Q4 2020 Liquidia Technologies Inc Earnings Call
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Good morning, everyone.
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Sorry, good morning, and welcome everyone to the Acadia.
<unk> 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. Following the presentation. We will conduct a question answer session.
<unk> will be provided at that time for you to queue up for questions.
Anyone has any difficulties hearing the conference. Please press star zero for operator assistance at any time on.
I would like to remind everyone that this conference call is being recorded.
I'll hand, the conference over to Jason of debt.
Vice 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 to provide a business update.
Before we begin I'd like to remind everyone that today's call will contain forward looking statements 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 Dot <unk> dot Gov or on liquidity as web site at Www dot liquidity on Dot com.
I would now like to turn the call over to our Chief Executive Officer Damian to go on 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 from being healthy.
I'm excited to speak with you today on my first earnings call for liquid yet.
I'll begin with liquidity in mid December as you might expect for the last three months have been busy as we position liquidity for the future.
But before we jump into the full corporate update and review of 2020 financials I would 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 Reg on merger also in November.
And Dr. Two 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.
Jason on the Dare, who you've met and continues to lead business development and Investor Relations.
And lastly.
I am pleased to announce that effective next week, Rusty schundler will join liquid yet as senior Vice President and General Counsel.
He has served as general counsel at <unk> 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 as an investor and manager.
As the newly assembled management team our initial thoughts on the company are as follows.
<unk> six one.
Our inhaled dry powder formulation of cross channel.
Great product.
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 in the hatch Waxman litigation.
Brought by United Therapeutics.
We know we have to do and are executing on those plans.
We also have an attractive commercial product.
Postal injection that we promote in partnership with Sandoz.
This AP rated generic formulation of our modulus offers the same active and inactive ingredients with the same patient and physician services, but other lower cost to the health care system.
The parenteral delivery of profit remains a sizable market and we see opportunity to increase utilization of our product.
We have a unique innovative platform in print technology.
There's clear advantage in inhaled therapies, but also applications that have been explored in vaccine anti viral.
Implant topical biologic.
We are actively considering new internal R&D product candidates that can either leverage our expertise in pulmonary hypertension or the value of print.
We will discuss more about the R&D pipeline as things evolve.
We have an asset and $8 five to control post operative pain that we feel its debt position with a strategic partner partner, which I will address in 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 from the actions and decisions of the company.
For the time being liquidity as a 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 true cross no injection and details of regulatory interactions.
So whats the future in mind I'd like to summarize some of the key activities from 2020 in the recent past.
First we have evolved from the company from a clinical stage, one with commercial presence in ph.
Having closed the <unk> merger transaction on November <unk>.
There have been no interruptions to commercial support.
Sandoz first to file generic to cross sell injection.
Despite the current limitation to IV administration only.
Manfred Crossville injection remains consistent and strong even if new generics of energy and commercial activities.
Had been limited due to COVID-19.
We continue to see increasing potential for generic utilization utilization appears consider adoption.
Positions become more familiar.
And importantly, we now have a ph focused sales force that establishes the initial commercial infrastructure needed to launch 861.
Prior to restructuring and liquidity a corporation.
Much of our activity last year was tied to the Fda's review of 861.
In January the company submitted an NDA for the first product enabled by our proprietary print technology.
And the first dry powder inhaler profitable.
But we were disappointed to receive a CRM.
We remain confident in our ability to address the items sufficiently and bringing this one to the market as soon as possible.
To that end, we expect to submit our formal response to CRM in the middle of the year.
This project timeline.
Has been informed by our type a meeting with the FDA in January.
As previously announced the items that led to the TRL were related to the need for additional information and clarification of CMC data and device biocompatibility.
CRM did not require any additional studies in areas of toxicology pharmacology.
Clinical exposure to patients.
We're fully prepared to host the FDA for an on site inspection net liquidity and our manufacturing partners.
After our responses on submitted.
While the 861 team works on the CRM response, the new management team has extended our cash runway by making financially disciplined choices to operate until 861 could be approved.
Specifically.
Over the last few months, we have implemented changes that will reduce our net cash expenses from 2021 on 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 in 2021 and 2022.
Beyond the projected exploration on the regulatory day in October 2022.
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 infringe nor valid we are confident in our arguments to be made in court, but will not be commenting in detail on these on ongoing proceeding.
Okay.
Anticipating commercial success liquidity has strengthened its intellectual property and competitive position with the issuance of the 494 patent which expires in 2037.
Enabled by the print formulation and clinical evidence of 861.
This patent were first allowed last August and relate to methods of treating pulmonary hypertension.
Not just pulmonary arterial hypertension.
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 in our pivotal in extension studies have received 861 doses of 100 micrograms or more.
We believe those dose levels may be translating to a patient benefit over time that would be true.
We did more than 75 patients for longer than two years.
With regard to 865 standard and earlier filing we are 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 the field of pain management.
We look forward to working to updating you on these efforts in future calls, though to be clear investment in 865 has been paused until these business discussions conclude.
At this time I'll turn the call over to Mike to review, our full year financial summaries.
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 in 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 in 2020.
