Q3 2020 Liquidia Technologies Inc Earnings Call
Conference operator today.
I would like to welcome everyone to the Liquidio technologies third quarter 2020 financial results and corporate update conference call at.
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I'll now hand, the conference over to Jason that their vice President corporate development and strategy.
Thank you and good morning, welcome to Liquidio third quarter 2020 financial results and corporate update conference call. This 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 and may involve significant risks.
Uncertainties that could cause actual results to differ materially from expected results.
Please refer to equity as filings with the FTC, which are available from the FCC at Www Dot I think she darko orphan liquidity as web site at <unk> 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 power CEO Liquidio.
Thank you Jason and thank you all for joining US. This morning on the call with me today is Steve very cherish.
Interim Chief financial Officer, as well as other senior members of our company who are available to answer questions if needed.
We had a very active third quarter and that has not changed midway to the fourth quarter.
We have a lot to be excited about as a company with what we believe to be two outstanding assets. They want to wait chicks, one our dry powder version of inhaled treprostinil.
And our proposed acquisition of religion.
Regarding 861, we're very proud of this program and there are many reasons why.
Including.
A strong set of clinical data that we have delivered over the last 18 months.
A clear patient preference for 861 as demonstrated by feedback and they inspire trial.
A strengthened product lifecycle with an IP position into 2037 with our recent patent allowance otherwise known as the 135 patent application.
Covering patient treatment with Drypowder treprostinil.
The potential for an expanded market opportunity into pulmonary hypertension.
And most recently clear external validation of the value was 861 is demonstrated by the recent unsolicited license offer.
And as for religion later this week, we will hold our special meeting of stockholders, which was scheduled for November 13th.
With this acquisition we are excited to participate in the P.H. marketplace. Later, this year and partnering with Sandoz will open opportunities to build key relationships within the P.H. community prior to the potential approval of Eightsix one.
What's closed the merger will change the profile of Liquidio is we will become a fully integrated by a foreign company that can further support the P.H. community.
The merger will add a profitable business unit in religion through the sales of generic remodulin.
Adds two additional highly experienced board members and Paul Manning and Roger Jeffs and.
Provides liquidity I would the scalable ph infrastructure that can be leveraged for the potential launch of Eightsix one.
We look forward to realizing the full potential of this merger and we'll provide further updates once closed.
No clearly we've had a lot of moving parts and I would like to take the opportunity to walk through the details of these activities and reinforce the reasons why we believe we were on a path that represents values.
For our company and our stockholders.
Let's first talk about like you wait six one and our regulatory path.
We continue to be encouraged to see that more than 70 patients have been treated with 861 for more than two years and we remain committed to making this product available for all patients.
As such we are very focused on the FDIC approval of 861, which has a PDUFA goal date of November 24th 2020.
We firmly believe that 861 is a meaningful innovation that has the potential to maximize therapeutic benefits of your profit nil for patients with P. age and we continue to support the FDA and its review of the 861, India.
As of today, we remain on track with our PDUFA goal date.
That said as other companies have reported the F.D.A. may be unable to conduct preapproval inspections. Prior to PDUFA goal date due to restrictions on travel due to code the 19th.
In August the F.D.A. did communicate that preapproval inspections of two U.S. sites involved in the manufacturing of 861 would be required before the FDA can approve the Indy acreage six one.
We will continue to work with the FDA with the goal of completing the preapproval inspections.
To date these inspections have not occurred.
Importantly should there be a delay on the F.D.A.'s review of Eightsix, one of any kind we have no reason to believe that resolution of these issues could not occur prior to the end of the 30 months stay or sooner with resolution of the hatch Waxman litigation, where we believe we will prevail.
We will continue to provide updates on the FDIC or viewed as needed.
Another area, where there has been a lot of activity surrounds our legal and intellectual property property efforts.
First we have established a strong patent position freight six one through the 135 patent allowance.
In August we were pleased to receive a notice of allowance from the U.S.P.T. as for our 135 patent application related to 861 covering methods of treating pulmonary hypertension ph.
