Earnings Call Transcript - JAGX Q1 2023

Operator, Operator

Greetings, and welcome to the Jaguar Health Investor Webcast. 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 about 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 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. Thank you for that very comprehensive forward-looking statements as well. Thank you all for joining our first quarter 2023 earnings webcast and welcome to you all. And as you just heard, my name is Lisa Conte, and I'm the Founder, President and CEO of Jaguar Health. While this is an earnings webcast, our overarching theme for this morning's discussion is patient voice and its importance in every aspect of drug development, including labeling in regulatory approval, raising awareness of non-infectious diarrhea, preparation for promotion related to the potential introduction of crofelemer for prophylaxis and mitigation of cancer therapy-related diarrhea, and commercialization to provide comfort and treatment, the meaningful share of the affected population. We are prioritizing, learning from and listening to patient voice to bridge from the HIV community through the cancer community. And to refer to crossing the chasm to take a phase from Geoffrey Moore has said anybody is familiar with that book. We can do better by co-creating awareness with the patient community through education around crofelemer's potential entry to the cancer market to provide a better solution to the comfort, the dignity and treatment outcomes to cancer patients with chronic diarrhea. We believe this will allow us to best serve these important and collective comorbidities. The potential patient reach is much larger for the cancer community than the HIV community, both in terms of the number of patients affected by non-infectious diarrhea and of emerging relevance with a paradigm-shifting cancer care to long-term targeted treatments that often results in chronic secretory diarrhea. We have two short video interviews: one from an oncologist, who is a thought leader in the field; and one from a well-recognized patient advocate on this important issue, which we will play for you in a moment and I think you will enjoy and find really important. First, however, I want to address our sales performance for the first quarter 2023. We have to own this and submit after five consecutive quarters of prescription product net sales growth, we've now seen in Q1 a decrease in prescription product sales compared to the prior quarter and compared to the first quarter of 2022. Let me say it again, this is a learning moment for the organization and likely a wakeup call that we have perhaps lost sight of the depth, reach, and importance of patient voice to facilitate expansion of the care crofelemer can provide into the HIV community the current approved indication. Over the past 18 months or so, as we shifted to a specialty pharmacy distribution model and incorporated other aspects of a patient access program, we facilitated the difficult process of gaining prior authorization for patient reimbursement and we improved gross-to-net revenues significantly by decreasing distribution costs and improving our payer mix. The population of adults living with HIV-AIDS is an aging population. And according to the National Institute of Health, nearly 50% of those living with HIV in the United States are age 50 and older and have had the virus in their gut for over 10 years. A trend we have seen over the last two years is a decrease in net sales in the first quarter of the year over the prior year quarter, due mainly to commercial and Medicare plan deductibles resetting, which results in a much higher out-of-pocket cost to patients during this time period, the first quarter. The Inflation Reduction Act, a specific Medicare provision that starts to take effect in 2024 that will reduce prescription abandonment in the first quarter of the year due to significantly lower out-of-pocket expenses for patients. We believe the provisions in this legislation should benefit the Mytesi brand in the Q4 to Q1 dip when implemented. We also believe that higher co-pays in Q1 account for about half of the decrease in net sales in the first quarter of this year over the Q4 2022. To help address the additional shortfall, we at Jaguar are taking diagnostic steps to understand how the voice of the people in the HIV community needs to be incorporated further into our patient access activity. It appears we've lost our reach to some of the patients. The continued learning of how to effectively navigate the HIV market is foundational to our preparations for the potential introduction of crofelemer to the much larger U.S. oncology market for our target indication of prophylaxis of cancer therapy-related diarrhea. This much larger oncology market refers to the estimated 1.8 million patients newly diagnosed with cancer each year in the United States. Additionally, annually in the United States, there are an estimated 1 million cancer patients on targeted therapies organically with an average rate of non-infectious diarrhea of 80%, the most common side effect. An estimated 40% of patients have their therapeutic dose, their cancer therapeutic dose reduced or go off their life-saving targeted therapy because of the side effect of diarrhea. With the now fully enrolled Phase 3 OnTarget trial, we are addressing this paradigm shift of prophylactic treatment of cancer therapy-related diarrhea with crofelemer. And I do want to say that again, the fully enrolled OnTarget trial, which we're very excited about. This is analogous to what already occurs in the supportive care cancer world with chemotherapy-induced nausea and vomiting, known as CINV. Guidelines and protocols that incorporate prophylaxis for CINV typically the first three days of cytotoxic chemotherapy. That global market is projected to reach $3.9 billion by 2029 according to a report from iHealthcareAnalyst, Inc. and there is a good portion of that market that is addressed with generic products. With targeted cancer therapy, we're talking about chronic diarrhea for several months to several years in both the metastatic and curative scenarios and nothing tested or approved specifically for cancer therapy-related diarrhea. Crofelemer would be the first entry to this market. We're going to place two short recent videos for you consisting of segments from interviews regarding the neglected comorbidity of cancer treatment-related diarrhea with two amazing women, both of whom are members of Jaguar's Scientific Advisory Board. Dr. Sandy Swain, who's a Professor of Medicine at Georgetown University and former President of ASCO, the American Society of Clinical Oncology. She served as the senior investigator of the investigator-initiated HALT-D trial, a Phase 2 trial evaluating crofelemer for preventing chemotherapy-induced diarrhea in HER2-positive breast cancer patients, which was published last October in the peer-reviewed journal Breast Cancer Research and Treatment. The other video features Dr. Kelly Shanahan, a metastatic breast cancer patient, who is now a full-time independent patient advocate, who made a shared decision with her oncologist regarding chronic targeted therapies, specifically to avoid the side effect of chronic diarrhea. And she so eloquently says that she could live, not just exist. Following the videos, Carol Lizak, Jaguar's Chief Financial Officer, who's having a little trouble connecting, so hopefully, Carol Lizak, Jaguar's Chief Financial Officer, will provide a more detailed recap of key financial results for the first quarter of 2023 and we will review the clinical milestones we have coming up in 2023 this year that we feel will be transformative in terms of value inflection for the company. We'll now move forward with the two videos and I'll turn it over to Pete. I'm Lisa Conte, I'm the Founder, President and CEO of Jaguar Health.

