Brickell Biotech, Inc.

Greetings, and welcome to Brickell Biotech Incorporated's Q2 2021 Financial Results Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Garth Russell of LifeSci Advisors.

Thank you, Operator, and good afternoon, everyone. Joining me on today's call are BRICL's Chief Executive Officer, Rob Brown, Chief Financial Officer, Burt Marcio, Chief R&D Officer, Deepak Chadha, and Chief Operating Officer, Andy Scholar. Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will not undertake obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and other periodic reports on Forms 10-Q and 8-K filed with the SEC. I would now like to turn the call over to the company's Chief Executive Officer, Rob Brown. Rob, the floor is yours.

Thanks, Garth. Good afternoon, everyone, and thank you for joining our call today. So far, 2021 has been a tremendously productive year for the entire BRICL team. As we've executed against our strategy to advance soft trunnion bromide through our pivotal Phase III program as a potential best-in-class treatment option for primary axillary hyperhidrosis, also known as excessive underarm sweating. First off, we recently announced that we completed enrollment in both of our phase three pivotal clinical studies, cardigan one and cardigan two, respectively, and that the last hyperhidrosis patients completed all scheduled visits in the cardigan one study. We expect the last hyperhidrosis patient in the cardigan two study to complete their final visit this month. Accordingly, We remain on track to receive and concurrently announce top-line results for both cardigan studies in the fourth quarter of this year. Secondly, as many of you are aware, we recently completed a financing of approximately $8.1 million. With this infusion of capital, we now expect to have sufficient cash to fund our operations beyond the potential NDA submission for soft-pronion and grub-mide gel 15% to the U.S. FDA. which is anticipated to occur in mid-2022, pending the Phase III results. Turning now to updates from Japan, Kakan is still in the very early stages of its commercial launch of E-Clock, or soft chromine bromide gel 5%, for the once-daily treatment of primary axillary hyperhidrosis in Japan. The E-Clock launch is an important milestone for both companies, as Japan is the first country to approve soft chromine bromide For any indication, an e-clock is the first topical prescription product for the treatment of primary axillary hyperhidrosis in the country. In addition to the benefit of Kakan building a regulatory and commercial track record for soft tronium bromide, Brickell currently receives royalties based on a percentage of net sales of e-clock in Japan and is also entitled to receive sales-based milestone payments. We are encouraged by Kakan's early sales progress as well as their continued investment in the commercial ramp-up of e-clock, disease state awareness, and life cycle management activities. Along those lines, this brings me to the most recent news of Kaken. In June, Kaken initiated a Phase I clinical study exploring the pharmacokinetics, safety, and efficacy of soft-pronion bromide gel in patients with primary palmoplantar hyperhidrosis or excessive sweating of the palms and soles. This is an extremely embarrassing and anxiety-provoking dermatological disorder that commonly interferes with the social and professional aspects of daily life, and there are currently no approved topical prescription treatment options for this disease in Japan or the United States. We look forward to seeing the results of this Phase I study, which will help us and Kakan determine next development steps, if any, in this new potential indication. Now let's turn the call over to Deepak to provide a clinical update. Deepak?

Thanks, Rob. Greetings, everyone. As stated by Rob in his opening remarks, we continue to be encouraged by our team's execution of the phase three pivotal studies, evaluating Sophronium bromide gel 15% for the treatment of primary axillary hyperhidrosis in nine years and older patient population. We started these two studies in the fourth quarter of 2020, Less than one year ago, midst of pandemic and well before vaccines were available to the public. As such, we recognize that we are extremely fortunate to have adhered to our clinical study conduct timelines. More specifically, we announced that the last hyperhidrosis patient completed the Cardigan 1 study. And today, as Rob mentioned, we currently expect to have the last hyperhidrosis patient complete the Cardigan 2 study this month. The entire Brickell team and our CROs have worked tirelessly to ensure that these two phase three pivotal studies were started and completed on time, and we greatly appreciate their hard work and dedication to get us to this critical moment in company's history. In addition, we owe a great deal of gratitude to all the clinical sites, investigators, and their associated staff, and most importantly, to the approximately 700 hyperhidrosis patients that participated across these two studies. It is because of the strong showing by the hyperhidrosis community that we remain on track to concurrently report such top-line results from both cardigan studies in the fourth quarter of 2021. If these studies are successful, we expect to proceed towards an ND submission to the US FDA in mid-2022. As a brief reminder, the Phase III pivotal co-primary efficacy endpoints, as agreed to with the FDA, are the proportion of subjects achieving at least two-point improvement on the patient-reported outcome assessment, that is the hyperhidrosis disease severity measure, or HDSM-AX scale, and the change in gravimetric set production, each from baseline to the end of treatment. Lastly, In the second quarter, we also announced the results from our Phase III open-label long-term safety study, which assessed the long-term safety, tolerability, and efficacy of Sopronium bromide gel 5 and 15% for 48 weeks of treatment in patients 9 years and older with primary axillary hyperhidrosis. We were proud to have these data presented in a late-breaking oral presentation at the American Academy of Dermatology's 2021 virtual meeting experience in April. Overall, the safety, tolerability, and efficacy results of Sopronium bromide gel 5 and 15% in the long-term open-label safety study were consistent with prior clinical experience and no unexpected safety findings were observed. With that, I will now turn the call over to Bert to provide a financial overview. Bert?

