Q2 2020 Lindblad Expeditions Holdings Inc Earnings Call

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I'd like to welcome everyone to the liquidity technologies second quarter 2020 furniture result in corporate update conference call.

This time, all participants are in listen only mode. Following the presentation [noise].

A question and answer session instructions will be provided at that time for you to queue up for questions.

If anyone has any difficulties here in the conference. Please press star is zero for operator assistance at anytime I.

I would like to remind everyone that this conference call is being recorded in I would now hand, the conference call over to Jason The Dare Vice President corporate incorporate development strategy.

Thank you Christine good afternoon, everyone welcome to Liquidio second quarter 2020 financial results in corporate update conference call. Today's call will include forward looking statements pursuant to the private Securities Litigation Reform Act of 1995 based on current expectations such statements represent managements judgment as of today may involve significant.

With that uncertainties that could cause actual results to differ materially from expected result.

Please refer to liquid is filings with the FCC, which are available from the FCC www dot FCC dako or from liquidity as web site at the equity at Dot Com.

For information concerning risk factors that could cause such differences and otherwise affect the company.

I would now like to turn the call over to Neal Fowler CEO of Liquidio.

Good afternoon, and thank you for joining us on the call with me today, our rich cats, our Chief Financial Officer, Kishore Shah, our Chief Medical Officer, He joined US in May as well as other senior members of our company who are available to answer questions if needed.

Before Richard I jump into describing our accomplishments from the second quarter I wanted to express how excited I am to have to shore joining our team at a pivotal moment and our company's evolution.

Transitioning from Teva Pharmaceuticals, as head of global specialty clinical development to shore brings nearly three decades of clinical development experience across respiratory immunology and neurology.

It's quite clear that ishares, our passion for improving patients' lives.

We're excited to have a support and helping drive the approval of our products and strengthen our strengthening our pipeline in the years to calm so welcome again to shore.

Like most of the country to second quarter of 2020 found our team adjusting to a new way of living and working under the threat of a global pandemic.

We quickly adapted and continued to build on the momentum from last quarter as we strengthen the company's portfolio leadership and balance sheet.

We had a strong start to the quarter with the FDA acceptance of the likely late six one India.

As a reminder, eightsix, one isn't inhaled dry powder formulation of Treprostinil.

Prostacyclin analogue used to treat pulmonary arterial hypertension, our PPA age by targeting the pulmonary arteries. We believe that 861 has the potential to maximize the therapeutic benefits of treprostinil by safely delivering higher doses directly into the lungs, using a convenient palm sized dry powder inhaler.

Our team is well prepared to support the agencies review, which from our point of view has not been greatly impacting during this pandemic.

With a November 24th PDUFA goal date on the horizon, we will provide relevant updates when needed but for now all eyes are focused on the ended the year milestone.

In addition to agency interactions, we continue to engage the medical community at virtual conferences with clinical data from our pivotal inspire study.

In April we presented the final safety and Tolerability data from our inspired trial at the month to time point confirming that Eightsix. One had met the primary endpoint and potentially offers a convenient safe well tolerated option for inhaled prostacyclin therapy.

And last week, we released data on six exporter exploratory endpoints from the same study through a virtual presentation at the American American thoracic society or Ats annual meeting.

While we can't draw any conclusions on efficacy from the open label uncontrolled study, we do believe that the observations further illustrate the value of inhaled treprostinil.

Overall, when compared to baseline we were pleased to see at month to that.

Most patients maintained or improved New York Heart Association functional class.

They are median six minute walk distance increased.

Their quality of life improved as measured by the Minnesota living with heart failure questionnaire and.

And that a greater percentage of subjects met two or three PPA each low risk criteria.

And we did not see clinically meaningful changes in NT Pro BNP.

We did observed that the majority of transition patients preferred our 861 dry powder inhaler compared to their tyvaso inhalation system.

The detailed data from both presentations is available on our publication page and continues to generate significant interest among physicians and patients to use eightsix one if approved.