Sandra Swain, Medical Oncologist

Hi, I'm Dr. Sandy Swain, I am a breast cancer medical oncologist and Professor of Medicine at Georgetown.

Lisa Conte, CEO

So Sandy, tell me, first of all, being a woman President of ASCO, how common was that and tell me some of the achievements that you feel that particularly proud of as President of ASCO?

Sandra Swain, Medical Oncologist

I was President in 2013 of the American Society of Clinical Oncology, which is what ASCO was. It's an international organization, really the biggest in the world for oncology. We have now 45,000 members. So what I did in 2013, I started 'Women Who Conquer Cancer' as part of the Conquer Cancer Foundation to raise money for young women investigators.

Lisa Conte, CEO

That is quite incredible. Congratulations.

Sandra Swain, Medical Oncologist

And then I went to the National Cancer Institute to do my training and really, really liked breast cancer.

Lisa Conte, CEO

All right. So tell me about cancer care back then?

Sandra Swain, Medical Oncologist

Well, at the NCI, we were some of the first to do things like the omics to me. And though at that time, we didn't have a lot of chemotherapy drugs that were that effective. And so early on in my career, I just saw that some of our treatments weren't that effective, especially in patients with metastatic disease, but the toxicities were pretty significant.

Lisa Conte, CEO

And so what does that interaction like with the patient?

Sandra Swain, Medical Oncologist

Well, I think that every patient or a person coming with the cancer diagnosis is scared to death. I think it's gotten harder for women in many ways. I just see women for the most part because there are so many choices and I think that makes it harder because you want to make the right choice, but as a person who's never dealt with cancer before, you have no idea what the right choice is. So you have to trust that person that you're talking to the physicians. So I really try to build up the trust with them, so they can feel comfortable and that we are together making the right decision for their treatment. Fortunately, in breast cancer, we've had extraordinary advances where HER2 specifically is something that I work on. And patients are surviving. With that being said, it's really important to pick the best treatments for the quality of life. So, I've been always interested in that and interested in the cardiac toxicity. The other big toxicity because I work on HER2 targeted therapy is diarrhea, which is a significant problem for many patients on the standard treatment regimen. So we did a study called HALT-D and we use a drug called crofelemer to try to decrease diarrhea in these patients. And we did show that the episodes of diarrhea were decreased.

Lisa Conte, CEO

So tell me about chemotherapy-induced nausea and vomiting?

Sandra Swain, Medical Oncologist

Well, with the nausea and vomiting, there are several classes of drugs that have been approved over probably last 20 or 30 years. So we're very aggressive about prophylactically treating for nausea and vomiting very aggressively. As I mentioned before, the diarrhea is one of the things I've been very interested in because of the regimen that I worked on. That is really disruptive and that's why I did the HALT-D study, especially in breast cancer. We have now the CDK4/6 inhibitors. There are three of them, palbociclib, abemaciclib, ribociclib and they all have different toxicities. The abemaciclib causes diarrhea and that's significant for patients. You can't reduce the dose, but there's not a whole lot else you can do because the opioids, they don't really treat the cause. They're just causing you to have constipation essentially.

