Welcome to the Talphera Second Quarter 2025 Financial Results Conference Call. This call is being webcast live via the Events page of the Investors section of Talphera's website at www.talphera.com. You may listen to a replay of this webcast by going to the Investors section of Talphera's website. I would now like to turn the call over to Raffi Asadorian, Talphera's Chief Financial Officer.

Thanks, Andrew, and thank you for joining us on the call today. Today, we announced our second quarter 2025 financial results and associated business updates in a press release. With me today are Vincent Angotti, our Chief Executive Officer; and Dr. Shakil Aslam, Talphera's Chief Medical Officer. Before we begin, I want to remind listeners that during this call, we will likely make forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties regarding the operations and future results of Talphera. Please refer to our press release in addition to the company's periodic current and annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward-looking statements. These documents can be found on our website within the Investors section. I'll now hand the call to Vince.

Thanks, Raffi. Good afternoon, and thank you to everyone joining our call today. We're excited about the progress made this past quarter, specifically in the acceleration of the NEPHRO study enrollment. At the end of last year, upon the announcement of Dr. Shakil Aslam becoming the Chief Medical Officer of Talphera, we embarked on the restructuring of the NEPHRO clinical study, which included changing the target profile of our clinical sites, approaching the FDA with various study protocol changes, including the reduction of the study size from 166 to 70 patients and adjusting internal processes to ensure acceleration of study enrollment with the goal of completing the study by the end of 2025. And I'm very pleased to inform you that we now have evidence that all of these changes were indeed the appropriate adjustments, and we're confident that we're on the right path to achieve our goals. We have seen a strong acceleration of the enrollment rate over the last 6 weeks from the first 3 sites with our new target profile. This target profile includes a nephrologist principal investigator and the institution screening patients at medical ICUs. As a result, the number of total enrolled patients has more than doubled since May. These sites, combined with 6 additional new target profile sites that are expected to begin enrolling over the rest of this quarter should keep us on plan to complete the study by the end of this year. Dr. Aslam and I have recently returned from a visit with many of the new study teams at their respective locations. In addition to observing their study engagement, I'm also highly encouraged by the eagerness of these institutions to have nafamostat available if approved. In their words, nafamostat, based on its profile and use in other countries, will be a preferred anticoagulant for CRRT. While we still need to complete the study, this feedback from these investigators continues to strengthen my belief that nafamostat, if approved, will become a primary product in the market for CRRT anticoagulation. The addition of more of the right clinical study sites and principal investigators has been critical to achieving the increased enrollment rates. As a reminder, the new site profile concentrates specifically on, one, the type of intensive care unit where the study will be performed, for example, medical ICUs instead of surgical or cardiothoracic ICUs where many of the legacy sites were focused; two, the specialty of the principal investigator, specifically a nephrologist as a primary lead for selecting patients to enroll compared to an intensivist or other specialists, which were the specialties of the legacy site PIs; and three, the efficiency of the administration to initiate a new study at their institution. Dr. Aslam identified these characteristics after his review and learnings from assessing the initial sites as critical to successful and timely enrollment. In addition to the acceleration in enrollment at existing new profile sites and the institutional interest in joining the study as we add new sites, we believe there are other tailwinds supporting the market potential of nafamostat. These include, one, advancing a compassionate use IDE. As stated on our last call, we have been approached by multiple institutions and are discussing using nafamostat under a compassionate use IDE for a specific patient population that does not do well with other available anticoagulants for CRRT; and two, continued shortages of citrate and potential supply chain issues with heparin. Health care providers are inquiring about the timely availability of nafamostat, given the recurrent heparin and citrate shortages. Now before I turn the call over to Dr. Aslam to provide some additional details, let me remind you that if approved, Niyad would become the only FDA-approved regional anticoagulant for use during continuous renal replacement therapy. This is important in that there are many disadvantages to the currently used products, heparin, which is systemic in nature; and citrate, which is being used off-label. I'll now hand the call over to Dr. Aslam.

