Q4 2019 Earnings Call

Welcome to the conference call hosted by DARI Bio Science to review the Companys financial results for the year ended December 31st 2019 and to provide a general business update. This call is being recorded my name is Jonathan and I will be your operator today with us today, our Sabrina Martucci Johnson.

<unk>, President and Chief Executive Officer, John Fair, Chief Strategy Officer, and Lisa Walters Hoffert, Chief Financial Officer Ms. Johnson. Please proceed.

Thank you and then welcome all of your try financial results and business update call for DARI, It's a pleasure to have the opportunity to talk about our yearend results and our company highlights.

In the upcoming milestones for 2020 and beyond.

Before I begin I'd like to remind you that today's discussion will include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Any statements made during this call that are not statements of historical facts should be considered forward looking statements actual results or events could differ materially from those anticipated or implied by these statements due to known and unknown risks and uncertainties.

You should not place undue reliance on forward looking statements forward looking statements are qualified in their entirety by the cautionary statements in the company's FCC filings, including our annual report on form 10-K for the year ended December 31st 2019, which was filed on March 27 20.

I'd also like to point out that the content of this call include time sensitive information that is current only as of today March Thirtyth 2020.

Hi undertakes no obligation to update any forward looking statements to reflect new information or developments. After this call except as required by law.

As you know Daria is a biopharmaceutical companies squarely focused on improving the wife and well being of women primarily in the areas that contraception that you know how sexual health and fertility.

Our value creation strategy is it to accelerate innovation in women's health by advancing candidates that we believe have the potential to be first in category or for swine products to meaningful value inflection point and delivering on key program milestones.

I would be remiss, if I did not start the call by addressing the potential for the Kobe 19 pandemic to impact our operations and our anticipated milestones.

We did not have any currently enrolling clinical trials, although we are conducting activities to support the conduct of two pivotal clinical studies and the phase three TB.

And we are currently on track to conduct and report the topline results of the plan phase three study of dared BB one before the end of 2020.

And we are still on track to report topline results of the planned phase to be steady as she dynasil Crane and 2021 and the planned pivotal study of other preening 2022.

We had been guiding.

All of us are facing unprecedented and rapidly evolving circumstances as a result, and covered 19, and we will continue to assess our circumstances and development timelines, but in this highly dynamic an uncertain environment. We believe we had the ability to react quickly to changes in circumstances due to our unique.

Accelerator model with our variety of programs and diversity of indications and development stages.

As a result.

We believe we are well positioned to deliver the topline clinical data and regulatory actions projected over the next three years.

As I mentioned, we're not actively recruiting and any of our planned clinical studies as many of these activities are slated to commence during the second half of 2020.

And therefore, the recent local and national actions to address Cobot, 19, which has impacted enrollment of trials across our industry has not impacted our clinical timelines as of today.

We believe our variety of programs and diversity of indications in development stages, as I mentioned enable us to recalibrate, our resources and direct investment across the portfolio in ways that will mean Neely advance our programs that we remain on track in the near term to deliver topline clinical study results and regulatory milestones.

Don projected timeline.

Given for instance, the relatively short duration of some of our planned clinical studies as is the case with the planned phase three for this year of Deer, BB, one our potential first line single administration product candidate for back to about Genesis.

And broader timeline flexibility, but some of our other programs, including sit NFL cream and over praying we have some flexibility in how we operate over the next several months.

By focusing our near term efforts on study start up activities and other non clinical work necessary to support our overall program objectives that can continue while restrictive work policies and government orders are in place. We can continue to advance the programs against the timeline we guided.

If it becomes necessary. We believe we can also in some cases adjust study initiation from this year to next without materially affecting our communicated timelines for important data read outs.

So therefore, while there clearly is uncertainty as to the effects of Kobe 19, the pandemic, we're facing we recognize it circumstances can change in this rapidly evolving environment, but at this time and based on the information available today as I have outlined we continue to anticipate topline results. This year.

