Jaguar Health, Inc.

Good day and welcome to the Jaguar Health Investor Webcast. Today's conference is being recorded. Before I turn the call over to management, I would 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 product, the impact of competitive products and pricing, industry trends, and product and technology initiatives, including products in the development stage which may not achieve scientific objectives or meet stringent regulatory requirements. Forward-looking statements are subject to risks 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 that its assumptions, expectations and projections are reasonable in view of current available information, you are cautioned not to place undue reliance on these forward-looking statements. The company's actual results may differ materially from those discussed in this call for a variety of reasons, including those described in the forward-looking statement and risk factor section of the company's Form 10-K for the year ending December 31, 2020, which was filed March 31, 2021, and its other filings with the SEC, which are available on the investor relations sections of the Jaguar website. Except as required by law, Jaguar Health 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 statement presented on a GAAP basis by providing gross sales, 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. 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.

Thank you. Thank you for those statements, and thank you all for joining our webcast today. My name is Lisa Conte. And I'm the founder and the CEO of Jaguar Health and our wholly owned subsidiary in the United States, NAPO Pharmaceuticals. And I'm so pleased to add, I am also a director of our new Italian subsidiary, NAPO EU. Today, we will update stakeholders on progress of NAPO EU's proposed business combination with Dragon SPAC, the progress of our ongoing phase three trial in cancer therapy-related diarrhea, and, of course, the financial performance of the commercialization of MyTESI in the first quarter of 2021, specifically in comparison to last year, the first quarter of 2020. We're going to start with the key financial results for the first quarter of 2021, which will be provided by Carol Lizak, Jaguar's Chief Financial Officer. Before we jump in, I'd like to let all of you participating today know that we will have a brief Q&A segment at the end of the webcast to address questions, if any, submitted in writing. Questions can be submitted via the webcast link for today's event that appears on the events and presentations page of the investor relations section of Jaguar's website. The URL for Jaguar's website is jaguar.health. Okay, we'll now move along and start with the key financial results for the first quarter of 2021, and I'm going to turn it over to Carol Lysak. You're on, Carol.

Well, thank you, Lisa, and thank you all for joining our webcast today. Key financial highlights for the quarter ended March 31, 2021 are as follows. My Tessie net sales during the first quarter of 2021 were approximately 1.2 million and 0.9 million in the first quarter of 2020. This first quarter 2021 result represents an increase of approximately 43% of the same period in 2020, or an increase of 0.3 million quarter over quarter. My TESI growth sales during the quarter, the first quarter of 2021, were approximately 4.6 million and 1.3 million in the first quarter of 2020. This first quarter 2021 result represents an increase of approximately 250% of the same period in 2020, or an increase of 3.3 million quarter over quarter. Total Mitessi unit sales volume increased by approximately 6% in the first quarter of 2021 over the first quarter of 2020. U.S. prescriptions for Mitessi decreased slightly by 2% in the first quarter of 2021 as compared to the first quarter of 2020. Prescription volume is the best estimate of patient demand while unit sales volume may reflect varying buying patterns among wholesalers as they manage their inventory levels. This can result in differences between these two metrics. The company believes the COVID-19 pandemic played a role in the slight decline in prescription volume, with the pandemic resulting in fewer patient visits to their healthcare providers. and subsequently fewer opportunities to diagnose new Mitessi patients. This is consistent with overall pharmaceutical industry performance that showed a negative growth in total U.S. prescriptions for all drugs and decreases in new to brand prescriptions. Additionally, pandemic necessitated travel restrictions negatively impacted the ability of the company's sales personnel to promote MyTSESI to physicians in the first quarter of 2021. For the first quarter of 2021, the loss from operations was $8.8 million compared to a loss of $7.7 million in the first quarter of 2020, a loss increase of 15% or $1.1 million quarter over quarter. The net loss for the first quarter of 2021 was 12 million, compared to a net loss of 7.9 million in the first quarter of 2020, a 51.3% or approximately $4.1 million increase quarter over quarter. In addition to the loss from operations, interest expense increased by 1.7 million from $199,000 in the three months ended March 31, 2020, to $1.9 million for the same period in 2021, primarily due to interest expense incurred on royalty interest agreements and Exchange Note 2. Additionally, there was a change in fair value of financial instruments and hybrid instruments designated at fair value option losses increased $598,000 from a loss of $1,000 in the three months ended March 31, 2020, to a loss of $599,000 for the same period in 2021 designated as fair value options. That concludes my recap of high-level financials for the first quarter of 2021. I will now hand the discussion back to you, Lisa. Thanks, Carol.

