Q2 2021 Jaguar Health Inc Earnings Call
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Please standby we're about to begin.
Before I turn the call over to management I'd like to remind you that management may make forward looking statements relating to such matters as continued growth prospects for the company uncertainties regarding market acceptance of products, the impact of competitive products and pricing industry trends and product and technology initiatives, including products in the development stage, which may not achieve scientific objectives.
Meet stringent regulatory requirements forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements.
These statements are based on currently available information and management's current assumptions expectations and projections about future events.
While management believes that its assumptions expectations and projections are reasonable in view of currently available information you are cautioned not to place undue reliance on these forward looking statements. The company's actual results may differ materially from those discussed in this call for a variety of reasons.
Including those described in the forward looking statements and risk factors sections in the company's Form 10-K for the year ending December 31, 2020, which was filed on March 31, 2021, and its other filings with the SEC, which are available on the Investor Relations section of the Jaguar's website.
Except as required by law Jaguar health undertakes no obligation to update or revise any forward looking statements contained in this presentation to reflect new information future events or otherwise. Additionally, please note that the company's supplements and its condensed consolidated financial statements presented on a GAAP basis by providing gross sales non-GAAP EBITDA and non-GAAP recurring EBITDA.
Jaguar I believes that the disclosure items that these non-GAAP measures provide investors with additional information that reflects the basis upon which company management assesses and operates the business.
These non-GAAP financial measures should not be viewed in isolation or as substitutes for GAAP net sales and GAAP net loss are not substitutes for or superior to measures of financial performance in conformity with GAAP.
Now at this time, it's my pleasure to turn the call over to Lisa Conte Jaguar has helped Jack warehouses, founder President and Chief Executive Officer, and he said the floor is yours.
Thank you and welcome all of you.
My name is Lisa Conte.
Our new President and CEO of Jaguar health in our wholly owned subsidiary in the United States, Napa Pharmaceuticals, and I Am a board member of our wholly owned subsidiary in Italy Napa.
We're going to begin with the key financial results for the second quarter of 2021, which will be provided by Carol Lizak Jaguar's Chief Financial Officer After Carol.
We will hear from Jaguar as Chief Commercial Officer, Ian Lynch, who will discuss the positive impact of <unk> ongoing efforts as part of our patient market access program to transition to primarily selling my kelcey directly through specialty pharmacies as Ian will explain this.
Initiative represents a significant benefit to patients and will we believe have a positive impact on net <unk> revenue on a moving forward basis.
After his comments I will provide a recap of activities related to Napa, EU and Dragons back and provide updates regarding our human and animal health pipeline. Please.
Before we jump in I would like to let all of you participating today.
We will have a brief Q&A segment at the end of the webcast to address questions that are submitted in writing questions can be submitted via the webcast link for today's event that appears on the events and presentations page of the Investor Relations section of Jaguar's website. The U R. L for Jaguar's website is <unk>.
<unk> Dot health.
Alright, well now move along to the key financial results for the second quarter of 2021, Carol Let me hand, it over to you. Please.
Thank you Lisa and thank you all for joining our webcast today.
Keith financial highlights for the quarter ended June 32021 are as follows.
Mike Hussey net revenue during the quarter second quarter of 2021 was approximately $400000.
And $3.2 million in the second quarter of 2020.
A decrease of $2.8 million quarter over quarter.
In the second quarter of 2021.
Sales discounts and rebates from various government programs included approximately $800000 to upcharge from the state of California related to several quarters.
The company believes this true up charge is nonrecurring and due in part to the impact of the COVID-19 pandemic on state administrative functions.
My taxi gross revenue during the second quarter of 2021 was approximately $4.9 million.
$6.3 million in the second quarter of 2020.
Representing a decrease of approximately one 4 million.
<unk> over quarter.
So we believe this is primarily due to the ongoing shift of our distribution to specialty pharmacies and the associated inventory draw down from our previous wholesaler distribution model.
For the second quarter of 2021, the loss from operations was $11.6 million compared to a loss of $8.5 million in the second quarter of 2020.
The loss increased $3.1 million quarter over quarter, largely attributable to the decrease in revenue.
Operating expenses from research and development increased by $2.5 million for the second quarter of 2021 compared to the same period in 2020.
Consistent with the increased clinical activities related to development programs, representing additional shots on goal for <unk>.
As our ongoing phase III trial of <unk> for cancer therapy related diarrhea.
And development related to short bowel syndrome with intestinal failure.
Lisa will speak about this morning.
General and administrative expenses increased by $1.3 million for the second quarter of 2021.
Compared to the second quarter of 2020.
Mostly related to the activities of the annual shareholders' meeting.
These increases were largely offset by a noncash adjustment expense of $3.6 million related to the warrant exercises in the second quarter of 2020.