Lisa Conte, CEO

So you are remarkable in the approach that you have to hearing the patient's voice in your individual meetings with them, in your patient treatment and the research, and the leadership roles that you have.

Sandra Swain, Medical Oncologist

I believe the input from patients is very important, and fortunately, in breast cancer, we have many strong patient advocates who speak out, which is very helpful. During my time as ASCO President, we also addressed this specific issue.

Lisa Conte, CEO

Do you notice any cultural differences, perhaps between Asia, Europe, and the U.S., regarding the role of supportive care in oncology?

Sandra Swain, Medical Oncologist

In Japan, for instance, there is a strong aversion to any kind of toxicities. Based on my experience in Europe, which is quite diverse with many different countries, it appears that in some places there is a more paternalistic approach, similar to what can be found in the U.S. as well.

Lisa Conte, CEO

How do you feel about the terms, tolerable toxicity, manageable toxicity?

Sandra Swain, Medical Oncologist

I think those are the worst things you could ever say and I try to strike them out of any paper that I ever write because manageable for whom? I think the interaction with the nurses is very helpful because they will tell more to the nurses and the nurses are very nurturing and really do help with some of these side effects.

Lisa Conte, CEO

How do you bring the nurses into your care for a patient?

Sandra Swain, Medical Oncologist

Well, they do the treatments, always, always dependent on the pharmacist. And I would always be in there asking them questions and making sure we were doing the right thing for that patient.

Lisa Conte, CEO

I'm Lisa Conte. I'm the Founder, President and CEO of Jaguar Health and I'm sitting here with an amazing patient advocate, Dr. Kelly Shanahan.

Kelly Shanahan, Patient Advocate

Hi. I'm Kelly Shanahan, former OB-GYN, now living with metastatic breast cancer since 2013.

Lisa Conte, CEO

I am here with Dr. Kelly Shanahan, amazing woman, mom, wife, leader, physician, who targeted just an amazing life for herself and that got thrown a little, got a thrown a little branch into the next year.

Kelly Shanahan, Patient Advocate

Thank you, Lisa, for inviting me here. I was living my life, going about my business in 2008. I had a nine-year-old daughter. I was a dinosaur at that time, solo practice, OB-GYN, up in Lake Tahoe. When my office manager scheduled me for a slightly overdue mammogram and much to my surprise, obvious cancer, being the primary breadwinner, taking care of my very active, very involved daughter. I chose to come down to San Francisco and have a bilateral mastectomy, so as an OB-GYN, I was a surgeon, I like surgery. And I went about my life driving my daughter to rehearsals, she was a theater kid and going wine tasting with my husband and traveling as much as we could. When five years later, I developed sudden back pain. And I thought, okay, Kelly, you're in your 50s now, you probably herniated a disc. I'll go have an MRI, prove that I have a herniated disc. I'll have a pet scan while I'm at it because we did have cancer and there was a voicemail on my phone. Kelly call me. I went back and I looked at the images with the radiologist and I had metastasis in every bone in my body. And the reason I had back pain, I had actually broken a vertebra. And this oncologist said to me, the National Comprehensive Cancer Network, the NCCN guidelines are to go on an aromatase inhibitor and when that fails, go on a second and when that fails, go on a third but I think if we put you on this crazy IV chemo, two drugs, we can cause your cancer to get to regress. So I did that for 14 months, and my scan showed no evidence of active disease within four months but he's like, let's just keep doing it.

Lisa Conte, CEO

Tell us about your liking the time, are you working?

Kelly Shanahan, Patient Advocate

So I went back to work but I did develop permanent neuropathy numbness in my hands and in my feet. And I realized that I would never, ever, ever be able to do surgery again. You don't want somebody wielding a scalpel if they can't feel their fingers and that was a huge blow. So I started becoming involved with various advocacy organizations, primarily METAvivor.

Lisa Conte, CEO

What are your goals in being a patient advocate?

Kelly Shanahan, Patient Advocate

There are personal goals, which give a sense of purpose. When I got involved with the advocacy community, I realized that when facing a life-threatening disease, there's little time for the usual process of building friendships. It feels like an instant connection. In the metastatic community, friendships can feel like love at first sight.

Lisa Conte, CEO

Alright. So tell me about, you educated me on terminology that we should use that you are living not just existing. What does that mean?

