Q4 2023 Talphera Inc Earnings Call
Participants
Raffi Asadorian; Chief Financial Officer; Talphera Inc
Vince Angotti; CEO; Talphera Inc
Pamela Palmer; Chief Medical Officer & Co-Founder; Talphera Inc
Thomas Yip; Analyst; H.C. Wainwright & Co., LLC
Presentation
Operator
Welcome to the Telfer era Fourth Quarter 2023 financial results conference call. This call is being webcasted live via the Events page of the Investors section of healthcare's website, triple w. dot telkom.com. This call is the property of tall fair and any recording, reproduction or transmission of this call without the express written consent of Telstra is strictly prohibited. As a reminder, this webcast is being recorded. You may listen to a replay of this webcast by going to the Investors section of Telstra's website.
I would now like to turn the call over to Raffi Ecuadorian Solzira Pharmaceuticals' Chief Financial Officer. Please go ahead.
Raffi Asadorian
Thank you for joining us on the call today. This afternoon, we announced our fourth quarter 2023 financial results and associated business plan business updates in a press release. This press release can be found within the Investors section of our website.
With me today are Vince Angotti, our Chief Executive Officer, and Dr. Pam Palmer, healthcare as founder and Chief Medical Officer.
Before we begin, I want to remind listeners that during this call, we will likely make forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties regarding the operations and future results of Tessera, please refer to our press release in addition to the Company's periodic current and annual reports filed with the Securities and Exchange Commission at www.SEC.gov for a discussion of the risks associated with such forward-looking statements. These documents can also be found on our website within the Investors section of Telstra.com. I'll now hand the call over to Vince.
Vince Angotti
Thank you, Raffi, and good afternoon to everyone, and welcome to the First Call. We're having as Telstra throughout 2023. We focused on our objective of repositioning the Company around a new portfolio of assets with an immediate priority on iAd and longer-term strategy on the broader thermostat pipeline and other pipeline assets. As these assets have the traits to drive our vision to support health care providers and optimizing patient outcomes and medically supervised settings.
2023 was a productive year in achieving this objective culminating in our ultimate rebranding to TAO fairer, signifying the completion of this repositioning. With this transition, we believe we successfully capitalized Telstra to achieve our 2024 goal to advance nine to a pre-market application submission or PMA. Today, we'll number one highlight the activities completed in 2023 that have positioned Tao fairer for success over the next 12 to 18 months to identify the important upcoming milestones in 2024. And then three update you on the status are not yet registrational studies as for 2023 in April, we closed the transaction with Loral to divest the studio to a partner with experience in manufacturing and commercializing controlled substances. This transaction allowed us to complete the reduction in our annual studio related operating expenses by approximately $14 million and refocused these resources on the development of my ad. With this transaction, we earn royalties of 15% on commercial sales, 75% on sales to the Department of Defense and up to $116.5 million in potential milestone payments.
We are confident that Alere is the right partner and we expect to begin commercializing 2024 after they complete all their work around restructuring and insourcing the supply chain in October, another pivotal success was achieved after several months of working on the NIOBE study protocol and discussing modifications with the FDA. We received an approval of our IDE from the FDA. That's allowed us to start preparations for the single registrational study that we expect to begin enrolling in the coming weeks. Clinical and regulatory teams have designed a 166 patient study as agreed to with the FDA that many of our KOLs Blease should be quickly enrolled. Remember the famous that is an approved and long-standing product in Japan and South Korea for anticoagulation and other indications with a wealth of safety and efficacy information. Our new thermostat product candidate Niagara, has received breakthrough designation from the FDA. We believe all of this bodes well for a successful clinical trial. This year. Dr. Palmer will provide an overview of the study and its status later in the call.
