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spk02: as a first step before we put forward a proposal for any use of oncology. Once we have feedback from FDA and alignment on our proposal related to TPM, we can then craft a proposed study for use in oncology. The decision to prioritize TPM for submission and FDA discussion was based upon the expected timing and cost of the clinical program being proposed relative to the expected market size. Though oncology is potentially a larger market opportunity, we've elected to prioritize the potentially faster program first. Assuming acceptable feedback from the agency in June, anticipate submission of an oncology proposal to FDA later this year. Lastly, from a supply chain perspective, in our efforts to de-risk our reliance on a single finished dose manufacturer, earlier this week we submitted a supplement to our NDA, adding Siegfried's Hamelin site as an alternate manufacturer. Pending a successful FDA review of the supplement, we anticipate Siegfried coming online as a manufacturer as early as the end of spring. Quarimedics have now grown to approximately 90 employees and I'm proud of what we have accomplished over these recent months. I would now like to turn the call over to Matt to discuss the company's first quarter financial results and financial position. Matt.
spk03: Thanks, Joe, and good morning, everyone. I am pleased to be here today to provide an overview of our first quarter of 2024 financial results, as well as an update on Quarimedics' cash position. The company has filed its quarterly report on form 10Q for the quarter ended March 31st, 2024. I urge you to read the information contained in the report for a more complete discussion of our financial results. With respect to our first quarter of 2024 financial results, our net loss was approximately 14.5 million, or 25 cents per share, compared with the loss of 10.6 million, or 24 cents per share in the first quarter of 2023. The higher net loss recognized in 2024, compared with 2023, was driven by an increase in SG&A expenses versus the first quarter of 2023, partially offset by the sale of New Jersey NOLs for 1.4 million. Operating expenses in the first quarter of 2024 increased approximately 44% to 15.9 million, compared with 11 million in the first quarter of 2023. R&D expense decreased by approximately 75% to 0.8 million, driven by the approval of DefendCath. As a result of the post-FDA approval commercial operations, costs related to medical affairs and certain personnel expenses that supported R&D efforts prior to the FDA approval of DefendCath have been recognized in SG&A expense. SG&A expense increased approximately 98% to 15 million in the first quarter of 2024, compared with 7.6 million in the first quarter of 2023. This increase was primarily attributable to increases in personnel expenses due to the hiring of Salesforce, medical affairs and marketing personnel. In addition, certain costs related to medical affairs and certain personnel expenses that had been previously recognized in R&D are now recognized in SG&A following the FDA approval of DefendCath. To a lesser extent, the increase was also driven by increases in non-cash charges for stock-based compensation and increases in consulting fees. We recorded net cash used in operations during the first quarter of 2024 of 17.3 million, compared with net cash used in operations of 10.4 million in the first quarter of 2023. The increase is primarily driven by an increase in net loss and decreases in accrued expenses and accounts payable. The company has cash and cash equivalents of 58.6 million as of March 31st, 2024. As we have discussed previously, we expect our operating expenses, especially SG&A, to remain at increased levels given the growth of the company and the cost driven by the commercial launch of DefendCath. QuarMatics anticipates 2024 quarterly operating expenses to range from around 15 to 18 million to support commercial infrastructure and the ongoing launch of DefendCath. We believe our cash, cash equivalents, short-term investments and projected future operating cashflow gives the company the ability to fund operations for at least 12 months and to fund the commercial launch of DefendCath through to anticipated profitability, which may occur on a run rate basis by the end of 2024, assuming we are able to achieve our internal base case assumptions for DefendCath demand, uptake, net pricing and reimbursement. I will now turn the call back over to Joe for closing remarks, Joe.
spk02: Thanks, Matt. QuarMatics is executing well on our key objectives and is hopeful to provide more substantive updates on sales progress on our next quarterly call in August. I appreciate everyone's continued support in QuarMatics and I'm happy to now take questions.
spk06: Thank you. Ladies and gentlemen, we'll now begin the question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. If you're using a speaker phone, please lift the handset before pressing any keys. Following the audio portion of the Q&A, we will take written questions from the audience as well. Your first question comes from Les Sulebski from Truis Securities. Les, please go ahead.
spk01: Good morning. Thank you for taking my questions. I have two on the outpatient side and then one follow-up. So can you give us a little bit more color around the economics of the ARC partnership? Essentially, will all of their dialysis centers convert to full use of the FedCaf day one upon the switch into your outpatient launch or is that an option left to the patient? And then second, I guess it's very interesting to hear that you're in discussions with one of the two leading national outpatient dialysis operators. How can we think about that conversation moving along? Is this a pilot run program that they could put in place and ultimately what kind of terms and impact and that pricing could we expect if a deal were to occur?
spk02: Thanks, Les, appreciate the question. And I'm actually gonna kinda, I think, blend these two questions together to some extent. So we're not gonna disclose specific terms in any one specific outpatient or ultimately inpatient agreement. I think the way we've guided you on price over the past year kind of remains consistent on the outpatient side. I think there'll be a healthy gross tonet that leaves room for discounts and rebates, volume incentive rebates, things like that. You'll have that to a lesser extent on the inpatient side. When we think about uptake in the facilities and as we've communicated previously, TADAPA today applies to Medicare -for-service patients which are probably about 40 to 45% of catheterized dialysis patients in any one site.