Kelly Shanahan, Patient Advocate

So with cancer of any type and often with the treatments for cancer, the treatments are sometimes, I think worse than the disease itself and it's just a matter of just existing, just making it to the next day. But I do get to choose every day how I deal with it. I can wake up with the attitude that's not dead yet and do as much as possible, keep on living. So a lot of people say they call themselves survivors, they call themselves fighters. I like to say it like it is. I am living with metastatic breast cancer.

Lisa Conte, CEO

Okay. So you wake up every day, you make choices, you've made choices also about your treatment?

Kelly Shanahan, Patient Advocate

At that point, the only thing that mattered to me was living long enough, even existing long enough to get my daughter through high school. But my goal has changed now and so now I am all about quality of life. Most people might get 18 months to 24 months but I got six years.

Lisa Conte, CEO

It did not fail you for a long time?

Kelly Shanahan, Patient Advocate

Right.

Lisa Conte, CEO

Surprisingly long time.

Kelly Shanahan, Patient Advocate

I was on it for six years. And I had my very first progression of my cancer in 2021 and I see an incredibly brilliant world-renowned metastatic breast cancer expert here in San Francisco that you may know as well, I think everybody knows her, Dr.Hokru Go. I went to see her and she said, I want to put you on a CDK4/6 inhibitor. We want to change that aromatase inhibitor, you've developed a mutation that makes aromatase inhibitors not effective anymore. And we're going to put you on this injection called fulvestrant.

Lisa Conte, CEO

What sort of side effects are you having? How are you feeling?

Kelly Shanahan, Patient Advocate

So on just my aromatase inhibitor, I had arthritis type symptoms, stiffness in my joints. I walked like a 100-year-old person when I got up. But if I kept active, if I kept moving, those symptoms were not too bad.

Lisa Conte, CEO

So there are multiple reasons staying active and being able to get that was very important.

Kelly Shanahan, Patient Advocate

It's very important to me, and I enjoy living in a beautiful area where I like to hike. I don't want to take medication that requires me to be near a bathroom. The suggestion was made to put me on a drug to manage that side effect, but that medication causes constipation, which I want to avoid. I don't want to end up taking one medication for a side effect and then have to manage the side effects of that secondary medication. I could take a drug that might make me bald, and that wouldn't bother me. I could also take something that turns my skin purple, and while I would say that it wouldn’t matter to me, if I really did turn purple, it might be a different story. The things I can't tolerate are vomiting and diarrhea.

Lisa Conte, CEO

But let's talk about diarrhea.

Kelly Shanahan, Patient Advocate

The inter motility drugs, the holy grail for patients is a highly effective treatment that does not have unwanted side effects. If there's a medication to mitigate a side effect that itself does not have side effects that need additional mitigation, then yes, that would be acceptable to me. Quality of life is so much more important to me as I've gotten my daughter into young adulthood.

Lisa Conte, CEO

What do you want to achieve as a patient advocate at this time?

Kelly Shanahan, Patient Advocate

I aim to simplify the journey for those who come after me. I participate in scientific conferences and often share my insights on Twitter, making findings accessible to those unable to attend major cancer conferences due to financial constraints, health issues, or personal preferences. Additionally, I serve on the Board of Directors for METAvivor, an organization dedicated to funding research for metastatic breast cancer.

Lisa Conte, CEO

And what advice would you have for other patients?

Kelly Shanahan, Patient Advocate

You have to find the right care team. Here's what my goals are. You're advocating for yourself. If you're that PTA parent, who always was raising money for your kid's school, you'd be great at fundraising for various organizations.

Lisa Conte, CEO

Okay. So tell me about the growing metastatic voice. Are you unique? Is this a growing population? What's important to this voice?

Kelly Shanahan, Patient Advocate

So I think my friend Elaine Schattner has recently written a book called 'From Whispers to Shouts' about cancer advocacy. People never talked about cancer and I think that's really important. Breast cancer doesn't just affect women, men get breast cancer, men die at a higher rate. Blacks die at a higher rate than whites. And I think we all have to use our voices and I think we are doing that.

Lisa Conte, CEO

Do you find a difference when you're at meetings in Europe, meetings in Asia?

Kelly Shanahan, Patient Advocate

I think there is a difference. I haven't attended any meetings in Asia, but I recently spoke with a friend of Asian descent who mentioned that they don't discuss topics like this in Asia. They don't talk about side effects or complain. So, they don't consider themselves as complaining women, and in the U.S., at least, this perspective is certainly changing.

Lisa Conte, CEO

I want to ask you two cross questions. Is supportive care considered cancer care?