For the Dare BB, one phase three as well as topline results for our planned phase Twob study its identical cream and 2021 and our planned pivotal study and I would print in 2022 as we have been guiding.

We're fortunate and that we believe we are well positioned to stage our activities and financially manage our burn during these uncertain times and we will continue to work hard to maintain our forward progress.

To that and we'll spend the balance of this call focusing on our plans for the D. There be one BT one phase three study a and the data read out this year, our next steps with Arsenical cream program and our Evergreen program will also provide an update on partnering activities.

Under review of our 2019 financial results.

So first to dare BB one for bacterial about you know says.

Dare VB one is a novel thermosetting bioadhesive hydrogen containing clindamycin phosphate cheaper said, it's being developed for one time Bachelet administration for the treatment of baby a highly prevalent condition estimated to affect more than 20 million women in the U.S.

We remain extremely excited about their BB wind as we look for it to demonstrate in the phase three study the meaningful clinical cure rate seen in the proof of concept study.

As we've previously reported 86% to the valuable subjects in the proof of concept study achieved clinical care at the test of cure visit seven to 14 days after a single administration of Dare BB one.

In comparison current fts proof products for BV have clinical cure rates, which range from the mid thirtys to the high sixtys on a percent cured basis.

Maybe spend associated with pre term birth and infertility and is the most common form a bad United's worldwide with a relatively low clinical cure rates of the current ft approved products and a high rate of recorded this condition requires more innovative effective medicine medicines.

Dear BB wind has received both fast track and qualified infectious disease product designation from the F.D.A. for the treatment of BV.

Fast track designation is granted by the FDA for drugs that are intended for the treatment of serious or life threatening diseases or conditions that it's intended to and its intended to facilitate the development for these conditions and expedite the reviews. So that unapproved product can reach the market as quickly as possible.

Our fast track designation for Dare BB, one underscores the BB is a serious infection for which current treatment options or an adequate and it validates steer BB ones potential to address this unmet medical need.

As I've mentioned, we are on track to initiate a phase three clinical study I Dare BB, one this year and approximately 220 women.

We're intending to initiate in the second half of the year with an anticipated topline data read out by the end of 2020.

Based on discussions with the FDA. The phase three study will include a placebo control and it will assess the primary endpoint as clinical care Bebe designed as defined as resolution of specified clinical signs and symptoms and baseline visit at the test of cure visit to occur at 21 to 30 days after enrollment.

In the study.

If this single phase three study and the Nonclinical studies to be conducted in parallel with the phase three our successful we intend to file the new drug application for Dare BB one in 2021.

Oh, I anticipate NFL crane.

We announced in December of 2019, the important alignment we reach with the FDA on the Phase Twob study design and the novel primary endpoint instruments.

He then they feel crane has the potential to be the first the F.D. approved product for female sexual arousal disorder or FSC D.

I think maybe is a female sexual dysfunction disorder, most analogous to erectile dysfunction or E. D. In med and then to fill is the active ingredient and a tablet for oral administration currently marketed under the brand name Viad route for the treatment at IGI in med.

So that if those topically administered it's a topical formulation. Therefore ipsit NFL, it's designed to increase local blood flow and provide a potential improvement in general are Bravo utilizing the same pathway that is acted in the de medications in med.

Well, so that I feel it's affected for men, it's not the optimal way to achieve the same response in women with.

With the potential to deliver sit NFL and a fast acting creep that can be applied locally, we maybe able to offer the benefits of increased blood flow and improvement. Therefore in general sexual routes will respond without the same systemic issues observed with the oral formulation.

[noise] market research suggests that 33% of women in the U.S. ages 21 to 60 experience symptoms of low or no sexual arousal, and 16% or approximately 10 million, winning our distressed and they're seeking a solution to improve their condition.

To put the market opportunity for an after you have proved out because they do treatment in context. The prevalence said complete E. D is estimated to be just 5% of Mad at age 40, increasing to 15% at age 70.

