Q3 2020 Earnings Call
Good day, ladies and gentlemen, and welcome to the power technologies third quarter fiscal year 2020 operating results conference call.
This conference is being recorded before we get our remarks I'd like to remind you that statements made I tell a 10th or not historical facts, maybe forward looking statements.
Based on assumptions that may or may not prove to be accurate and actual results may differ materially from those anticipated did you were a variety of risk and uncertainties discussion the company's most recent filings with the Securities and Exchange Commission.
Please consider such risks and uncertainties carefully in evaluating these forward looking statements at college and prospects.
To turn the call today's host Dr., Carl Spana, President and Chief Executive Officer of Collinson Technologies. Please go ahead Sir.
Thank you good morning, you're welcome to the palace.
Third quarter fiscal year lucky to be cool.
Dr calls, so I don't feel threatened troublesome.
Well today, you will help vice President Chief Financial Officer.
<unk> Chief operating officer on today's call.
Darren financial.
Including the impact the Coke.
Yes, it's really both you and your families are seeing healthy that's you deal with like Wolverine changes.
Corporate banking pandemic.
Like many of you.
As of the extended families that are working on the front lines.
He takes care of patients. If you then we were truly great.
You want your dedication and break your safely.
Thank you goodbye.
That's why did you update on any next divestiture of Idcs.
One thing because biopsy Congress works I'd get older programs.
Let's turn the call over to Steve.
Thank you call and good morning, everyone.
The call imagine I'll handle the.
Program up their delinquency and then B one that's a result for the quarter ended March 31st 20 Twond.
Regarding the RBC, which is an approved drug for hypoactive sexual desire disorder, and pre menopausal women for each of these days.
Thanks for your support I see treatment approved for pre menopausal women with acquired generalize it can't be good.
Our North American life to date, they like Pharmaceuticals wants why why Didnt nationally in September 2019, we select specialty pharmacies, which was established wasn't bulk sales force.
In January 2028, not talking about that as a result, other strategic review.
It will start the process to got that's why leasing.
[laughter] 20, Twond and bags stated that it is in negotiations regarding <unk> I got to true up RBC.
And Mike will provide an update within the next few months.
How open continues to closely monitor everybody's process related to be divestiture of RBC.
Obligations.
Just a heartbeat license agreement with powerful.
Themselves subordination have been adversely affected by the cope with my team pandemic. The company believe they liked divestiture process has also adversely impacted by these T cells.
Look in his prepared to take appropriate steps to protect its rights as to why didn't you liked indoor.
And the significant value of the body program.
Pallets and continued discussions on Bobby collaborations for territories outside the current we'd like to territories of North America, China, and Korea and anticipate.
Executing multiple agreements during the second half of this year.
During calendar 2021.
Moving on through the third quarter fiscal year 20, Twond financial results regarding Robin though.
Quarters ended March 31st 2020, and 20 my team there were no revenues recorded.
Due to the always commercial stage of light leasing and the sales and marketing strategy of any bag.
Quoting no charge for the first why do you see prescription payback is not generated positive next sell through March 31st 2020.
This is resolved it no royalties be poulton during this period.
Regarding operating expenses total operating expenses for the quarter ended March 31st 20, 25.7 million compared to 5.8 billion for the comparable quarter 29.
The decrease in operating expenses was mainly due to the overall reduction in research and development expenses offset by slight increases in the general administrative expenses.
Other income and expense not told <unk> total other income that was approximately 341000 for the quarter ended March 31st 20, Twond compared to total other income that.
Approximately 35000 for the quarter ended March 31st 20 like team.
The primary girlfriends, it's related to the increase in investment income.
Regarding that loss.
Listen reported a loss of 5.4 million or two cents per basic and diluted share for the quarter ended March 31st 2020.
Compared to one that loss of 5.7 million or three cents per basic and diluted share for the same could 20 my team.
The difference in financial results three months ended March 31st 20, 2029 to mainly troubled through increased the other income net.