We must also note that the FDIC ability to approve Eightsix one is subject to recent legal actions taken by United Therapeutics.

In June United Therapeutics asserted a patent infringement suit against liquidity under the Hatch Waxman Act in the US District Court of Delaware.

While we do not comment on the strategy of our legal actions. We believe these patents are invalid and not infringed by the practice of Eightsix one.

And we will vigorously defend the suit and our freedom to pursue the commercialization of 861.

Lastly, we closed the quarter announcing our intent to acquire religion and a subsequent raise of $75 million in gross proceeds.

The combination of these events clearly establishes liquidity as commitment to the ph community expands our capabilities and strengthens our financial position.

We believe that the strategic benefits of the merger once closed are clear.

It improves liquidity as position to provide a broader ph offering to patients should eightsix one be approved.

It adds a profitable business unit from rare Jun operations through the sales of Sandoz is first to file generic version of Remodulin, the peripheral formulation of Treprostinil.

We add new board members with deep experience in public companies with commercial revenue and PA and Paul Manning and Roger Jeffs.

And it provides potential synergy with rare agents commercial strategy scalable ph infrastructure marketing capabilities and relationships of hospitals specialty pharmacies and national and regional payers.

We are trending liquidio will remain separate entities until the shareholder vote. Later this year after which both companies will consolidate under a new holding company that is expected to trade under the ticker symbol El Cubo da on NASDAQ.

We look forward to the time, where we can speak about our combined business, but for now we'll remain focused on the operations of liquidity.

And to that point I would now like to turn the call over to rich to review, our second quarter financial summary.

Thank you.

For the second quarter revenues were.

Zero on that compared to 8.1 million for the second quarter 2019.

You might recall during 2019, we had recognized 8.1 million of deferred revenue in connection with our inhaled collaboration with GSK, hi that was terminated around that time.

Cost of revenue I was zero.

Second quarter and that compared to 0.8 million for the second quarter 2019. This decrease again was due to.

Decrease in revenue.

Cost of revenue as a reminder, represent sublicensing fees that are paid to the University of North Carolina, when we recognize licensing revenue from the intellectual property that we license from Uxc.

R&D expenses were 8.5 million for the second quarter, 2020, and that compared to 10.7 million for the comparable period at 2019.

Decrease of 2.2 million was primarily driven by a decrease in clinical trial related expenses of 2.8 million, partially offset by a point 5 million increasing consulting fees.

DNA expense.

5.2 million in the second quarter of 2020 that compared to 2.4 million for the comparable period in 2019.

The increase of 2.8 million was primarily due to a 1.5 million increase in legal expenses.

In connection with the research and acquisition intellectual property.

Litigation related expenses.

Net loss, then putting that together was 13.9 million for the second quarter 2020.

That compared with 5.9 million for the second quarter of 19.

The increase of 8 million again was primarily driven by the.

Decrease in revenue and cost of revenue.

As compared to the 8.1 million it was recognized.

2019 of revenue and point $8 million.

Additionally, we had as mentioned in increasing GNS expenses that was partially offset by a decrease in R&D expenses.

Cash position as of June Thirtyth, we had $23.6 million no cash and there were 28.4 million shares outstanding.

July 2nd as noted we.

Our success successfully executed an underwritten public offering of 9.375 million shares price at $8 apiece.

Resulting in gross proceeds of 75 million and net proceeds of approximately 69.8 billion.

I'll turn the call back to deal.

Thanks, a lot rich.

So in summary, we closed another eventful quarter for liquidity of.

Positioning us for even greater growth into the future.

And while our actions and results are easy to describe we also hope that you hear what belies our successes dedication to execution in a commitment to patients. We were founded on the belief that our technology, but equally important our people could advance the treatment of disease beyond the current standard of care.

More recently the company. We are building holds at its core the tantamount belief that advancing products for the greater good in the face of scientific challenges clinical whore hurdles or competitors actions will drive value for every one it focused on a patient's life.