Kelly Shanahan, Patient Advocate

Absolutely. ASCO has a position paper out a guideline that every patient with advanced metastatic cancer should be offered supportive care, aka Palliative Care, although I like the term supportive care better.

Lisa Conte, CEO

How prevalent is that in the treatment community?

Kelly Shanahan, Patient Advocate

It's not offered anywhere close to what it should be partly because of a lack of enough providers of supportive care services. And in some institutions, they reserve referring patients to palliative care because the resources are limited. Now I would really like to say thank you for the opportunity to spread some knowledge and awareness about metastatic breast cancer that, yes, it is a life-shortening disease but it is not an immediate death sentence.

Lisa Conte, CEO

What percentage of dollars go to metastatic research versus preventative in early treatment?

Kelly Shanahan, Patient Advocate

Not nearly enough, supportive care, quality of life, softer issues and research into metastatic breast cancer only comprises about 10% of research dollars. And that's up from 3% to 5%, about three to five years ago.

Lisa Conte, CEO

Thank you all for joining us today. I want to express my appreciation to Lisa and Peter for sharing those inspiring videos. It’s difficult to emphasize enough the strength and inspiration these women and healthcare advocates bring, particularly from the cancer community and patient advocacy groups, connecting back to the HIV community. We're privileged to have them on our Scientific Advisory Board. As a company, we've worked diligently to amplify the patient voice and design a pioneering Asian-centric clinical trial aimed at exploring the prophylactic use of crofelemer to address diarrhea related to cancer therapy. This trial, known as OnTarget, has now finished enrollment and focuses on patient-reported outcomes as a primary endpoint. Our objective is to gain FDA approval for an innovative oral anti-diarrheal drug to manage diarrhea related to cancer treatment. OnTarget stands out as the first trial of its kind, including adult cancer patients representing a variety of solid tumor types. It is also the first to encompass multiple targeted therapies associated with over 50% incidence of diarrhea, with or without standard chemotherapy. In this initial prophylactic trial using targeted therapy alongside chronic crofelemer administration, we aim to enroll a diverse group of cancer patients. The trial encompasses clinical sites not just in the U.S., but also in Georgia, Serbia, Argentina, and Taiwan. This phase is conducted using the same dose and formulation of crofelemer as our Mytesi product, which has a robust GMP supply chain stretching from the rainforest to our specialty pharmacies across the U.S. It's important to remember that safety and manufacturing issues are the leading causes of failure for new drug applications. We've completed the necessary regulatory preparations for crofelemer, based on our commercially approved product currently in a Phase III trial. A new short-term development goal for our company is to focus on Microvillus Inclusion Disease, an ultra-rare pediatric congenital diarrheal disorder. MVID represents a severe medical situation for pediatric patients, and at this moment, there are no approved drug treatments for it. We plan to submit an investigational new drug application to the FDA for MVID in the upcoming quarter. In Europe, MVID and other congenital diarrheal disorders may have opportunities for early access programs expected to generate revenue by 2024. By adhering to specific European guidelines, we hope that publications from proof-of-concept trials can facilitate participation in early access programs for Crofelemer. While these programs are not available in the U.S., they offer a chance for reimbursement and can significantly reduce the economic burden associated with chronic unmet healthcare needs. To summarize, we anticipate having top-line results from our Phase III trial for the prophylaxis of cancer therapy-related diarrhea this year, as well as initial proof-of-concept data for patients affected by Short Bowel Syndrome, intestinal failure, and congenital diarrheal disorders, including MVID. These findings could support potential early access initiatives in certain European countries. We are committed to advancing these late-stage clinical programs in 2023 while prioritizing the patient voice, reflecting on lessons from the HIV community, and enhancing our educational efforts concerning crofelemer’s entry into the cancer market. This aims to better support the comfort, dignity, and treatment outcomes of cancer patients facing chronic diarrhea. Before turning the discussion over to our CFO, Carol Lizak, I would like to remind everyone participating today that there will be a short Q&A segment at the end of the webcast. If you have any questions, please submit them through the provided link on the Investor Relations page of the Jaguar website. Now, let's move on to our key financial results for the first quarter of 2023. Carol, are you there?