Another key achievement in 2023 was the December publication in the Journal of renal failure of our market research with 150 physicians in the US regarding the practices of anticoagulation of the extra capacity or CRT. circuit, many of the authors of this study are in the process of becoming investigators in our clinical trial that provided us with valuable information and better understanding how physicians are currently using anticoagulants during CRRT. and the potential issues with current standards of care. We hosted two authors of this study and a KOL panel discussion in December, which provided interesting insights into the market and clinical practices at two leading academic institutions. We believe that the family status approved in the US would be an important addition to the market for anticoagulation during CRT., particularly given the disadvantages raised in this publication of the two anticoagulants currently used, those being heparin and citrate, if approved by the FDA, NIOBE would be the only regional anticoagulant approved in the US for the extra portal circuit. After achieving these 2023 objectives to reposition the Company, we were prepared to proceed with corporate rebranding to ensure all stakeholders were aware of our new vision with a focus on and I add in the near term. Accordingly, in January, we rebranded the company to Tom Farrell. The new name was derived in part from Talisman, meaning a strong leader and reflects the new pharmaceutical era for the Company. This signals the beginning of our newly transformed company, and we're excited about the momentum we have gained and the positive feedback we've received from the many investors we've met with over the last couple of months soon after the rebranding. Importantly, we announced the completion of two financing events focused on ensuring we have sufficient capital to get to a potential approval of NIOBE and the second quarter of next year.
The first was a nondilutive royalty financing closed with Xoma royalty, where we partially monetized our studio royalties and milestones. We received $8 million at closing from Xoma in exchange for the royalties and milestones being paid by Laura, once Xoma receives a specified amount of payments will share equally in the Department of Defense royalties and the milestone payments. Separately, we closed an equity financing from two of our existing investors not to Hala and Rosalind. The equity financing provides $18 million and total fund structured over two closings. We received $6 million at the first closing and another $10 million of committed capital will be received at the second closing upon the announcement of positive net flows trial data by September 30th of this year and an additional $2 million of tougher our stock trades above $0.92 following that announcement. To be clear, this is committed capital once the milestones are met. In addition to the milestone-based warrants from the July 2023 financing be exercised. An additional $14.4 million of capital would be injected into the company. Concurrent with the equity investment, we were delighted that RB Jane from not the whole agreed to be on our Board of Directors, which adds further depth to our experienced board that you may have seen. We announced last week that the Board has decided to reduce the total number of directors to seven from the 10 we previously had. This reduction is consistent with best governance practices of other companies, our size accordingly, Howie Rosen rectify and Pam Palmer voluntarily resigned from the Board. I'd like to expressly thank Howie, Rosen & Rick, the family for all their valuable contributions over the years on our Board and of course, look forward to continuing work with Dr. Palmer, he's our Chief Medical Officer.
Finally, before handing the call over to Dr. Palmer, I'd like to remind everyone of all the upcoming milestones expected over the next 18 months. We anticipate our first patient in the naive study to be enrolled in the coming weeks. Once patients begin enrolling, we'll have a better overall sense of the timing. But based on feedback received from the various KOLs, we expect this study to enroll quickly after 32 patients have been enrolled. There will be a planned interim safety analysis. Top line data readout from the completed study would then be expected by the end of the third quarter with a PMA submission planned for the end of the year with a six month FDA statutory time line. This would put us on track for a potential PMA approval by the end of the second quarter of 2025 with that, I'll hand the call over to Dr. Palmer, who will provide an update on the metro CRT. or Niagara clinical study. Pam?