Our largest competitor has dramatically improved the lives of thousands of ph patients by introducing for Prosigna nearly 20 years ago.

However, we believe that more than one company is required to expand the clinical utility of that molecule by safely delivering higher doses directly to the lungs in an attractive and convenient manner all benefits made possible by a simple precise and uniform print particle.

Operator, we're now prepared to take questions from the audience. Thank you.

As a reminder to ask a question do we need to press star one on your telephone keypad to withdraw. Your question you can press the pound a heskey. Please standby, while we compiled acuity roster.

Our first question comes from the line of Kim.

Jefferies.

Hey, Neal this is Tom began to Chris a couple of questions around 86 one.

What do you see as the path to market rate six one.

And do you still anticipated determination by pizza.

To Institute petitions for inter part to review before the end of third quarter 2020 and.

One last one on behalf boxing litigation if trial began March 2022.

Do you have any expectation on the potential trial type trial lane. Thank you very much.

Sure Great. Good very good questions I'm joined here by Sean Good and who is our council and I'll actually turn your question over to Sean who can handle that thanks.

Thanks for your question.

So.

With respect to the trial date.

The hatch Waxman action.

The fact that trial to be.

About a week.

I think is the typical timelines for drug answers on those cases as far as the IDR timelines.

Institution.

The IP ours, we expected decision here in.

End of third quarter early fourth quarter of 2020.

And if instituted we you'd expect the final written decision from the patent office on those two patents to be 12 months later.

But the typical timeline for an IDR.

Okay.

Thanks that was going to your question. If you had another element to please please.

No just wanted to also get kind of on understanding of the path forward to market for a quick one are you still pending on commercializing yourself.

Any type of detail on that would be appreciated.

Sure ill take that question. The quick answer to your question is yes, our plans are to commercialize on our own we have.

From the beginning then very attracted to the commercial potential that Eightsix one has.

As I've indicated in the past two we were still excited by the relative efficiency of being able to launch and on our own.

And that it requires a footprint of approximately.

50, plus or minus sales representatives for the United States.

It's obviously a fairly.

Focus group of physicians and groups we need to.

To approach to get to these patients and and the community is obviously very driven toward great patient outcomes, which is what we think eightsix. One provides the opportunity to do so we as we sit here today, we still definitely hurt going down the road of doing it ourselves.

Thanks, so much that's it for me.

Sure.

Thank you.

Our next question comes from the line of Liana Moussatos from.

Bush Securities.

Thank you for taking my questions.

Hey.

Another question about VIP, our timelines you mentioned potential decision and to Q3 early Q4, and then a final written decision 12 months later on with the FDA half did we.

For that final written decision 12 months later or could they go ahead and approved 861.

End of Q3 early Q4 with a November 20 ports the deal.

Hey, Liana. This is Sean so decision the decision this fall from the cotton offices decision to institute the IP ours. So the IPO process generally begins with the with the petitioner, making a petition to basically asking the patent office to take a look at the pattern.

That's the phase we're in a at the moment.

We will find out of the patent office Real Institute the Eurs here. This ball our followed by the final written opinion of the patent office to invalidated or maintain the validity of.

As a general process with respectively.

The impact on the hatch Waxman action.

So that the 30 months day.

Is tied to the district Court case, so the district Court news to dismiss the case before the stay is alleviated, which then is the trigger to allow the FDA to give final approval of an anda.

So the IPO our decision itself would need to be entered into the court and importantly them move on the IPO, our decision and dismiss before the FDA would be clear to give final.

The final approval of India.

Okay. So it's that we see year and a half before that can happen.

The potentially coming.

A year from now.

Yes, I think this is Jason Liana I think we're showing thing is consistent with the things that we've expressed the last time, we spoke on this topic, which was because if you looked at the 12 month timeline from institution of the detailed review that our expectation is that we have a very strong case and based on that we feel that we have very high degree of confidence of being able to.

