TFF Pharmaceuticals, Inc.
Q3 2020 Earnings Call Transcript

Published: 9 Nov 2020

[Operator:]

Good afternoon, ladies and gentlemen and welcome to the TFF Pharmaceuticals’ Third Quarter 2020 Financial Results. I would now like to turn the call over to your host, Mr. Paul Sagan of TFF Pharmaceuticals, Investor Relations. You may begin your conference.

[Paul Sagan:]

Thank you very much, operator. Hello, everyone and welcome to TFF Pharmaceuticals third quarter 2020 financial and business results conference call. With me on the line today is Glenn Mattes, President and CEO of TFF; Kirk Coleman, Chief Financial Officer; Dr. Bill Williams of the University of Texas at Austin; Dr. Dale Christensen, TFF’s Director of Clinical Development; and Chris Cano, TFF’s Chief Operating Officer.

[Glenn Mattes:]

Good afternoon and thank you for joining us today to review the company’s third quarter operations and recent highlights. During his call, I will provide an update on our clinical and corporate progress. And then I will ask our Chief Financial Officer, Kirk Coleman to review the company’s financials. We are also happy to have Dr. Bill Williams from the University of Texas at Austin, who will talk about some of the exciting progress we are making in applying our Thin Film Freezing technology to drugs, vaccines and biologics. And then Chris Cano, our Chief Operating Officer and Head of Business Development will update us on business development and operational initiatives for the company. And then we will open up the lines for your questions. As you have seen from this afternoon’s press releases, we have had yet another enormously productive and active quarter, culminating this week with two very significant agreements

[Kirk Coleman:]

Thank you very much, Glenn. For the 9 months ended September 30, 2020, research and development expenses for the company were $7.6 million compared to $5.6 million in the same period in 2019. The increase in research and development expenses during 2020 was due to the ramp up of research and development activities following the completion of our IPO in October of 2019. The ramp up includes our preliminary analysis in the testing of dry powder formulations of certain drugs and vaccines we believe have the potential to become a product candidate. General and administrative expenses for 9 months of 2020 were $5.1 million compared to $1.7 million in 2019. The company reported a net loss for the 9-month period of $12.7 million compared to a net loss of $7.2 million for the same period in 2019. Weighted average common shares outstanding basic and diluted for the 9 months ended September 30, 2020 were 20,810,004 compared with 4.4 million for the same period in 2019. As of September 30, 2020, we had total assets of approximately $43.2 million and working capital of approximately $40.6 million. At the end of the quarter, our liquidity included approximately $41.6 million of cash and cash equivalents.

[Glenn Mattes:]

Thanks, Kirk. And now, I want to turn the call over to Dr. Bill Williams, who will talk about some of the groundbreaking work we are doing using our Thin Film Freezing platform in the broad field of biologics, including our efforts with Augmenta, Felix and the University of Georgia. This is an area where our technology is unique in its ability to reformulate these biologics into inhalable dry powders. Bill?

[Bill Williams:]

Thanks, Glenn. Good afternoon, everyone. For the next few minutes, I would like to review at a high level our Thin Film Freezing process, what it does and the significant implications that it provides, focusing mainly on the delivery of biologic therapeutics and vaccines to patients. Also, I would like to discuss how the Thin Film Freezing process can facilitate and improve in the eventual worldwide distribution of these types of therapeutics by eliminating the resources and prohibitive cost associated with cold chain storage requirements in handling. We have developed the technology that can very rapidly freeze liquids that contain a therapeutic drug at a high rate. We have greatly expanded the types of drugs that benefit from the Thin Film Freezing process, including low molecular weight drugs that are water insoluble and now even more biologics-based drugs, including monoclonal antibodies, messenger RNA, or mRNA, both naked and contained in lipid nanoparticles, small interfering RNA, or siRNA, plasmid DNA, bacteriophages and a variety of antigenic vaccines, both adjuvanted and non-adjuvanted. We have discovered that these therapeutic agents maintain their chemical and physical properties as a dry powder and we have demonstrated this in both in vitro and in vivo studies. How and why have we done this? Well, COVID-19 and the rapid search for vaccines and therapeutics have provided us the quick pivoting start and continued momentum to improve upon the drug delivery systems that are being developed to eliminate this virus. And with this as a driver, we are broadly applying our Thin Film Freezing technology to many other diseases that benefit from similar therapeutic agents. So, why is Thin Film Freezing so relevant to solve these drug delivery problems? The Thin Film Freezing process creates what we call a brittle matrix powder. In other words, a powder that has a high surface area, low porosity and is easily shared all highly relevant and useful properties for drug delivery. These types of powders are extremely well suited for administration by dry powder inhaler delivery. The Thin Film Freezing process is also well suited for providing a chemically and physically stable dry powder to facilitate long-term storage without the need for cold chain storage. Also, the dry powders can be reconstituted at the point of administration to the patient and injected.

