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spk02: Good morning, ladies and gentlemen, and welcome to Liminal Biosciences, Inc. fourth quarter and year ended December 31st, 2021 results. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session for analysts. If at any time during this call you require immediate assistance, please press star zero for the operator. Note that this call is being recorded on Friday, March 18th, 2022. And I would like to turn the conference over to Shranel Inandar, Investor Relations and Communications Manager. Please go ahead.
spk00: Thank you, Apoita. And good morning, ladies and gentlemen. This recorded webcast will be accessible from the Investor Resources page on the Liminal Biosciences website and will be available for replay later on today. For those of you dialing in, you can find a copy of our presentation slides on the webcast section of the website or via the conference call portal. Moving on to slide two, I'd like to remind everyone that we'll be making forward-looking statements today during the webcast, including remarks or current expectations concerning future developments of the pipeline, the properties of our product candidates, the timing of initiation or nature of preclinical and clinical trials, and potential therapeutic areas, regulatory plans, financing plans, our ability to resolve the NASDAQ listing deficiency and regain compliance with the NASDAQ listing rules, our company, its financial position, the impact of COVID-19 on our business, and possible changes in the industry and competitive environment. The forward-looking statements are based on our common expectations and beliefs and on information currently available to us. These statements are subject to risks and uncertainties, including those contained in our updated reports that we file with the U.S. Securities and Exchange Commission, or SEC, and Canadian Securities Commissions from time to time, including our annual report on Form 20F, and our 6K, containing our press release of the results for the fourth quarter and fiscal year ended December 31st, 2021, each of which we have filed with the SEC and on CDAR. That could cause actual results to differ materially from those contained in the forward-licking statements. Please note that these forward-licking statements made during this webcast speak only of our expectations as of today's date, and Liminal Biosciences undertakes no obligation to update these statements to reflect subsequent events or circumstances except to the extent required by law. As stated on slide three during this morning's webcast, Liminal's Chief Executive Officer, Mr. Bruce Pritchard, will provide an update on the business highlights. Then, Ms. Nicole Russell, Interim Chief Financial Officer, will present the financial and operational highlights for the fourth quarter and year ended December 31st, 2021. We will then follow with the closing comments on the expected near-term milestones and a short question and answer period for financial analysts only. Mr. Patrick Sartori, Luminal Biosciences President, will also be joining us for the Q&A session. I'd just like to note here that unfortunately, as Bruce is suffering from a sore throat, please do bear with us for the conference call today. I'd now like to welcome Luminal's Chief Executive Officer, Mr. Pritchard, who will discuss Luminal's key recent developments. Bruce, over to you.
spk01: Great. Thank you very much for now, and good morning, everyone. If I could ask everyone listening now to move to slide four in the presentation. I'd like to talk about some of our business highlights for the fiscal year ended December 31st and the first quarter of 2022. I'm very pleased with the progress that we have made in the past 12 months to refocus the company into a streamlined small molecule business. Today, we have a focused pipeline of promising small molecule therapeutic candidates with a cash runway positioned to support our immediate clinical development plans. We're delighted to have completed the divestment of our plasma-derived therapeutics business in 2021 which resulted in total proceeds net of payments that were made to third parties, including PVP, of $100.2 million. Consequently, the previous plasma-derived therapeutic subsidiaries are presented as discontinued operations in our financial statements. As a result of these divestments, the leadership team and I are pleased to have successfully delivered on our objective of simplifying our business structure over the past 12 months as part of our evolution in becoming a streamlined small molecules business. Today, Liminal Biosciences is a simplified and debt-free company, and we believe that our pipeline is positioned to deliver multiple anticipated data points throughout 2022 with unencumbered intellectual property and a data-driven clinical and preclinical development plan. In February 2022, the company also announced the early repayment of secured debt with Structured Alpha LP, or SALP, which eliminated the total debt of $39.1 million. The early repayment of this debt continues our strategy to simplify our business, deleveraging our balance sheet and eliminating the associated interest expense. As a result of the early repayment of all of SALP's secured interest against the company's assets was released and will be discharged, resulting in no one having security over our intellectual property. This streamlines the path forward for our operations and grants us additional flexibility for the future, including in relation to potential deal-making around our pipeline assets. The early repayment also results in total interest savings of $9.1 million Canadian dollars, termination of the royalty stream agreement, and cancellation of all warrants issued pursuant to the restructuring agreement. So if we transition to slide five, in summary, the