And at Phase two way trials that NFL crane increased measurable blood flow to the badgeville tissue and both pre and post menopausal women, but that would say D compared to placebo cream and further data from after Mcguffey study in healthy women demonstrated significantly greater increases in general temperature after administration of sit NFL crane.

Compared to after administration, a placebo cream and no clean that all indicating a positive impact on general blood flow.

As we've previously communicated discussions with the FDA followed the completion of a content publicity study.

The proposed patient reported outcome instruments.

Non interventional study integral to initiating the at home product dosing portion of our sit anymore cream phase to be program.

That phase Twob study will utilize the agreed upon patient reported outcome instruments to measure achievement as a primary efficacy endpoint, namely improvement in that local general sensation of arousal response and reduction at the distressed that women with up as they do you experience.

We're pleased that the FDA recognize the validity of the patient reported outcome instruments to test the efficacy of a drug to treat at the safety that are specific to sit NFL cream and its mechanism of action.

It's a significant milestone in the development of what has the potential to be the first after they approved product to treat FSC D.

In addition, we aligned with the F. T on several exploratory efficacy endpoints, which will be measured in our phase Twob study and could potentially be additional measurements of efficacy in a feature phase three program.

We're really encouraged by the continued collaborative approach we've been experiencing was all left EA divisions and are thrilled to have reached this point in this identical cream development program.

So over the next month, we'll focus our efforts on preparing to conduct the phase to be studies.

Activities, such as preparing electronic diary and other startup activities as well as other nonclinical activities to support a future and D.A. submission.

The phase to be studies designed to evaluate suddenly so cream versus placebo over 12 weeks of dosing following boats and non drug and placebo run in period and as we've indicated we would expect results and 2021.

Well into other frame ever present, as you know always an investigational hormone free monthly Badgeville contraceptive currently in clinical development for the prevention of pregnancy.

If approved it could be the first monthly non hormonal contraceptive product.

On January 13th of this year bear the marketers as a billion dollar Marina contraceptive franchise, and Jari announced that we signed a license agreement under which bear may commercialize ever freight in the United States once approved by the FDA.

Bare received the right to obtain exclusive rights to commercialize the product in the U.S. Following completion of the pivotal clinical trial is buried its sole discretion pays diary $20 million. In addition, we may receive up to 30 $310 million and commercial milestone payment plus tiered royalties on net.

Sales in the double digits.

Bearable support the development and regulatory process by providing up to two full time equivalents or internal experts.

As an advisory capacity role, which gives us access to their global manufacturing their regulatory medical and importantly, commercial internal expertise.

We believe the licensing agreement with bear is validation of our broader strategy and confirmation of other cranes market potential as a first monthly non hormonal contraceptive product.

There is committed to bringing to market innovation and women's health and is the only company to a delta contraceptive brand family in excess of a billion dollars.

We believe partnering now with bear as a means to commercially de risked the program and unlock the program its full value.

Over the next several months, we intended to continue our regulatory manufacturing and other non clinical activities as planned to advance the program.

We plan to file an investigation and no device exemption application or an I.D. for ever preen. This year and depending we have changed reviewing clearance of the I.D., we plan to initiate a pivotal contraceptive effectiveness and safety clinical study of other brain.

Anticipated to report out in 2022, if successful we expect to study to support marketing approvals of ever print in the U.S., you're up and other countries worldwide.

With that product overview, I'll now turn the call over to lease Sachin review the financials [noise].

Thank you good Marina and thanks to all of you for participating on this update call. We'd now like just summarized our financial results for the full year ended December 30, Onest 2019.

As you know dairy business model is to assemble advance and monetize a portfolio of novel product candidates in women's health.

As a result, our expenses generally fall into three buckets first corporate overhead second cost associated with portfolio acquisition and maintenance such as license fees and future milestones and finally research and developing men expenses related to clinical nonclinical preclinical work to generate safety and efficacy.

Data and advance our candidates through clinical and regulatory milestones.

So with that for the full year ended December 31st juries General and administrative expenses were 5.3 million.

Our license expenses representing fees due under our varies product candidate license agreements were approximately 530000.