Pamela Palmer
Thank you, Vince, and good afternoon, to everyone today, I'll provide a brief update on the NFRO. study status. As we've been eager to get the study started, most of our clinical sites undergoing contracting with us or large academic institutions across the country. And we've experienced delays in administrative efforts to have our contracts and budgets in place to begin enrolling patients. We had expected to have our first patient enrolled already, but our CRO has confirmed that they are seeing similar administrative delays with institutions across many other studies as well. We do not expect to have any significant delays in enrolling patients once each site is set to start. As Vince mentioned, the feedback provided by KOLs is that they believe once they are set up to initiate the study enrolling should be fairly rapid given the relatively short study period and broad inclusion criteria for the trial, patients are considered completers after only 72 hours on CRT. and all primary and secondary endpoints are assessed during this period. This said, we expect the first patient to be enrolled in the coming weeks at our first site as we have recently completed the site initiation visits with an additional site initiation visit another institution scheduled for next week. As a reminder, our clinical study will include 166 patients with half receiving an infusion of NIAD. into the CRT circuit. While the other half will receive an infusion of saline as placebo into the circuit, the primary endpoint will be the CRRT. post filter activated clotting time over the first 24 hours with a key secondary endpoint, including the same measurement over 72 hours additional secondary endpoints evaluate filter WideSpan number of transfusions and dialysis efficacy. There are a number of reasons we are confident in the successful study outcome. First and foremost being the three decades of new famous that safe and effective clinical use in Japan and South Korea. Secondly, an independent meta-analysis evaluating almost 3,000 patients published in 2022 to analyzing the use of the families that as an anticoagulant for the exit of Oreo circuit provides insightful data on mortality, bleeding risk and filter life, all of which were favorable for November stat as compared to conventional anticoagulant therapy or in the absence of an anticoagulant.
Thirdly, is the net proceeds are our key straightforward study design in which we are comparing a proven powerful anticoagulant to saline and measuring and activated clotting time as a primary endpoint use of saline as a comparator in our study is ethical. As we know from our recent published market research that nearly a third of CRRT. patients received no anticoagulant KOLs have informed us that the main reason for not using an anticoagulant is that the current available options heparin and citrate carry risks that many patients cannot tolerate. Heparin is a systemic anticoagulant with a half-life of up to three hours. Therefore, it's circulating back into the patient from the circuit and should not be used in patients at risk of bleeding. By comparison, the thermostat as an ultra short half-life of only eight minutes reducing the risk of systemically anticoagulated, the patient various citrate formulations used either off-label or under an EUA, our complex to administer and have their own complications, including hypo calcemia, citrate toxicity and ventricular arrhythmias. While we do not have enough time here today to discuss all the disadvantages of citrate and heparin. Suffice it to say, we believe that in the family that if approved, will be an important addition to the current anticoagulants being used more information on the disadvantages of heparin and citrate as well as the risk of using no anticoagulant is detailed in the recently published market research study in the journal renal failure, as well as by the KOL panel discussion that we hosted in December of last year, both the publication and a webcast recording of the KOL panel can be found on our website. I will now turn the call back over to Vince.
Vince Angotti
Thanks Pam, we've previously discussed the peak sales potential of Niagara of $200 million, which is split fairly evenly between CRT. in the hospital setting and Intermet chemo dialysis use in the outpatient setting. We will initially by concentrating on CRT in the hospital. As this is the focus of the net proceeds of our key clinical study. We're currently working on additional market research to inform potential updates to the market opportunity, pricing and market penetration potential of Knighthead. Our peak sales potential assumes only a 19.5% market penetration in the hospital CRT. setting. Over feedback received from our KOLs indicates we may be underestimating our market penetration potential. We'll share any updates needed to our estimated peak sales following the completion of our additional market research.
I now hand the call over to Roger to take you through the details of the financial results.
Raffi Asadorian
Events through 2023 was clearly a year of transformation for Telstra, and we're excited about the prospects of our lead asset, and I add it as well as the longer term potential within the thermostat portfolio. We are thankful for the support from our investors, including non to Hala and Roslyn who participated in the January 2024 for equity financing, with the objective to ensure we have sufficient capital to reach a potential Q2 2025 PMA approval of nine the Company friendly structure of this equity financing, majority of which requires the investors to fund the Company at the second closing, should we achieved a pivotal trial milestone regardless of the stock price at the time demonstrates the investors' conviction and belief in the Company.