company is focused now on value creation for patients or shareholders and employees. Over the last year, we've worked to improve the financial position, simplify our business operations, refine our business strategy, and focus on our core assets. We believe the steps that we've taken to diverse certain non-core assets have set the stage for future value-cating events and advancing multiple assets into clinical development for the treatment of inflammatory, metabolic, and fibrotic diseases. Following the divestment of the plasma-derived therapeutics business in 2021 and the more recent repayment of debt to Structured Alpha LP this year, we've consequently reduced our cash burn and associated interest payments, meaning that our cash on hand can be better utilised by funding our research and development activity. The continuing operations line in our financial statements now gives a clear picture of the scale of our more focused operations. To repaying our loan with Saab, we consequently ended our creditor relationship. However, we welcome Saab's ongoing support as our major investor. Our pipeline is now made up of three development programs. Our lead asset is Agipras, also known as PGI 4050. clinical stage product candidate which we now intend to pursue as a potential nitrogen scavenger and our gpr 84 antagonist and officer one antagonist programs which are pre-clinical all of which i'll talk about more next at this point though i'd like to take the opportunity to announce an addition to the leadership team nicole riso who recently was appointed as our interim chief financial officer Nicole brings with her over 20 years of financial management experience in the biotech and pharmaceutical industries and 17 years experience in publicly traded companies. Nicole's skills and experience complement those of the existing team and will add additional management bandwidth to allow us to continue delivering on our business objectives. As Trinal mentioned, Nicole will be taking us through the financial and operating results of the fourth quarter and year ended December 31st, 2021, later on in the call, and we look forward to having her presenting on these calls going forward. But for now, let's move forward to slide seven in the deck, and I'd like to highlight some key takeaways from the completed phase one multiple ascending dose clinical trial. In March of this year, we announced that we had completed our analysis of the safety and pharmacokinetic data for our phase one MAD clinical trial of physagiopras and healthy volunteers. The completed phase one MAD randomized double-blind placebo-controlled study was designed to evaluate the safety, tolerability, and PK of multiple ascending doses of Fasagipraz in healthy subjects. While we remain pleased that there were no significant drug-related safety findings in the study, indeed, our analysis of the data from this trial continues to indicate that Fasagipraz well tolerated all doses tested during the Phase I MAD clinical trial. However, based on our observations, the PK profile resulting from the Phase I MAD clinical trial showed lower-than-anticipated plasma concentrations of FasagiPras, which, combined with disproportionate levels of metabolite, lead us, unfortunately, to conclude that FasagiPras is not a suitable candidate to advance for the treatment of fibrotic diseases. Essentially, the data observed showed that the plasma concentrations of the product candidate previously observed in animals did not translate to similar plasma concentrations in humans and led us to conclude that insufficient amounts of the product candidate were activating the fibrosis-related receptors. This data confirmed our previous disclosure that the company would not be progressing the development of FasagiPras for the treatment of idiopathic pulmonary fibrosis nor hypertriglyceridemia. At this stage, we don't believe that any of the potential new indications to be evaluated in the development of FasagiPras are expected to be for the treatment of fibrosis. The pharmacokinetics observed following administration of FasagiPras at all doses in the study up to 2,400 milligrams daily in single and divided doses, demonstrated that the major metabolite of FasagiPras was the glutamine conjugate. What this does mean is that our analysis of the metabolite data from the Phase I MAD clinical trial provided evidence to support the hypothesis that FasagiPras had nitrogen scavenging properties. And this provides an opportunity for FasagiPras' potential development and diseases associated with high plasma ammonia concentrations. Therefore, based on our observations that FasagiPRAS has demonstrated nitrogen scavenging capabilities, we intend now to conduct further research, including a Phase Ia single ascending dose clinical trial designed as a head-to-head comparison with sodium phenylbutyrate to provide us with the further data to determine if FasagiPRAS is worth developing for one of the many potential indications where nitrogen scavenging is beneficial. We've initiated work to conduct the trial and expect, subject to receiving the usual approvals, to commence the phase 1 SAD clinical trial in the second quarter of 2022. Thereafter, if the anticipated phase 1A clinical trial shows satisfactory results, we expect to move physagiopras into an interleaved phase 1 SAD-MAD study in the second quarter of 2022. with potentially higher doses than used before in disease subjects. If we move on to slide eight, and to our earlier stage assets, the companies made significant progress in the identification of high-potency small molecule antagonists of GPR84, including potential selective candidates for development from different structural classes to those GPR84 antagonists for which data has already been published. GPR84 expression is not restricted to the cells in the immune system. It's also