That concludes my recap of high level financials for the second quarter of 2021.
I will now hand over the discussion to Ian wins.
Our chief commercial officer.
Yeah.
Thank you Carol and good morning all.
Mackenzie prescription volume metric, we believe to be the best indicator of patient demand increased four 3% in the second quarter of 2021 over the first quarter of 2021, New my tendency prescriptions increased two 8% during the same time period. This is a positive result for patients.
And our commercial performance and importantly marks the first quarter over quarter prescription growth since the start of the Covid pandemic.
Mike Pizzi prescription volume decreased 9% from Q2.2021 over Q2.2020, we believe that the necessary travel restrictions related to the COVID-19 pandemic played a role in this decline with the pandemic, resulting in fewer patient visits to health care providers fewer opportunities to diagnose.
Numerous IC patients and fewer prescription refills.
Early in the Covid Lockdowns, we did not see a large decrease in prescriptions since many patients had remaining refills and had stocked up on medication by getting 90 day prescription fills as patient visits to their providers decreased last year, we saw a corresponding decrease in new starts and at the same time, our sales representatives were not able to access their customer.
To provide the branded education that drives my Tessa utilization the.
The increase in prescriptions, we have recently seen in Q2 over Q1.2021 corresponds to more patients now seen their providers and our sales representatives, making significant improvements in their ability to access their customers.
Over the same time period, we've also seen an increase in the number of commercially insured patients enrolling in and using our co pay assistance program, which is another strong indicator that more patients are starting on my tessie.
Again, we view <unk> prescription volume is an indicator of patient demand and this metric can differ from Invoiced sales volume, which reflects among other factors vary in buying patterns, among wholesalers and specialty pharmacies as they manage their inventory levels.
<unk> mentioned in her opening comments our plan to transition a substantial amount of Mike Pizzi volume to select specialty pharmacies by the end of 2021.
As a key component of our market access strategy.
This is intended to help remove access barriers for people living with HIV to start and stay on my testing.
The availability of my Tessie through specialty pharmacies represents a significant benefit to these patients the key difference between specialty pharmacies and traditional retail pharmacies.
Level of support that they can provide what patients often visit retail pharmacies, where short term or uncomplicated medical needs specialty pharmacies focus on serving patients with complex and chronic conditions like HIV that require a more hands on approach the services a specialty pharmacies include a higher level of support for prior authorizations.
Appeals adherence counseling and home delivery options each of the support services can help appropriate patients started on HSE and stay on <unk> for as long as as medically necessary.
Additionally, the ongoing process of transitioning to primarily selling my test directly through specialty pharmacies, rather than to wholesalers that that resell the product to retail pharmacies is expected to significantly decrease our distribution costs and have a positive impact on net my Tennessee revenue on a moving forward basis, we can.
Currently have three contracts in place with large national specialty pharmacy chains with people with pharmacy benefit manager relationships that cover the majority of lives in the U S. Generally our distribution fees selling directly to specialty pharmacies are approximately half of what we have historically paid a selling through wholesale channels.
As part of the shift to focusing on specialty pharmacies, we expect an overall decrease in the number of bottles carry the inventory pipeline specialty pharmacies typically carry less days on hand of inventory compared to wholesalers during the transition period of moving more of our volume from wholesalers to specialty pharmacies.
Wholesalers continue to draw down their inventory levels, which was not entirely offset by specialty pharmacy inventory and resulted in a corresponding decrease in sales for this period.
Those volume through our expanding pool of third party specialty pharmacies through which we distribute much FC was approximately 17% of total sales volume in the second quarter of 2021 compared to approximately 14% in the first quarter of 2021.
That concludes my comments and I'll now hand, the discussion back to Lisa.
Thank you very much in sort of trying to explain who will provide some clarity on the specialty pharmacy model.
Moving along to Napa <unk>, our wholly owned subsidiary in Italy, and Dragons back.
And Josh Mailman Dragons <unk> founding sponsor and board member, we're thrilled to announce on July 19th the closing of the financing of Dragons back for gross proceeds of approximately 8.83 million euros.
Net proceeds from this private placement transaction.
We will be used to fund the anticipated merger of Dragons back with Napa EU and therefore, the business plan and activities of the combined Napa <unk> Dragons back entity, resulting from the merger, which will be known as Nappo EU.
Emergent is expected to be effective within approximately 60 days.
In this time period is filled with administrative activities the timeframe and.
And the timeframe it takes into account of disclosures and et cetera that we're dealing with in Italy. During the August holiday.
The parent company Jaguar Napa is providing Napa U with an exclusive license to study develop and commercialize our proprietary drug profile in there for the European marketplace.
But multiple planned follow on indications.
Our initial focus is on pursuing the accelerated conditional marketing authorization pathway from the EMA, which stands for the European Medicines agency the equivalent of the U S FDA for Chris.