Regarding cash position, probably some cash and cash equivalents were 88.9 million as of March 31st 2020, compared to 91.5 million at December 31st 2019.
Compared with cash cash equivalents of accounts receivable of 103.8 billion at June Thirtyth 20 My team.
Management will.
I believe that exist in capital resources will be adequate to the talk to fund the company planes operations through at least March 31st 2022.
Well.
Thank you see.
Operational update the impact of the corporate banking pandemic.
Our primary concerns have been see of our employees are patients and healthcare partners.
We instituted a workers on policy in March that remains in effect.
Fortunately most of our key research and development partners continued remains operation.
Telecoms use various online.
Yes in fact, it's continuing to advance our programs.
Assuming partially open got economic activities by mid Twentys Lucky we believe there will be limited impact of the Pandemics operations whoever you understand even with reception resumption of activity. There can be further disruptions to business activity based on resurgence of the virus and we'll be prepared for this outcome.
Oh didn't have the corners likely be focused on them. One important system, which is involved is regulation that energy balance includes beating big sexual function the resolution.
We probably responses.
Our first it's actually want to court system program. The stakes in the World Waterborne system regulating sexual function.
Research work resulted in the discovery of IVC and its eventual approval.
Right given situation at the treatment for pre menopausal women suffering with I'd like to sexual desire disorder.
Our recent research to bet on developing drugs that target the ability.
Justin resolved were turned down information.
Yes about multi drug candidates that precludes the bottoms up demonstrate potential to resolve right laboratory disease conditions.
Research work like Austin, others have shown that targeting immune cells is a lot of core drugs results and the resolution of profiles reprocessors.
Hi, guys. When you can activities include immediately conversion so.
Why don't worry.
Regulatory state you depiction of the production of 12.4, I'm, sorry, sorry to clients such as TNF Alpha.
Six others.
Regulation anti inflammatory cytokine such as pilots.
In addition, moronic one system plays a role in reducing the fact, Boston spots that occurs its part Mehdi laboratory diseases.
For those results of apartments, where do these has more term negative consequences to the help patients.
Well actually took a lot of consistent regulating interact with them. Your response that occurs then you bought inventory diseases. They couldnt sides target novel drugs.
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Therefore, we believe that a lot of drugs targeting system, you have one utility treating chronic diseases.
Developed through the stage drug cabbage diseases, such as <unk> you.
Got it stretches your guidance retinal diseases. We also have a clinical stage drug Cabot gastrointestinal diseases, such as opposed to twice.
Our first one important drug targets.
Pardon me immune system, you don't nine six for Threed together, they used to Sheeple controlled study dry eye disease.
Yeah, I dropped formulation in January 2025.
Well I disease also known as well could justify the SIGA sexy cornea, good jumped about hi, resulting irritation redness pain vision.
Barry if you believe that might actually be blackboard system locally steel ninesix forgery reduced against when they ship lives.
Ethics dry eye disease.
First of all the patients were enrolled in study parts of the Coke 19 endemic these patients have pitching being treated and needs that they will finish their study treatment in Mary.
What do you 20.
Currently Rome and studies I hope.
Discussions with far contract research organization wanting to study we believe the already significant number of patients that are waiting to go study and we anticipate getting general new patients starting in June.
It's wants to keep the study that David.
After 20 choppy.
If we were able to restart enrollment in June.
Limited impact of the cover that pandemic on the study.
We successfully study by the data required to advanced feel fine six for three.
How much solution.
A good phase three studies, which we start in the first half talkie 21.
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Walter Pritchard driving these treatments represents a substantial commercial opportunity.
2 billion, whose sales and continued growth based on patient demographics.
Jeff I could see favorable tolerability and safety.
I think what's really well this is after walking penetration of drive market.
Oh clinical trials war retinal disease indication and non infectious uveitis are now scheduled to begin in the first and second half of 2021.
