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spk01: Please stand by. We're about to begin. 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 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 currently 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 statements and risk factors sections in 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 in the investor relations section of the Jaguars 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's supplements and its condensed consolidated financial statements 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. They're not substitutes for or superior to measures of financial performance and conformity with the gap. Now 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.
spk03: Thank you, and welcome all. As you just heard, my name is Lisa Conte, and I am the founder, president, and CEO of Jaguar Health and our wholly owned subsidiary in the United States NAPA Pharmaceuticals And I am a board member of our wholly owned subsidiary in Italy, NAPOEU. We're going to begin with the key financial results for the second quarter of 2021, which will be provided by Carol Lysak, Jaguar's chief financial officer. After Carol speaks, we will hear from Jaguar's chief commercial officer, Ian Wendt, who will discuss the positive impact of Cofellimer's ongoing efforts as part of our patient market access program. to transition to primarily selling Mitessi directly through specialty pharmacies. As Ian will explain, this initiative represents a significant benefit to patients and will, we believe, have a positive impact on net Mitessi revenue on a moving forward basis. After Ian's comments, I will provide a recap of activities related to NAPO EU and Dragon's Back and provide updates regarding our human and animal health pipelines. Before we jump in, I'd like to let all of you know participating today that we'll have a brief Q&A segment at the end of the webcast to address questions that are 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. for Jaguar's website is jaguar.health. All right, we'll now move along to the key financial results for the second quarter of 2021. Carol, let me hand it over to you, please.
spk02: Thank you, Lisa, and thank you all for joining our webcast today. Key financial highlights for the quarter ended June 30, 2021 are as follows. My TESI net revenue during the second quarter of 2021 was approximately $400,000 and $3.2 million in the second quarter of 2020, a decrease of $2.8 million quarter over quarter. In the second quarter of 2021, sales, discounts, and rebates from various government programs included an approximately $800,000 true-up charge from the state of California related to several quarters. The company believes this true-up charge is non-recurring and due in part to the impact of the COVID-19 pandemic on state administrative functions. My TESI gross revenue during the second quarter of 2021 was approximately $4.9 million. and $6.3 million in the second quarter of 2020, representing a decrease of approximately $1.4 million quarter over quarter. We believe this is primarily due to the ongoing shift of our distribution to specialty pharmacies and the associated inventory drawdown from our previous wholesaler distribution model. For the second quarter of 2021, the loss from operations was $11.6 million, compared to a loss of $8.5 million in the second quarter of 2020. The loss increased $3.1 million quarter over quarter, largely attributable to the decrease in revenue. Operating expenses from research and development increased by $2.5 million for the second quarter of 2021, compared to the same period in 2020, consistent with the increased clinical activities related to development programs representing additional shots on goal for crapelomer, such as our ongoing Phase III trial of crapelomer for cancer therapy-related diarrhea. and development related to short bowel syndrome with intestinal failure, which Lisa will speak about this morning. General and administrative expenses increased by $1.3 million for the second quarter of 2021 compared to the second quarter of 2020, mostly related to the activities of the annual shareholders meeting. These increases were largely offset by a non-cash investment expense of $3.6 million related to the warrant exercises in the second quarter of 2020. That concludes my recap of high-level financials for the second quarter of 2021. I will now hand over the discussion to Ian Wendt, our Chief Commercial Officer.
