Q1 2020 Earnings Call

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Welcome to be Q1, meddling Twentytwenty conference call.

This time, all participants are now or any listen only mode.

After the speaker presentation, there will be a question answer session.

To ask a question. During this session you want me to press Star one on your telephone keypad.

If you require any feather assistance. Please press Star then zero I would now like to hand, the conference over to your speaker today, Jeremy Feffer. Thank you. Please go ahead Sir.

Thank you Brandy and good morning, everyone.

Earlier today somebody would issued a press release announcing results financial results and provided a business update for the first quarter 2020.

You may access that released on the company's website under the investors tab.

Yesterday, or Sharon Malka, Chief Executive Officer, better word boys Girls movie Chief Financial Officer.

Following management's prepared remarks, we will open the call for Q right.

Before we begin I would like to remind everyone that statements made during this call, including the acuity session relating to matter was expected future performance future business prospects. Your future events. Your plans for forward looking statements is defined as a private Securities Litigation Reform Act would like to 95, although the company believes the expectations reflected he said.

Forward looking statements are based upon reasonable assumptions actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecast due to be impacted many factors beyond the control megawatts company assumes no obligation to update or supplement any forward looking statements, whether as a result of new information future events or otherwise.

Participants are directed the cautionary note set forth in today's press release as well as the risks factors set forth in Mehta with annual report 2019.

The information contained in other documents filed with the FCC factors that could cause actual results could differ materially from that was anticipated in the forward looking statements. This conference call is the property of metal wounded any recording <unk> rebroadcasting of expressly prohibited without the written consent that matter work.

At this time I'd like to turn the call over Sharon Malka, Chief Executive Officer Sharon.

Thank you Jeremy.

Good morning, everyone and good afternoon dollar leasing their opinions I.

Thank you everyone for joining got today, when I Love Fest quote that twentytwenty and in called which will provide business and financial updates related to the Colby 19 pandemic.

Fifth we I'm thankful to the Heska walk out for the critical EFL Entertainment and Kale Corbett 19 patients and I will go out to those affected by the Colby making been dynamic.

We would also like to saying.

All of our employees for their tremendous dedication commitment and flexibility demonstrate that do you want it likes is enabling us to carry on critical business function.

We ended up 2020 with great momentum after an extremely productive 2019 looking forward to dwell not exciting.

This call. It there has been unique and with the impact of the Kobin acting pandemic. Unlike anything we could have anticipated when do you began.

Let me walk through and Dave you what took place during the quarter for.

Over the past several weeks, we have implemented a number of major in response to pick up in 18 pandemic doing tool continuous manufacturing and supply of Nexobrid to has kept providers and patients with severe Ben injury.

Reinstituted globally remote walk policy, we thought that employees, who could walk from home.

Why do we implemented and modified to walk schedule.

Well the operational personnel walk and get to other facility to ensure the safety.

We leverage we have to outdoors and big data communication to continue I think two actions, we all thought they called us and to support completion in the region.

Well executive Oh, do well have picked up policies they think that access.

Hi, sportsmen Cabot in more details in a moment, we also implemented appropriate expense reduction measures and adjusted although operating plan for Twentytwenty.

Why do many of the Colby 19 related to distinction I stealing placed globally.

Now beginning to see the lifting well soon to be lifting of distinction in some countries and regions.

Any side the government approved lifting father distinction on businesses and public.

As it continues to gradually videotaping he's rise economy.

Meet the Corona by what's been Danny.

Then he opening.

Oh that he said either positive or take into right direction and hopefully it Stein offer better things to calm as we begin until the deal I don't know my looking.

As previously reported on our maps that D.

Due to the continued uncertainties and hospitals policies.

I think form the impact of the coping making prices.

We made the decision to temporarily suspending initiation of additional clinical sites and new patient enrollment in our U.S. Escharex phase two study for the treatment of things like ourselves.

Well it was difficult decision. It was the most rodin and rocky kind of course to protect the safety and ahead of our theme clinicians and patients.

Patient well already in the won't continue with that that treatment in accordance with imports of coal and so many told you think remote sites Monique tolling.

And no patients have been lost two follow up due to covert nicotine disruption.

I'm pleased to say that do we have what is your own patient screening and randomization Apollo esque IDE study in regions, where cleaning costs rise with fiction have been lifted.

In compliance with applicable to cover meant that Oh, there and clinical site policies and procedures.