Not just pulmonary arterial hypertension with doses between about 100 micrograms to about 300 micrograms of dry powder treprostinil.
The dose range and this patient is important when you consider the greater than 70% of patients who have been enrolled and the inspire an extension studies tighter.
Hi traded to 861 doses of 100 micrograms or more.
With no maximum tolerated dose yet established we feel the 861 has the potential to increase the clinical utility of Treprostinil.
Allowing patients to dose to relief not tolerability.
Once issued the patent which should expire no earlier than 2037 will substantially strengthen liquidity as intellectual property position with respect to dry powder and held for Prost Anil in pulmonary hypertension and represents an important milestone for 861 on its path to potential.
Commercialization.
Regarding the hatch Waxman litigation.
We also continued our efforts to defend against the complaint filed by United Therapeutics, asserting patent infringement against Liquidio under the Hatch Waxman Act in the U.S. District Court of Delaware and are pleased with our progress to date.
In July we filed our response to this complaint that included counter claims of insularity non infringement and Orange book Delisting of two U.T.C. patents related to the manufacturing a for profit Anil.
Liquidity also responded to the filing of an amended complaint by United Therapeutics, asserting infringement of an additional recently issued patent 793.
Importantly regarding this patent judge Andrews presiding over the hatch Waxman litigation recently denied United Therapeutics motion to dismiss Liquidio is invalidity defenses in counter claims.
And in July Judge Andrews also set a claim construction hearing from May 2021, and set the trial to begin in March 2022.
In addition to our strong arguments of non infringement and validity in district Court. We also pursued an offensive strategy a filing inter parties review for those six six and 901 Orange book patents list that are listed in an effort to shorten the hatch waxman timeline.
In October we reported the patent office instituted one IDR for the 91 patent and for reasons, we don't entirely agree with the patent office denied institution of IP are on those six six patent.
While disappointing that the patent office did not institute IP on those six six patent we're confident the technical and legal patent of elements involved with the nine one IDR will continue to benefit our efforts against those six six Pat a sister patent to the nine one patent in the hatch Waxman litigation.
As a result of the split decision. It is less likely that we will resolve the litigation and 2021 and we are focusing our business planning on launching 861 towards the second half of 2022.
Given this timing we are acutely aware of the need to optimize our cash runway into.
In July we augmented our company's balance sheet with the close of an underwritten public offering that generated net proceeds of $70.3 million our biggest raised to date.
After the appointment of Steve very terrorists as interim CFO in August. We also began implementing actions to slow our monthly burn by prioritizing our 2021 investments around strategic R&D programs to.
Defending our right to bring 861 forward and managing readiness for commercial manufacturing, which should us should allow us to extend our cash runway later into 2022.
And as always we will continue to be thoughtful and opportunistic in evaluating potential options.
Strengthen our strategic position and balance sheet.
With regard to financials I would now like to turn the call over to Steve to provide additional color around this plan and to review our third quarter financial summary.
Thank you Neil and good morning, everyone.
I will briefly summarize our financial results for the quarter ended September Thirtyth 2020.
And then for five perspective on our operating plan going forward.
Let me start with highlights of the third quarter consolidated statement of operations.
Research and development expenses were 7.7 million for the third quarter of 2020.
Compared with 10.9 million for the same period of 2019.
Decrease of 3.3 million was primarily due to lower clinical trial spending.
General and administrative expenses were 7.2 million compared with 2.4 million for the same period of 2019.
Increase of 4.8 million was from the problems.
1.7 million of legal spending associated with the planned Bridger acquisition.
$1.1 million legal expenses from our ongoing litigation with United Therapeutics.
1.1 million and spending driven by commercial competitors.
And approximately $900000 that was related to 2019 fourth quarter accounting Reclassifications.
Or it can be to today.
Interest income interest expense was a net expense of $156000 for the quarter.
In summary, this results in a net loss of $15 million for the third quarter of tranche, one compared with $13.4 million for the third quarter from 2019.
The additional loss of 1.5 million, primarily due to the higher it's you're going to expenses, partially offset by the R&D expenses.
Let me now shift and discuss our cash on hand.