spk00: Thank you, Carol, and good morning, all. Mitessi prescription volume, the metric we believe to be the best indicator of patient demand, increased 4.3% in the second quarter of 2021 over the first quarter of 2021, and new Mitessi prescriptions increased 2.8% during the same time period. This is a positive result for patients and our commercial performance, and importantly marks the first quarter over quarter prescription growth since the start of the COVID pandemic. Mitessi prescription volume decreased 9% from Q2 2021 over Q2 2020. We believe that the necessary travel restrictions related to the COVID-19 pandemic played a role in this decline, with the pandemic resulting in fewer patient visits to healthcare providers, fewer opportunities to diagnose new Mitessi patients, and fewer prescription refills. Early in the COVID lockdowns, we did not see a large decrease in prescriptions since many patients had remaining refills and had stocked up on medication by getting 90-day prescription fills. As patient visits to their providers decreased last year, we saw a corresponding decrease in new starts, and at the same time, our sales representatives were not able to access their customers to provide the branded education that drives Mytesi utilization. The increase in prescriptions we have recently seen in Q2 over Q1 2021 corresponds to more patients now seeing their providers and our sales representatives making significant improvements in their ability to access their customers. Over the same time period, we have also seen an increase in the number of commercially insured patients enrolling in and using our copay assistance program, which is another strong indicator that more patients are starting on Mitessi. Again, we view Mitessi prescription volume as an indicator of patient demand, and this metric can differ from invoiced sales volume, which reflects, among other factors, varying buying patterns among wholesalers and specialty pharmacies if they manage their inventory levels. As Lisa mentioned in her opening comments, our plan to transition a substantial amount of Mitessi volume to select specialty pharmacies by the end of 2021 is a key component of our market access strategy. This is intended to help remove access barriers for people living with HIV to start and stay on Mitessi. The availability of Mitessi through specialty pharmacies represents a significant benefit to these patients. The key difference between specialty pharmacies and traditional retail pharmacies is the level of support that they can provide. While patients often visit retail pharmacies for short-term or uncomplicated medical needs, Specialty pharmacies focus on serving patients with complex and chronic conditions like HIV that require a more hands-on approach. The services of specialty pharmacies include a higher level of support for prior authorizations, appeals, adherence counseling, and home delivery options. Each of these support services can help appropriate patients start on Mitessi and stay on Mitessi for as long as is medically necessary. Additionally, the ongoing process of transitioning to primarily selling Mitessi directly through specialty pharmacies rather than to wholesalers that resell the product to retail pharmacies. This is expected to significantly decrease our distribution costs and have a positive impact on net Mitessi revenue on a moving forward basis. We currently have three contracts in place with large national specialty pharmacy chains with pharmacy benefit manager relationships that cover the majority of lives in the US. Generally, our distribution fees selling directly to specialty pharmacies are approximately half of what we have historically paid by selling through wholesaler channels. As part of the shift to focusing on specialty pharmacies, we expect an overall decrease in the number of bottles carried in the inventory pipeline, since specialty pharmacies typically carry less days on hand of inventory compared to wholesalers. During the transition period of moving more of our volume, from wholesalers to specialty pharmacies, the wholesalers continued to draw down their inventory levels, which was not entirely offset by specialty pharmacy inventory and resulted in a corresponding decrease in sales for this period. Sales volume through our expanding pool of third-party specialty pharmacies through which we distribute Mitessi was approximately 17% of total sales volume in the second quarter of 2021 compared to approximately 14% in the first quarter of 2021. That concludes my comments, and I will now hand the discussion back to Lisa.
spk03: Thank you very much, Ian, for trying to explain and provide some clarity on the specialty pharmacy model. Moving along to NAPOEU, our wholly owned subsidiary in Italy, and DragonSpac, I and Josh Mailman, DragonSpac's founding sponsor and board member, were thrilled to announce on July 19th the closing of the financing of DragonSpac for gross proceeds of approximately 8.83 million euros. Net proceeds from this private placement transaction will be used to fund the anticipated merger of Dragon's Back with NAPO-EU and therefore the business plan and activities of the combined NAPO-EU Dragon's Back entity resulting from the merger, which will be known as NAPO-EU. The merger is expected to be effective within approximately 60 days, and this time period is filled with administrative activities, and the time frame takes into account office closures and et cetera that we're dealing with in Italy during the August holiday. The parent company, Jaguar NAPO, is providing NAPO-EU with an exclusive license to study, develop, and commercialize our proprietary drug, profilamer, for the European marketplace for multiple planned follow-on indications. The initial focus is on pursuing the accelerated conditional marketing authorization pathway from the EMA, which stands for the European Medicines Agency, the equivalent of the U.S. FDA, or CROFELIMER, for an important orphan-designated disease, short bowel syndrome with intestinal failure. As Carol mentioned, this represents another shot on goal for Profelimer to potentially benefit another dramatically in need patient population, along with a highly valued license agreement to the parent organization, Jaguar NAPO, and a potentially accelerated pathway to bring the product to short bowel syndrome patients with intestinal failure. And to remind everyone of the nature of short bowel syndrome, This is with intestinal failure. This is a catastrophic situation for patients where they have maybe 30 to 60 centimeters of intestine versus our normal 22 to 24 feet. They therefore cannot absorb what I call the nutrients of