spk06: So
spk02: some I think facilities will elect to roll out potentially on a kind of a payer basis. We're actively in discussions with the Medicare Advantage plans around additional reimbursement. I think they wanna see uptake and demand. So they'll be looking to see -for-service volumes to some extent. I do think potential rollout for a larger operator could be some combination of payer-based or patient-based focused on potentially high-risk patients. There's a large volume of patients over many facilities. So the rollout will take time to implement regardless of the customer.
spk01: Got it, appreciate that. And as a follow-up more on the kind of a general corporate strategy, given the favorable price of Cormetic stock performance and then you're factoring your cash burn, just to give you a little bit of a cushion as you head into closer to profitability or breakeven, have you considered an equity raise or any other source of financing such as a convertible note or warrants? Thank you.
spk02: Well, thanks, Les. Well, in the script, today we announced the letter of intent for the credit facility, which we do expect to close over the next couple of weeks. Certainly that facility is based upon or would be contingent upon receivables. We've also announced the ATM facility, which will give us some flexibility to utilize it down the road. What I wouldn't wanna do, and I think what you're asking is why I wouldn't do a large, potentially dilutive raise today. I just think that would be premature and potentially irresponsible to unnecessarily dilute the stock until we get better visibility on commercial execution in the back part of the year. I feel pretty good about where we are in our discussions today with customers. I think we're still in line with our base case expectations and assumptions to get to that kind of run rate breakeven by the end of the year. Now that doesn't necessarily mean I'm gonna allow minimum cash to fall below certain levels. And I think the tools that we've put in place today give us that flexibility as we move through the year to reassess, to look at customer orders as they're coming in, to evaluate our payment terms, our working capital needs, and make that determination. So I hope that's sufficient.
spk09: Very helpful, thank you.
spk06: Your next question comes from Gregory Renza from RBC Capital Markets. Gregory, please go ahead.
spk04: To Nishan for Greg, congrats on the progress this quarter and thanks for taking my questions. Just first on the call, you mentioned BD and M&A. Just wanted to dig into that and see how you're thinking about opportunities and areas of interest that would sit well on your platform. And then secondly, maybe if you could just remind us on the commercial opportunity and team CPN and PEEDS, if you could quantify
spk08: on Lumenlox, et cetera. Thanks again.
spk07: Thanks, Sean, I appreciate the question.
spk02: So look, from an M&A standpoint, obviously, we're gonna continually be opportunistic and take a look as we're moving through our commercial launch this year and the next year. We've got a fixed infrastructure cost. It makes a heck of a lot of sense to try to spread that cost across multiple products. So I do think there are opportunities in the market today that could be actionable. We don't have anything that we are currently either negotiating or actively pursuing, but this is just something that I think as we move past, let's say commercial launch, could become a bigger focus in our mind as we develop as a company. We're doing a refresh right now on your second question. We're doing a refresh on our market research around TPN and oncology and hope to put something out in the second half of the year.
spk07: Sean?
spk06: Hi, Greg, did you have any follow-up questions?
spk08: No, we're all good here. Thank you so much.
spk06: Thank you. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star all by one. Okay, so there were no further questions at this time. So this concludes the audio portion of our survey. I'll now turn it back to Dan for written questions from the audience.
spk09: Thank you, operator. Joe, we have a couple of written
spk05: questions from the audience here. The first one is, are there other post-market type studies that the company is considering or that may help with uptake
spk09: in the
spk05: inpatient or
spk09: outpatient settings?
spk07: Post-market studies. Okay, thanks,
spk02: Dan. Actually, that is something that we are actively pursuing. Right now, I think that when you talk about post-marketing studies, we're looking at real-world evidence studies, right? We wanna be able to demonstrate the efficacy and health economic benefits of DefendCath in a real-world setting. So we are currently in discussions with what I would characterize as value-based care entities to run this type of an evaluation. It's not something that'll happen overnight, but I do think it's something that over the course of time will help demonstrate the value of DefendCath and certainly be useful
spk07: in increasing uptake.
spk09: All right, great, thanks, Joe. Another
spk05: one here. What are the formularies focused on when it comes to their decision-making? In other words, how does DefendCath fit into those themes?
spk02: Okay, and I'm assuming from formularies that the question is asking about inpatient P&T process. So I guess I'll address that. So I think a typical P&T process in a hospital is gonna focus on first, clinical efficacy, and then from there, they're gonna look at price and then the health economic impact of the product. I think with DefendCath, there's a couple other unique things that might factor into the discussion that are certainly beneficial for us. The first is within these institutions, antibiotic stewardship has become an incredibly important issue for them, right? They wanna minimize the use of antibiotics, and to the extent that you can reduce or prevent any infections, lessens the need for antibiotics. The second is as a preventative measure, these hospitals, they get evaluated, right, based on their infection rates and their re-admission rates. And I think that DefendCath fits squarely within that need. So I'd say that's likely part of the discussion. I think that works well in DefendCath's favor as we're going through these P
spk07: &T processes.
spk09: Okay, great. Thanks, Joe.
spk05: Operator, that concludes the written portion of the Q&A session. You may now close the call.
spk06: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
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