And the steps, we've taken to optimize our cash runway.
As of September Thirtyth, we had 79.6 million of cash on our balance sheet.
We have begun to implement a more cost efficient operating plan.
This operating plan focuses investments against our top priority and pace of spending accordingly to optimize our hardware.
The plan includes the following highlights.
Continuing to resource 861 ongoing clinical trials to secure Heatsticks warm NDA approval.
Seeking a partner to advance paralyzed Q six products through a strategic collaboration.
To address them early stage preclinical charges, which we negotiated back from GSK last year.
That will leverage our current capabilities proof of concept and expertise this.
This is an important driver of long term value creation.
Jason our commercial revenue this investments to correspond with six swarm launch timings the back half of 2022.
And then once you and doing through meet management or external spend.
We project the full implementation of this plan will deliver greater than 20% reduction on annual spend in 2021 first mortgage.
With regard to the time of the savings we anticipate Brampton over the next six months as we fully implement this plan.
In addition, assuming a successful close of divergent acquisition this will improve our cash runway even further.
Hi, John is a positive cash flow business, we are looking forward to having to come part of liquidity.
The full implementation of this program coupled with the Virgin acquisition.
Turning to our cash runway into the second half.
2022.
I would now like to turn turn the call back over to Amir.
Thanks, very much Dave.
In closing as I've said before we have closed another important quarter for liquidity.
And we're poised to seize on the opportunities that lie ahead.
And if you haven't heard it in my voice, we are very excited about entering the ph community with the acquisition of religion, and adding to it with the potential approval of Eightsix one.
We're encouraged about the benefit that it takes one brings patients as demonstrated in our clinical trials.
We're confident in the strong patent position that we have built the innovation of dry powder to profit Anil.
And we're confident in the strong case, we're building to defend our right to bring 861 forward upon approval and are ready to respond to the FDA as needed and supported the review of the 861, India.
We're fully aware of what is required for the path ahead and have prepared for success, including the optimization of our investments and cash runway into 2022.
All this has been made possible by an incredibly talented and dedicated team that goes above and beyond everyday to support the liquidity admission.
Operator, we're now prepared to take questions. Thank you.
If you would like to ask a question. During this time. Please press Star then the number one on your telephone keypad. If you would like to withdraw your question press the pound or hash key please stand by while we compile the human day roster.
And your first question is from can be Steve with Jefferies.
Hey, Neil how are you doing to but can be how are you.
Excellent thanks Ralph.
What is the significance of the high dose pattern, if competitors are able to demonstrate GPI equivalent to tyvaso at doses below a 100 micrograms and then second question is what we learn more about rare key marriage and metrics such as revenue and margin split at the special shareholders may.
Okay. Thank you.
Sure maybe what I'll do is Jason a day or is with me here he and I will split the answer on your question on adjacent more take first part sure I can meet it. We also have a strong bid in our internal counsel on the phone. So I think comby to your point well that is true to think that maybe other products could show a comparable dose of of what their product might be.
Be to Tyvaso dose I think what we have to consider is that in the field of using your profit no exposure drug efficacy and you see that with clearly the very good EPS.
Efficacy with the peripheral form so the intent with the inhaled form would be to push the dose to the highest level that you could add a tolerable way until 861, we haven't seen that and in fact, we hadn't hit a maximum tolerated dose in our phase one study we move that forward into our inspire study and now our extension study and as you heard Neil.
I said earlier, we have more than 70 patients on drug for more than two years. Most of the patients are at doses above 100 micrograms. So while it might be true to think that someone can show comparable do practically speaking you want to push that dose to the level that you can to avoid transitioning that patient to principal therapy. So what does that mean from a patent position.
We clearly demonstrated with our innovation that we have done something very unique and we look forward to bringing that to market.
And if we need to get to more detailed the thing we can talk about how we'll look for continuation onto the work that we've done there to consider maybe using a dicks going at lower doses.
So from that perspective, I think we're well protected and looking forward to driving forward does that address your question companies.
Absolutely Jason.