What's the mentally debate act, which clinical trial resume will depend on several factors.

Yes on how state and local government policies he board, although the comic mine.

Second the readiness and ability offering to be do offered to see like Steve talked with you on cleaning costs rise.

And third the willingness and ability Beijing, we can't do the clinical setting.

In light of the fact that save a state have recently announced plans to lift distinction on cleaning cost wise, we are monitoring all sites and stand ready to swiftly we view and to what demand at all side I soon I think he's brought the cost.

Consequentially the interim assessment is currently anticipated in defense half of 2021.

Next up lead has been less directly impacted by depend damage, even the critical nature of superior ban injuries.

We continue to enroll patients in the next simply the expenses program at the U. S band Center.

Additionally.

Patients longtime follow up safety data collection, you know people thought phase three detect study easy ongoing.

We are continuing to move fold, we don't plan and preparation for the next to bleed BLE submission as these activities have not been D disrupted even without a multi well he won't walk doctors.

We continue to target the P.L.A. submission to the F.D.A. in meat Twentytwenty.

And look forward to U.S. commercial launch bio Pos now very sad appoint a pullback.

On the manufacturing font.

We feel really continue operations, maintaining a significant safety stock off all tivo materials and be sufficient inventory next to bleed on hand to meet expected demand over the next several quarters.

At this time.

The company does not expect any disruption due its manufacturing operations and global supply chain.

For lumpy initiation of Stifel Cume into next to bleed full emergency response and any of this year by BARDA.

We began manufacturing next up lead and building and emergency stockpile.

Due to shifting priorities related to the pandemic.

Bob that requested an adjustment to deliver the plan next up we'd emergency stockpile.

The fast delivery of Nexobrid is currently expected in the third quarter of Twentytwenty why did the majority off the deliveries will occur in 2021.

On the commercial front.

We continue to support has skip, especially not utilizing biju outdoors, well access was the scripted and chewing on interrupted access to next week.

In view of the challenges of the Heska sees them. They died in society of Burns said JV published an official guideline full band patient treatment doing to cope with 19 pandemic Inreach eat the recommended to shift mall burn patients from said you got it.

In two old nonstandard, Chicago, and the Multicare you know the to alleviate the burden on acute care stuff and inpatient although they think cool.

Since the beginning of Twentytwenty, we expended next to bleed global brass and with new distribution agreements in international markets, such as Australia, and the grain in a wage.

Commercialization is subject to local marketing up on.

In addition, we expended next couple in fuel Pantheris then.

<unk> distribution agreements in France, Switzerland, and I did you currently.

The next somebody is already Apple.

The addition of these distribution agreement you then extension or follow global commercial strategy to maximize Nexobrid. Macbook, then shot as we continue to the fed up next to bleed into a meaningful cash generated I think border.

Finally, we enhanced our board to weed death fundamentals Temozolomide.

And David folks Salmon debuted a highly respected seasoned professionals, who brings unique insight as we go out of a company and moved to also be station and commercialization.

No.

It is my pleasure to attend the call over to bought to provide more details on our first quarter financial results and additional details on other although all financial position and covered 19 response then.

Please go ahead.

Thank you show on and good morning, everyone.

I would like to start with its financial overview, our response to the club evening in crisis.

Yeah, but just you know what twentytwenty operating plan and implemented prudent measures.

Reduced operating expenses and the pairing nonessential capital project.

In order to review the company's cash utilization, while maintaining flexibility for additional expense reductions in future.

Necessary.

As a result of that's correct study patients to one of my suspicion variable costs associated with the clinical trial will lead to cost saving in the short term.

Additionally, the over on a g. and they call it wouldn't be viewed on a 91 basis.

I would like now to provide he was an update on our financial performance for the fourth quarter Twentytwenty.

Revenues for the fourth quarter Twentytwenty were 4.4 million versus Europe when phenomenon in the fourth quarter 2019, primarily driven by revenues from development services.

Gross profit for the fourth quarter Twentytwenty was one thing to me doing compared to a 0.2 million in the prior year period.

R&D expenses net of participation for the quarter, My 1.7 million compared with a once in scream again for the fourth quarter when can maintain.

Hi, My really driven by Escharex development costs.

<unk> expenses for the quarter were 1.7 million compared with 2.4 million for the fourth whatever 20 linking.

My only as a result of course containment measures and onetime costs in the fourth quarter 2019.