life, fats, proteins, carbohydrates, minerals, vitamins. And they live on parenteral nutrition sometimes for as much as 22 hours of the day. That obviously has an impact on quality of life, dignity, comfort, and devastating morbidity and mortality associated with the potential for infection and organ failure. If an intervention could decrease the need for parenteral nutrition by even 20%, you have a huge positive impact for these patients. Moving along to our U.S. pipeline, We are in the midst of our pivotal phase three trial of CROFELIMER for cancer therapy-related diarrhea. We refer to it as CTD. And that is the core planned follow-on program in the United States for CROFELIMER. CROFELIMER, a product that is currently approved and commercialized for HIV-related diarrhea, a product with a chronic safety profile because the current indication is a chronic indication. and a product obviously for which there is a global manufacturing supply chain already in existence, and a product that is the only oral plant-based drug approved by the FDA as a drug under botanical guidance and the exclusivity advantage provided by that. I believe it's also important to reiterate our ongoing commitment to fund our planned pipeline opportunities in a non-dilutive matter. This commitment is evidenced by the non-dilutive royalty financing transactions we entered in the fourth quarter of 2020 to secure funds to support primarily profilamer CTD development and also the agreement we entered this past January with proceeds from the sale of a potential future tropical disease priority review voucher we're pursuing as incentive for the development of our Leclamer drug product, our second-generation anti-secretory product, for the symptomatic relief of diarrhea from cholera and other acute infectious diseases. As I mentioned, NAPOEU's focus on developing profilamer for an important orphan-designated disease, the short bowel syndrome with intestinal failure, is also slated to be funded in a non-dilutive matter, as a result of the anticipated business combination of NAPO-EU and Dragon's Fact, again, under license from the parent corporation, Jaguar, NAPO, and the United States. These pipelines within a product target follow-on indications represent not just additional shots on goal for profilamer, but also an opportunity to expand the possible benefits to be evaluated in a clinical development setting further along the value chain, from where we are now, supportive care, and that's how Crofilamer is recognized and valued in the HIV community, to a potential impact on patient outcome and the cost of care for cancer therapy-related diarrhea patients, as the recent papers accepted for the past June's ASCO meeting, ASCO's American Society of Clinical Oncology, and then possibly even further along the value chain in the case of prophylamine development for short bowel syndrome with intestinal failure, where we're potentially modifying disease management modification. From a financial perspective, we've also focused heavily recently on cleaning up our balance sheet. And as this morning's earnings release states, there are no cashless warrants outstanding. as of June 30th, 2021. We believe all of these efforts grow the value of the company and we expect our patient market access strategy for which our plan transition to primarily selling Mitessi directly through specialty pharmacies is a main pillar to further grow value. With regard to Jaguar's legacy animal health business, we're eagerly looking forward to the expected approval and commercialization in the fourth quarter of this year of profilamer for the treatment of chemotherapy-induced diarrhea in dogs. According to our estimates, more than 230,000 dogs in the United States receive chemotherapy treatment for various cancers each year. And roughly one in four, more than 50,000 dogs will experience diarrhea as a side effect of the treatment. And following the expected approval of profilamer for chemotherapy-induced diarrhea in dogs, we also expect profilamer to be approved for exercise-induced diarrhea in dogs, likely in early 2022. And an interesting fact about exercise-induced diarrhea in dogs, the condition is actually the Second most common reason that dogs are removed from the world famous 1,000-mile-long Iditarod Trail sled dog race in Alaska each year. Lastly, as announced Friday of last week, we decided to adjourn our annual meeting of stockholders one more time until Friday, September 3rd, September 3rd, 2021, because we are very, very, very close to reaching quorum, less than an additional point 84% of the company's eligible common stock are standing as of April 12th, 2021. The record date for the meeting needs to be voted for us to achieve quorum. This ongoing attempt to reach quorum dating back to April of this year has been extremely costly and distracting for the company. And we greatly encourage all eligible stockholders who have not yet voted their shares or provided voting instructions to their broker or other record holder to do so as soon as possible so that Jaguar can obtain quorum and be able to conclude the annual meeting. Your participation is very important, very valued. If you have any issues, don't know how to do this, please feel free to reach out to me or Peter Hodge on this topic. With that, we'll now open the floor for written questions, which I will look at right now. One of the questions that we have here is, what is the current status of Mitessi and COVID-19? So NAPO-EU was initially looking at the long hauler situation of COVID-19 recovery patients, which is a constellation of symptoms which can include brain fog, cardiovascular issues, respiratory issues, and diarrhea. It was about 30% of the patients were dealing with diarrhea as an initial indication. NAPO-EU has now prioritized short bowel syndrome and intestinal failure as the accelerated approval pathway. And it's watching. We're all watching what's going on with the long hauler situation. There are some reports that the long hauler symptoms have been ameliorated as patients who experience long hauler got vaccinations. So it's still not clear what that market opportunity is. What are, therefore, how would you access patients? What would the trial design look like? So that is on a wait and watch at this time. but the goal of getting an accelerated approval in Europe for a very serious, important patient population is being achieved and moving forward with the short bowel syndrome intestinal failure indication. Okay, we have another question. When do you expect impact of pandemic to improve in light of recent surge Delta variant? How will the net price improve as you move my testes special pharmacies?
