TFF Pharmaceuticals, Inc.
Q1 2021 Earnings Call Transcript

Published: 13 May 2021

[Operator:]

Thank you for standing by. Welcome the TFF Pharmaceuticals Inc. First Quarter 2021 Financial and Business Results Conference Call. At this time all participants are in a listen-only mode. Now I like to introduce your host for today’s program Paul Sagan, Investor Relations. Please go-ahead sir.

[Paul Sagan:]

Thank you, operator. Hello everyone and welcome to TFF Pharmaceuticals’ first quarter 2021 financial business results conference call.

[Glenn Mattes:]

Good afternoon, and thank you for joining us today to review the company’s first quarter operations and recent highlights. During this call, I will provide an update on our clinical and corporate progress; then I'll ask our Director of Clinical Development, Dr. Dale Christensen to update us on the important progress we were making in our internal clinical programs. Then our Chief Financial Officer, Kirk Coleman will review the company's financials. We're also happy to have with us, Dr. Bill Williams from the University of Texas at Austin, who will talk about some of the new data we are seeing in the application of our Thin Film Freezing technology to drugs, vaccines, and biologics. And specifically, about the important advantages that our Thin Film Freezing technology offers over other types of dry powder formulation approaches. And Chris Cano, our Chief Operating Officer and Head of Business Development, will update us on business development and operational initiatives for the company. And particularly some of the groundbreaking work being done with liquid nanoparticles and mRNA biologics, where the capabilities are thin-film freezing technology are generating enormous interest on the part of some of the world's leading academic research institutions, as well as industry, pharma and biotech partners. And then we'll open up the lines for your questions. As you know, it's only been two months since our last earnings call and in just that short period of time, we've made significant progress on all fronts. This is true for our two flagship clinical development programs, Voriconazole Inhalation Powder and Tacrolimus Inhalation Powder. The better-than-expected clinical data we've generated recently will allow us to begin the pivotal trial phase for both of these important programs by the end of 2021. And significantly the data we have seen from our Tacrolimus Inhalation Powder trial indicate that we can achieve efficacious, immunosuppressive blood levels from just a once daily, low dose of inhaled Tacrolimus.

[Dale Christensen:]

Thank you, Glenn, and good afternoon to everyone who has joined us today. I'm very pleased to give you an update on the TFF internal clinical development programs. As Glenn mentioned, we are making considerable progress on our internal development pipeline. Our Voriconazole Inhalation Powder product development is proceeding well on plan to support the upcoming clinical development program, we successfully completed dosing in a 13-week, GLP chronic toxicology study. In our ongoing clinical trial in asthma patients, we've completed the first cohort and are proceeding to dosing patients at 80 milligrams. The dose level that will be used for our efficacy trials going forward. Finally, we are preparing for our end of Phase 1 meeting with the FDA that will be held after the dosing in the asthma study is complete. With this progress we are on track to begin our pivotal clinical trials that are designed to demonstrate efficacy of the product for treating patients with IPA or for preventing infection in patients at highly risk for developing IPA infections. For infectious disease therapy, it is accepted dogma that a higher dose of the drug results in improved efficacy because higher doses kill the infectious organism more efficiently and with less opportunity for the development of resistance. The data generated in our Voriconazole program to date has significantly removed risk from the program, since we can safely administer a dose more than twice, the dose of inhaled Voriconazole that is currently being used in hospitals in Europe to successfully treat patients with complicated aspergillus lung infections, even when the other treatment options failed due to toxicity or by not reaching sufficient doses in the lung that are required for efficacy.