[Chris Cano:]

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

[Glenn Mattes:]

Thanks very much, Kirk, Chris, and thanks to Bill as well. This has been another quarter of remarkable activity in progress for TFF. The marketplace is responding to the promise of our technology. And our team continues to deliver and produce remarkable science. Despite the challenges of the global pandemic, I am so proud of their efforts. As always, we appreciate the support of our investors, and partners as we look to further the potential of our technology and our company. And we look forward to updating you on our progress in the coming quarters. And with that, I would like to 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 with ROTH. Your line is open. Please go ahead.

[Jonathan Aschoff:]

Thank you very much. Glenn. I was just curious why do you release the interim Phase 1 SAD dosing data for Tacrolimus rather than await for full SAD results, which in and of themselves would have still been partial Phase 1 data? And I was just curious, what was the significance of that?

[Glenn Mattes:]

Yes, thanks. Jonathan, it’s a good question. So, we were so impressed with the results we were getting in that Phase 1 data that in fact, Dr. Dale Christensen is actually on the line with us who is running all of our studies. It started to make us really look at Tacrolimus and the potential of the compound, beyond even the indication that we are thinking of . So, we are finishing off the SAD, we are going to be starting the MAD shortly, but we wanted to really be able to say, hey, look, we know we have something really special here, no adverse events, the blood levels that we are getting were so significant. Now, when you look at this compound, from our strategy standpoint, which would be to dissolve to the pivotal trial. And then looking to find a partner that we think the asset itself has even greater value than we originally anticipated. And then I would believe has tremendous potential beyond lung transplant into heart, liver and kidney transplant. And when we look at those indications, Tacrolimus has a very, very significant market share. Secondly, we think that the results could be so positive, because of a lower dose going directly to the lung for at least similar efficacy that the drug has potential to show advantages in survival. So, we thought it was important to get that information out and really reflect sort of an enhanced view and an expectation of what we have for the asset.

[Jonathan Aschoff:]

And how long do you think it would take a trial to show survival?

[Glenn Mattes:]

Dale, do you want to answer the survival question?

[Dale Christensen:]

Yes. And I did want to add one more thing to what Glenn had said, the other aspect of that release is that we are interleaving the MAD, to the SAD cohorts will be dosed along with the starting of the MAD. And so we have reached a point in the safety data that allows us to start the multiple dosing instead of waiting until the end and that was another aspect of that release. In terms of the survival aspects for the lung transplant patients, the first year it shows the greatest degree of survival and really the key aspect would be to show the survival advantage at that 1 year time point. And so it’s really 1 year survival, where we would expect that and we would start treating subjects early on within the first month after transplant and we would be following them for that full year.

[Glenn Mattes:]

Thanks, Dale.

[Jonathan Aschoff:]

Thank you, Dale. A question for actually first of all, can we have any more Felix financial details or is just that’s a blanket no?

[Glenn Mattes:]

Well, I can give you the structure, Jonathan, where we are doing this as we have been – we are going to do all of our licenses with meaningful upfronts, milestones. So the number you are looking at is the compilation of the upfront development in sales milestones, less royalty. So we haven’t been disclosing the specifics of these dollars, but that’s the structure. And what we have agreed this just to sort of give you the bottom line on what these deals are worth. Maybe as an aside where we have been working with Felix are quite some time had great results as Chris described in our work, getting the formulations done. This also helps improve their IP position with the compound, using the TFF technology gives them great differentiation and a high level of confidence that they are going to and secure the funds and get this done quickly so we can move ahead.

[Jonathan Aschoff:]

Okay. And what – I joined the call late, what regular release, what’s Felix going to do with that?

[Glenn Mattes:]

Do with sorry.

[Jonathan Aschoff:]

The phage, inhalable phage?

[Glenn Mattes:]

Chris, I don’t know, do you want to talk a little bit about? We are not disclosing the indication, but I guess I will answer the question, because it’s a respiratory indication.

[Jonathan Aschoff:]

Okay. Last one, for Bill, as I think probably best for Bill, as you are buying against competitors for these transactions. It certainly sounds like you are using quite a few talks. Could you please put your finger as hard as you can on how you differentiate Thin Film Freezing from the technology available from your closest competitors going after the same business?

