Earnings Call Transcript - JAGX Q2 2023

Operator, Operator

Good morning. 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 initiatives, including products in the development stage which may not achieve scientific objectives or meet stringent regulatory requirements. Forward-looking statements are subject to risk 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 of future events. While management believes its assumptions, expectations and projections are reasonable in view of the currently available information, your question not to place undue reliance on these forward-looking statements. The company's actual results may differ materially from those discussed during this webcast for a variety of reasons, including those described in the forward-looking statements and Risk Factors sections of the company's Form 10-K for the year of 2022 which was filed March 24, 2023, and its other filings with the SEC which are available on the Investor Relations section of Jaguar's website. Except as required by law, Jaguar 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 supplements its condensed consolidated financial statements presented on a GAAP basis by providing non-GAAP EBITDA and non-GAAP recurring EBITDA. Jaguar believes that the disclosure items of 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 and are not substitutes for or superior to measures of financial performance in conformity with GAAP. Today's conference is being recorded. At this time, it's my pleasure to turn the call over to Lisa Conte, Jaguar Health's Founder, President and Chief Executive Officer. Lisa, the floor is yours.

Lisa Conte, CEO

Thank you all for joining our earnings webcast for the second quarter of 2023. My name is Lisa Conte. I would like to start today's call with an overview of the Jaguar family of companies, followed by updates on our key near-term initiatives and milestones. After my comments, Carol Lizak, Jaguar's Chief Financial Officer, will present a detailed recap of our financial results for the second quarter of 2023. We are pleased to report that net revenue increased by 36% in Q3 2023 compared to the first quarter of this year. Jaguar is a commercial stage pharmaceuticals company that develops novel proprietary prescription medicines derived from plants found in rainforest areas for both people and animals dealing with GI distress, particularly overactive bowel. This term encompasses chronic loose stools, GI urgency, unpredictability, and incontinence, all of which can severely affect the patient's quality of life. I will also discuss the relationships among the Jaguar family of companies. Napo Pharmaceuticals, wholly owned by Jaguar, is dedicated to developing and commercializing human prescription pharmaceuticals. Napo Pharmaceuticals' crofelemer drug product is currently part of the OnTarget study, which is a pivotal Phase 3 clinical trial for the prevention of chemotherapy-induced overactive bowel in adults undergoing targeted therapy for cancer. Another Jaguar family company, Napo Therapeutics, is based in Italy and focuses on improving access to crofelemer in Europe for rare diseases. Jaguar Health, trading as Animal Health, concentrates on developing animal prescription pharmaceuticals and non-prescription products, while Magdalena Biosciences is a joint venture with Filament Health, focused on developing novel medicines from plants for mental health. The FDA-approved human prescription drug product crofelemer, branded as Mytesi, is a first-in-class anti-secretory chloride ion channel. It was approved initially in the U.S. for alleviating non-infectious diarrhea in adults with HIV/AIDS undergoing antiretroviral therapy. Crofelemer is plant-based and sustainably harvested, and it's the sole oral prescription drug approved by the FDA under botanical guidance, granting us indefinite exclusivity. We possess global unencumbered rights to crofelemer, which keeps business development discussions ongoing. Despite the challenging state of the small-cap biotech market, we are excited about two significant upcoming clinical events that could transform our pipeline into blockbuster opportunities. These events are crucial not just for our company’s value recognition but also for addressing neglected medical needs. Crofelemer has the potential for multiple follow-on indications beyond HIV, prioritizing chemotherapy-induced overactive bowel, or CIOB, previously known as cancer therapy-related diarrhea. Additionally, we are focusing on two rare disease indications: short bowel syndrome and microvillus inclusion disease with intestinal failure. These are severe medical situations often requiring total parenteral nutrition. Recently, the FDA activated our investigational new drug application for crofelemer for MVID treatment and approved a physician IND for an SBS patient. We are thrilled that crofelemer could help these patients improve their difficult health situations. We continue to advance our clinical activities for the Phase 3 OnTarget trial of Mytesi. Patient enrollment has been completed, an important milestone in making crofelemer available for CIOB. We expect top-line results from this trial in late October 2023, which are vital for potentially expanding Mytesi's indication to CIOB. OnTarget is unique as it involves a diverse group of adult cancer patients receiving multiple targeted therapies. The market for CINV prophylactic indications is estimated to reach approximately $3.9 billion by 2029. The OnTarget study aims to address CIOB caused by chronic administration of targeted therapies, supporting patient adherence to anti-cancer treatments. This preventative approach is essential, as many patients must deal with the disruptive side effects of diarrhea, which can significantly impact their treatment compliance and overall quality of life. In conclusion, the upcoming data release from the OnTarget trial will showcase crofelemer's ability to normalize gut function, making it a key companion drug for patients undergoing targeted therapies. We are focused on enhancing patients' lives by addressing their health needs while maintaining their dignity and quality of life. Effective treatment can lead to better adherence to cancer therapies and improved treatment outcomes. I'll now discuss Jaguar's two prioritized rare disease investigative indications for a novel crofelemer powder and highly concentrated oral formulations, so, crofelemer, yet a different product than Mytesi. MVID is a life-threatening and ultra-rare autosomal recessive disease estimated to affect a couple of hundred newborns and children globally, leading to intestinal failure, significant morbidity, and even death from severe secretory diarrhea. While there are currently no approved therapeutic treatments for MVID, total parenteral nutrition, the delivery of nutrition via IV, which is the standard of care for the management of MVID, can cost around $150,000 a year, or multiples of that with complications. MVID patients suffer from severe cholera-like diarrhea daily, and symptomatic management of diarrhea in MVID may reduce their dependence on parenteral nutrition. We plan to host an investor-facing webinar in the near future with leading pediatric gastroenterologists to further elaborate on the value of managing diarrhea in MVID patients with intestinal failure and bring a greater understanding of this ultra-rare disease. Crofelemer has been granted Orphan Drug designation by the FDA and the European Medicines Agency (EMA) for MVID, and crofelemer has also been granted Orphan Drug designation for Short Bowel Syndrome (SBS). SBS patients with intestinal failure are also treated with parenteral nutrition. Jaguar is supporting Investigator Initiated proof-of-concept studies of crofelemer for SBS and MVID with intestinal failure in the EU and MENA regions, with the goal of reducing dependence on parenteral nutrition by about 15% to 20%, which is known as an accepted regulatory endpoint. We're also providing product for an FDA-approved physician IND for an SBS patient here in the United States. We'll be looking at improved stool volume, end stool formation, and other metabolic measures. In accordance with the guidelines of specific EU countries, published data from such clinical investigations could support reimbursed early patient access to crofelemer for Short Bowel Syndrome or MVID, potentially in 2024 for these debilitating conditions through early access programs which do not exist in the United States, providing an opportunity for reimbursement while impacting the morbidity and high cost of care of these chronic neglected needs. That was a major catalyst and impetus for us establishing Napo Therapeutics in Europe to be able to have feet on the ground, to access these early patient access opportunities for both patients and all our stakeholders. That is the second major transformative clinical event around the corner for these rare diseases to affect the opportunity for patients to access these products in 2024. There is an estimated 40,000 Short Bowel Syndrome patients around the world, so it's a typical rare disease business model. SBS patients have high morbidity, high mortality, high expense, and an active patient advocacy group. The patients require very expensive and toxic, in some cases, parental nutrition essentially every single day, 20 hours a day, for the rest of their lives. The global SBS market is projected, again, based on third-party research from Vision Research Reports, to grow to $4.6 billion by 2027. Other studies put the growth to approximately $12 billion, and the standard of care at this time for the population of SBS patients is, in fact, parental nutrition. So, to recap here, we expect to have top line results from our Phase 3 trial of crofelemer for the prophylaxis of chemotherapy-induced overactive bowel (CIOB) in the last week of October this year. We expect initial proof-of-concept evidence before the end of the year for patients with either SBS and/or MVID with intestinal failure in support of early patient access participation in certain European countries. So, both potentially important revenue generation opportunities in 2024 based on these late-stage clinical results in 2023. Before I hand the discussion over to our CFO, Carol, I'd like to let all of you participating today know that we will have a brief Q&A segment at the end of the webcast to address any questions submitted in writing. They 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, and the URL for our website is jaguar.health. And we'll now move along to the key financial results for the second quarter of 2023.