[Kirk Coleman:]

Thank you very much, Dale. For the three months ended March 31, 2021 research and development expenses for the company were $5.3 million, compared to $2.2 million for the same period in 2020. The increase in research and development expenses during 2021 was due to increased preclinical activity related to niclosamide and clinical activity to Voriconazole Inhalation Powder and Tacrolimus Inhalation Powder. The ramp up includes our preliminary analysis in testing of dry powder formulations of certain drugs and vaccines, we believe, have the potential to become product candidates. General and administrative expenses for three months ended March 31, 2021 were $2.6 million compared to $1.6 million in 2020. The company reported a net loss for the quarter of $7.7 million compared to a net loss of $3.8 million in 2020. Weighted average common shares outstanding, basic and diluted for the three months ended March 31, 2021 were 23,140,607, compared with 19,008,611 for the same period in 2020. As of March 31, 2021, we had total assets of approximately $61.3 million and working capital of approximately $59.5 million. At the end of the quarter, our liquidity included approximately $58.1 million of cash and cash equivalents. The offering completed in March has strengthened our cash position and will enable us to further the development of our current programs. And with that, I'd like to turn the call over to Dr. Bill Williams who will talk about some of the groundbreaking work we're doing using our Thin Film Freezing platform, particularly with large molecule biologics and how our technology is unique in its ability to successfully transform these complex molecules into an inhalable dry powder.

[Bill Williams:]

Bill. Thank you, Kirk. Good afternoon, everyone. I'm pleased to report that we have continued to advance the science and partner applications, supporting thin-film freeze-drying. Thin-film freeze-drying was designed to provide a specific freezing rate, not too slow like that required by conventional localization and not too fast, like that required by spray freeze-drying, such that a particular and unique powder morphology and stability of drugs in the powder form is a tank. Thin-film freeze-drying was also designed to not expose the protein to high shear stress like that used in spray drying and spray freeze-drying. Recognitions of the benefits of thin-film freeze-drying technology to drug development is most recently evidence by our newly accepted and invited paper by the peer reviewed journal, Kona Powder and Particle Journal. As part of this effort, we have continued to focus on differentiation and benefits of symptom freeze-drying compared to other competing technologies like conventional localization spray drying and spray freeze-drying.

[Chris Cano:]

Thanks, Bill, and good afternoon, everyone. Thank you for joining us today. As I have previously shared, the TFF business development team is laser focused on three key areas of growth for the company. These three key areas are

[Glenn Mattes:]

Thank you very much, Chris. And thanks to the rest of the TFF team who participated today. This has been another quarter of progress and accomplishment for the company. As Chris just said, the recognition of the unique capabilities of our thin foam freezing technology platforms has generated a groundswell of interest among potential partners in the academic governmental and farm biotech fields. Particularly within the realm of biologics, our technology's ability to formulate a dry powder for inhalation to the lungs, or to formulate vaccines into a stable, dry powder that is not subject to cold chain storage issues is bringing people across the world to our door. As Bill explained, our thin-film freezing-technology has capabilities that are unmatched by other forms of conventional lyophilization, spray drying, or even spray freeze-drying. These other technologies cannot effectively reformulate large complex biologics into a dry powder form, giving us a distinct competitive technological advantage that is further being recognized in the industry. As Dale elaborated, this technology has resulted in far better than expected clinical results in our two flagship clinical programs. Programs that address unmet therapeutic needs with large market potentials. And in the case of our tacrolimus inhalation powder demonstrating immunosuppressive effectiveness with just a single dose, the market potential can indeed increased significantly. So to sum up, we hope this call has given you a sense of the pace and progress of our clinical business and scientific developments during the quarter, it's been enormously gratifying to see the efforts of our professionals as they move the company forward, and especially to see the recognition within the industry, that our technology can have game changing consequences. As always, we appreciate the support of our investors and partners. As we look forward to speaking with you next quarter, I hope you all stay well. And with that, I will turn the call back to the operator and open it up to questions. Operator?

[Operator:]

Our first question comes from the line of Jonathan Aschoff from ROTH Capital Partners. Your question, please.

[Jonathan Aschoff:]

Thank you, guys. Congrats on the progress. What organ transplant market shares and pricing assumptions do you factor into your Tac forecast of around $1 billion?