Thank you, Vince, and good afternoon to all. The acceleration in enrollment rate is exciting, and the new site engagement has been excellent as we shift away from the legacy sites to the new target profile sites previously described. We now have a total of 7 sites that are actively screening. We have 4 legacy or old profile sites and 3 new target profile sites. These new sites have enrolled over 90% of the 15 patients to date. Importantly, the enrollment rate from these 3 new sites has been impressive and has validated our strategy of changing the target site profile. These sites have enrolled 9 patients over the last 6 weeks, which was in line with our enrollment forecast. We terminated one legacy site because of its low screening numbers and failure to enroll any subjects. We expect to add 6 new sites over the course of the third quarter, all with the new profile. As a matter of fact, a couple of them were recently activated and will begin enrolling shortly. This gives me confidence that the relaunch of the NEPHRO study with significant protocol changes and a pivot to the sites with a different profile has been successful. We expect the study enrollment rate to accelerate further with the addition of the 6 new sites with a similar profile over the current quarter as these are large academic institutions with CRRT volumes higher than the legacy sites. As we mentioned on our last call, we continue to advance our compassionate use IDE with a large institution. Physicians at this institution see an immediate and compelling need for a subset of patients with contraindications to currently available anticoagulants and need an alternative. We are in the process of submitting a compassionate use IDE to the FDA. This is an opportunity to provide an alternative to these patients who cannot receive the currently available anticoagulants. And as a result, clot their CRRT circuits frequently. We do not have a timeline finalized, but we wanted to share this information as this was not the first such request we have had. It is evident that the current anticoagulants for CRRT are not ideal products, and there is no FDA-approved regional anticoagulant on the market. We will provide more information on the progress of this compassionate use IDE submission. And with that, I'll turn the call back over to Vince.

Thank you, Dr. Aslam. Before I hand the call over to Raffi, I want to reiterate our belief that the 3 critical risk elements, clinical, regulatory and commercial for the nafamostat program are low for a number of reasons. First, with over 30 years of use as an anticoagulant during CRRT in Japan and South Korea, we know nafamostat's track record of efficacy and safety, minimizing the clinical risk. The trial design has been agreed with the FDA, including broader inclusion criteria in a reduced number of patients, all of which help minimize study execution risk. Second, we have a clear regulatory path, including breakthrough designation from the FDA, which has provided us with efficient access to the agency, leading to quick review and response times. Lastly, while we know there is always commercial risk, we believe this is mitigated given the disadvantages of the products currently being used for anticoagulation of the CRRT circuit, namely heparin and citrate. As you heard from Dr. Aslam, there is a clear need for an FDA-approved regional anticoagulant. I'll now hand the call over to Raffi for a financial update.

Thank you, Vince. We continue to focus on our efficiency while accelerating the enrollment in our clinical study. Accordingly, we are reducing the previously communicated 2025 expected cash operating expense guidance to now be in the range of $16 million to $17 million, which includes the estimated expenses related to executing and targeting completion of the NEPHRO CRRT registrational trial by the end of the year. This is a reduction from the $17 million to $19 million range provided last quarter. Our cash operating expenses or combined R&D and SG&A expenses for the second quarter of 2025 totaled $3.7 million compared to $4.3 million for the second quarter of 2024. Excluding noncash stock-based compensation expense, these amounts were $3.5 million for the second quarter of 2025 compared to $4 million for the second quarter of 2024. The decrease in cash operating expenses in the second quarter of 2025 was primarily due to reductions in personnel expense and other general and administrative expenses. Our cash balance at June 30, 2025, was $6.8 million, including the proceeds from the first tranche of financing that closed on April 2. As a reminder, the financing was structured in 3 equal tranches with the first tranche received at the initial closing and the 2 additional tranches committed upon achieving an enrollment of 17 patients and 35 patients and with the stock trading above $0.73 per share following the announcement of each milestone. The expected proceeds from the closing of the 2 additional tranches, combined with the $6.8 million in cash at June 30, 2025, should support the company through the completion of the study anticipated by the end of the year. I'll now turn the call back to Vince.