This represents a two to three core delay, which is due to the crack the code 19 pandemic.
We are using this additional time to expand our scientific understanding why the court system and popular consolidation.
In addition to walk through a pipeline programs you have to go all Colin release formulation of P.L. eight ones have.
That's a treatment also why there's others.
I'll diseases.
Completed two phase what P.L. 8.77 clinical trials, the first with a combined simulation and multiple ascending dose study to evaluate systemic shaky subcutaneously administered feeling much better job.
Second study evaluated all of the kinetic see.
Okay. Good reformulations appealing what's happened is up.
Your plans, but the phase two people controlled people principles critical study I wasn't quite as patients. This study is scheduled to start the first half of 12 to 21 theater read out in the second chapter talking 22. This represents an approximate two quarter delay due to the pent up.
Based on our research work on an after you peptide system, our drug candidates Yeltsin guideline for naturally peptide receptor antagonists will be evaluated things to make another study in heart failure patients.
Sure it's the Jackson fracture.
Those that music separation with two major academic medical centers and it's supported Latin American Heart Association rent study that was just speak to start patient enrollment in the second half in calendar year Twentytwenty.
Fortunately, our preclinical research activity and the toxicology manufacturing other drug development work required to file investigational new drug application.
Direct administration happened in continues on schedule, what did it impact of the cold Nike and that.
You can find additional information not that ramps on our website Www Dot college and dotcom.
Based on the extreme global uncertainty caused by the corporate banking pandemic Executive management Board of directors acted quickly to adjust our business operations. He took immediate actions to ensuring the safety of our fleet patients and healthcare partners.
Please waste processing that allowed our employees remain highly productive.
Our ability to continue to advance our development programs.
Healthy cash position you about pallets into emerging that have been seeing.
The strong position.
However, we named village, we didn't plan in place should the virus make resurgence.
We believe that and I said, that's your the lead people to occur I think after the second quarter of calendar Twentytwenty and we are taking the appropriate steps before or rights provided by the leasing North American license agreement to ensure that the valuable easy remains intact.
Yeah, the strong pipeline, Bobby <unk> drug candidates and we remain focused on their advanced that continue to progress or development, which we would anticipate will accelerate.
Activities begin to try to wash.
In closing I'd like to back to college gene or development partners for their rapid adjusted to argue working environment. Your continued dedication to the advancement of our novel drug candidates. Thank you I'll call for questions.
Thank you at this time, if you do have a question that won't be star one once again that will be start one for questions. We'll pause for just a moment.
[noise] [noise] her first today from John Newman with Canaccord.
So I guess the warning thanks for taking my question.
So the question Tom I believe she.
Sure.
Do you see paired remarks that you expect.
Divestiture to be finalized with next several months, but you also talked about protecting the value of that asset.
What are you, saying that's.
As a company you have concerns regarding the timing of the divestiture or do you have more concern regarding the terms of each of us. Thanks.
Hey, John its its Steve Thanks for the question.
Its a combination of both.
We.
We believe in it.
The statement that there's.
There's been some down here too.
The bodies the program.
Just by definition inherently a divestiture process.
It is going to go into caused that there are somewhat standard provisions and are likely to graeme about putting forth.
Reasonable commercial efforts.
Regarding the program and that's just not something maybe magazine as has been able to do a throughout the divestiture process.
I believe you're aware they they've already done.
One reduction.
And in the first quarter early in the fourth quarter, 20, Twond and announced yesterday on their conference call that.
They are going to another significant reduction.
So what we're looking out is it.
It is twofold, we we have some we believe we have some reasonable influence we want to make sure that the next I want to recall about leasing is capable and committed.
But in addition to that we are looking.
As I mentioned closely monitoring the process too and we're prepared to.
To make sure that car rights are protected and damages related to the body program or are resolved.
Mhm.
And just wondering.
As a possibility that you.
We'll go to regain yes. It through this process that you're considering if so.