[Glenn Mattes:]

Yes, thanks Jonathan. So we actually employ a group called trinity partners who are very well known in the industry to do our work. They do a series of primary and secondary research with KOL and payers. And they have forecasted based upon this feedback, about a 40% share of the heart, liver and kidney transplant market, assuming that we have at least equivalent efficacy profile, but certainly a better adverse event profile, reducing the number of comorbidities specifically related to our renal impairment. On the lung side and this is actually compared to forecast we did about a year and a half ago that share went up to about 50% and the price assumptions are on the very, very low end of what an orphan drug pricing plan schedule will be. It's about a $6,000 annual use rate, which I think is conservative. I'd rather be conservative in this case, but when you do that calculation and you look at incidents and prevalence, we hit a peak according to use data of about $1.2 billion, takes about seven years to get there because of the numbers of procedures. But it's a very, very important forecast. It's a very big drag and our data are continuing to inform the type of result we think we'll get the marketplace. So that's great.

[Jonathan Aschoff:]

Okay, thanks for that. How do you anticipate monetizing your academic vaccine relationships?

[Glenn Mattes:]

Yes, so first of all, if you take a look at what Chris discussed, the breadth of the relationships that we have are, important to note and just adding the work now with Dr. Weissman, adding, the work out of Albert Einstein to what we already have with USAMRIID at UGA. And there are other institutions that we're working with. The plan is to, once we get the in-vitro data is to work with the tech transfer groups, to license the technology TFF with the purpose of then, looking and gaining financing, mostly non-dilutive financing to the academic institution to progress those assets through Phase 1 development and not all of them, but the ones that are the best-in-class. We would then see commercial partners. So the technology of license TFF through the academic institution and then we find a development partner and take these two in commercial. So, very – maybe all often get they're highly doubtful. But look at who we're working with here. It's sort of like the Mount Rushmore of vaccine developer. So that's the plan. And the discussions that we're having right now are with the tech transfer groups and the licensing directly to TFF.

[Jonathan Aschoff:]

Okay, and then two really quick ones, they could be a one answer, one word answers. Can inhaled Voriconazole be used in prophylaxis as well as treatment and is the R&D number a new run rate.

[Glenn Mattes:]

And what's the second question. I'm sorry, Jonathan is the R& D…

[Jonathan Aschoff:]

The R&D expense number, is that a new run rate it's bumped up a lot. Is that just a kind of temporary hump there? Or is it a new run rate?

[Glenn Mattes:]

I will answer the first question. So yes, prophylaxis is an opportunity for us back in a recent KOL meeting, the KOLs were actually urging us to take a more deep look at that. And we basically didn't get a more important share of that market. Kirk, could you answer Jonathan's question about the R& D expense please?

[Kirk Coleman:]

Sure. As you know, Jonathan, we haven't given formal cash burn and guidance, so – but I'm trying to give you some idea on how to think about it. We have $15 million in cash in the quarter and we roughly burned approximately $7 million during the quarter, and that's consistent going back to 2020, although there was a slight uptake in this quarter. So we really don't anticipate that there's going to show a dramatic departure from the historical run rate and the trend that would just report into Q1, but given the nature of the business, there's likely to be some fluctuations quarter-to-quarter that we can predict with complete certainty. So…

[Jonathan Aschoff:]

Okay. So it sounds like it'll be somewhere in between?

[Kirk Coleman:]

Fourth quarter and first quarter.

[Jonathan Aschoff:]

A fair assessment. Okay. Thank you very much, guys.

[Operator:]

Thank you. Our next question comes from the line of Daniel Carlson from TW Research Group. Your question, please.

[Daniel Carlson:]

Hey, Glenn. Thanks for taking my question. First off, this new relationship with and Dr. Weissman, can you tell me a little more about it and what exactly you'll be working on?

[Glenn Mattes:]

Yes, I'll answer the first part of the question. I'll turn it over to Chris to talk about what we're working on. So we actually met Dr. Weissman through a presentation we gave to a group called civics, and it's basically a United States group of the top vaccine specialists in the country. Dr. Weissman was part of that presentation. He actually reached out to us with interest in the technology, which is in itself are really, very quick to take that call, as you can imagine, given Dr. Weissman reputation, and he's basically the father of mRNA vaccine. So very quickly we established a relationship. And at that point Chris is closest to I'll have him talk about this and what happened then and what we're working on.