Okay, I'm now going to move to NAPOEU, which is the named target of Dragon SPAC. And I'm happy to announce that Dragon SPAC, like Jaguar subsidiary NAPOEU, has recently been successfully incorporated in Italy. and has brought on two remarkable board members. The process of incorporating Dragon SPAC took Dragon SPAC's founding sponsor, Josh Mailman, a little longer than hoped, a lot longer than hoped, due to factors such as pandemic necessitated administrative and government office closures and delays, the same issues we faced in the timing to get NAPO-EU incorporated in Italy. Josh has indicated that he expects the financing of Dragon's Back with NAPOEU as the main target for merger to be completed by the end of June 2021. We too are confident of that timing. We are both being advised by global and Italian banks and expect to hold another joint communication this month introducing the board members, drug development updates, and of course the key business activities. I know this feels long. I receive the investor messages. So let me say that again. Josh has indicated that he expects the financing of Dragon's Back with NAPO-EU as the target for merger to be completed by the end of June 2021 this year, and we too are confident of that timing. In the meantime, the profilamer drug development for the European marketplace for COVID-related diarrhea is moving with deliberate speed being funded now by the Parent Corporation and targeting an accelerated regulatory pathway, conditional marketing authorization by the EMA, the European Medicines Agency, which is the European FDA for COVID-related diarrhea. Daily Life provides an interesting analogy. I'm sure you've all heard of the 17-year emergence of the cicadas. It made me think, what was Napa Pharmaceuticals doing 17 years ago? I looked back, and at that time, we were creating the manufacturing process and transferring that technology, the manufacturing process for crofilomer to India. That is currently part of the approval for Mitessi. So it's quite interesting. Most people don't realize that the two most common reasons that new drug applications fail are because of safety and manufacturing issues. As we are progressing forward, in development of pipeline indications for a prophelomer follow-on indications prophelomers such as covid related diarrhea and cancer therapy related diarrhea these are planned follow indications for a product that is already approved for hiv related diarrhea are currently commercialized by tessie with chronic safety and of course gmp manufacturing and under FDA botanical guidance as the only oral plant-based FDA-approved drug. For cancer therapy-related diarrhea, as a reminder, we are in the midst of our pivotal Phase III trial with FDA agreement on trial design. Recently, MD Anderson agreed to be a participating site, and interestingly, Dr. Pablo O'Keeson from MD Anderson agreed had a poster accepted for poster presentation at next month's ASCO annual meeting, the American Society of Clinical Oncology. And this poster is regarding patient outcomes associated with cancer therapy-related diarrhea. The title of the accepted poster presentation is The Impact of Cancer-Related Diarrhea on Changes in Cancer Therapy Patterns, Real-World Evidence. There are two additional publications at ASCO by key opinion leaders accepted for online publication as part of the event, which is being run virtually this year on similar topics of the important benefits of managing diarrhea in cancer patients. Diarrhea is the most common symptom associated with cancer therapy, and there are no approved agents specifically tested and approved in this patient population. We are quite pleased with the attention as these activities engage the oncology world and provide pre-education to the benefits of managing diarrhea. Pre-education to the time when we complete the trial and are able to launch and commercialize Mitessi for this indication. As announced this past Friday, the annual meeting of stopholders of Jaguar Health was held on May 13th and was adjourned until Friday, June 11th, 2021, because there was an insufficient number of shares of the company's common stock present or represented by proxy to reach quorum. Stockholders have thus far strongly supported the proposals, and we need an approximate additional 11% of the company's eligible common stock outstanding as of April 12, 2021, which is the record date for the meeting. Those are the shareholders who are eligible to vote. And they need to be voted to reach quorum. And we actually even need more to have sufficient votes to approve the proposal to increase the company's number of authorized shares. So this is important. Without additional shares, we will be compromised in our ability to react and respond to strategic options, which may include potential product acquisitions, may include equity financings if deemed important and valuable, and in the shareholders' best interest by the board, and any potential use of equity to further the valuation enhancement activities of our commercial operation. We encourage all eligible stockholders who have not yet voted their shares or provide voting instructions to their broker or other record holder, please do so prior to the annual meeting as your participation is important. If you would like to speak to me prior to your vote, feel free to reach out to Peter Hodge who's responsible for investor relations at Jaguar to schedule a call. It's an important vote and it's important to me that all our shareholders have the opportunity to understand why and have in common vision with the recommendation of the board of Jaguar. With that, we will now address written questions and I'm going to go to a different location here and see some of the written questions that have come in.

So give me a moment. Okay, I will get there. Hang on. Okay. So there's a question. from one of our analysts.