[Bill Williams:]

Yes, I mean, the differentiating factor for the type of powders that we are able to make with Thin Film Freezing, it’s this freezing rate enables the formation of these brittle matrix powders. So, those brittle matrix powders are then you can do those to where it’s a one step process that can – they can then be delivered to the lungs or as an injectable for reconstitution for kind of the cold chain storage argument. So, that’s the differentiating factor. A lot of these biologics, I mean, they are protein based. They are sensitive to being an illiquid and also they are sensitive to vibrations and pH and all sorts of stuff will cause degradation. And that’s why they in essence have to be in a cold chain environment. And so we are able to have a process that will produce this type of powder and not affect their stability or viability.

[Jonathan Aschoff:]

So, would your closest competitors maybe make a product, but it doesn’t dissolve as readily or after its inhale the proteins don’t function, they don’t fold properly, is there something like that?

[Bill Williams:]

Yes. So a competing technology might be conventional localization. So, it’s very slow freezing. And the issue there is the powder you get, even if the biological stable, the powder, you get is not in a form that can then be administered by dry powder inhalation that you would have to reconstitute and then administer by nebulization. And so a lot of the nebulizers are high energy, you get a lot of shear from the device itself. And that can affect the stability of the protein. The other competitor for some of the biologics could be spray drying, but that also exposes these biologics to significant shear during the process, mechanical shear as well as heat, because it’s an evaporative process. And so we believe, well, we don’t use mechanical shearing and we don’t use heat. So right away, we are – our process is advantageous over spray drying, but that’s how – Jonathan, that’s how we differentiate.

[Glenn Mattes:]

So, Bill thanks and Jonathan thanks. We have a lot of people in the queue. So around kind of follow-up one on one. Thanks, Jonathan.

[Jonathan Aschoff:]

Thank you.

[Operator:]

Thank you. And our next question comes from a line of Mayank Mamtani with B. Riley. Your line is open. Please go ahead.

[Unidentified Analyst:]

Hi, good afternoon. This is on for Mayank. Congrats on all the progress this quarter and fantastic. Couple of questions from us. Maybe first, piggybacking on some that were already discussed, specific of the Tacrolimus program, good to see it’s kind of progressing as it is. Can you talk to some of the steps before you start to explore some of these other indication that it relates to heart, liver and kidney and maybe in the context of any benefits with the inhale delivery relative to Tacrolimus orall?

[Glenn Mattes:]

Yes. So the thinking strategy remains intact. We plan on developing the drug by doing a pivotal trial and getting the drug to the point where it’s ready for marketing approval. Our business model in terms of resources to take the drug and invest in the drug to that point and at that point find a partner, so that remains intact. However, our outlook and our forecast for Tacrolimus are much higher than I think they were only started the program. And therefore, we mentioned the fact that we think there is great opportunities to develop the drug in other indications. So, we will enter the next step for us from a clinical development standpoint is to do the pivotal trial, ever an interim analysis on that trial and report the results and then take it to the finish line with that specific trial.

[Unidentified Analyst:]

Great. That’s really helpful. And then kind of given everything that’s going on across internally on programs and then some of the other partnerships that you have recently entered and may enter in the future, can you talk to kind of what the recent manufacturing agreement with Experic does in regards to production for both clinical trials and commercial scale that should get you capacity for each?

[Glenn Mattes:]

Well, we are constantly looking at expanding our contract manufacturing partnerships, to be prepared to do the work and be able to satisfy all of the potential opportunities we have. So right now, the strategy is focused on CMO partnerships. And as we – so when we go and we discuss, for example, phages or mAbs or vaccines, we know where we are going to go. So, we haven’t put a capital plan or intend to put a capital plan in place to do our own bricks and mortar. But there are enough potential partners out there that we are engaging and talking to them. So we will have capacity to satisfy all of our internal needs and future needs with the transactions that we are going after.

[Unidentified Analyst:]

Great. And then if I can squeeze in one more, maybe for Dr. Williams. Just wanted to kind of understand it was really helpful to hear the process on kind of how the business development goes on. But further Augmenta sort of collaboration and some of the in vivo studies that are done, could you talk to what you are seeing in terms of neutralizing or binding assays and how that compares to what was observed with remdesivir?

[Bill Williams:]

On – so Augmenta on the monoclonal antibodies, Dale, you want to – you think you are closer to that. Hey, Dale?