Thank you, Raffi. And I'd like to open the line for any questions you might have. Operator?

Your first question is from Ed Arce from WestPark Capital.

Hope all is well, and congratulations on the progress with NEPHRO enrollment and the expense run rate. I have a major question and perhaps a follow-up. I'm trying to get a clearer understanding of the acceleration you expect to achieve the 70 enrollment target by year-end, considering that the last six weeks saw nine patients enrolled. Can you discuss the trajectory you anticipate for the rest of the third quarter and into the fourth quarter?

Ed, this is Vince. Congratulations on your new position, and welcome to the call. I can help answer that. The rates of enrollment are significantly increasing, especially with the new sites enrolling at a comparable rate, given that many of them are larger. If we do the math, there are 9 sites expected to join in the next month and a half, aiming for an average of 4 months from September to December, which means we need a total of 55 patients. That breaks down to about 1.5 patients per site per month. Our current run rate over the last 6 weeks is already higher than that. We’re not seeing any changes in the run rate; in fact, it may be slightly lower on a per site basis. The key is getting these sites operational. As Dr. Aslam mentioned, 2 of the next 6 with the new profile just started as of yesterday, and their enrollment will begin shortly. Even if there are no enrollments through the end of August, if we assume everyone is active in September and starts enrolling, we expect the run rate to be consistent with what we've seen historically from these 3 new profile sites. So, while there might be an acceleration on a per site basis, we’re primarily discussing maintaining current production levels.

Okay. Great. That's helpful. And then just wondering, you mentioned this program where you're providing the products for sites that would like to try it, as you mentioned, given all the issues, especially now with the use and provisioning of heparin and citrate. Is there any opportunity given their use? I would assume this is more than one site or facility to leverage the data that they have, perhaps not for approval, but perhaps for future publication and to buttress commercial uptake?

Yes, it's a great question regarding the background. Dr. Aslam can elaborate on why specific sites, particularly the one we're working with quickly, are important and the requirements for capturing data with compassionate use. Throughout various CRRT meetings last year and into this year, we have been approached by experts from certain institutions whose patient profiles may be unique. While we cannot accommodate everyone for compassionate use, there are one or two institutions we are actively pursuing based on their capacity to meet the requirements and the uniqueness of their patient population, which doesn’t overlap with our current study. Now, Dr. Aslam, I'll let you explain what those patient profiles might look like at these institutions, why they are seeking nafamostat, and the data capture requirements they may have.

Thanks, Vince, and congratulations, Ed. You're correct. The data we gather from these patients won't be part of our efficacy dataset. However, we will include a larger safety dataset that consists of information from every patient exposed to nafamostat in our submission. This will be valuable for demonstrating that nafamostat can be used safely and effectively for CRRT anticoagulation in patients who cannot receive heparin or citrate. These patients typically undergo chemotherapy, which severely affects their bone marrow, leading to low platelet counts that make heparin unsuitable. Additionally, due to low white blood cell counts, they are at risk of infections, sepsis, and liver dysfunction, which contraindicate citrate use. Healthcare providers are facing challenges managing these patients since they can't use two of the three common anticoagulants currently available, with citrate being an off-label option. Cancer significantly elevates the risk of blood clotting, resulting in frequent clotting incidents. While this specific patient group is not represented in our clinical study, there is a significant unmet need in this population. The data we gather from them will be highly beneficial for our commercial objectives as we seek approval for nafamostat. Does that address your question, Ed?

Yes, that's helpful color. I appreciate that. And again, congrats on the progress.

Your next question is from James Molloy from Alliance Global Partners.