[Chris Cano:]

Sure. And thanks, Glenn. So with Dr. Weissman, we are going to be working on two different mRNA vaccines. I can't really share what the indications are. We're going to be formulating them in our dry powder. And we are planning with to work with partner in initial in-vitro work and in-vivo work and give our technology a run. So looking forward to working with them, there, it's a fantastic opportunity to work with other research group.

[Daniel Carlson:]

Yes, thanks. I mean, I just Googled him and he's a very impressive individual to say the least. So congrats on that. Glenn, can you talk a little bit about what you're intending to do with the use of proceeds from the recent capital risk?

[Glenn Mattes:]

Yes. Thanks Daniel. Good question. So at this point the money is in the bank and if that's a good thing, because it certainly extends our runway. As you know, we invested very carefully. So the two areas we're looking at is there a potential program we want to add to our internal development pipeline, potentially a 505(NYSE

[Daniel Carlson:]

Great. Thanks. And then if I could one last question just, you go through a ton of different programs, which is awesome. I mean, you've got so much going on in many different areas. And I'm wondering, a lot of times you look at sales funnel you definitely putting a lot into the funnel. I'm wonder if you could talk about just the progress on existing programs to moving them through and how do you quantify where you're at? I mean, we've talked about the red zone in the past, so I'm just trying to understand how the progress are going there in the funnel?

[Glenn Mattes:]

All right. So the way, we track it as yet, so what what's coming in, if it's a top of the funnel. But – when we want to really just determine how well we're doing in moving these things forward, we quantify it with how many relationships do we have, where we're doing in vivo work, right? And that then needs to mature, I am sorry, in vitro work to start in vitro work, and that needs to mature and consider the in vivo piece. So not going to give a number, but take a number it's in that bucket. You've got your MTA, in vitro work almost all the time – about all the time is successful. Then how many you have an in vivo and ultimately, how many – where you negotiating a transaction, right. I can tell you that that progress from in vitro through vivo to negotiation, the numbers are tracking very, very positively and negotiation sometimes take a little longer. We only want to do deals that make sense for us. And then we get to that value creation want, but that real sort of determinant of progress, because the transition from an in vitro to in vivo, as to demand. And then, when you're done with that successfully, and when are you actually negotiating table for referred deal? And I hearkened back to Chris's statement, which is, we're highly confident that we'll get at least two deals done this year and that position is not changing.

[Daniel Carlson:]

Great. Well, thanks, Glenn, congrats on all the progress, keep it up.

[Glenn Mattes:]

Thanks Daniel. Appreciate it.

[Operator:]

Thank you. Our next question comes from the line of Ram Selvaraju from H.C. Wainwright. Your question, please.

[Ram Selvaraju:]

Thanks so much for taking my questions and congrats on all the progress. Very impressive on all these fronts here. Firstly, I wanted to ask about the status of the patent application pertaining to the once daily dosing. And if you have a sense of when you expect to see office action on that patent application and assuming it is issued, can you give us a sense of the degree to which you anticipate highly strategic protection coming from the claims in that patent as well as what you anticipate the expiration date to be?

[Glenn Mattes:]

Chris, can you handle that one?

[Chris Cano:]

Sure. And thanks Ram for the question. So we have a very IP is really the core foundation right around our thin-film freezing. So this particular patent, the provisional was just filed earlier this week, just to get any kind of a timeframe because it's based on right the work that we're doing in the clinic right now. But we have formulation patents, right. And a multitude of patents that protect the product, the formulation, and now we're expanding into the clinic. So it's all about building on that strong foundation. As far as protection, right. So the patent in – we filed the provisional in one year, that patent will be reviewed and then upon successful review we would expect to get that 20 years.

[Glenn Mattes:]

Bill or Dale, I don't know if you have anything to add to that. If there is any give please.

[Bill Williams:]

Yes. This is Bill. Since we just filed, it'll be a year before anything happens, we'll convert in a year and then it'll be sometime after that month to a year before we get first vaccine just based on experience.

[Ram Selvaraju:]

Okay. Very helpful, thanks. Also, with respect to your PLUS Products collaboration, you have any more granularity on specifically when they anticipate introducing the first product based on the Thin Film Freezing formulations of cannabis to the market?