And validate patent ticked up to the.

The District Court and then hopefully move for summary judgment very quickly all in the end of 2021.

Those are our plan can make any you can't predict but thus far we're still planning to do just as we stated when we initiated the IDR in March.

Got it thank you very much.

Thanks Liana.

Okay, and ladies and gentlemen, if you have any questions. At this time you can press star one of your telephone keypad.

Our next question comes from the line of search.

The major from need him.

Hi, good afternoon, and thanks for.

Thanks for taking my questions.

Just one on the six one.

Given the PR process and the 30 months day.

There's a good possibility.

You will get 861 approval.

By the time sides pesos label has expanded Dion ph.

What are your expectations for the six one label you think it could be.

Dth, plus and what additional if not what additional clinical work would be required to together.

So hey, surges Neal I'll I'll take that yes, so our label by default would not include you're specifically asking about group three and we would need to do additional clinical work for that label inclusion. So while we we certainly are supportive.

And and believe in the group three.

On premise, we would need to do some additional work and obviously so first step for us is to get Eightsix. One on the market in group one and then we would need to do some additional work and submit to have that label claim for group three.

Okay.

Do you expect that additional work would be a whole pivotal phase three trial or something similar.

Through the development pathway for the current one for its one ph.

Yes, it's kind of hard to know because we have not had that dialogue with FDA, yet just to be transparent obviously it will be some the a body of clinical work will need to do we would like to think that would be an efficient.

Path, but we'll have to have dialogue with the agency to define that further.

Okay. Thank you.

You bet.

Our next question comes from the line of Jorg Gordon from Cowen.

Hey, guys. Thank you so much for taking my question.

So I guess.

Just a very brief one on the inspire study and exploratory endpoints that you mentioned.

Remarks.

You spoke about the majority of patients.

They preferred.

The Liquidio device could you provide any additional color in this.

Specific and I guess anything about the percentage of patients.

And generally what we learned to.

Through this through this trial that could help market the products.

Inventory once its launched in the market and the and then I do have a question for Sean as well.

Good.

Yes.

So do you like to short.

Yes, yes.

Yes, thanks to Charlotte.

Yes, absolutely.

If you look at the poster that we presented at the Ats virtual meeting.

Just capacity recently.

You'll see that that data was presented as part of that poster and what that data shows is that.

At the end of the study about 85% to 86% of the patients.

Strongly prefer the liquidio dry powder products relative to the takeaway so product that they were using previously and another 12 and a half with 13% preferred our new product. So most people who had the opportunity to try the dry powder and had use time.

So before.

Preferred the dry powder products versus their individual product.

Great that's helpful and I guess.

A question for Sean I'm, sorry, but could you walk us through how the recently issued seven to nine three patents from United affect your ability to launch is.

The IPO reviewing validate the other two patents.

Would you need to wait for the resolution of the litigation and where would displaced the launch timing would you need to have two.

To the pool lawsuit basically duration if this happens.

Hey, George.

Thanks for the question, yes, so to be clear the 30 month day is triggered by and based on the.

Patent infringement allegations under the six six and a nine on one patent only.

The layering in of the 793.

As an event that happened after the window.

To trigger the 30 month day, so 793, while it's still in the same litigation that does it is not.

Supporting the 30 months say.

So for example, if the court dismissed as the case after the IPO ours of the over six six or nine to one and an example situation that would distinguish the 30 months day, even if the 793 was still in litigation.

Got it and despite this patent being.

Valid you would be looks to be able to launch.

You would you you would be able to loss.

In a scenario that is typically referred to in the industry as launching at risk.

Got it Doug Thank you.

There are number questions at this time.

Great well, thanks to everyone.

On the call today, we appreciate your time and appreciate the questions and everyone be say thanks again.

Ladies and gentlemen, just conclude today's conference call. Thank you for participating could you may now disconnect.

Yes.

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