Revenue related to sales of true Cross channel injection was recognized for the period from closing of the merger transaction November 18th to year end.
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 of the NDA in April 2020, and lower expenses from the Companys ASIC.
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 in expenses related to the merger transaction $2 4 million in legal and patent expenses from the company's ongoing a six one related litigation and increase of $5 $8 million in outside consulting expenses and personnel costs.
<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 of 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 in 2021, it would be on.
As of December 31, we had $65 $3 million of cash on our balance sheet.
As David Damien mentioned earlier, our operating rating plan. This year should result in more than a 40% reduction in net annual spending compared to 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 equivalent of consultants by nearly 40%.
Refinancing equipment leases.
And finding other opportunities for increased efficiency across operations.
This improvement in cash expenditures will be further amplified by the anticipated positive contribution from the profit split arrangement with Sandoz on the sale of true Crossrail injection.
As this product is revenue registered under standard we will not be providing any specific revenue guidance. However, we are confident that the intravenous use of a true cross sell infection will contribute revenue to liquidity in the mid to high single digit millions as discussed at the time of the merger transaction.
We will provide updates on future calls calls 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.
I'd now like to turn the call back over to Damien.
Thank you Mike.
Having reflected on the major activities of the company in 2020 on my first few months on the job.
I'd like to make a couple points for you before taking your question first we are committed to 861 and doing everything we can to achieve FDA approval.
This is a great product with tremendous market potential.
Second we will exercise financial discipline, and look for value, creating opportunities opportunities in R&D and business development.
As we look to build value in the near and mid term.
I will now turn the call over to the operator to take your questions.
As a reminder to ask a question you will need to press star one on your telephone.
Total drawing a question press the pound key.
Violently coupon other Kenny roster.
Our first question will 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 could 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.
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.
The second question from me would be just kind of remind us in terms of where we're at 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.
We basically taken that over from our partner.
The Opex and where we are basically doing a full biocompatibility testing and that's all underway and ongoing as we speak.
And so those results should are part of the timeline and things that we need to resolve prior to being able to response respond to the CIL response.
However.
This devices in use of millions of patients and been on the market for a number of years.
And in prior versions, so we feel pretty confident on it but we just need to do the work.
In relation to the ongoing litigation.
I would say the next major event is the claims construction that'll occur in may of 2021.
And Chris, we're probably going to take a little bit more of a.
The 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 do what they do and then provides comment as appropriate.
Sure, yes totally understood. So basically the markman hearings should be coming up and that's the day.
The next potentially.
Public viewing 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 progress.
Thanks, Chris.
Our next question on come from the line on.
Dress.
Alright, <unk> from Wedbush Securities you may begin.
Good morning.
For all the updates on the quarter.
Andreas on surround him his thoughts on <unk>.
I'm going to keep it brief myself.
Well regarding debt at six five you are hoping strategic partnership development until you find a strategic partner what might've partnership looked.
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 I think there's a lot of factors that'll go into who is the right potential partner.
In terms of terms of.
Financials related to that it's too early to have any discussions around that.
Okay, and then just one on Japan.
That amortization in the press release you mentioned.
October.
This October coming up.
As another.
Potential event.
How might a favorable decision by the <unk> to Institute the IPR from 79, three shifts timelines on potential approval on launch.
Thanks.
Thanks. Good question I don't think it will actually have any impact on on the overall timing.
Tober would be when the P tap would decide whether or not to accept the petition and then it would be 12 months result, thereafter, so that coincides pretty.
Pretty consistently with the hatch Waxman litigation risk.
A resolution in October of 2022.
Okay. Thanks for the clarity guys look forward to catching up later on the congrats again on the on the quarter.
Yeah, once again Thats star one.
Our next question on income from the line of Serge Belanger from Needham.
Needham <unk> company you may begin.
Okay.
Hey, good morning.
Couple of questions for me first one on the.
The generic from module and product.
Just talk about your outlook for that product and for 2021.
And then secondly.
I think when the CRA was issued.
Last fall pre book.
The pre approval inspection had not been completed.
Have you gotten any color on that or that's going to be contingent on a re.
<unk> submitting the NDA for that to be schedule. Thank you.
Thanks, Josh.
In relation to generic <unk>.
<unk> injection product we.
So we feel pretty good about that as I kind of mentioned it.
It's the same product it's AP rated.
Same active same inactive 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 on 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 in for that procedure. So there is certainly some headwinds from COVID-19, but this is a life sustaining drug and so patients are going to continue to be on it.
During this COVID-19.
On the Emmick.
So we feel good about flow.
Good about the product I think we're doing it in a smart way in terms of the way that we're approaching it 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 <unk>.
From the prior approval inspection perspective.
That was not conducted but we fully expect that the FDA will be.
We'll be doing an inspection, we don't know when or what the timing would be but we would expect it to be sometime after we respond to the CRO.
And once again, that's a start on one quick question Star one.
And I'm not showing any further questions in the queue.
Great well I, thank everyone for joining us today and we appreciate your continued interest and investment in liquidity and we look forward to providing more progress throughout the year a great day.
Yeah.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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