spk00: and what percentage of your sales do you expect to come from specialty pharmacies for my tessie and ian i i'm going to turn that over to you to answer please yeah happy to do so and louise great great questions once i think about a lot um so there's three pieces here let me uh let me take those uh in in order here so when do you expect the impact of the pandemic to improve in light of the recent surge delta variant Yeah, I mean, of course, you know, that can be difficult to predict. And we see, as you might expect, a lot of regional variations across the country, either at the state level or sub-state level, in terms of patients' ability to access their providers or, you know, our reps, frankly, to be able to access and influence our customers. However, we look at the market data, you know, outside of MAPO and then our own kind of performance data. quite closely. And, you know, Acuvia publishes great reports on this every month. And we do see some great trend lines returning back to close to baseline in terms of both of those metrics, patients seeing providers and reps being able to see their physicians. And I think that's reflected in our patient populations and what our reps are able to achieve as well. So it's trending in the right direction with all the recent news and events associated with the Delta variant and We haven't seen that, you know, kind of reverse things too much. I mean, regionally here and there, yes, but we still think it's headed in the right direction and we'll continue to make those assumptions until we see the data tell us something different. The second part of your question was, how will the net price improve as you move Mitessi to specialty pharmacies? Yeah, so there's a few things that are, we believe, are very valuable about this kind of strategic shift in terms of our distribution. And I mentioned one of them, I think, in my earlier comments. You know, we're going to cut distribution fees through our contracted pharmacies by about half versus selling through wholesalers. So that's significant. We also believe, and we're starting to see data to support this, that the specialty pharmacies just do a better job in managing mytessy patients. You know, they are much better equipped, more capable physicians. in dealing with all the challenges that payers put in place. So think about, you know, prior authorizations and appeals, just making sure that they're overcoming access and reimbursement issues for those patients. And then that corresponds to greater adherence and persistency levels with these patients so they stay on drug longer. They do a great job of adherence counseling, making sure that the medication is shipped directly to the patient's door if that's what they choose. I mean, there's all these kind of wraparound services that allow our patients to start on Mitessi more easily and stay on Mitessi longer if that's medically appropriate. So that, you know, certainly has implications on the bottom line. We also feel that there are some advantages to the pair mix in making this shift. And that's quite important to us as well. Lastly, ultimately, what percentage of your sales do you expect to come from specialty pharmacies or specialty pharmacies for Mitessi? Yeah, if we do a great job here, and I think we will, we'll transition the majority, the vast majority of our Mitessi volume from wholesalers to specialty pharmacies. There's very few exceptions to where that wouldn't make sense. There are a couple contracts that we need to work through, like, for example, the VA, but that's a relatively small percentage of our overall volume. So, ultimately, it'll be, you know, the vast majority of our volume we anticipate being transitioned over before the end of the year.
spk03: Terrific. Thank you, Ian. And thank you, Louise, for the question. Specialty pharmacy is a very, very important commercial strategy that we're pursuing, and obviously, has an impact on these second quarter results. All right, we have another question about voting using DeGiro or Trading 212. And believe it or not, European retail investors who hold shares through online brokers in Europe, such as eToro and DeGiro, They are not always able to vote as these platforms don't provide any mechanism for holders to submit votes. We are in communication with them trying to see if we can come up with some sort of creative solution. So we so are appreciative of our European retail investors who have reached out and are trying to figure out how they can vote. And we are working on it. So you will hear from us on that topic if we can find a solution. Okay. I don't think I see any other questions. So that concludes our webcast for today. Thank you all once again for joining. Please be safe and be well and look forward to the next time we're together. Thank you.
spk01: And once again, that does conclude today's call. We thank you for your participation. You may now disconnect.
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