Q4 2020 Liquidia Corp Earnings Call
Everybody and looking at it and.
And sorry, good morning, and welcome everyone to their and Acadia Corporation full year 2020 financial results and.
Corporate update conference call. My name is Victor and I'll be your conference operator today.
Currently all participants are in a listen only mode.
The presentation, we will conduct a question answer session.
And you will be provided at that time for you to queue up for questions.
And anyone has any difficulties hearing the conference. Please press star zero for operator assistance and any time and when.
And I like to remind everyone that this conference call is being recorded.
And I'll hand, the conference over to Jason and Dan.
Thanks, President corporate development and strategy.
Thank you Victor it's my pleasure to welcome everyone to today's conference call to discuss our full year financial results for 2020 and provide a business update.
Before we begin I'd like to remind everyone that today's call will contain forward looking statements and based on current expectations such statements may involve risks and uncertainties that may cause actual results to differ materially from these stated expectations.
For further information on the company's risk factors. Please see liquidity as filings with the Securities and Exchange Commission at Www, SEC Gov or on liquidity as website at Www dot.
Dot com.
I would now like to turn the call over to our Chief Executive Officer Damian to go up for our prepared remarks, after which we'll open the call for your questions.
Thank you, Jason and good morning, everyone.
We hope you and your families remain healthy.
And I'm excited to speak with you today on my first earnings call for liquid yet.
And I began with liquidity and mid December as you might expect for the last three months have been busy as we position liquidity up for the future.
But before we jump into the full corporate update and review of 2020 financials.
And we'd like to take a moment to introduce a few of the new members of the management team.
Joining me on the call today are Mike to setup, our Chief Financial Officer, who joined in November.
Scott Maw, our senior Vice President of commercial who joined as part of the Weird Zone merger also in November.
And Doctor to short Shah, our Chief Medical Officer, and head of R&D, who joined in May.
The rest of the management team includes Rob Lippi, our Chief operations Officer, who has helped scale print technology over the last six years.
And the Dare, who you've met and continues to lead business development and Investor Relations.
And lastly.
And I'm pleased to announce that effective next week, Rusty schundler will join liquid yet as senior Vice President and General Counsel.
Rusty and served as general counsel at P. B M capital group, where he and I worked together for more than five years.
What can you expect from our leadership team, we will operate with a sense of urgency.
We will be decisive and results oriented.
We will be financially disciplined and efficient.
We will focus on value creating objectives.
We will be entrepreneurial and approach growth doesn't investor and manager.
And the newly assembled management team our initial thoughts and the company are as follows.
And like you eat and six one.
Our inhaled dry powder formulation of profitable is a great product with very good market potential.
Patient benefits are clear.
We recognize that we have work to do to achieve final approval, including one.
Responding to the complete response letter issued by the FDA last November.
True.
Preparing for a prior approval inspection by the FDA.
And three achieving a successful outcome and hatch Waxman litigation.
United Therapeutics.
We know we have to do and are executing on those plans.
We also have and attractive commercial products.
Fossil injection that we promote and partnership with Sandoz.
A P rated generic formulation of our modular and offers the same active and inactive ingredients with the same patient and physician services, but at a lower cost to the health care system.
The perennial deliberate and cross channel remains a sizable market and we see opportunity to increase utilization of our product.
We have a unique innovative platform and print technologies.
It's clear advantage and inhaled therapies, but also applications that had been explored and vaccines and anti viral and.
Implants topical and biologics.
We are actively considering new internal R&D product candidates that can either leverage our expertise and pulmonary hypertension or the value of print.
We will discuss more about the R&D pipeline as things evolve.
We have and asset and 865 and control post operative pain that we feel is best position with a strategic partner partner, which I will dress and a few minutes.
And we need to look for value, creating opportunities both from our R&D and business development.
This team will strive to provide balance and transparent insight and the actions and decisions of the company.
For the time being liquidated and small company and the impact of many events are magnified.