And our research and development expenses for 2019 were approximately 8.5 million.

The R&D expenses included the completion and related top line data read out a bit post quidel test clinical trial for overpowering.

Work to prepare for the initiation of the phase three study for Dare BB one.

Regulatory and other activities to advance still dental cream.

Preparatory work on two of our batching offerings, one for hormone replacement and the other for pregnancy maintenance. These are jar HR team, one and our F. R. T. One as well as personnel cost of our R&D team.

Our comprehensive loss for the year was about 15.1 million.

[noise] suffice it to say, we had quite a bit isn't meaningful activity over the past two quarters. So let's start with the fourth quarter of 2019.

In Q4, we announced positive top line results of the overpowering P.T. study, which was a huge milestone for us.

Q4, we also announced the acquisition of Microchips biotech through which we acquired an exciting technology platform a relationship at the Bill and Melinda Gates Foundation.

Season development team to complement our and at that time of closing microchips had cash and cash equivalents of approximately 5.9 million after the payment of various transaction related expenses.

Jury issued approximately 3 million shares of our common stock in agreed to pay future consideration contingent on the achievement of specified funding product development regulatory and commercial milestones as well as tiered royalty payments.

We currently expect that approximately 1 million of the contingent consideration may become payable through the into 2021.

So we ended 2018 wouldn't approximately 4.8 million in cash and cash equivalents 19.8 million common shares outstanding and no debt.

But now into the first quarter of 2020.

The compelling data from our PCT study of overpowering opened the door to serious negotiations with a number of potential partners.

And if Sabrina said on January 13th we announced the license agreement with bear.

We believe bears exhaustive due diligence and our license agreement served to validate first to market opportunity for overpowering as potentially the first monthly non hormonal contraceptive product.

Second the capabilities of various clinical and regulatory team and lastly, the value of our business model.

During the first quarter up 2020, we increased our cash by approximately $8.1 million gross or 7.9 million net of fees and expenses from a combination of sales of stock under our ATM warrant exercises for cash and partnering fees. None of this cash is reflected in our key.

Cash and cash equivalents as of yearend December 30, Onest 2019.

So as a result of there's activities as of today March Thirtyth 2020, we have 24.7 million shares outstanding and no debt.

We will need to access the did but additional capital to advance our programs, particularly for our three later stage candidates a variety of funding sources or potentially available to us to financer operations in clinical development activities.

Since our inception, we have raised cash through private placement and public offerings of our equity securities M&A transaction, the exercise of warrants for cash non dilutive grant funding and license fee.

In our recently filed 10-K, we noted that Jari continues to have a going concern as we do not have sufficient cash to satisfy our working capital needs or other liquidity requirements for at least the next 12 months.

We will continue to be created creative in opportunistic to read the capital we need to advance our candidates and we will strive to be very efficient in the use of that capital.

We encourage all investors to review the more detailed discussion of our financials and financial condition liquidity capital resources and our risk factors that were filed in the 10-K in are included in our ticket. It was filed last Friday.

So with that I would like to now turn the call over to John unfair.

Thank you Lisa as we navigate our dynamic global health and economic environment. We will continue to focus on effectively executing against activities that position us to deliver on key program milestones and build additional incremental value in the portfolio. We believe the agreement with bear for our hormone free monthly contraceptive candidates.

Overprint was a significant validating its events for Doris and moving forward, we will execute against our broader business strategy of accelerating novel innovation in women's health and continue to engage with potential partners on subsequent collaborations and follow on transactions.

As we have discussed we view partnerships as core to our business strategy and we will continue to evaluate collaboration opportunities and the timing of these opportunities in the context of what we believe will deliver the greatest value for our shareholders.

We believe that the level interest in our portfolio from potential strategic partners really from our early stage programs through to our mid and late stage assets will enable us to provide significant value for investors and most importantly for women.

And with that I believe you will now turn it over the operator, who will open the lines for Q Wednesday.

[laughter] certainly ladies and gentlemen, if you have a question at this time. Please press Star then one on your touched on telephone. If your question has been answered and you'd like to remove yourself from the Q. Please press the pound key.