Cash and cash equivalents were $9.4 million at the end of the quarter or $23.4 million on a pro forma basis. If you include the $16 million of initial proceeds we received from the January financing, we continued to remain vigilant over our cash expenditures for the year. Our combined R&D and SG&A expenses, excluding noncash stock compensation for the year were $15.8 million, slightly better than the guidance range of $16 million to $20 million we provided for the quarter. The combined R&D and SG&A expenses, excluding $0.3 million of non-cash stock compensation, was $4.3 million. Our estimated full year 2024, combined R&D and SG&A expenses, excluding non-cash stock related expense, are expected to range from $21 million to $23 million. Revenues for the fourth quarter of $0.3 million were generated from royalties on the sales of the studio, principally from sales to the Department of Defense on which we earn a 75% royalty from Laura as stated earlier, we will continue to account for these royalties and milestones as revenues. However, there will be no cash flow impact going forward until Xoma received their specified return and we begin sharing equally in the DoD royalties and the milestones. Given the historically variable nature of these revenues, we do not plan to provide any guidance on the expected time frame on when these royalties and milestones would begin to generate cash flow to Telstra.
I'll now turn the call back over to Vince.
Vince Angotti
Thank you, Rafi. I'd now like to open the line for any questions you may have. Operator?
Question and Answer Session
Operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star one on your touchtone phone, you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star two using a speakerphone, please lift the handset before pressing any keys.
Your first question comes from Ed Arce of H.CC. Wainwright.
Thomas Yip
Good afternoon, everyone. This is Thomas with. Hi everyone. This is Thomas Yip asking a couple of questions for ad tech in particular, questions on. So first, good to see the PMA submission is still on target by year end 2024. I'm just trying to tease out, what you know is as we are close to the end of Q1, should we expect the first patient who can grow with by the end of the quarter reset within the coming weeks? And also, I believe top line beta is still on target and sometime in third quarter of this year?
Vince Angotti
Yes. So I'll answer the first part of that so again, reiterating what you mentioned, our target remains by the end of the year to have the PMA submission occurred. We've already completed the SIVs SIV or site initiation visit with one of the sites, another one scheduled for next week, and we'll monitor the enrollment from that point moving forward. Dr. Palmer might be able to give you some additional color as it relates to discussions with the sites and the availability of patients moving forward. And really what we just heard from the site were visiting next week.
Pamela Palmer
Yes. So the sites are really excited to move forward there as frustrated, I think by these administrative delays, as we've been on the you know, there have even said to me.
Hey, Pam, I had two patients that we would have qualified for the study, half of, hey, they see these patients that they want to get in and we're just trying to get these SIPs the site initiation visits done so they can quickly started enrolling on it is competitive enrollment. So there is no cap on any site. That means the first up and running will get to enroll more patients than the last. So we're really trying to move this forward and keep it on the timeline.
Vince Angotti
Yes, I think in direct answer to your question by the end of Q1. That's certainly our goal, Thomas on and with the feedback. Hopefully, that's what we'll achieve here in short order.
Thomas Yip
Got it. And then on perhaps a follow up on that for a component. Can you discuss the nature of these administrative delays? You mentioned, you know, these delays and all of the science or certainly not just some of the sites have they been chosen?
Pamela Palmer
Yes. Well, no, it's actually kind of across the board and what we've been hearing these large academic centers on really had an exodus of administrative personnel. You know, during the past few years on a lot of working from home. They've been the numbers have been cut such that we are dealing with fewer folks in the contracting office in the budgeting office. And so when you put in your you're guiding on contracts and budgets, you're sort of queuing up for their attention. And so we are banging the drum and making phone calls and e-mailing investor kits such as we can, but some things are slowly starting to move. So we're excited but know that they are almost all on the same time line. So now we are starting to see these SIVs are being scheduled. And we're super excited because once we do meet with the team and we're doing these SIVs on were the caliber of researchers that we're dealing with is very high. They're patient our populations of qualify. They're seeing these patients every single day in their ICUs. And so we just really feel like once we can get these sites kicked off, it'll be a nice rapid enrolling.