We understand these details can be important to investors, but need to be managed with do sensitivity.
Such as around active litigation competitive Intel related to Coprostanol injection and details of regulatory interactions.
So with the future in mind and I'd like to summarize some of the key activities from 2020 and.
And the recent past.
First we have evolved from the the company from a clinical stage, one with commercial presence and P. H.
Having closed the merger and merger transaction in November.
There have been no interruptions to commercial support.
Sandals first to file generics cross sell injection.
<unk> the current limitation to IV administration only.
Demand for its profitable Jackson remains consistent and strong even if new generics have entered and commercial activities.
And had been limited due to COVID-19.
We continue to see increasing potential for generic utilization utilization is payers consider adoption and pause.
This and become more familiar.
And importantly, we now have a P. H focused sales force that establishes the initial commercial infrastructure needed to launch 861.
Prior to restructuring as liquidity at Corp.
Much of our activity last year was tied to the Fda's review of 861.
And January the company submitted an NDA for the first product enabled by our proprietary print technologies.
And the first dry powder inhaler possible.
But we were disappointed to receive a C. R L.
We remain confident and our ability to address the items sufficiently and bringing this one to the market as soon as possible.
So that and we expect to submit our formal response to D. R L and the middle of the year.
This project timeline.
Has been informed by our type a meeting with FDA and January.
As previously announced the items that led to the CRM were related to the need for additional information and clarification of CMC data and device biocompatibility.
CRM did not require any additional studies and Aries.
College, you pharmacology.
Clinic school exposure to patients.
We're fully prepared to host the F D a for and onsite inspection that liquidity and our manufacturing partners.
After our response has been submitted.
While the 861 team works on and CRM response, and the New management team has extended our cash runway by making financially disciplined choices to operate until 861 can be approved.
Specifically.
Over the last few months, we have implemented changes that will reduce our net cash expenses in 2020, one and more than 40% when compared to spending in 2020.
Mike will outline some of the components of those savings.
As a result of these quick decisions. The company is well positioned to drive value through key events and 2021 and 2020 two.
Beyond the projected exploration and the regulatory day and October 2020 two.
To that point, we continue to progress the hatch Waxman litigation brought by United Therapeutics, and our concurrent concurrent IPR effort at the U S patent office.
We believe the patents being asserted or not and fringe nor valid we are confident and our arguments to be made and court, but will not be comedy and detail on the aesop ongoing proceeding.
We anticipate and commercial success liquidity has strengthened its intellectual property and competitive position with the issuance of the 49, and four patent which expires and 2037.
Enabled by the print formulation and clinical evidence of 861 and claims at this pattern where were first allowed last August and relate to methods of treating pulmonary hypertension.
And that's the pulmonary arterial hypertension.
And with doses between approximately 100 micrograms to approximately 300 micrograms of dry powder to cross channel.
Specifically more than 75 per cent of patients enrolled and our pivotal and extension studies have received 861 doses of 100 micrograms or more.
We believe those dose levels may be translating to a patient benefit overtime, having treated more than 75 patients for longer than two years.
With regard to 865 standard and earlier filing we're advancing conversation with external collaborators about continued development.
To ensure we achieve our near term financial objectives, as well as providing six five with a highest chances of success.
We feel it is important to collaborate with partners are already working on and feel the pain management.
We look forward to working with to updating you on these efforts and future calls, though to be clear investment and 865 had been paused until these business discussions conclude.
Yeah.
At this time I'll turn the call over to Mike to review, our full year financial summary.
Thank you Damian and good morning, everyone.
Our full year 2020 financial results can be found in the press release issued earlier today.
And on our form 10-K to be filed with the SEC the coming days, both of which will be available on our website.
And those documents, you'll see that revenue was zero point $7 million for the full year of 2020, compared with $8 $1 million for the full year of 2019.
The decrease was due to the full recognition and the second quarter of 2019 of $8 $1 million of deferred revenue from the company's agreement with GSK for which there was no comparable revenue and 2000 and 'twenty.