Thanks, Deepak, and good afternoon to everyone on the call. Before I provide a summary of the second quarter financial results, I want to encourage you to read our full consolidated financial statements and MD&A contained in our quarterly report on Form 10-Q, which can be accessed through the Investors section of our website once filed with the SEC. Starting with cash and cash equivalents, the company reported $24.4 million as of June 30, 2021. As noted by Rob, subsequent to the end of the second quarter, we announced the completion of an equity capital raise for gross proceeds totaling approximately $8.1 million. We intend to use the net proceeds of our offering for research and development, working capital, and general corporate purposes. Most importantly, we believe our current cash position will support our operations beyond the potential soft peronium bromide NDA submission to the US FDA, which is anticipated in mid-2022, pending the outcome of our ongoing Phase III clinical program. Revenue for the second quarter was the royalty revenue we recognized from the sales of eClock in Japan by Kaken of approximately 151,000, up from 17,000 in Q1. This was compared to 600,000 in total revenue reported for the same period in 2020, which was driven by collaboration revenue recognized for R&D funding provided by Kaken to Brickell back in 2018. R&D expenses were $8.8 million for the second quarter of 2021, compared to $2.7 million for the second quarter of 2020. This increase was primarily due to an increase in the clinical trial costs related to the Phase III cardigan studies. G&A expenses totaled $2.9 million for the second quarter of this year, compared to $3 million for the second quarter of the prior year. Net total other income was $429,000 for the second quarter of 2021 compared to $7,000 for the second quarter of 2020. The increase was primarily due to a gain on extinguishment of debt that resulted from the forgiveness of the Paycheck Protection Program loan in June of 2021. Lastly, our net loss for the second quarter of 2021 was $11.1 million compared to $5.1 million for the second quarter of 2020. As I previously noted, this increase was driven by the increase in our R&D expense. And with that, I'll turn the call back over to Rob for closing remarks. Rob?

Thanks, Deepak and Bert, for your recap. This is an exciting time for Brickell. We continue to work together and build momentum towards the upcoming phase three readout later this year, which we hope will be a meaningful advancement for the company, the patients we support, and the physicians who treat them. In addition, we are continuing to explore potential business development opportunities to expand our pipeline with products that we believe can become potentially transformative therapies for patients. We look forward to providing additional updates to the extent these efforts materialize. Lastly, it's worth mentioning that the clinical, financial, and corporate milestones that we've achieved over the past year would be meaningful in normal times. But considering they were all accomplished in the middle of the pandemic speaks to the resilience and resourcefulness of our team, as well as the unmet need that exists for a safe and effective hyperhidrosis treatment. This concludes our prepared remarks. I'll now ask the operator to open the call up for questions. Operator?

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Leland Gershel with Oppenheimer. Please proceed.

Great. Hey, congratulations on the progress, and thank you for taking my questions. Two questions from me. First, I wanted to ask, pending the data from the cardigan trials, assuming they're positive, are there any significant items outstanding required for the NDA, or is it simply a matter of compiling the pivotal data, you know, the CMC section and so forth. And then I wanted to ask, with Kaken's going into Palma Plantar, you know, that leads me to kind of wonder how you may see indication expansion, you know, under Brickell, and would that be an indication that you would look to do a trial in for perhaps an SNGA? How should we think about expansion opportunities, you know, for soft peronium? Thanks.

Hey, Leland. First, thanks for the questions, Rob. In regards to the submission, there really aren't any – there are no clinical – no clinical work needed to do that submission. Obviously, there is a significant amount of work to pull the whole thing together. We do plan to have a meeting with the FDA, post-Phase III meeting with the FDA. But all the big pieces are done. for clinical trial, you know, once the phase three data is completed. So we feel really good about that. In terms of Kakan and, you know, their work in this phase one, I mean, we're really excited about that. We have obviously rights to that data. We'll be really interested to see the results of that and be interested then to make a decision on how we go forward. It's a really interesting indication in the sense that there's a lot of unmet need and in many ways, The sweatingness of the hands is one of the most debilitating aspects of hyperhidrosis. It's hard to use a phone, keyboards, et cetera, besides the social embarrassment that people have. So there's a real functional challenge to that, and it can create significant problems for patients. So obviously we need to see the data, and we'll take a look at that, obviously, when Kaken gets done. But we're happy that they're investing in the products, and we're excited about that being a potential future opportunity for this asset. Great. That's very helpful. Thanks.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the queue. There are no further questions at this time, so I would like to turn the call back to Rob Brown for any closing remarks.

Great. Thank you, Joe, and thanks to everyone for taking the time this afternoon to listen to our update. I wanted to close out the call by thanking everyone for joining us and your continued interest in BRICL. We look forward to keeping all of you updated on the progress and the outcome of our studies over the coming months. As always, please feel free to reach out to us at any time with any further questions. Have a great rest of your day.

This concludes today's conference. You may disconnect your lines at this time. Thank you very much for your participation and have a great day.