Would you prefer to commercialize on your own or would you also explore potential opportunity to be license, yes. It. Thanks.
Okay.
I'll.
I'll I'll stay on the on the buy leases and call Tonight any color.
With my response is completed its.
There was a potential having to work where pallets and actually we getting satellites to two by leasing.
We're very cognizant of that.
Based on certain components your confidentiality factors, we call and I really can't expand on that.
But we are making sure that if that if that type of event transpires, we always prepared as possible.
Regarding the second half of your question John.
You know there there's it's not something that that we're prepared to state that if we got it back that we would absolutely.
You don't commit ourselves too.
You know health care franchise.
Okay or are we license if it wasn't likely would be a combination of both of those paths.
We don't have the comedy we don't have that type of infrastructure.
In place, we frankly is gone into a different direction from from female health care with his colleagues.
The company has really conveyed.
Regarding our programs at me I think on Italian auto immune, but you know we're going to make sure that those that's of RBC has the best chance of having the nominal value to the to the shareholders.
That's chances that it's in Palatins handful a period of time that period of time could be.
Could be a year could be greater oh, but we.
We would even structure something whereby we've had the flexibility optionalities whereby if it made sense or would we consider we license it absolutely.
Great.
Yeah. Thank you.
Yeah.
[noise] well hear next from Joe Petronas with H.C. Wainwright.
Hey, guys. Good morning, Thanks for taking my question, obviously, you want to continue in Carl I'm glad you're doing well on your prior comments so.
The statement that you make that divesting that the divestiture process is also adversely impacted sales I might that might be a little bit of a stretch right now would put you on the spot, but it's my understanding that you know a mag as part of the contract.
It is essentially or what's required to continue with good faith to keep the franchise intact and growing so with that said are we starting or have we entered sort of the legal arena now with regard to potential breach of contract.
Oh My Gosh why don't you described unless you can jump in.
No we haven't.
We.
Our best favorite outcome.
Be that the divestiture of CUDC occurs in a manner.
That is after the product.
Any recourse to legal action I think you have to understand whoever that we believe by these he has substantial value.
We've had many conversations over the years about that value.
And we will do.
We will protect that that we think it's a highly valuable assets and the reason why you know make statements, but you know.
<unk> legal savings that we have or to make sure that it's clear that you know we are you know to the shareholders that we believe there is value and if we have to we've got to protect our rights.
To ensure that this I believe see winds up in a home with the property committed to realizing that value.
Yeah, I don't want to add up anymore.
No I'm I'm Gonna go with what you say the call you said it very well so I'm I'm good with your statements.
Perfect No that that's very helpful. I appreciate the clarity and then the second part of the question is just wanted to focus on you know where you already have existing partnerships and you know markets that can be addressed in the relative near term just wanted to check for example on are there any updated timelines with regard to approval in China, and Korea and for your ex U.S. part.
Your ships that currently exist I know there needed to be some potential or short term PK bridging studies wanted to check on the status of those thanks.
Sure.
Okay, yes, but we're preparing in working with.
Well, our Korean and Chinese partners, they've gone through extensive regulatory discussions on what they need to do a and really where in the process now providing drug product and what have you for them to start their studies you know what the impact will be we have not had any direct discussions yet with them.
What what if any impact that would be at the corporate 19 pandemic you know.
On the ability of them to continue those studies are getting completed on schedule.
I think it would you say say there there's there can be some slippage in their timelines, but what I see I feel very comfortable with it is.
Both of the Chinese and Korean partners have been.
Amazingly committed to this product.
We're in contact with them you know multiple times, a week or at really works very closely with them and they do appear to be quite committed to the product.
And I'm sure over the next quarter or so we'll get a better understanding as these trial start.
You know if or what impact that would be a though the pandemic closet and how that might affect eventual timeline.
Got it got good luck, guys and stay well.
Thank you.
[noise] and from Ladenburg Thalmann, we'll hear from.