Carol Lizak, CFO

Well, thank you, Lisa. And thank you all for joining our webcast today. I'll begin my review of our financials for the second quarter of 2023. Prescription product net revenue was approximately $2.7 million in the second quarter of 2023, representing an increase of 36% compared to prescription product net revenue in the first quarter of 2023, which totaled approximately $2 million. This is a decrease of approximately 8% over prescription product net revenue in the second quarter of 2022, which totaled approximately $2.9 million. Mytesi prescription volume increased approximately 4% in the second quarter of 2023 compared to the first quarter of 2023 while it decreased approximately 4.5% in the second quarter of '23 compared to the second quarter of 2022. Prescription volume differs from invoiced sales volume, which reflects among other factors, varying buying patterns among specialty pharmacies in the closed network as they manage their inventory levels. Loss from operations increased by $1.6 million from $6.5 million in the quarter ended June 30, 2022, to $8.1 million during the same period in 2023. This increase was largely attributed to increased research and development expenses related to the clinical trials for CIOB and other indications. Non-GAAP recurring EBITDA for the second quarter of 2023 and the second quarter of 2022 were a net loss of $7.8 million and $5.3 million, respectively. Net loss attributable to common shareholders increased by approximately $2.8 million from $9.4 million in the quarter ended June 30, 2022, to $12.2 million in the same period in 2023. That concludes my recap of high-level financials for the second quarter of 2023. And I will now hand the discussion back to Lisa Conte.

Lisa Conte, CEO

Thank you, Carol. We at Jaguar and our family of companies are highly, highly energized about all our important initiatives underway in 2023 and the culmination of these late-stage clinical events, and what this can mean for patients and all that follows from that. We have no questions that have come in, unless I have screwed up my access to them, but I believe we have no questions. So, with that, we will conclude our call for today. Thank you to all who have listened and participated and supported Jaguar. Have a good day.

Operator, Operator

Thank you. This will conclude today's conference. You may disconnect at this time. And thank you for your participation.