Yeah and come to you had made a comment to that region. You know with time, we will have more specifics on that right now we're seeking deal closing on and.
And can get into more of the financials with time on that.
Yes.
Thank you I appreciate it thats it for me with money.
Sure. Thank you.
Your next question is from Liana Moussatos with Wedbush Securities.
Hi, Liana.
Hi, the push backs off when Vietnam. Thank you for taking my question.
Value in your storage for a strategic partner for eight six sites.
Yes, so we are at the infancy of that I.
I think as we have shared with everyone in the past in our plans were to finish up the requisite tox work here and be prepared to go into phase two but looking at the reality is as you can hear in our commentary. This morning, the priority for the company right. Now is 861, and we want to see a six one realize its.
It's a full potential so with that their realities around our spending on we think 865 has a very viable path forward, but we need to find a partner to do that on that can can also bring the necessary dollars and expertise to the party to do that in carry 865 forward and we think thats the more prudent path.
So given.
The events that I shared earlier from third quarter and even most recently.
We feel it's best to pursue a strategic partnership freight six five and.
Ultimately create 61865 benefit from both of those moves.
And I just have one follow up question on apex. One then.
When do you plan to congrats conduct pediatric patients.
Good try for six months.
Yes, so we'll do that and timely fashion, obviously some of that is moving in concert with the potential approval for 861. So we don't have a proposed official date to start the trial on as you would imagine we had a very productive ongoing dialogue with the agency on that and as the details of that continued.
Emerge, we'll keep you posted.
Okay. Thank you.
Thank you very much.
And again, if he would like to ask a question. Please press Star then the number one on your telephone keypad your.
Your next question is from Sergei Belanger with Needham and company.
Hey, Serge.
Hi, Good morning, just a couple of questions for me first on the upcoming PDUFA target action dates.
So two weeks away.
What are your expectations there do you expect the.
And.
A decision from the FDA and what kind of decision would it be.
Or do you expect him to to push outs.
So its a delayed due to the lack of a pre approval inspection and then second question is just an update on the hemo dynamic.
Next one study.
And I guess when you could be in a position to.
Hi, David.
Yes, Serge happy to do that thanks for your questions I'll take the first one maybe I'll, let Jason hit the second one is with regard to the Paducah date. We're in Unchartered territory. Here I think you know is well documented kind of its Darren a wrench into a lot of things that are going on you know certainly in our society, but FDIC not immune from that.
And we've been an active dialogue with them throughout regarding this I think it is unknown to us at this point in time exactly what will happen whether that will be some type of delay due to the inspection.
A CRL, which could be in their purview to do that because of the inspection. We we just don't know.
Clearly as we've gotten you know within kind of T. minus two to three weeks here of the PDUFA date on and still have not had the inspection.
We are just as attuned to this question has anybody I think one of the things I think is important for investors to understand is.
In any kind of twisted way here with hatch waxman underway on kind of way.
What's wagging the dog more if you want to put it that way is the hatch waxman timeline. So you know regardless of what FDA does here in this interim period.
Period here as we work through that still we have you know the launch date as we've indicated here is the back half of 22 from our planning purposes.
We will be poised and ready to answer ft, any way, we can whether thats preparation.
For the inspection or anything else that I, just think surge we're in uncharted territory here, we don't really know either we continue to have active dialogue, but they have not hit there had to us yet about what exactly that will look like.
Ill briefly address the hemo dynamic question Serge we do mention that in the Q. So as you recall. This is a dose response study that we're doing in Europe, specifically in Germany and France.
We're pleased to say that we are started back with enrollment and sites in Germany. We actually are looking forward to getting those started in France, we're working closely with our clinical sites, but also the local regulatory authorities to ensure that we can proceed safely.
We said, we're doing that in Germany, we hope to start doing that in France and.
Thank you.
I begin if you would like to ask a question. Please press Star then the number one.
And there are no further questions at this time.
Well great. Thank you very much for joining us on the call. This morning, we really appreciate it we thank you for your continued interest and investment in liquidity and look forward to updating you on our progress as the year continues to everyone have a great morning, NBC. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Okay.