Associated management changes.

Operating loss for the quarter was 2.2 median reduction or 38% compared it was a loss of 3.6 and again in the fourth quarter. When do you think.

The company's net loss for the quarter was 2.5 million or north of nine cents per share compared with a net loss of 4.1 million.

No. So 15 cents Fischer for the fourth quarter when thinking.

Adjusted EBITDA for the quarter was enough to 1.8 million compared it was a loss of 2.9 million into fourth quarter 20.

19.

Reconciliation of adjusted EBITDA to GAAP net income is included in the press release, we find it was nice to see earlier this morning.

Operating cash flow for the quarter was 2.1 million and there's a march 31st Twentytwenty. The company had cash and short term bank deposit.

27.3 million and carried no debt.

The company will continue to invest primarily in research and development efforts for me correct.

In reiterating or expectation Kashi was operating activities and twentytwenty, two beans or range of eight to 10 media.

Well, ladies times, a company cannot predict kazakhstan or duration the impact because it could be thinking outbreak on its ongoing financial and operational results.

We'll continue to closely monitor our preparation and this is the impact.

He called me thinking.

With that I have concluded the financial overview.

I'll now turn the call back over to Sharon.

[noise] Thanks bought.

Despite the uncertainty caused by the company 19 crisis.

We remain highly confident in the fundamentals of our business.

We appreciate the support to follow bold and we are also grateful for the tremendous effort and commitment to follow management and employees.

We face these pandemic do good though.

We are fortunate to have a strong balance sheet to help us whether the stall.

Hey, Scott God. He is once again underway at most clinics and we eagerly anticipate our next up would be late filing soon.

Oh, the confidence in our thought that you and now a program has not wavered.

We will continue executing our plan and actively progressing towards save it on meaningful milestones in both broke ground.

That concludes our up with both of them out.

Now I'd like to open it up to open the call for your question operator.

Thank you would like to ask the question. Please press star one.

Keith.

My first question comes online.

Jennings with Cowen.

Hi, Good morning, Sharon I'm bullish things for the <unk> I was hoping to started on a couple of questions on Nexobrid first and.

Good to hear the <unk> filing timing is unchanged maybe you could just help us think about what what steps are left in the submission process and what are the risks of hitting that timeline is as mid year 2020 years.

In the coming coming weeks two months.

Mhm.

Thanks, just fall day question.

Hey, we are pleased we day I'll be Les Paul good into collaboration we have we thought they sell team and follow the team.

And as I've said before despite to cope with 19 options. We remain on track and we did preparation and submission and believe that we would submit the ballet no later than early July.

Yeah, I'll comment he had to find that stage Ofyou know.

Thank you away all the different models publishing and be out there.

Excellent thanks for that extra color.

But the brought border procurements.

I think you're talking about this third quarter.

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So.

Our earnings call talked about assuming nothing until 2021.

Just wanted to sanity check.

Messaging.

The difference between your timeline today it was a good enough.

Just wanted to checking on that and also on the same.

In the same theme.

Since historically assume kind of a straight line.

Sure.

Revenue modeling perspective.

Timeframe and then.

Think about that type of modeling in terms of BARDA.

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Steady steady flow.

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Thanks for the question so to put that's all understand page, we do our expectation.

Oh, we thought we'd there our previous announcement, which ended specified defense delivery by end of the first quarter Twentytwenty why do we have also indicate that the dot their revenue recognition. It's like it's okay topping from second quarter due to both acceptance process. It.

Put on T. initiation of the book fuel procurement of next subway full emergency response earlier. This year. We had met anyone began manufacturing of Nexobrid and building any magic to stockpile at 84 delivery, which is currently we maintain it in either right.

But that requested an adjustment due to the Cobiz 19, and shifting priorities to Delever the plan well think simply the imagine stockpile.

While the definitive delivered a plane he's not yet schedule.

Based on recent discussion we have we do we had we bought adopt defense deliveries currently expected in the third quartile Twentytwenty followed by subsequent deliberately India falling quote though.

So we do expect because they've been you spoke about document into second half of Twentytwenty why they majority off that they leave it would have gotten twentytwenty wine and they know it's played I'd say as we said before coming to see a quarterly revenue recognition stopping form the so called though going forward.

Excellent.

That's correct.

Thinking about.

Analysis timeline.

21.

Targeting 100 patients for that.

Uh huh.