Data from investigator studies including what and timing on potential data. So we have a couple of investigator-initiated trials that are going on right now. There is one that has completed, which is for cancer therapy-related diarrhea. It's called the HALT study. It was completed at Georgetown. So the key thing about investigator-initiated trials is that it's exactly as they are defined. Investigators initiate them. They asked companies to support them. In our case, we supported the drug. This is a study that actually is being funded by Genentech, and it was run in cancer patients on Herceptin, breast cancer, and diarrhea associated with that epidermal growth factor receptor antibody. And so we don't have control over the data. But I would suspect since the trial is over that that data will be out sometime in the next weeks or months. It did miss the ASCO deadline, but there are additional cancer meetings later this year. So we're very excited and anticipating that. There are one to two other investigator-initiated trials that are unrolling right now. One is in functional diarrhea and one is in idiopathic diarrhea. So those are unrolling. We don't have data from those. And there is one additional study, which was not investigator-initiated, but a phase four study looking at microbiome restoration, an important topic on label in HIV patients. And that's a study that we ran, and data is being analyzed from that study right now. So that should be out in the next same thing, weeks or months. The other question was, what is the total addressable market for COVID? cancer therapy related diarrhea. There's a lot of drugs for chemotherapy induced nausea and vomiting, but not for diarrhea. So the numbers that we have there are, and that is correct, there's a great number of drugs for chemotherapy induced nausea and vomiting. In fact, sales for this indication In 2013, we're $620 million. It's expected, this market is expected to be over $2.5 billion by 2022, just around the corner. And what's interesting as a comparison is chemotherapy-induced nausea and vomiting is typically an issue for the first couple of days, perhaps the first three days in a chemo cycle. What we're looking at now with cancer therapy related diarrhea is a chronic situation from epidermal growth factor receptor antibodies, tyrosine kinase inhibitors, about three dozen of these agents that are utilized for adjuvant therapy. So patients staying on them for a year or two or three to keep them in a remission state, in a healthy state. Most of these agents, if not all of these agents, are working by a mechanism that induces fluoride-mediated diarrhea, secretory diarrhea, which is the way our product works. So there are about 650,000 cancer patients who receive chemotherapy in outpatient oncology clinics. So this is in the United States. Chemotherapy-induced diarrhea is the most common side effect. And as I mentioned, there are no agents. specifically tested or approved in this indication. So Mitessi is the leader, a first in class, a new way of managing the disease. And it's expected to be about 50 to 80% of the patients are dealing with diarrhea, either chronically or chronic episodically. So quite blockbuster in terms of the number of patients that can benefit, the number of lives that can benefit, and as well as the financial return to the company. And as I mentioned with the publications that are coming out in ASCO, this is not just an issue of patient comfort, which is a very, very important issue, but it's also a matter of allowing patients to stay on their life-saving cancer therapies, not take drug holidays, not go to reduced therapeutic doses because of the side effect of diarrhea. And that affects patient outcome. That becomes disease modifying. And also the cost of, there are many patients, for example, with neratinib, about 40% have grade three diarrhea or worse. Grade three will put you in the hospital for a need for rehydration. So the expense associated with that. So that's that question.

Let's see. There was another question. Let's see. Sorry about that.

The status of NAPO EU I think is the third question. I gave that status. So it is moving forward. We are, as I mentioned, we're quite confident in the end of June, as is Josh, which is Dragon's Back, which is the organization that will be financed to merge with NAPO EU. And then there's a question about telehealth.

And so telehealth has been quite interesting. So what we heard from

some of our treating physicians in HIV, if they were to do a virtual appointment with their patient, they got less reimbursement. So they had to have more patient appointments. And when the HIV patient has less time with their physician, often what gets cut are those questions about diarrhea, are those questions about GI health, because they focus on their antiretroviral medicine, And if they're dealing with accelerated aging issues, that might be cancer or some other issues. So we're quite pleased that as offices are opening, we're going to get patients back to face-to-face appointments with their physicians. We don't currently have any telehealth initiatives beyond what's going on in the physicians' offices themselves. We are looking to explore new ways of working with some of these companies on our own initiatives and some of the innovations that have occurred because of the pandemic. And we'll see how that goes in the next year or so.

And let's see. And I think that's both questions. So let's see. How many additional shares are being requested?