[laughter]. Thank you Marty guys. Thanks for taking the questions I'm glad you're doing well step back on that leaves the a bit just give us an update on the communications that you have in Mag you guys in your I'm not sure if it's called the joint venture.
But you got exactly with them the marketing others, but then that shared agreement that you have are you a party with their conversations that they have you know who's making inbound interest what those discussions are or like how much they're offering that kind of as much detail do you have I guess, they're negotiating.
Yeah, it's up thanks for question, Mike What's that Steve I'll take the first part there due to confidentiality factors, we really can't go into a much detail other than to tell you that.
For the license or anybody that would be interested in taking over the rights from a bag would inherently invariably have discussions with us where we're not we're not at Liberty again due to confidentiality I love. The fact that has to go into any type of granularity, but we we are involved with with the process.
Yes, and we're working with him out because as Carl mentioned, we we want to make sure, especially kids that the next almost with by these he is the best home, but in the same sense, we want to protect our rights and and deterioration of value a antibody program, but we are.
Huh.
Friendly with Hey, Mike.
At this stage and has involved with the divestiture process.
[noise] just a follow up and that then I. Appreciate it's a situation you can't provide a lot of detail on but I'm just trying to understand from the outside here based on your contractual obligations their contractual obligations, how much youre able to prevent the sale.
Of those rights if it's something that's just two small by your estimation is it something you can put down on or is it something that they just simply have the.
They say, a 50 yard 49% situation, where they have the file say.
I'm going to its Steve again, Mike I'm going to go with which we just can't go into that type of specificity response wise or we're working with with what they Mac to to make sure. It's as good a deal what's possible for all the parties. That's that's about as detailed as I can get it at this stage. So hopefully you'll you'll appreciate just the.
The confidentiality factors around these types of things as he mentioned yesterday on their call within the next several months they'll be giving an update and we believe that update will be would be very well be specific.
Regarding the next steps with by leasing and as you recall there wasn't justify leasing program. They there were two programs that 80, Meg a there to a commercial programs related to the female health care franchises is what they strategically decided to to divest.
Yeah I.
Expect in fact, what a flip the process that benefit in some cases, maybe the late and others, but I'll move on appreciate your your feedback I understand you can't say a everything that we may want to hear on so a question that drive program, you've mentioned that a year over to restart the 90 643.
[noise] phase two up again in June what gives you confidence you know he started in June that it wouldn't be delayed until the summer or later in the summer [noise].
[noise] [noise] I'll say, because you know we bought the rather we work which is for us.
And Oh this is what they do their very specialized they've actually you know we've actually had the first cohort of patients.
<unk>, 90% of them actually continued with their monthly coming back every month, they were able to you know device processes to make.
Make sure examination rooms, and things were clean that appropriately and patients came back through.
They have a stable oh, a large stable of patients and large outreach to patients so when weve canvas them.
Canvas their patients there are more than as it's been sufficient patients.
That have expressed a desire interest to enroll in this study.
Obviously external factors can in fact that for example.
The states where these.
Mostly seismic northeast states, where where they may come in they shut down and say you can't do it but I think under the assumption that.
Yeah, there's a there's a groundswell I.
I guess you don't.
Common population in most states now, saying, it's time to get back to business I think that by June we feel comfortable that.
Well, we'll be able to open up.
Sure has developed and put in place systems that.
We'll ensure patient Stacey you.
You know, making sure that you know the appropriate P. E gear is in place that patients are space appropriately. So we've been working very closely with them to make sure that this study can begin its enrollment as quickly as possible of course, we always you know listen we live in a very uncertain world and and at any point.
Obviously, there can be a resurgence.
And maybe we have to shut down again.
That's the case, then we would obviously do take steps every necessary to ensure patient safety and the safety of the healthcare workers that are conducting studies what on the assumption that you will see a.
Lightning up of the Ori.
Lets restrictions on People's mobility.