expressed in tissues such as the lung, brain, heart, muscle, colon, kidney, liver, intestine, and adipose. We believe that the GPR84 receptor could be an important biological target in a number of therapeutic areas of interest. GPR84 is broadly expressed and may play an interesting role in the relationship between inflammation, obesity, and diabetes. Our preclinical research indicates a potential role for antagonism of GPR84 in the reduction of fibrosis in several diseases, including kidney disease and non-alcoholic steatohepatitis, or NASH. Work on selecting a lead product candidate to progress to the clinic is ongoing from the company's current lead compounds. with plans to finalize candidate selection later on in 2022. Similar to the GPR84 antagonist program, the company is also making good progress on developing potential OXR1 antagonist candidates, as seen on slide 9. OXR1 is a G-protein coupled receptor that is highly selective for 5-OXO8, believed to be one of the most potent human eosinophil chemoattractants. Migration of eosinophils to body sites, including the lungs and intestines, is mediated by eosinophil chemoattractants, such as 5-oxoate. These eosinophils play a key role in type 2 inflammation-driven diseases, including respiratory disease and gastrointestinal diseases. Eosinophils are major effector cells in the immune system. They're part of the innate immune system, traditionally recognized as the first plane of defense against parasitic infections. When activated, they release a cocktail of toxic proteins to damage the parasite, along with cytokines to attract other immune cells. And these toxic proteins can also damage normal tissue and promote inflammation. Eosinophils are also recruited from the blood into the tissues at the sites of inflammation, and they play a role in tissue repair and the resolution of that inflammation. So the development of our pipeline now provides several potential opportunities for the company's growth in the year ahead. At this point, I'll pause and I'll hand over to Nicole Rousseau, who will talk us through the financial and operating results for the fourth quarter and year ended December 31st, 2021. So, Nicole, over to you.
spk03: Thank you, Bruce, and good morning, everyone. Slide 10 is just a quick reminder that this part of today's webcast is based on the audited consolidated financial statements for the year ended December 31st, 2021. All figures are prepared under international financial reporting standards and the full annual information and other important information can be found online at scc.gov and cdar.com. Our financial information is presented in Canadian dollars and all references during the webcast to dollars mean Canadian dollars unless otherwise specified. For simplicity, some numbers being discussed have been rounded. As mentioned on the slide here and as disclosed in the company's annual report on Form 20F for the fiscal year ended December 31st, 2021, the company has restated the company's financial statements for the period ended September 30th, 2021. On slide 11, I'd like to review selected information from our results from continuing operations. Given the company's divestment of its former plasma-derived therapeutic segment, The company has presented the current and comparative period results of its former plasma-derived therapeutic segment as discontinued operations. Research and development, or R&D, expenses from continuing operations was $18.3 million for the year ended December 31, 2021, compared to $14.2 million for the year ended December 31, 2020. The increase in R&D expenses is mainly due to increases in intangible amortization expenses, as well as a decrease in government grants, in addition to increases in clinical and preclinical expenses and consulting fees on a year-over-year basis. These increases were partially offset by a decrease in share-based compensation expenses year-over-year. Administration expenses from continuing operations were $31.9 million for the year ended December 31, 2021, compared to $32.6 million for the year ended December 31, 2020. The decrease in admit expenses is primarily due to reduced D&O insurance premiums resulting from the change in the company's registered office from Quebec to Ontario, as well as the fact that the comparative period expense contained a one-time charge of approximately $2.2 million relating to additional warrants issued pursuant to an amended securities purchase agreement dated November 2020 with no equivalent cost in 2021. decrease in admin expenses during fiscal 2021 was partially offset by increases in share-based payment expenses as well as a reduction in government grants. Finance costs were $6.3 million for the year ended December 31st, 2021 compared to $2.9 million for the year ended December 31st, 2020. The $3.4 million increase in finance costs year over year reflects the increase in our level of indebtedness following the issuance of the secured convertible debentures, or SCD, in July of 2020, which remained outstanding until the SCD were converted into our common shares in October 2021, as well as the issuance of the second term loan in September 2020. The company reported a net loss from continuing operations, net of taxes, of $45.1 million for the year ended December 31st, 2021, compared to $49 million for the year ended December 31, 2020. The decrease in net loss from continuing operations was mainly due to the reduction in admit expenses and the increase in the gain on the change in fair value of the warrant liability. The decrease in net loss from continuing operations net of taxes was partially offset by the previously discussed increase in R&D expenses and a decrease in impairment losses. The company reported a gain on sale of subsidiaries of $140.4 million for the year ended December 31st, 2021, compared to a gain of $3.4 million