% of vaccines are highly temperature dependent it must be maintained at between two and eight degrees C. Refrigerated temperature conditions during transport or storage and the majority are delivered by middle injection.

Many of the currently licensed and commercially available human vaccines also have aluminum containing adds events to enhance their immunogenicity and require controlled cold chain handling.

If these vaccines are inadvertently exposed to heat or freezing conditions. They may lose potency due to aggregation.

This could result in significant financial cost estimates indicate that cold chain storage alone can account for up to 80% of the vaccination calls and an estimated 75% to 100% of vaccine shipments are exposed to freezing temperatures, resulting in spoilage nearly half of all global back.

Seems.

Therefore, there's an immediate need for processing technology for converting liquid vaccines, including those containing aluminum imagine funds into a dry powder that would eliminate cold chain storage requirements and allow for more convenient and efficacious drug delivery options.

Then film precinct technology has shown the potential to convert liquid vaccines, even vaccines that contain aluminum solves into a dry powder without causing particle aggregation or a reduction in immunogenicity upon reconstitution.

This potential dry powder vaccine appears not to be sensors that ended Burton freezing and would not require cold chain handling.

It could potentially be maintained at room temperature during ship and extended storage.

We believe the vaccine powder could also be readily reconstituted for injection into human patients and it could also be administered needle free by inhalation or intranasally.

In short, but then film freezing process potentially allows for ease in handling and storage of vaccines and offers he added advantage for an innovative route immunization.

The temporal increasing platform has been validated using a number of vaccines, including the FDA approved human vaccines marks and Gardasil and GSK indirect b as well as a human vaccine currently under development and the veterinary kindness talk so indexing.

In the example of the cousins talks always vaccine.

We found particle size distribution was maintained as well as immunogenicity. After it was subjected to the thin film precinct process and re constitution.

Similar results were obtained using other vaccines as well.

And importantly, we're in the midst of testing a number of code that 19 specific vaccine candidates as well as using our thin film precinct technology to include biologics, such as peptides and proteins as Glenn mentioned.

The validates that we can convert the liquid form to a dry powder for four inhalation or reconstitution.

There's obviously, an urgent global need to develop a cobot 19 vaccine quickly with the imperative to shorten the development timeline and get patients a therapy to treat the core on the virus ideally developed as a stable dry powder form for needle free administration and cost effective stockpiling.

And I just want to say that the TFS team along with the University of Texas Huddleston.

We stand ready today to use and apply our innovative technology formulation testing capabilities scientific expertise and capabilities to support the development of a much needed vaccine and therapeutics that can all be you directly apply to the site of cope with infection.

And with that I'll turn the call back to Glenn Thank you.

Thanks, very much bill thanks for your contributions to T F and to health care.

As you correctly pointed out is a critical unmet need for the development of more effective vaccines therapeutics and drug formulations, and we feel we have a potential technology approach that can produce efficacious covert 19 countermeasure powder formulations that are highly suitable for the respiratory route of administration.

That are highly absorbable and or physical chemically stable for an extended period.

With that I'd like to turn the call back to the operator and an open up the questions Gigi.

As a reminder to ask a question you need to press star one on your telephone to withdraw your question press the pound Kane. Please standby will we compile the Q and a roster.

Our first question comes from the line of Jonathan Aschoff from Roth Capital Partners. Your line is now open.

Thank you hi, guys good afternoon.

Hi, Jonathan most I was wondering how big could the DARPA would be.

Yes, thanks to the question Jonathan So.

It really depends on which project, we're asking for and how much we're asking for half the pie.

You know to more than likely we'll be looking at.

Doing some late preclinical work going into phase, one and usually those say I can tell you that usually the preclinical program.

About a million and a half to two and a half million dollars and then you're looking in a phase one program for about a million and half plus staffing, but I can tell you that different programs are different stages with different partners in our request and of course this funding would be outstanding because its non dilutive and would would.

An impact the cash on hand that we have.

I can you give them.

And with someone goes portion of the agree.

Well.

Uh huh.

Huh.

Sure. Thanks for that I'm going to call on D.R. Christenson Dell is the head of our clinical development programs and we also have Brian wins, there on the phone Brian is our chief Scientific officer.

Yeah, I'll ask you to answer the questions about the phase one program the status of four columns long.

Alright.

Thank you Glenn.

The four cohorts of the single ascending dose in the first.

Seven day cohort in the Mad.

We had seen.

Very well tolerated drug.

And importantly, when delivering a drone come along you actually want to see that there are no changes in pulmonary function as would be evidenced by a drop in the PD one.

And we had seen no indication that there is a problem and so this study so far has looked very safe and the drug it's very well tolerated.

Okay. So.

With all the potential deals.

It's about.

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Can you maybe help me understand where you might be focusing.

Well the good news Jonathan is that Bill has tremendous capacity to do feasibility in his lab in fact during the process of securing.

Another space within bills building at the.

Okay.

So the general process, where should we get material in far from a potential partner, we do feasibility sometimes we send samples back then we review the sample so we're running.

Consequently, the other piece of good news is that.

Because bill is working on profit 19 projects using this insulin freezing platform is labs remain open.

So certainly saw or our vaccine programs are quite advanced some of the work we're doing on M&A is quite advance.

The work that we've done on an Avenue always is quite advanced and then now bill is accelerating the work you're doing on some of the antiviral that we're trying to see how the PFF platform technology will impact.

Looking at some specific academic collaborations and also be on covert 19 were working with a major academic institution to other engines are looking at perhaps flu vaccine using the technology. So oh, we've got quite a bit going on some of it almost.

Round the clock on simultaneous.

And we're hopeful that these transactions will come shortly as we begin to.

Yes, you some of these data more mature and negotiate the the transaction.

Okay. Thank you though.

Thank you. Our next question comes from a line of keep Gill from quarter to carry and company. Your line is now open.

Congratulations on all your opportunities Glenn.

Appreciate it.

What would be a your goal.

Possible business transactions.

2000.

Uh huh.

Different ones are going.

Yeah, So Keith I don't have a crystal ball and I hesitate to give you a specific number and.

Over promise and on the deliver but I'm very optimistic that we'll have multiple transactions done by the end who year.

Oh, Thank you very much and again tremendous on all those achievements.

Thanks, Keith I appreciate it thanks for your support.

Thank you.

At this time I'm showing no further questions I would like to turn the call back over to Glenn Madden CEO for closing remarks.

Thank you G.. Thank you all for calling in the.

Releases out and the where this webcast can be seen again our website <unk>.

I also want to thank all the folks on the life from CFO. Thank them all for their continued contributions to the company. We look forward to keeping our lines of communication wide open and we'll keep you in touch with all the major developments happening in the company in the near future and certainly by the end of next quarter I want all of you to stay well.

Follow the direction as washer hands.

Our social distancing distancing and a b well I'll walk you through this covert 19 period and we continue to celebrate the successes of TFS and the coming days enough and month.

Thank you.

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

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