Carol Lizak, CFO

Yes, I am. Thank you, Lisa and thank you all. Yes. Thank you all for joining our webcast today. I'll begin my review of our financials for the first quarter of 2023. Prescription product net revenue was approximately $2 million in the first quarter of 2023, representing a decrease of 40% compared to prescription product net revenue in the fourth quarter of 2022, which totaled approximately $3.3 million and a decrease of approximately 25% over prescription product net revenue in the first quarter of 2022 which totaled $2.6 million. Mytesi prescription volume decreased approximately 9% in the first quarter of 2023 compared to the fourth quarter of 2022 and decreased 1% in the first quarter of 2023 compared to the first quarter of 2022. Prescription volume differs from invoice sales volume which reflects among other factors, varying buying patterns among specialty pharmacies in the coast network as they manage their inventory levels. Loss from operations decreased by $2 million from $11.8 million in the quarter ended March 31, 2022, to about $9.8 million during the same period in 2023. Non-GAAP recurring EBITDA for the first quarter of 2023 and the first quarter of 2022 were a net loss of USD9 million and USD9.4 million respectively. Finally, net loss attributable to common shareholders decreased by approximately $6 million from $18 million in the quarter ended March 31, 2022, to $12 million in the same period in 2023. That concludes my recap of high-level financials for the first quarter of 2023. I will now hand the discussion back to Lisa Conte. Thank you.

Lisa Conte, CEO

Thanks, Carol. Okay. We at Jaguar, Napo, Napo Therapeutics are energized about all of the important initiatives underway in 2023 and beyond. And as you can see from the numbers, we're working very efficiently with these very important near-term late-stage clinical activities. The company's current cash position and less reported cash at the end of the first quarter is approximately $14.3 million. And the current cash position also includes gross proceeds from a PIPE transaction concluded in the second quarter of approximately $1.86 million, involving the issuance and sale of approximately 3.4 million shares of unregistered, unregistered Jaguar common stock and approximately 6.85 million warrants, not exercisable until January 1st of 2024. This financing involved a small group of dedicated long-term Jaguar investors. Pursuant to the terms of the PIPE purchase agreement, each participating investor agreed not to sell or transfer any Jaguar equity securities for a period commencing on the signing of the agreement, which was very recent last week, and ending six months after the PIPE closing. There is no anti-dilution, no resets, no variable pricing rights, nothing toxic associated with the securities issued in this PIPE. We believe this financing illustrates the confidence that the participating well-educated investors have in the company and the expectation that both the OnTarget trial and our focus on development of proof-of-concept data for crofelemer for the rare disease indications previously discussed will prove transformational in 2023 for Jaguar's value inflection and recognition. We will now take written questions that have been submitted. I'll repeat the questions. Alright, what questions do we have? Here’s a detailed question: How many shares are currently outstanding? What is the cash balance on the balance sheet, and what is the monthly net burn? To recap some of the numbers we discussed, as of the end of the first quarter, the last reported cash was approximately $14.3 million. Regarding the expected date for results from the OnTarget trial, it's about $14.3 million. The PIPE that closed in the second quarter was approximately $1.9 million. In the first quarter, the average monthly burn was about $3 million, primarily due to Phase 3 clinical trial operations. We expect to report top-line results from the OnTarget trial in October of this year, which is just about six months away. We feel confident in our ability to reach that point, and there are currently about 19 million shares outstanding. I'm also seeing a question about the Chewy deal we just announced. I didn't cover this in my comments for efficiency's sake. We have a small but significant business in animal health. We have a conditionally approved product for chemotherapy-induced diarrhea in dogs, called Canalevia. The conditional approval allows us to work with the FDA's Center of Veterinary Medicine to address an important unmet medical need. Ian, if you’re on the line, could you discuss how Chewy can help expand access to Canalevia for pet parents?

Ian Wendt, Chief Commercial Officer

Yes, sure, happy to. Thank you, Lisa. Yes, Chewy, as a major retailer, is including a lot of different pet-related products but including prescription products and supplements. And this just gives another very convenient option for oncologists or any vets who would prescribe Canalevia to be able to utilize our services and it makes it more convenient for the vet but also more convenient for the pet owner. And so if a vet doesn't have stock on hand of Canalevia, they can e-prescribe to Chewy very easily or even the pet owner can initiate the prescription and Chewy will reach out to their vets to fulfill the prescription. So it just gives additional options, a different additional channel of distribution just to make the lives more convenient, as I said, of the pet owners and the vets. So we're really happy with this relationship that we have with Chewy. We're already getting good feedback from both pet owners and vets about this. And at the end of the day, it makes the product more broadly available and more easily accessible for all the stakeholders that we believe are so important.

Lisa Conte, CEO

Thank you, Ian. While you were speaking, a question arose about the impact in the first quarter that many companies face regarding the donut hole. Could you share your perspective on how this operates within the U.S. reimbursement healthcare system, especially concerning Medicare and government-funded programs, and what changes we might expect in 2024?