[Glenn Mattes:]

Yes, so at this point, Ram the best guidance I can give would be very, very late, very towards the end of the second quarter, early third. We crossed the very, very important threshold in that the powder was made in their facility. But actually, the quote from their CEO, Jake referenced is that now, it's a matter of doing some different strands. And I think because it really isn’t unique for any re-formulation we move in through the testing phase. Let’s go and start to look like and it is a consumer launch, so they have a really nice plan laid out for consumer testing, through some of the budtenders and then, it's off to the race. So, to me, the most important hurdle is can we make it, can it be inhaled, people cough, and we passed that path, a big sigh of relief. So now it's maybe some finetuning, get the feedback, how do you market it and we are off to the races there.

[Ram Selvaraju:]

Okay. And then just two other quick ones. With respect to your work in the dry powder vaccine domain, do you anticipate this to be primarily focused on the influenza space for the foreseeable future, or are there other respiratory viral pathogens that you anticipate going after in the future, in the wake of the work that's been done – that's being done on influenza? And if so, what might some of these be? And then the second question is just a technical financial question. Based on the nature of the collaboration agreements that you have in place, should we be anticipating going forward, meaningful offsetting of your R&D spend by what is reimbursable under the terms of these collaboration, or is that expectedly going to be de minimis?

[Glenn Mattes:]

Okay. Yes, Chris, first answer the question about flu. I want to make a comment, I think, beyond that, and then Kirk you may be the one to answer the second question. So you could begin to think of that answer. But Chris, if you can start?

[Chris Cano:]

Sure. Really, when we look at the vaccines and the work that we're doing, right, it's really driven a lot by our partnership. So, the University of Georgia and CIVICs, right, there is a tremendous focus on influenza, also universal influenza. We're also focused very heavily on COVID. It's really any vaccine that is a liquid that would benefit from the characteristics of our technology and a dry powder. So, we are working with USAMRIID filoviruses and alphaviruses, those are both vaccine there, yes, monoclonal antibodies. So, we're really across many different modalities when it comes to vaccines.

[Chris Cano:]

Yes, so if you think about it, Robin, as a portfolio play, so you've got mAbsas Chris says, for antifungals, you've got flu universal flu, you got COVID-19, where also, we haven't disclosed that feasibility work we're doing with a company that's looking at just COVID period, not even COVID-19, but broad-based, COVID-19. GreenLight, so GreenLight, if you know about them, they are looking at, basically developing vaccines for the developing world and how better could they play with a technology and a formulation. It isn't a subject to a need for cold chain. So, if you kind of put it all together and you can step back, I hope the listener, it sounds you are, putting the pieces together, these guys are building a very, very big team portfolio that frankly, if any of them hit are important, if all of them hit great. But we are not a COVID-19 company, we're not a flu company, we're not Ebola company, we're working with a company that approached us about chikungunya. Now you'd say chikungunya well, there's been chikungunya outbreaks in Puerto Rico recently, and that's a start, right. And it goes on and on. And that's the strategy and it sounds like you're breaking the code on what we're thinking there. So, thanks for that. And then, Kirk, do you have an answer on Ron's question about R&D?

[Kirk Coleman:]

Yes, sure, on the first one with the current contract that we have in place, you have the contract, the financial terms are not disclosed publicly. It did not cross the threshold for materiality, but this will be P&L neutral as well, there will be offsets obviously, as you alluded to. And we really hope that these are ultimately, strategically, accretive for additional opportunities for the product candidates, as well as getting additional government work in the future.

[Chris Cano:]

Rob if I can take a little bit of a second here since you've opened the door for me to say this, when we get selected for work by Drew Weissman, or Ted Ross, or John Dye, or Cart Ted , it's not automatic, they do a tremendous amount of diligence. They look at every potential formulation partner. Some of these relationships started a year or more ago. The DARPA announcement was about 18 months in the making a year that was diligent by Lidar. So, it's not like, oh, we pick you. They pick us because they'd done their work. So, I think it’s validating, yes there's a bit of a way to go here, maybe not too long. But we win every time. I'll stop there. Every time we're put up in a make-off or a beauty contest, we win. I’ll let…

[Ram Selvaraju:]

Yes, that is clearly a testament to the disruptive nature of the TFF platforms, level of innovation. So, I have no problem seeing how that would be the case, but that's very impressive. Thanks very much for answering my questions.