[Dale Christensen:]

Yes, sorry. Could you just for clarity, repeat the question, so I’m answering exactly what you were asking?

[Unidentified Analyst:]

Sure. Just wanted to know kind of what you are seeing in some of the neutralizing and binding assays that were conducted with some of the Augmenta monoclonal antibodies using a TFF formulation?

[Glenn Mattes:]

Yes. So, again, generally, Augmenta has isolated a number of different antibodies. They are testing in a variety – in a panel of different neutralizing assays, starting with pseudovirus then progressing all the way to the active virus. And we are working and will work to formulate the dry powders and deliver dry powders to in vivo as part of the progression to the clinic, but these are fully neutralizing and potent as well.

[Unidentified Analyst:]

Understood. Fantastic. Thanks for taking our questions and congrats on a great quarter.

[Glenn Mattes:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of Daniel Carlson with Tailwinds Research. Your line is open. Please go ahead.

[Daniel Carlson:]

Thanks guys for taking my questions and congrats on all the progress. First question is just do you guys intend to undertake any new offerings from the shelf registration in the near future?

[Glenn Mattes:]

Yes, thanks, Daniel. So, the filing of the shelf registration, I guess you would categorize it as procedural. We were not able to do that and so the 1 year anniversary of the IPO, so we did that. However, we have – if you look at our statements, we have a lot of working capital, that capital is substantial enough to support what we are doing now. So we have no plans right now to raise additional funds. So it’s there. And I think it’s good business to have it in place. It gives us an opportunity to be opportunistic should we need to be, but right now, our capital is sufficient to support the business as we go forward.

[Daniel Carlson:]

Okay. That’s great. Thanks. And then about your Voriconazole program, I mean, with the number of COVID associated after cases that have been seen. Is there any chance that you guys with the excellent Phase 1 data you had could be looking at some sort of accelerated approval process on that program?

[Glenn Mattes:]

Dale, could you answer that, please?

[Dale Christensen:]

Yes, thank you. It’s a very good question. We have been talking to both to the FDA or to get information both from industry leaders in that space. We certainly think there is the case to be made. The question is exactly how to define that study and optimize it. And so, we are consulting with some of the industry leaders and the academic KOLs to look into that going forward.

[Daniel Carlson:]

Okay, thanks. That’s great. And then the last question just about the vaccine program with the University of Georgia, it seems to me that there is a lot broader implications of the success you have shown there. And I am just wondering if the other vaccine manufacturers, are you in contact with them? Are they reaching out to you? Does this have the potential to go far beyond Georgia?

[Chris Cano:]

Yes, thanks, Daniel. Our practice is not to discuss transactions that haven’t been consummated. So yes, there is a lot of activity in the vaccine space, both new vaccines, right we are doing with the influenza vaccine at UGA. We are working on some government programs and we are talking to companies about utilizing the technology in a number of different areas. I think at this point, if you were to conjecture, our opportunities to partner with vaccine manufacturers, potentially will fall into second generation. But clearly as we do more and more of these deals and now it’s more and more of these data, which is building a great foundation, strong first and second floor as those deals and opportunities will come.

[Daniel Carlson:]

Okay. Thanks guys. I will jump back into queue. Appreciate it.

[Operator:]

Thank you. And our next question comes from the line of . Please state your company name and your question.

[Unidentified Analyst:]

Hello, Glenn, it’s Steve . Congratulations again on such a wonderful quarter. The progress you have made is really exciting. I have one question and that is when might we see some data from USAMRIID?

[Glenn Mattes:]

Chris, can you handle the question on the USAMRIID?

[Chris Cano:]

Yes, sure. Thank you. And thanks Steve for the question. So that work is ongoing. So we are – we have delivered, we have formulated and delivered the monoclonal antibodies. And so that in vitro work is ongoing, the VSV, we are in the process of formulating. So to answer your question probably within the next month or so we will get some immediate in vitro data, but the next step from there would be to seek additional funding to advance those programs.

[Glenn Mattes:]

Thanks.

[Unidentified Analyst:]

Alright. Well, thank you very much. I will get back into queue then.

[Glenn Mattes:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of Keith Gill. Please state your company name and your question.

[Unidentified Analyst:]

Yes, Keith Gill, . Excuse my voice, but I had to get on the phone. Congratulations, Glenn and to the entire TFF team, really appreciate all your efforts. I have a question for Dr. Bill. Doctor, is there one area that excites you the most in using the TFFP technology?