And Carol, maybe you can help me out here, Peter. Is it 150 million additional shares that are being requested? 140 million additional shares. 140 million. Thank you. So we currently have 150 million shares that are authorized. Almost all those are utilized on a fully diluted basis. So 140 million, which is not an indication that we're using that number. It's just to have it done and so we don't have to come back and do this in any foreseeable future. As I said, shares are important as a commercial organization with one product, of course, we're always on the outlook for business development activities. And there are some business development activities, for example, that are, it's more valuable, in our opinion, for the shareholders to utilize shares rather than to use cash, for example. So the company really needs to have additional shares to operate. And the number, as I said, is just so that we don't have to be coming back and doing this in the next five years or so. Okay. Do we have any additional pharmaceuticals in the pipeline? So our philosophy for drug development is risk mitigation. So drug development in the pharmaceutical industry is a risk-based process. pharmaceutical development is exactly what it says. It's risky. And as I mentioned, for Mitessi, for Crofilamer, we already have two of the most important issues, two of the most risky issues when you file a new drug application addressed, which is safety, and in particular chronic safety, and commercial manufacturing. And so what we do with our six or seven follow-on indications is take as much risk out of the pipeline as possible. How do we do that? What's left is to achieve pivotal trial results that show that the product works to the statistical satisfaction of the FDA. So we meet with the FDA and spend the time, this is not a rapid process, and spend the time to gain their agreement on patient enrollment criteria, on trial design, on endpoint definition, on the statistics that will be used for the endpoint definition. We have well over a dozen studies, published studies with profilamers, so we understand what is the endpoint, what is the powering that is necessary that shows that the product works and to the satisfaction of the FDA. And we don't want to compromise on that experience and that knowledge in our trial design. So, for example, for cancer therapy-related diarrhea, we spent close to two years working with the FDA to come up with a design and a common vision of design and endpoint definition of statistics that we feel, A, mirrors the successful design that we had in our pivotal trial for the HIV, the approved indication, and B, will in fact be successful, and C, will in fact allow not only for enrollment for the trial, so you don't want to have criteria that limits the enrollment of the trial because it's so strict, but also, therefore, will support a label that will allow for broad utilization by as many patients as possible that can benefit. So, for example, the cancer study, we expect to have final results. That's a long study. It's about 240-something patients by the end of second half of 2022, and that's taking into account a bit of a slow up that has occurred during the pandemic when there are certain sites that were managing COVID and were not able to open up and sign on for clinical trials, which is changing right now.

Okay. Another question. How is the employment of NAPOEU managed?

NAPO EU is currently searching for three key positions, managing director, essentially a business head, president head of NAPO EU, a chief medical officer, and a head of regulatory. So we'll be there in Europe, we'll be there in Italy, employed there. At this time, there is a signed management service agreement with key personnel from NAPO Pharmaceuticals. So NAPO-EU is progressing, or I should say the COVID indication, as I indicated in my comments, is progressing. It is not slowed up in any way based on support from NAPO Pharmaceuticals, Jaguar Health, the parent corporation here in the United States. And that's adding value to NAPO-EU. So NAPO-EU is continuing to gain in value as it is the name target of Dragon's Fat. Okay. Is there any update on the NOMAD? So the NOMAD is the nominating advisor. It's basically sort of between an investment bank and a governance body when you list publicly on the AIM exchange in Italy. And so we will, as I said, we expect to have a joint session, a joint announcement as we did in the past with Josh Mailman. And at that point, we expect to be naming the organizations that we're working with. So there are details of engagement letters, et cetera, that need to be worked out, and then we'll be naming the banks that we're working with. What is the status of emergency authorization with Long Hauler, and is it granted only upon NAPO EU IPO? So the drug development process with the EMA, which is the equivalent in Europe of the European Union of the FDA here in the United States, is unrelated to the NAPO EU IPO. So that, as I said, is progressing. We have met with a European regulatory agency. We have agreement on a COVID-related patient population, more the acute infected that qualifies for conditional approval. And we've been asked to provide a protocol synopsis, which we have provided, and waiting for a response on that. And in the meantime, preparing to initiate the clinical trial in Europe. We've already identified The CRO, the clinical research organization that we will be working with, and that is moving forward. So there is nothing that is slowed up. And as I said, this is. A pathway drug development pathway that is unrelated. To the IPO or the stack. Financing or the merger with. And my other message was a congratulations on the financial metrics. That's nice. And I think that those are all the questions. So, Peter, did I miss any?

I believe all the questions that we can address have been addressed. Perfect.

Okay. Well, thank you, everyone, who listened in. Thank you, everyone, who participated. Thank you for your support of Jaguar and NAPO Pharmaceuticals and now NAPO EU in Europe. We are energized, so I'm glad we did this early. We have a full day ahead of us. So best to all of you. Be healthy, be safe, and we'll talk. We'll have another session in the next couple of weeks, as I mentioned.

Thank you. Thank you. Ladies and gentlemen, this concludes today's call.

Thank you for your participation. You may now disconnect.