Revenue related to sales and she cross channel injection was recognized from the period from closing of the merger transaction November 18th two year and.
Research and development expenses were $32 $2 million for the full year of 2020 compared to compared with $40 5 million for the full year of 2019, the decrease primarily related to lower expenses for the company's 861 clinical program, which was substantially completed prior to filing and the NDA and April 2020, and lower expenses from the Companys Asics.
Clinical program.
General and administrative expenses were $27 4 million for the full year of 2020, compared with $13 6 million for the full year of 2019.
This increase was due to $4 8 million and expenses related to the merger transaction and $2 4 million and legal and patent expenses from the company's ongoing a six one related litigation and increase of $5 8 million and outside consulting expenses and personnel costs Inc.
<unk> share based comp and a one time charge of $1 $4 million associated with the reduction of head count.
In summary, we have incurred a net loss of $59 8 million for the full year 2020, or $1 76 per basic and diluted share compared to a net loss of $47 $6 million or $2 57 per basic and diluted share for the full year of 2019.
Let me now shift and discuss our cash on hand, and the actions taken to provide stable financial footing and 2021 and beyond.
As of December 31, we had $65 $3 million of cash on our balance sheet.
As David and Damien mentioned earlier, our operating reading play and this year should result in more than a 40 per cent reduction and net annual spending compared to your spending in 2020.
This reduction is more than twice the anticipated savings projected on the third quarter earnings call.
Some of the changes implemented since Damian and I joined the company include.
Refinancing the existing credit facility with a new facility, providing interest only payments for the first 24 months, which saved more than $10 million over the next two years.
Reducing internal staff and full time equivalents consultants by nearly 40 per cent.
Refinancing equipment leases.
And finding other opportunities for increased efficiency across operations.
This improvement and cash expenditures will be further amplified by the anticipated positive contribution from the profit split arrangement with Sandoz on the sale of true process, It all and Jackson.
And this product is revenue registered and understand those who will not be providing any specific revenue guidance. However, we are confident that the intravenous use of a true cross sell and Vection will contribute revenue to liquidity and the mid to high single digit millions as discussed at the time of the merger transaction.
We will provide updates on future calls called should this change in any material way.
I'm encouraged to say that the combination of cash saving measures plus positive contract revenue should extend our cash runway through the value, creating events related to the regulatory approval and litigation activity in 2021 and 2022.
And now I'd like to turn the call back over to Damien.
Thank you Mike.
Having reflected on the major activities of the company and 2020 and my first three months and the job.
I'd like to mix a couple of quick points for you before taking your questions. First we are committed to 861 and doing everything we can to achieve FDA approval.
It is a great product with tremendous market potential.
Second we will exercise financial discipline, and look for value, creating opportunities opportunities and R&D and business development.
As we look to build value and the near and midterm.
I will now turn the call over to the operator to take your questions.
And as a reminder to ask a question you will need to press star one on your telephone.
And until they draw your question press the pound key.
And finally commodity Kenny roster.
Our first question and I'll come from the line of Chris Howerton from Jefferies. You may begin.
Excellent. Thank you and good morning, everybody and thanks for taking the questions.
I guess the first one for me would be just kind of if we can have any more color in terms of what the operational activities would be required to kind of satisfy the deficiencies with respect to the biocompatibility and.
Information I guess I'm, just trying to find out what technically or tactically you have to do to kind of accomplish those goals.
And then the second question for me would be just kind of remind us in terms of wherever and in terms of the ongoing litigation from a just procedural perspective, and what news flow, we might be able to expect out of that process over the coming months.
Hey, Chris Thanks.
I think in terms of the biocompatibility.
You know, we basically taken that over from our partner plus the Op, Inc, and where we are basically doing a full biocompatibility testing and and that's all underway and ongoing as we speak and.
So those results should are part of the timeline and think that we need to resolve prior to being able to response respond to the CIL response. However.