Oliver for an important orphan designated disease short bowel syndrome with intestinal failure.
As Carol mentioned this represents another shot on goal for a profile there to potentially benefit another dramatically in need patient population.
Along with our highly valued license agreement to the parent organization Jaguar Napa, though.
And a potentially accelerated pathway to bring the product to short bowel syndrome patients with intestinal failure.
And to remind everyone of the nature of short bowel syndrome. This is a with intestinal failure. This is a catastrophic situation for patients where they have maybe 30% to 60 centimeters of intestine versus our normal 22 to 24 feet.
Therefore could not absorb with what I call the nutrient supply fats proteins carbohydrates minerals vitamins and they live on parental nutrition, sometimes for as much as 22 hours of the day.
That obviously has an impact on quality of life dignity come thread and devastating morbidity and mortality associated with the potential for infection and organ failure.
And intervention could decrease the need for parental nutrition by even 20%.
Huge positive impact for these patients.
Moving along to our U S pipeline, we are in the midst of our pivotal phase III trial of cross selling there for cancer therapy related diarrhea, we referred to as C. T D.
And that is the core planned follow on program in the United States for propel in their <unk> a product that is currently approved and commercialized for HIV related diarrhea.
With a chronic safety profile because the current indication is a chronic indication and a product obviously for which there is a global manufacturing and supply chain already in existence.
And a product that is the only oral plant based as approved by the FDA as a.
A drug under botanical guidance and the exclusivity advantage provided by that.
I believe it's also important to reiterate our ongoing commitment to fund our planned pipeline opportunities in a non dilutive manner. This commitment is evidenced by the non dilutive royalty financing transactions, we entered in the fourth quarter of 2020 to secure funds to support.
Primarily profile them or CTD development.
And also the agreement we entered this past January with proceeds from the sale of a potential future tropical disease priority review voucher, we're pursuing as incentives for the development of our luck loomer drug product or a second generation anti secret Tory product for the symptomatic relief of diarrhea.
From Colorado.
And other acute infectious diseases.
As I mentioned Napa, we use focus on developing copolymer for an important orphan designated disease, the short bowel syndrome with intestinal failure.
Is also slated to be funded in a non dilutive manner.
As a result of the anticipated business combination of Napa.
And Dragons fact, again under license from the parent Corporation Jaguar Napa in the United States.
These pipeline within a product target follow on indications represent not just additional shots on goal for fulfilling her.
But also an opportunity to expand the possible benefits to be evaluated in a clinical development setting further along the value chain from where we are now supportive care.
That's how cross selling Mary is recognized and valued in the HIV community.
Two a potential impact on patient outcome and the cost of care for cancer therapy related diarrhea patients as the recent papers accepted for the past Junes <unk> meeting at the American Society of clinical oncology.
And then possibly even further along the value chain in the case of cross element in development for short bowel central with intestinal failure, where we're potentially.
Modifying disease management modification.
From a financial perspective.
We've also focused heavily recently on cleaning up our balance sheet and as this mornings earnings release States. There are no cashless warrants outstanding as of June 32021.
We believe all of these efforts grow the value of the company and we expect our patient market access strategy for.
For which our planned transition to primarily selling my Cassie directly through the specialty pharmacy is a main pillar to further grow value.
With regard to Jaguars legacy animal health business were eagerly looking forward to the expected approval and commercialization in the fourth quarter of this year of cross sell them or for the treatment of chemotherapy induced diarrhea and docs.
According to our estimates more than 230000 dogs in the United States received chemotherapy treatment for various cancers each year.
And roughly one in four more than 50000 dogs will experience diarrhea, as a side effect of the treatment.
And following the expected approval of Palomar for chemotherapy induced diarrhea does we also expect <unk> to be approved for exercise induced diarrhea and dogs likely in early 2022.
And an interesting fact about exercise induced diarrhea and dogs. The condition is actually the second most common reason that dogs are removed from the world famous 1000 mile long I did write trail sled dog race in Alaska each year.
Yes.
Lastly, as announced Friday of last week, we decided to adjourn our annual meeting of stockholders. One more time until Friday September 30 September 32021, because we are very very very close to reaching for them less than an additional 0.84% of the company.
He's eligible common stock outstanding as of April 12, 2021, the record date for the meeting needs to be voted for us to achieve a quorum.
This ongoing attempt.
To reach Quorum dating back to April of this year.
In extremely costly and distracting for the company and we greatly encourage all eligible stockholders, who have not yet voted their shares or provided voting instructions to their broker or other record holder to do so as soon as possible. So the Jaguar can obtain the quorum and be able to conclude the annual.
<unk>.
Your participation is very important very valued if you have any issues don't know how to do this please feel free to reach out to me or Peter Hodge on this topic.