It doesn't wear face bass social dismissing.
In most states, we should be able to reserve safely.
The study so what I can tell you is we worked very hard bid or.
Excellent job and getting the patients that we currently have room I was amazed that that I mean, it wasn't a logical borders maybe 20, some odd patients, but the vast majority of them, 90% plus has stuck with the study it come in on their for their monthly visits.
And your monthly analyses are and they will complete this month. So I'll give that guidance you know we have to get device you asked what we think the effective D.
June is our target date and at the moment barring a you know and external factor occurring or a government a change in something we expect it will start in June if it does we will have a page the study done and the data into the fourth quarter, which really is on schedule. So the impact can be.
Very minimal.
But it's a bit so that's the guys then.
Yes of course, the risk is of course, you know nobody knows what's going on with this virus and if it does resurgent resurgence and then we'll deal with it appropriately.
[noise] right now that's helpful. Yeah, I would think during recessions phase one sites have a troubled enrolling patients and I think more saw an issue of regulations. It sounds like you've got clarity on those sites in those states as they can start up engines out here.
Yeah, absolutely, we have and you know.
These are our prudently.
Two of the sites or sites. So they are under very tight control Oh, they're very limited staff that are there any necessary staff is there and.
They've been instituted the appropriate.
In guidance with the CDC and others.
And other government agencies Institute at the appropriate steps.
Keep in mind listen the help here I'm going to your general saved.
The hospitals and health care practice in this country are going to have starts to get back to work very soon.
The bare let's see tremendous amounts of money and they're going to need to get back to work I can tell you.
It's a personal experience at the hospice that I had you know family members that work at they are preparing to open up and begin doing surgeries I know I have family members that surgeons that are beginning to operate so this is going to change.
We have to get on with Vice and you have to get on with treating patients their patients out there.
It has to these conditions that have put on hold so hoax healthcare was going to open up again and I was kept treatment practice and open up again I think we can do this safely I know we can do it safely as we've been showing all through this pandemic weve treating these patients so.
I'm confident that we will need it.
But I always have to put the caveat all have to sit back. The mindset. You know, we we know a little bit about how the Cibers works and how is transmitted we don't know everything at any point you make a resurgence that will cause and other.
R&D in place.
[noise] a one final question, if I could and that's on the digital promotion. That's why we see the brand awareness that continuing is that something I imagine something you're not able to quit boots on the ground, but those digital ads can be pretty efficient.
Any feedback sports and those.
Its Steve Michael the in line with there with that reductions notwithstanding the feed on the ground. There. There's also been pulled back.
Regarding DTC and those types of things on the buy there she program.
All right back in there and there's bad.
Yeah.
Yeah.
Makes sense I appreciate the time guys. Thank you.
Thank you Michael.
Thank you my basic question.
And at this time I'd like turn things back to Dr. spin off for any closing remarks.
Well first of all thing I'd like to thank everyone for participating on our call certainly our Atlas and the questions. They asked helpless to clarify our communications to the investors that are either on the color that eventually listen to the call later on.
Well I can only say to all of you. This is we need an unprecedented times and please be safe practice resources disappearing wash your hands don't touch your face these things work.
And we really want all be safe and we hope that we can see a normalization.
This is activity in the near future. We look forward to obviously updating you the ways, we're going to do that in the future will certainly be different.
As we begin to get clarity on by the C and some of the exciting earlier stage for projects that were working on and we certainly would be doing virtual non deal road shows well see that we'll be out.
The company, we believe that we are in an extremely exciting position with as we transition.
At least the story will play out.
I am optimistic as I think see it is that there.
We'll be favorable.
And it will find a home with someone that will support it it's a great products. It's got a great label It works.
We know from the women that we've been talking to a that they like it people use it or.
And I'm optimistic because they hold and resumed its launch activities.
So that's it thank everyone you say, we'll talk to you soon bye bye.
And that will conclude today's conference again, thank you all for joining us.
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