for the year ended December 31st, 2020. The $140.4 million consists of $137.8 million gain on the sale of our Riplezine business and the PRV, as well as a gain of $2.6 million on the sale of our plasma collection centers. The $3.4 million gain recognized in the comparative year relates to the sale of Promatic Bioseparations Limited, or PBL. Total net income or loss from discontinued operations was income of $57.3 million for the year ended December 31, 2021, compared to a loss of $69.7 million for the year ended December 31, 2020. The income from discontinued operations recognized during 2021 was a result of the company's divestment of four of its subsidiaries, which were formerly part of the plasma-derived therapeutic segment. Net income loss was a net income of $12.2 million for the year ended December 31st, 2021, compared to a net loss of $118.8 million for the year ended December 31st, 2020. Moving to slide 12, I'd like to walk through the major elements that impacted our cash and cash equivalents throughout the year. These cash flows include both the continuing operations as well as the discontinued operations. We started 2021 with $45.1 million of cash and cash equivalents. $99.6 million in cash was used in operating activities, mainly due to the $45.8 million in total payments made by PBT to PBP after PBT moved under the ownership of Kedrion. These payments were made on account of past and future research and development services. Cash flows for operating activities were partially offset by lower operating expenses given the change in ownership of the different entities sold throughout the year and reduced operating expenses while we were waiting on the outcome of the FDA review of the Biological License Application, or BLA. $8.4 million of cash was used in financing activities related to lease payments and interest on outstanding debts, and $170.7 million of cash was generated from investing activities mainly due to the net proceeds received in connection with the divestiture of the plasma-derived therapeutic segment. As Bruce has previously discussed, subsequent to year end, the company repaid its secured first and second term loans of $39.1 million, thereby terminating both the consolidated loan agreement and royalty stream agreement with SELP, cancelling the outstanding warrants held by SELP, and releasing the security granted in favor of SELP over the company's assets, including our intellectual property. I will now pass the call back to Bruce for some closing comments.
spk01: That's great. Thank you very much, Nicole. And again, welcome to the team. Just before I move on to the sort of closing comments, I just wanted to clarify when I spoke earlier about the timing of the phase 1A single ascending dose study. We intend to start that study in Q2 of 2022. And thereafter, assuming the results of that study are successful, we will move into the a further phase one SADMAD study, the timing of which will be updated in due course. So just wrapping up then on the presentation this morning on slide 13, we've multiple opportunities and multiple chances for growth in the year ahead. For Zagipraz, we've initiated work to conduct the phase 1A study and expect, subject to receiving the usual approvals, to commence that Phase 1 clinical trial, as I said, in the second quarter of 2022. As I mentioned, we expect to have data which will support whether or not to continue the development of physagioprase as a nitrogen scavenger, and we expect to provide an update on the outcome of this additional research in the second half of 2022. we expect to nominate a preclinical candidate for our GPR84 program in 2022 with our OXR1 candidate to follow in 2023. As I described, the potential for these programs is quite exciting and we of course look forward to providing further updates on these potential opportunities as data becomes available. Although it seems we're beginning to see a slow return to some form of normality, given the ongoing unpredictability of COVID-19, our future operational objectives. We may need to amend guidance on the expected progress or nature of our business going forward with an improved understanding of how COVID-19 may impact our future operations, including ongoing and future clinical studies. We continue to work towards opportunities for the disposition of our remaining non-core assets to provide additional funding for our ongoing operations and programs beyond 2022, and are focused on delivering on our highest priorities for 2022 and 2023. At this point, we'd now like to address any questions that any of our financial analysts may have. And as Shrenel mentioned in the introduction, we'll be joined for this section by Patrick Sartori, Rural Biosciences President, who will be joining us for the Q&A session. So, operator.
spk02: Thank you, sir. As mentioned earlier, ladies and gentlemen, we will now take questions from financial analysts. If you would like to ask a question, please press star followed by 1 on your touch-tone phone. You will then hear a three-tone prompt acknowledging your request. And should you like to withdraw from the question queue, please press star followed by 2. And if you're using a speakerphone, please lift the handset before pressing any keys. Please go ahead and press star 1 now if you have any questions. And at this time, Mr. Pritchard, we have no questions. Please proceed.
spk01: Thank you very much, operator. Well, I'd like to thank everyone for taking the time to join our call this morning, for listening in to the update on the company. We're excited about what the future holds for Lumino, and I look forward to updating everyone on our progress on coming calls. Thank you very much, and good morning.
spk02: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines. Have a good weekend.
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