With that we'll now open the floor for written questions, which I will.
Look at right now.
One of the questions that we have here is what is the current status of my Tessie and COVID-19.
So.
We Napa EU was initially looking at the long haul or.
Situation of COVID-19 recovery patients, which is a constellation of symptoms, which can include.
<unk> fog cardiovascular issues respiratory issues and diarrhea was about 30% of the patients were dealing with diarrhea as an initial indication.
Napa U has now prioritize for bowel syndrome intestinal failure as the accelerated approval pathway.
And as watching we're all watching what's going on with the long haul. There's situations. There are some reports that the long haul or symptoms.
Ameliorated as patients who experienced long haul or got vaccinations. So it's still not clear what that market opportunity is what what are what therefore, how would you access patients what would the trial design look like so that is on a wait and watch at this time, but the goal of getting an accelerated.
Approval in Europe for very serious important patient population is being achieved in moving forward with the short bowel syndrome intestinal failure indication.
Okay I have another question when do you expect impact of pandemic to improve in light of recent surge Delta variance.
How will the net price improve as you move my test the specialty pharmacies and what percentage of your sales do you expect to come from specialty pharmacies for my Tessie and Ian I'm going to turn that over to you to answer please.
Yeah happy to do so and Louise great great questions. Once I think about a lot.
So there is three pieces here, let me take those in order here. So when do you expect the impact of the pandemic to improve in light of the recent surge those various yes.
Yes, I mean of course, you know that can be difficult to predict and we see as.
As you might expect a lot of regional variations across the country either at the state level or some state level in terms of patients' ability to access their providers or are our reps frankly.
Frankly to be able to access and influence their customers.
We look at the market data.
Outside of <unk>.
Of Mapco in our own.
Performance data.
Quite closely in a cube publisher's great reports on this every month and.
And we do see some great trend lines of returning back to close to baseline in terms of both of those metrics patients providers and reps being able to see their physicians and I think that's reflected in our patient populations and what our reps are able to achieve as well.
So it's trending in the right direction.
With all the recent news.
<unk> associated with the Delta variance, we haven't seen that.
Kind of reverse things too much I mean regionally here in there, yes, but we still think is headed in the right direction and we will continue to make those assumptions until we see the data tell us something different.
The second part of your question was how long will the net price improves you move my Cassie, especially specialty pharmacies.
Yes, so there's a few things that are we believe a very valuable about this kind of a strategic shift in terms of our distribution.
And I mentioned one of them I think in my earlier comments, we're going to cut distribution fees throw contracted pharmacies by about half versus selling through wholesalers are significant.
We also believe and we're starting to see data to support this.
Specialty pharmacy is just do a better job in managing Mike Hussey patients they are much more better.
Equipped with capable in dealing with all the challenges the payers put in place. So we think about prior authorizations and appeals.
Just making sure that they are overcoming access to reimbursement issues for those patients and then that corresponds to greater adherence and persistency.
Levels with these patients so they stay on drug longer.
They do a great job of like adherence counseling and making sure that.
Medications is shipped directly to the patient store if that's what they choose I mean, there's all these kind of wraparound services that allow our patients to start on my Tennessee more easily and stay on my toes longer that's medically appropriate so that certainly has implications on the bottom line.
We also feel that there are some <unk>.
Advantages to the payer mix and shift in making this shift.
And in that deck, it's quite important to us as well.
Lastly, ultimately what percentage of your sales do you expect to come from specialty pharmacies.
For specialty pharmacies, where Mackenzie yeah, if we do a great job here and I think we will we will transition the majority the vast majority of our my coffee volume from wholesalers to specialty pharmacies, Theres very few exceptions to where that wouldn't make sense.
There are a couple of contracts that we need to work through like for example, the VA, but thats a relatively small percentage of our overall volume.
So ultimately it'll be you know the vast majority of our volume, we anticipate being transitioned over before the end of the year.
Terrific. Thank you Ian.
And thank you Louise for the question specialty pharmacy is a very very important commercial strategy that we're pursuing and obviously has an impact on on these.
Second quarter results.
Alright, we have another question about voting.
Using degree the euro or trading to 12.
And.
Believe it or not European retail investors, who hold shares through online brokers in Europe, such as the Toro and the euro they are not always able to vote. As these platforms don't provide any mechanism for holders sits in that sense. We are in communication with them trying to see if we can come up with some sort of creep.
<unk> solution. So we so are appreciative of our European retail investors, who have reached out and are trying to figure out how they can vote and we are we are working on it. So you will hear from us on that topic, if we can find a solution.
Okay.
I don't think I see any other questions.
So.
That concludes our webcast for today. Thank you all once again for joining please be safe and be well and look forward to the next time, we're together. Thank you.
And once again that does conclude today's call. We thank you for your participation you may now disconnect.
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