Our first question comes from along you know Jason Kolbert from Dawson James Your question. Please.

Oh, Hi, guys. Thank you so much really appreciate it I just want to talk a little but I mean, clearly the acquisition of microchips, which brought in cash was very very smart and I know Lisa you mentioned the outstanding share count can you spend a little time with US and you also mentioned the going concern can you spend a little upon with us and just talk about.

Ill.

All the cash runway and what we should expect as you.

Cleared the hurdle to continue clinical progress and I say that I'd hesitate to say that because as as we all understand you know running clinical trials around the world right now is going to be likely delayed and so does it mean that you reduce spending.

The little bit in second quarter extend the runway and then you know maybe amp up business development and look for some other ways to strengthen the balance sheet into the second half. Thank you.

Yeah. So Jason this is sebree now I'll give some context to the last part of your question around kind of how we can manage our resources to to your point and then I'll turn it over to check to Lisa and and at first and foremost of course, we are biotech company and therefore as you know, we always need bringing additional capital at some point and you know.

Clearly, we funded the company creatively as leases said since the beginning so I'll, let her address that part but to the second part of your question.

In terms of how how do we believe we're going to be on track to hit those milestones, particularly in this environment and how are we doing that so as I mentioned and you kind of touched on it you know it's a combination of the variety of the programs, we have and and where we are in stages of development and importantly, the types of activities that we need.

To to be doing to keep us on track that actually gives us a lot of flexibility and particularly the fact that we were not actively enrolling into any clinical trial subsidies gives us a lot of flexibilities in terms of how we can recalibrate, our resources and and direct our investment as needed across the portfolio, but in way.

Yes that can meaningfully advance them, particularly in this environment. So the flexibility really gives us some insulation from the uncertain market impacts of covered 19, a in this uncertain times and gives us flexibility kinda Tierpoint I think that you're getting at on when and how we raised.

So that we can react quickly to changes in circumstances and I. Just also want to highlight one thing that may not have been obvious before I turn it over to Lisa that I think there's a little bit touched on your question, which is you know why do we remain confident we can have date on VB one [laughter]. This year our phase three study this year.

For a with read out expected by the ended this year. If we haven't commenced enrollment in that and really I want to use this opportunity be clear that.

You know inspite of the current market situation. We think we can do that for a couple of reasons. One is just the high prevalence of Bebe so that coupled with today's in effective treatments enrolling it'd be these studies has tended to be quite efficient, but importantly, BB is kind of in acute condition and so.

The study there for the short one it's basically a one month study patients will be diagnosed enroll treated and examine it at the test of cure visit and all of that will occur you know 21 to 30 days after they enroll in the study. So you know just one month or less from enrollment so that gives us a lot of flexibility in terms of when we actually initiated.

Enrollment, while still meeting the objective of the data read out before the end of the year 2020, and then importantly, and then D.A. submission and 2021, where we get to leverage that fast track.

So let me turn over to Lisa let her talk a little bit specifically and maybe remind you again on cash and yeah. So I'm just as a reminder, everyone. We did ended the year with 4.8 million and then subsequently raised about 7.9 million I'm very happy that we did that so to answer your question first Jason about going concern to me.

Make sure everyone on the phone understand what that means that means as of the time, we filed last Friday. So that was March 27, 2020. If you don't believe you have adequate cash through next year is March 27, 2021, you have a going concern. So you know based on three.

Active programs some uncertainty on the timing, but these are later stage programs. The cash that we currently have we don't believe is enough to get us all the way through to basically April of next year and in terms of financing strategies and I know, we sort of talked about this one of the interesting part for DARI is.

Again sales of equity remain one of our options we have an S. Three shelf, we raised over 11 million over the last beginning in January of last year. So we will continue to monitor on our availability to use that but we also have the opportunity, which we are aggressively exploring for non double.

You know grant funding recalled that that the the grant for over Crane basically funded the.