Could you provide an update on the heparin and citrate shortages mentioned earlier in the call? How long have these shortages been occurring, and when do you expect them to be resolved? Additionally, regarding the second tranche, now that you are at 17, does the long path to reaching $0.73 mean that cash may not come in, or do you believe investors might waive that requirement?

Yes. Good questions, James. I'll start with the supply chain issues we've been tracking regarding heparin and citrate. Heparin issues have been well-documented, and we continue to see challenges with its supply each year at various times. This inconsistency makes dependency on it difficult. Regarding citrate, we have received reports this year from several sites that they are running low or completely out. I can't specify the exact reasons for this shortage, but it may be due to manufacturing issues at certain facilities or other supply chain problems. Additionally, citrate is utilized not only for continuous renal replacement therapy (CRRT) but also in other areas like blood banks. Therefore, there is a broader demand for the product beyond CRRT. Over the years we've been involved in this area, we've consistently faced challenges with both heparin and citrate. Sometimes these issues are resolved quickly, while other times they linger. Users of these products for CRRT are understandably concerned about the predictability of their supply. The second question related to the financings, Raffi?

Yes. We will need capital to reach the PMA filing. The two conditions for investors to provide funding are the requirement for 17 and 35 patients and the stock price. We will see what happens after we announce the enrollment of the 17 patients, which should be coming soon. However, we know that investors have the option to waive those conditions. During our discussions, the majority of investors were primarily focused on the 17-patient milestone rather than the stock price. We will need to have further conversations with them if we do not reach the $0.73 target. Their main interest lies in hitting the 17-patient milestone since that is crucial for gaining the momentum we are currently experiencing.

Understood. And kudos to Dr. Aslam for rejiggering the trial design and getting it back moving. So definitely the plan is coming to fruition. Just quick question. What are the main components of the OpEx that drives down sort of the numbers looking at, if you just run the numbers you had in the current quarter out, you're well below that $16 million to $17 million OpEx for the year? Do we anticipate a bump here in the second half?

We do, yes. It will bump up. Maybe we're being a little conservative, but it will bump up because of the enrollment that's increasing now, has just recently increased and is increasing as we head into the third and the fourth quarter.

Your next question is from Naz Rahman from Maxim Group.

Congrats on the progress. I have a couple. The first one is on the new site initiations. Obviously, previously, you had quite a bit of logistical administrative issues on the site initiation. I guess at this point, what kind of gives you confidence that you could have the new sites up and running and enrolling basically by the end of the third quarter to basically reach the end of 2025 completion? That's my first question.

Yes. So I'll turn it over to Shakil because Shakil has done an outstanding job on vetting these institutions before moving into the contracting process. So Shakil, maybe you can comment on that vetting process and what we've actually seen the performance of the administrative advancements.

Thank you, Naz. When we evaluated potential new sites, one of our key criteria was the speed at which they could become operational. We looked at historical data regarding their paperwork timelines, and many of these sites had internal benchmarks indicating that they could go from initiating paperwork to being open for enrollment in 90 to 120 days, which translates to about 3 to 4 months. They were also held accountable if they did not meet those timelines. This information was reassuring as we engaged with these sites. Additionally, as Vince mentioned, we streamlined our internal processes for managing contracts, allowing us to act quickly. We utilized external resources to assist with paperwork, and we are on track to activate all sites by the end of this quarter. We are actively reaching out to schedule initiation visits and are confident that we will have all 9 sites meeting our target profile operational and enrolling by that time. While the enrollment rate at our existing sites may not see immediate acceleration, it is expected to improve over time as they become more accustomed to working with patients in clinical trials. The new sites coming on board are anticipated to have a much higher enrollment rate compared to our current target profile sites.

I think, Naz, what I'll add to that is it's important. None of these sites will start from scratch right now. I want to emphasize what Shakil said, we're way down the path. As a matter of fact, of the next 6 sites with the new profile, 2 have already been activated as of last week and this week. So they should start enrollment imminently here this month. And that leaves us just with a balance of 4 more sites that we've already got CTAs agreed to, budgets agreed to. We get the SIVs, which are site initiation visits scheduled, all here to get completed by the end of this quarter. So we're not starting from scratch on any of these. If anything, we're on the last leg of the sprint.