[Bill Williams:]

Yes, great question. What excites me the most is applications biologics and it’s something that we have worked on for a few years, but really with COVID as I said few minutes ago, with COVID, it really caused us to pivot and explore in depth, just how useful Thin Film Freezing is to biologics. And so that’s what excites me and we have got a lot of resources geared towards biologic as we speak. Thanks for the question.

[Unidentified Analyst:]

Thank you and congratulations.

[Glenn Mattes:]

Thanks, Keith.

[Unidentified Analyst:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of William Morrison with National Securities. Your line is open. Please go ahead.

[William Morrison:]

Hi, guys. Congrats on all the progress in the quarter. Quickly on Union Therapeutics, how are the milestones going and they come in and stretched out or how are you executing on that? And then on the larger pharma potential JDAs, where are the timelines on those? Thanks.

[Glenn Mattes:]

Yes. Hi, Will. Thanks. So, we are really doing very well with the Union products where we have taken both the oral and powder. We are going to have a pre-IND meeting for an IND and as quickly as we can get into our first-in-human trials. So, things have been progressing well there. And on the collaborations that we are working on, Will, as Chris described, now we are really entering into the green zone or the red zone to kind of getting a football analogy here, we still got to get him over the goal line. But once you transition into in vivo testing and these companies can actually now that they have got a formulation that they like and we have been able to do things that frankly they didn’t even expect us to be able to do from a formulation standpoint. We cross over into in vivo testing. So we are getting we are at that stage on a number of really important fronts, like all of our deals are important and they are all going to be very positive for us. But as Chris described what we are really approaching that point on an siRNA platform, on mRNA platform and some others. So I don’t want to give you specific date, because we are frankly not sure and I would rather under-promise and over-deliver, but what we are really getting into the red zone, I am very, very excited about it. Look, just to maybe address all of you on the phone, I am sure you can sense the enthusiasm of the team here. Personally I am extremely bullish about our future. We have incredible potential for short, mid and long-term value creation as we advance our internal pipeline and we expand our partnerships. I believe this is really the tip of the iceberg. And we were just working on these opportunities and paying really, really close attention on the execution to our internal opportunities for niclosamide and now the Augmenta monoclonals.

[William Morrison:]

Great. Thanks a lot. Great work, guys.

[Operator:]

Thank you. And our next question comes from the line of Doug Russell with Brown Harris Stevens. Your line is open. Please go ahead.

[Doug Russell:]

Hi, Glenn, I want to congratulate you and thank you on an amazing first year as a public company. You have done a hell of a job and we appreciate it. My question is about I think you were talking about doing a three product deal with DARPA. And I am wondering how that is progressing, if it is?

[Glenn Mattes:]

Yes, we have alluded to DARPA partnerships in the past. And for those of you that have worked with the government before that it takes a while to get these things finished. That’s a T crossing and I dotting before you get a signature. So we are in that process, again, no new percent guarantee that the signature will come. But we are also again waiting pretty much on the goal line with that one. So hopefully that gets done. And we are able to make an announcement about that opportunity in the very near future.

[Doug Russell:]

Okay. And one other question, I know at some point, you were in discussions with Bill Gates and his team about vaccines. I am just curious if you are still talking or dancing with them?

[Glenn Mattes:]

Yes. So we have talked to Gates about a lot of things. There is mutual interest. I would say that at this point, those are still at the discussion stage, nothing has really moved forward to where I can say something is in the immediate offing, but there is lot of interest certainly in what we can do. Gates is focused on a lot of things right now that makes their bandwidth a little bit limited. And frankly, so are we. So we stay in touch. And hopefully, one day something will come of that, but again, we are staying in touch.

[Doug Russell:]

Thank you. I really appreciate it.

[Operator:]

Thank you. And this does conclude our Q&A session for today’s conference. And I would like to turn the conference back over to Glenn Mattes for any further remarks.

[Glenn Mattes:]

Yes, I am sorry, if we didn’t get to answer your questions. You all know how to get in touch with me. And if you do have questions, please do that. I also just want to conclude by thanking all of you for the support again the company and all the people that work here are doing an amazing job. We are really excited. It has been a great year, but it’s only the beginning for us. So, I would ask all of you to please stay well and hard to believe in this 2020 year but we are actually getting into the holiday season. So, I want to be one of the first to wish all of you a very happy and healthy holiday season. I hope we all get to enjoy the holidays in a positive way. So, please enjoy and call me if you want to have any questions and stay well, happy and healthy. Bye.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.