The variable costs, if you will not all of our salaries of the variable costs associated with the overprint PCT. There is money available out there we're doing our best to be creative uncovered and keep our eyes open and apply for those spreads. So that's something that we are actively watching in doing and then of course partner Izzy.

John touched on it to our portfolio is finally getting to that point words and later stage. We're starting to have data read out that's when when investors have all kinds, including strategic search you get to take some interest. So you know our goal is to kind of manage these various buckets of financing and.

You're right, we'll have to keep an eye on.

What the impact of Cobot is things were would jump between for slow down, but most likely things maybe a little bit slower.

Thank you guys and thanks taken that a very directly and clearly I really appreciate that.

Thank you know that help it was helpful.

Thank you. Our next question comes from allowing them to even Weinstein from Aegis capital. Your question. Please.

Hey, guys or congrats on the progress and thanks for taking my question. So I was just hoping we could step back and look or maybe you could opine a little on the overarching theme of your pipeline just specifically how your various products could help to improve patient choice in the market, maybe there's been some on it.

Under investment at an industry level and focusing on those will hold maybe some of your products could help patients have more choice.

Yeah, Nathan Thank you for that.

The next seeking and.

No. It's it's a great opportunity to to remind everyone wide daria exist and really what the value creation opportunity here is that Daria you really touched on it is there are a number of really compelling and interesting unmet needs in womens health.

And we've touched on some of them with products like other Crane, you know first potential monthly hormone free contraceptive.

The NFL first product for female sexual arousal disorder, which as I shared with those those number of women statistics versus D.D. and Matt I think you get a sense for how much demand there is out there for that but there really hasn't been an industry focused on developing despite the fact that as we've demonstrated as we've built our portfolio.

Selecting products that address some of them as persist an unmet needs in women's health that have the.

First line and first in category opportunities, while often likes it NFL leveraging that five or five be to regulatory pathway and would be the one which means that you are using a well known and well understood product. There's a lot of data to show that fiber five be two products often have a faster time to approval and a higher six.

That's right, we're able to leverage that but still have first in category product opportunities because we are delivering them often in the way that really takes advantage of the unique female biology again think BB one delivered badgley thinks it then a bill cream delivered topically to the general tissue.

So while on the one hand, there's great innovation, there's unmet need all of that is outstanding but the fact that there is a lack of industry investment in development.

While there are nonetheless companies like bear as was exhibited with our other pre transaction that are looking for truly differentiated disrupted products to add to their portfolio. It really creates this very unique business dynamic that we have built diary around this accelerator opportunity that we think.

You know really has an opportunity to to drive value and not just around one program, you know or two programs, but but several in the in the portfolio.

And so.

Hopefully that addresses your question of what we're trying to do and why we think the opportunity this but frankly importantly for investors hopefully that gives everyone a sense of.

You know what the value opportunity is here with our portfolio and you know what that means in terms of where we should be as a company you know not based on just one of our products, but I mean, we have three late stage assets.

Thank you Sabrina that's really helpful and we continue to watch or goes progress with Susie ago.

Thank you you need.

Thank you before we take our next question I'd like to remind you that if you have to question at this time. Please press Star then one our next question comes from a line no selling your interest from Brooklyn Capital. Your question. Please.

All right.

Yeah.

Hi.

Sally.

Sally.

Yeah.

Sallie I [laughter] lease die her I, yeah. Your credit card number operator, okay, great. Once again, ladies and gentlemen, if you have a question. Please press Star then one.

And this does conclude <unk> question and answer session of today's program I'd like to handle program back to Sabrina Martucci Johnson. Please go ahead.

Thank you. Thank you all for taking the time this afternoon and thanks for the great questions that we had an opportunity to answer we definitely look forward to keeping you updated on our progress and we're really grateful to the entire diary team of course, and particularly our shareholders for their commitment and dedication to our mission and particularly during these times.

So thank you so much and we look forward to keeping you updated.

Thank you, ladies and gentlemen for your participation in todays conference. This does conclude the program you may now disconnect today.

[noise].