Got it. That's very helpful. And my next question is kind of on patient enrollment. So, obviously, you like cross corrected for some of the sites, but you have basically been running the study for just a little over a year at this point. I guess what has been the trepidation from the different sites or I guess, patients from enrolling the trial? Has it been the fact that a lot of these patients and either the investigators have been concerned about enrolling them or the patients, they didn't want to agree to enroll in the trial or the families? And like the most recent initiations or the most recent enrollments, have they more been a function of just the new sites have been more effective understanding nafamostat? Or has it been more of a function of the fact that there's been the shortages so these investigators decided, okay, why not enroll into this NEPHRO study?

Shakil, I'll start with the first part of this and maybe talk about the characteristics of the new sites. Supply really has been an issue. Look, the original sites that we inherited when we assumed this program from the previous owner of the company. Those original sites were sites that that company had a relationship with based off of their previous development program in the ICU. That product was a vasopressor. That product utilized PIs that were typically intensivists. And that study typically with those intensivists pulled patients from surgical ICUs, which aren't really the patient populations we'll see for CRRT. These were very good sites, very good investigators, very good people for that disease state of vasopressor. And I believe they felt because they were intensivists in an ICU, there would be an easy cross to a CRRT study. And that was basically every site that we inherited. Dr. Aslam, when he came in, evaluated the sites and quickly based off his experience as a nephrologist and involvement with CRRT, diagnosed the fact that while these are great institutions and very talented PIs in medical centers, for a study in CRRT, it would need to shift to specialties with nephrology who are pulling patients from the medical ICU. So the original sites, while they were inherited, really weren't the right match for this study moving forward. And with Dr. Aslam's expertise intervening, he changed that profile. Now Dr. Aslam, you can comment on why this acceleration lately. Maybe you can talk about other metrics you're seeing and why you feel the patient enrollment is occurring.

Absolutely. Thanks, Vince. As Vince mentioned, while our previous sites were good, they were not very effective for this particular indication primarily due to the patient population being screened, which included many with cardiac failure, heart failure, and postoperative cardiac surgery. Most of those patients also had kidney failure and were being treated with heparin for ECMO and other extracorporeal therapies. This systemic use of heparin posed a significant challenge because there were very few patients consenting each month. Many of these patients did not qualify during initial assessments. Additionally, I believe nephrologists are more engaged with Continuous Renal Replacement Therapy (CRRT) compared to intensivists, who typically focus on pulmonary critical care and may see CRRT as a secondary concern. Nephrologists primarily manage these patients for CRRT and are acutely aware of the complications associated with CRRT anticoagulation. They're often dealing with bleeding issues or frequently switching circuits. Because of this, I believe nephrologists will take greater ownership of the study and enroll more patients, as they are eager for new anticoagulant options. Over the past six weeks, our consent rates for patients passing the initial screening have significantly increased, indicating that many patients are now being enrolled in the study. The enthusiasm of the principal investigators and their access to nafamostat, along with having the right patients to select from, are critical factors driving this positive trend. Although there is a shortage of heparin listed on the FDA's website due to ongoing problems with raw materials and manufacturing, I don't think this is the reason for the recent spike in enrollment. The key factors are the interest and commitment from the PIs and the new sites.

There are no further questions at this time. Please proceed with closing remarks.

Thanks, Andrew. Again, thank you for joining our second quarter earnings call. As you can tell, we're very excited about the progress we've made, all with the goal of completing the NEPHRO trial this year in 2025 with an FDA approval of Niyad in 2026. We'll continue to manage our cash prudently, and we look forward to providing additional updates on our progress. That concludes our call, and thank you for your interest in our company. Have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you to please disconnect your lines.