However.
This devices and use of millions of patients and Ben and the market for a number of years and.
And in prior versions, so we feel pretty confident in it but we just need to do the work.
And relation the ongoing litigation.
And I would say the next major event as the claims construction and that'll occur in May of 2021.
And Chris, we're probably going to take a little bit more of.
A higher level response on kind of the day the activities on a day to day basis. If you will of the ongoing litigation and will probably.
Let our litigators and do what they do and then provides comment as appropriate.
Sure, yes totally understood. So basically the markman hearing should be coming up and that's the day next potentially.
Public viewing and in terms of new information is that kind of the correct perspective.
That's right.
Okay, Okay, well, thanks again for taking the questions and look forward to the continued practice.
Thanks, Chris.
Our next question comes from the line of Andreas.
The rides from Wedbush Securities you may begin.
Good morning, and thank you for all the updates on the quarter.
Andreas on per annum and thoughts on us.
And then I'll keep it brief myself just.
And regarding debt at six five and Youre, hoping strategic partnership development until you find a strategic partner what might a partnership look.
And it looked like what are you expecting.
Any color on that thanks.
Yeah, I think it's too early to say Andreas I think that we do have several interested parties and.
And I think there's a lot of factors that will go into who's the right potential partner and.
In terms of terms or or or financials related to that it's too early to have any discussions around that.
Okay, and then just one on.
And the patent litigation and the <unk>.
Press release, and you mentioned.
October.
This October coming up.
Another.
Potential event.
And how might a favorable decision by the <unk> to institute the IPR for seven and nine three shifts timelines from potential approval and launch.
Thanks.
Thanks. Good question I don't think it will actually have any impact on the overall timing the October would be when the P. Tap will decide whether or not to accept the petition and then it would be 12 months resolve thereafter, so that that coincides pretty.
Pretty consistently with the hatch Waxman litigation rest.
Resolution and October of 2022.
Okay. Thanks for the clarity guys from Florida, catching up later and congrats again on the quarter.
And once again Thats star one.
Next question and I'll come from the line of Serge Belanger from Needham.
And Needham and company you may begin.
Okay.
Hi, good morning.
Couple of questions from me first one on the.
And the generic from module and product and you just talk about your outlook for that product and for 2021.
And then secondly.
And <unk>.
I think when the Euro was issued last fall.
The pre approval inspection and not been completed.
Have you got any color on that or that's going to be contingent on our <unk>.
<unk> submitting the NDA for that to be schedule. Thank you.
Thanks Paresh.
In relation to generic or module and.
The troughs and injection product.
And we feel pretty good about that as I kind of mentioned.
It's the same product it's AP rated.
It's the same active they've been active we've done a lot to make sure that we provide the exact same services that the patients and the physicians have come to expect.
And we do it all at a lower cost.
I think all of those all of those positives.
Should lead to continued utilization of our product.
We are in a COVID-19 environment, and and right now and the delivery is through intravenous.
Which means that patients would be getting a central line and so that certainly is a consideration for physicians as they start new patients as to whether or not theyre going to bring patients and for that procedure. So there is there is certainly some headwinds from COVID-19, but this is a licensed staining drug and so patients are going to continue to be on it.
During this COVID-19.
And the epic.
So we feel good about we feel good about the product I think we're doing it and a smart way in terms of the way that we're approaching it and not just as a generic but kind of with this branded approach too.
Promoting the brand or the generic.
And so we expect a positive things there.
From from a P. Eight from the prior approval inspection perspective.
Debt that was not conducted but we fully expect that the FDA will be.
We will be doing and inspection, we don't know when and what the timing would be but we would expect it to be sometime after we respond to the CRM.
And once again Thats star one if a question star one.
And I'm not showing any further questions and the Q.
Great well I think everyone for joining us today and we appreciate your continued interest and investment and liquid yet and we look forward to providing more progress throughout the year a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
And then.
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And yet.
Okay.