Yes.

How should we thinking about.

Overall travel enrollment completion time lunch.

That sometime in 2022.

Mhm.

So it does show time set for the first about the question. These debt that day targeting Nondeal patient <unk> two full day and interim assessment is down to 100, Isaac the finding that both of course.

Yeah, what they can show we do stuff we are basically.

Got to be able to fume the study in regions, where they shouldn't have been lifted.

And we now can skiing and onto my station I.

As you may recall that first quartile twentytwenty wants to sit appeared to be say study focusing on site openings and staff training.

Patients, who already and the old before we suspended study you only to set up in the old continued the treatment in accordance with the study both of cold and wet money told using the most sites monitoring tools.

None of these patients have been lost two follow up due to the Colby 19.

In light of the fact that several states up recently announced plans to lift the they Chen we have money tolling side by side and that the ready to swiftly doom and the whole meant that the oldest I soon as it is black because.

And I believe a death, we need more time to evaluate the pace of fleet growth man.

Which is you know subject to to be a main factors. One is a school big governmental policies, which is evolving and hopefully in the coming gay and mines to see more and more lifting distinction to their readiness and ability often D.V. do I facilities to your own clinical trial.

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Side by side policy, and Theres, one which is not placing both it.

He's their willingness and ability of patient to it down to clean it kind of setting.

I said it previously we expect to have our interim assessment in the first half of Twentytwenty and lastly to a question regarding get potential metrics, we plan to shed and metrics on the ex Cat IQ study why stay uncertainties, David and we will provide you with more insights or <unk>.

The progress and equipment base.

And then just.

About you've historically talked about it second trial with Escharex I believe in either.

Yes.

Based off of the interim analysis and that could potentially start.

I mean any updated thoughts strategies on.

Potential second trial, thanks for taking the questions.

And thank you. So currently we do not change this strategy the stuff that you remain the same means.

Same plane.

And that's you know we out.

Got that that even company and based on that thought that that do we will have entities that into inculding later on and to find out it and if that's what the study piece will be day that that that to be used to discuss with the FDA and cost within the next step off the development and our plans I meant this thing.

Excellent. Thank you.

Thank you.

Your next question comes from the line Kevin.

Oppenheimer.

Okay, great. Thanks for taking my questions guys.

Can you talk a little bit about.

You know changes you may be seen in response to code at 19 and in practice protocols specifically.

You know have you seen is there any survey work or plan to do any survey work yourself to capture whether or not there's a shift away from surgical debridement towards nonsurgical methodologies and how are you thinking about the best why choose to monitor weather.

There are well in fact fee sustain change and.

Burn protocols with regard to.

Broadband cleaning alone.

Thank you for the question Kevin So generally speaking I'd say said before we know that makes it would have been less directly impacted by depend damage keeping a click on mix nature will disappear ban.

On one hand, it we've been discussing a week time of day Benson does and we are keeping a close the relation with all our customers and how they called US saying to you it part of their clinical settings.

And which have been communicating.

Okay on the fact that we did less industrial activity.

Hey, let's Ben patient have been admitted for treatment. They recently I.

Having said that on the I did hand, we live in coal Lynch formed a recent guidelines such that they talent guidelines that recommending to shift Mallaband Beijing and treatment form that says he got these men the walls and non surgical treatment or specific most specifically to the nonsurgical ends the Mikael.

No the to alleviate that burden on acute care stuff and invasion operation a home.

And we believe these whelan hey next to bleed as it stands out of scale and underscoring its all as often you might think debridement full burn care in emergency.

Great. That's extremely helpful. And then maybe following up on some of the earlier questions with regard to metrics to think about you know enrollment of yeah spark Saudi I appreciate that.

There's a lot of uncertainty is at the moment, perhaps you know you can frame for US, though you know what portion of sites that were were opened during Q1.

Our under current local regulations, all allow to consider re and re initiating patient enrollment.

Into the study you know is it the 90% isn't 60% or the science to true up and because it is a little bit difficult.

Measure just given how variable and heterogeneity somebody is local policy, it's hard to understand the impact on a specific study.

And again to ask your question Please press <unk>.

The one on your television.

Your next question comes online game.

<unk> Wainwright.

Good afternoon Sharon.

I hope you're going to some doing well.

Most of my questions have been.

But just just wanted to follow up a little bit on day Nexobrid Liberty to BARDA.

And just trying to understand.