Vince Angotti
Pam, can you comment quick? We used to do words are and shortening of SIVs site initiation visits. So we just started completing and have more now scheduled. What does the site initiation?
Pamela Palmer
Yes, the site initiation visits. So the last thing you do and you have to originally do I know confidentiality agreements, you have to do site feasibility questionnaires, you have to then negotiate a contract. You've got to negotiate a budget. All of that is what's taken awhile. The very last thing you do before enrollment is a site initiation visit. And when you're actually on site looking at the pharmacy, looking at their, you know, data entry and things like that. So it really shows you there's a lot of paperwork and there's it just takes time to get through. But once you get through it and get up and running. We're excited what we're hearing from the sites. I think David's role is fairly quickly.
Vince Angotti
Then just to add a little additional color on the site initiation visits, we've already started completing some of the additional ones really in the process of scheduling. They happen within a day or these aren't extended visits. It's less than a day visit at site by the CRO. Just finishing up the final details. I hope that gives you some insight, Thomas on that.
Thomas Yip
Yes, definitely that bankable for four for the added details from and then from do we start up on the you mentioned on the call or maybe events that there will be an interim analysis from macro after verifications have been those will just be a blinded safety analysis and what can we expect from? But after this analysis.
Pamela Palmer
Here is the DSMB data safety monitoring board and what they do is there there are value? Yes, it is on actually unblinded because they are selected on to look at the data to make sure there's no safety signals that's very typical for a new chemical entity. That's not been approved yet in the US before. Although it's got a great 30 years of great history in Japan, South Korea is coming over here for the first time. So the first 32 patients, which will be 16 active 15 placebo in general are going to be evaluated by this and unblinded committee and they give thumbs up or thumbs down to continue the study.
Thomas Yip
Okay, understood. Thanks for clarity and some perhaps one question for Raffi. And so our cash runway up to second quarter next year, and I think you saw that increased $16 million pro forma cash influx during the first quarter 2020 for that right?
Raffi Asadorian
Yes. Just I need to correct my what I said in the prepared remarks, actually $14 million on that first closing plus the royalty financing?
That's $16 million. So I correct that there. So yes, that includes that plus the additional $12 million that we're expecting once we announce the pivotal trial milestone or the top line data and which we're planning for in the third quarter. It does not include I mean, obviously, as we mentioned in the prepared remarks on top of that? And should the should those July 2023 warrants be exercised?
There's additional capital that comes into the company. It, that's autonomous.
Thomas Yip
Okay. Thank you.
Thank everyone for taking the questions and looking forward to the first patient enrollment and Got it.
Vince Angotti
Yes, on for operator, additional questions.
Raffi Asadorian
Thanks, Thomas.
Operator
There are no further questions at this time. I would hand over the call to Vince Angotti for closing comments.
Vince Angotti
We feel had dropped right before adjuvant for comments. There's clearly a high interest in the study and execution thereof and Dr. Palmer mentioned a component called a competitive enrollment start from. Can you just give a quick elaboration on on competitive enrollment?
Pamela Palmer
Yes. Basically, it's on no site is capped and so the first site that gets this IV and gets the first patient in that has much longer period of time to enroll patients and so on, it's an incentive for all the sites to get up and running as quickly as they can. Otherwise, they will be limited in the number of patients they can enroll as their 14th.
Vince Angotti
I think a pretty important feature of the study design and the contracts that we have with the sites.
So with that as the final Q&A, I want to thank everyone for joining us today. As the new Telstra and also for your continued support.
We certainly remain focused on driving long-term shareholder value as a newly positioned company with a focus on executing this natural study to make Knight available to the health care providers moving forward, we look forward to sharing future developments with you, and thank you again for your continued interest and support in our company.
Thank you.
Operator
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