Ian Wendt, Chief Commercial Officer

Yes, yes happy to. So yes, every Q1 for Mytesi and this is common among most prescription brands. There are some challenges that are seasonal and a little bit unique to Q1 each year. And the main reason that occurs, it really impacts mostly commercially insured patients and Medicare Part D patients. As many on the line here may have experienced, your deductibles reset in the new year sometimes plan changes occur with your employer during the new year and can cause a little bit of disruption. So for those individuals that are on a chronic medication and through the end of Q4, so the preceding quarter, they may have met their deductibles and what the result there is often that their co-pays are very low or maybe zero for their medications at that time. There's very few cost barriers to fulfilling and getting your medication. And then in Q1, all of that resets and we all have to meet our deductibles again which can present challenges for patients. Now on the commercially insured side, we have a great co-pay program in place to really assist those patients. It's a very generous program and very few patients have significant out-of-pocket if they take advantage of that program. So we really work hard to make sure that all those commercially insured patients know the program exists, so they can take advantage of it. And most commercially insured patients are going to pay $0 in out-of-pocket even in Q1, although there are some exceptions with some patients that have catastrophic insurance plans and things like that. The bigger challenge is with the Medicare Part D patients. So federal law prohibits us from offsetting the out-of-pocket costs for those patients. This is true for every branded product manufacturers would love to help those patients but we're just not allowed to do that. And for those patients, this is a pretty big impact. And this is something that occurs every year, as I said, it disproportionately impacts the Medicare Part D patients. And we see a dip in prescription refills for those patients in Q1 and over 50% of our patients are Medicare Part D. And then when they meet their deductibles, usually around the February-March timeframe, we see the prescriptions pick back up again because their deductibles are now lower or more manageable. The other positive news here, though, is the Inflation Reduction Act has some provisions and it's specific to Medicare Part D. And there's a lot of complexity in there but the main thing that we focus on and that we're excited about is that starting in 2024 and then really ramping up in 2025, there's going to be a cap to out-of-pocket co-pays for Medicare Part D patients in 2024, the cap will be about $3,250. In 2025, it will cap out at $2,000. So this is good news for all of our Mytesi patients current and future Mytesi patients because when you think about cancer therapy, and our potential future indication there, about 65% of those patients are Medicare Part D. So the timing shouldn't be better from our perspective and having this legislation take effect right around the time we'll be launching into the therapeutic area.

Lisa Conte, CEO

Thank you, Ian. We all learned something about Medicare today. Pravin, are you on the line?

Unidentified Company Representative, Unidentified

Yes, I am.

Lisa Conte, CEO

Thank you for your question regarding our past mention of COVID-related diarrhea, specifically for long-hauler cases. We have decided not to proceed with that program as it is not sufficiently defined for us to confirm a mechanistic match. Our focus this year is on the financial landscape, particularly concerning small-cap and medium-cap biotech companies, and on transformative late-stage clinical events that can drive near-term revenue. Pravin, could you elaborate on the mechanistic rationale for using crofelemer in treating cancer therapy-related diarrhea and how that connects to its current approved use for HIV-related diarrhea?

Unidentified Company Representative, Unidentified

Oh, absolutely, happy to. Thanks, Lisa. We believe that Crofelemer functions by regulating the secretory action of ion channels, which are essential for brain, heart, and gut activities. Individuals with epilepsy or those who know someone affected by it rely on a precise balance of ion channel regulation, as it's crucial for the body's normal homeostasis and functionality. Just like we wouldn't want either the heart or brain to stop functioning entirely due to the severe consequences, Crofelemer similarly manages the CFTR chloride channels in the gut, moderating their activity to ensure normal stool output. Diarrhea can be seen as a symptom of irregular ion channel activity, similar to epilepsy. In HIV patients, diarrhea arises from two main factors: gut inflammation caused by HIV, which alters cytokine levels and disrupts chloride ion channel regulation, and the specific antiretroviral therapy they receive. Current drug package inserts typically acknowledge only Grade 3 and Grade 4 diarrhea along with other adverse events. However, Grade 1 and Grade 2 diarrhea, such as three watery stools a day, can significantly affect daily living, even if not classified as severe. This is primarily due to the inflammation linked to HIV and the drugs used. Similarly, cancer therapy-related diarrhea results from gut inflammation, as cancer itself is an inflammatory disease that disrupts cytokine regulation and can lead to diarrhea. Additionally, certain targeted therapies may exacerbate this impact by affecting the regulation of epidermal growth factor, further causing secretory diarrhea, much like in HIV cases. Crofelemer has a long history of use, even among Shamans in various forms. We worked closely with the FDA, clinical advisors, and our scientific board to effectively design a trial aimed at addressing chronic non-infectious diarrhea in cancer patients, which is often overlooked yet significantly burdens them. We are excited to have completed enrollment and are progressing towards filing with the FDA later this year. Back to you, Lisa.