[Chris Cano:]

Thanks.

[Operator:]

Thank you.

[Glenn Mattes:]

Next question.

[Operator:]

Our next question comes from the line of Bill Morrison from National Securities. Your question, please.

[Bill Morrison:]

Hi guys. Couple of questions. Just to follow through on the previous question about the pipeline, just a little more color, the research institutes that you are working with, does that work in conjunction with your existing mRNA partners in vaccines, or is it to generate new interests with new partners for vaccines? This, my first question.

[Glenn Mattes:]

Yes, so it’s all stacking Bill. So, you can start to think about some of the networking, right. So you've got Drew Weissman, mRNA, you fill in the blank, right. But yes, the academic relationships if you want to call them that and the pharma relationships, are really distinct. And they're sort of, you think about it as – and if you want to look at it as my cycle, certainly the pharma relationships are more near term, you have some midterm and then longer-term opportunities. Some of these could go very, very quickly. And, I think, you've got researchers that know how to do this. But it's all accretive, it's all stacked, there’s not a lot of overlap there if any. But there are networks and it's great to have Drew Weissman on our side, when you are talking to a pharma company.

[Bill Morrison:]

Right. So, would that accelerate, licensing opportunities with existing partners?

[Glenn Mattes:]

Hopefully. I don’t want to over commit, but you can certainly see where that would ever be an opportunity for us.

[Bill Morrison:]

Okay, great. And with the existing license partners, what are the – what's the outlook for upfront and when might those happen?

[Glenn Mattes:]

And Bill I think I tried, I think, to Dan’s question, we now have sort of crossed over to this world of, in vivo testing and negotiation. So that's good. You were tracking and kind of tracking over time. I still stick to what we said at the beginning of the year, two deals, at least two deals by the end of the year. Hopefully sooner rather than later, but it’s annual these two. And no reason to back off of that expectation at all.

[Bill Morrison:]

Okay, great. Good, good job guys. Really appreciate it. Thanks.

[Glenn Mattes:]

Thank you, Bill. Next question, Anthony.

[Operator:]

Yes, our next question he is a private investor, your question please.

[Unidentified Analyst:]

Hi guys. Thank you. Great to hear some progress on UNION, PLUS and Augmenta, but can you give a update on the status with the Felix?

[Glenn Mattes:]

Yes, so, what I can say about Felix because obviously Felix is there on bait, they are recruiting to a trial, it’s a university-based trial. They are at a certain point of recruitment in that trial. They are saying that that will initiate the ability for them to raise their capital. It’s not totally the completion of the trial, but there's a certain threshold they want to hit. And that's what their potential investors are requesting. So, we do speak with their CEO, Rob McBride frequently, he gives us update. And behind the scenes, there's either some continued optimization going on so that we can hit the ground running with the Thin Film Freezing version of their compound quickly.

[Unidentified Analyst:]

Okay. Another question for me please. So, you announced NeuroRX and GreenLight just a couple months ago and NeuroRX seems to be progressing to the next phase. How about GreenLight?

[Glenn Mattes:]

So, yes, NeuroRX is progressing nicely. We're happy about that. We actually have done some work already, we have some other work going on its about ready to be finished. And we're far along in discussing with them next steps. Greenlight, we actually had a conversation with them today. And they are forwarding us some material to start the specific feasibility work there. Generally, when we get material takes us about, Chris, three weeks or so to turn it back to them. There may be other formulations they want us to try as well. So, the feasibility work is underway.

[Operator:]

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Glenn Mattes for any further remarks.

[Glenn Mattes:]

For those of you that are still on the line, thank you so much for your participation and your support of the company. We're anxious to have our next call with you, because we believe we'll have some interesting more information to share. And hopefully even before that, I wish you all the best. Be well, be safe. And you could always reach out to the company and we'd be happy to talk to you. Thank you. Good night.

[Operator:]

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.