Oh, how confident you about your delivery timelines you know considering quoted 19 and also.

Confident or Youre BARDA.

I'm going to the whole procurement not only for the.

16 million initial 16 million, but also the additional.

Jim and that you've got do BARDA that.

Hello.

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Yes.

Hello.

[noise] excuse me this is the interim operator.

Thanks.

Corruption peace Sweet spot as one of our speakers has lost connection.

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And it's just the operator, we do you have our speaker back on you may want them with your question.

Sure. Thank you.

Oh sure own book was good afternoon, and you guys hear me now.

Yeah, Yeah, if I thought I apologize to all and Kevin I Hope you have you've helped my a response to a question if no I will repeat it.

Go ahead out gate.

Okay and then thank you for taking my questions as it was saying most of my questions have been answered, but just trying to follow up on the Nexobrid delorey to BARDA.

How confident are you on the on on deleveraging and all the current procurement order and also your confidence on BARDA not only linked to this to the 16 million, but also that additional one that there that you had announced earlier.

I'm just trying to.

Get a feel for like how confident are both of them are going to happen.

So we I, we started the fed fund the committed one which found that a initiate initiated the procurement earlier. This year. So for that part of the 16.5 million growth. We are a fully confident are highly confident as you said, we in and began manufacturing of.

If there is talk and we stockpiled currently destock and maintain it in he's I'll tell you will be able to deliver it in light of the restriction as early as thick channel and the other fiction as a result of the coffee 19.

A foreign those with fiction and due to shifting priorities by the Jack requested an.

Adjustment to the day original deliver plan, which we made and currently we are discussing together about an hour theme and currently tentative delivery a date for the first delivery is expected in the third quarter early third quarter means that we're highly confident that.

We do expect to recognize revenue in third quarter and in the fourth quarter going forward to 2021 as to the second part which is the auction of BARDA to increase day, a procurement by App to additional $50 million. This is subject to.

About the sole discretion and as a reminder, deception can be utilized on.

Targeted to be utilized idea why when they initiated stock will be expired in order to update these expiry stock or to extend or increase the safety stock that BARDA a defined originally back in 2000 a 15.

Okay, Great and then on the on the Escharex study.

In the United States, maybe I'm not sure. If you answered. This question, yes, how many centers are open.

At this point traditions randomize randomization.

And how it was how's the randomization going.

At this point.

Okay. So.

I will repeat what I they started to respond to campaign before we hang the often it provided the full I answer at when at the date of the suspension of the study weve been any position that about 20 side, although all with active after its type is ready for an all man.

Our plan is to have a as a reminder, about 25 to 30 sites over all of the majority of them in the U.S.

Currently falling to discussion with P. eyes in a inputs we get from the site, we resumed their activity insight in regions, where restriction of being lifted and we have about 70, 75% of the active sites already and we plan to gradually Oh.

All of the older 25 sites in the coming fuel mine subject of course to local government policies involvement over the coming months.

Okay. Thank you very much thanks for taking my questions.

And we do have a follow up question.

Kevin This is there with Oppenheimer.

Okay, Great I'm, just really a housekeeping question for me can you.

Right just the some additional metrics as to how to think about within the $8 million to $10 million.

Burn guidance.

You know a range of assessment for potential BARDA procurement contribution or or or some other metric with regard to the topline contribution you're just to be able to more fully appreciating perhaps the magnitude.

Somebody operating expense adjustments you described in the call.

Thanks, Kevin for the question I will turn the call over to blood and they will respond to provide you with their Antiplatelet hi, Kevin and first a you know we'd like to mention that we feel very comfortable with our liquidity position.

The cash we haven't hand, and you know the frankly I've no no adapting.

The next agreed is it kind of generated for that.

A you know why maybe the shape of revenues from BARDA decrement to 2021 of the shown indicated.

We expect the cost saving in the short them.

As a result of the Escharex study suspension and and we've actually it's associated ramp of course.

In addition, we've also a for.

Some of the capital projects in order to reduce the cash utilization.

So overall I think if we look at the range and the operating it previously I think not right now is that not only that we've maintained.

Great. Thank you for that.

And there are no further questions at this time.

Okay.

Thank you everyone for joining got today.

We look forward to continue and executing on our strategy.

And bringing new therapies to market and to updating you again on our next quarterly update call. Thank you another great day.

This concludes today's conference call you may now disconnect.

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