Lisa Conte, CEO

Thank you. I have a related question for you, Pravin. What are your thoughts on the potential introduction of crofelemer to the cancer therapy-related diarrhea market after the trial is completed? How might this influence patient adherence to cancer therapies?

Unidentified Company Representative, Unidentified

Oh, it will only make it better because the way, as you heard from Dr. Swain's video and from Dr. Shanahan's video, the way currently oncologists manage the AEs, particularly related to GI and lower bowel movement which is diarrhea, is by actually reducing the dose of the cancer therapies. So what they do is they either give a drug holiday and we used to do that for HIV drugs as well back in the '90s and early 2000s or discontinue or switch their regimen. And since cancer is like running a marathon, you got to have the right shoes on and basically have enough runway to go through one regimen and then to another because you might be progression-free or you may be in remission for a few years and if you're lucky for several years. But then when the cancer comes back, you need to go to a new regimen. And so in terms of using your regimens well and at the right dose, by not having so much diarrhea, as I said, even Grade 1 is three watery stools every day. You are able to stay on your regimen and not have to suffer dose reductions and/or dose discontinuations. We're going to analyze that data as well in the ongoing Phase III study. So we will have more information on that. I hope that answers the question?

Lisa Conte, CEO

It does. I hope this clarifies the question about our focus on patient care and outcomes, including the cancer outcomes for these patients. The question revolved around the revenue impact for cancer therapeutic manufacturers and the potential business opportunity with Jaguar. Where there is a positive financial impact on the pharmaceutical industry, there is indeed an opportunity for business discussions. As I have stated publicly many times, those discussions are currently ongoing. We anticipate that the release of top-line data from the OnTarget trial, expected in mid-October of this year, will further these business conversations. There was also an inquiry regarding the Entheogen Therapeutics initiative within Jaguar, which is an early-stage program aimed at exploring psychoactive and psychedelic plants for treating mental health disorders and mood disorders. This initiative follows the emerging movement surrounding compounds like psilocybin, MDMA, and LSD as new treatment options for mental health issues. Many well-funded companies are pursuing the same compounds and approaches, but we are focusing on the next generation of solutions. Similar to our work with crofelemer, we are investigating new mechanisms of action and concentrating on plant-based botanical products that can expedite clinical trials. Our strategy involves a joint venture with Filament Health, called Magdalena Biosciences, named after the beautiful river in Colombia. This initiative's initial therapeutic focus is on adult attention deficit disorder, and we have prioritized several approaches based on symptoms observed in the field, collaborating with healers and shamans while leveraging our expertise in botanical drug development and sustainable supply. Magdalena has a post-money valuation of $5 million, and we own approximately 40% of that joint venture. Our aim is to advance a plant-based product, potentially for ADHD, depression, or schizophrenia, into clinical development and then partner with an entity that has the resources and regulatory expertise to take it all the way to market. We are making significant progress on this business plan with minimal effort from the company at this time, allowing us to concentrate on our late-stage clinical activities in 2023 while adding more value and diversity to our portfolio. Lastly, there was a question about ATM utilization. An ATM is an after-market facility regarded by investment bankers as an efficient and cost-effective funding method for the company. We have agreed with our recent investment not to utilize the ATM or introduce additional shares into the market under extraordinary circumstances. Based on our last cash position, the funds acquired from the PIPE, our historical burn rate, and our target for the OnTarget trial results in mid-October, we believe we are well-resourced to reach that goal along with likely achieving proof-of-concept data for the MVID rare disease initiative. I will conclude here. Thank you very much for your participation and thanks to everyone from Jaguar who took part in this call. Lastly, I would like to recognize that last Friday was the international day of plant health, proclaimed by the food and agriculture organizations in the United Nations. We take this moment to express our commitment to protecting and celebrating the world's plant life, as healthy plants are vital for all life on earth and essential for ecosystem function, food security, and nutrition. According to the U.S. Forest Service, 40% of the drugs available in pharmacies in the Western world are derived from plants that have been used for centuries, including the top 20 best-selling prescription medications in the United States today. At Jaguar, we understand that plants are a precious resource, and human health is deeply interconnected with their well-being. This concludes our webcast for today. Thank you again for joining.