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spk06: Good day and welcome to the Liminal Biosciences, Inc. First Quarter 2022 Results Conference Call. Today's conference is being recorded. There will be a question and answer session after today's prepared remarks, where we will only be taking questions from financial analysts. At this time, I would like to turn the conference over to Chanel and Amdar. Please go ahead.
spk01: Thank you, Operator. Good morning ladies and gentlemen, my name is Srinale Enamda and I'm the Investor Relations and Communications Manager at Liminal Biosciences. This recorded webcast will be accessible from the Investor Resources page on the Liminal Biosciences website and you'll be able to replay later on today. For those of you dialling 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 2, I'd like to remind everyone that we will 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 or initiation of preclinical and clinical trials, including the 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. These forward-looking statements are based on our current 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 first quarter ended March 31st, 2022, each of which we have filed with the SEC and ONCEDA that could cause actual results to differ materially from those containing the forward-looking statements. Please note that these forward-looking statements made during the 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 3, during this morning's webcast, Liminal's Chief Executive Officer, Mr Bruce Pritchard, will provide a business update. Then, Ms Nicole Russo, our Interim Chief Financial Officer, will present the financial and operational highlights for the first quarter ended March 31, 2022. We will then follow with closing comments on the expected near-term milestones and a short question and answer period for financial analysts only. Mr. Patrick Sartori, Liminal Biosciences President, will also be joining us for the Q&A session. I'd now like to welcome Liminal's Chief Executive Officer, Mr. Bruce Pritchard, to the call, who will give a brief update on our research and development programs, as well as Liminal's anticipated key upcoming data catalysts. Bruce, over to you.
spk02: That's great. Thank you very much, Renal, and good morning, everyone. If I could now ask you all to move to slide four in the presentation And I'll provide a brief update on our pipeline and expected near-term milestones. As we previously disclosed, our lead asset, FasagiPras, completed a phase one multiple ascending dose or MAD clinical trial earlier this year, which provided data to demonstrate that the major metabolite of FasagiPras was the glutamine conjugate. This provides an opportunity for FasagiPras' potential development in diseases associated with high plasma ammonia concentrations. In the second quarter of 2022, subject to the usual regulatory approvals, we expect to initiate a phase one single ascending dose clinical trial designed as a head-to-head comparison with sodium phenylbutyrate to provide us with further data to determine if physagioprase is worth developing for one of the many potential indications where nitrogen scavenging is beneficial. We look forward to providing more information on this upcoming clinical trial in the near future, and expect to provide an update on the outcome of this additional research in the second half of 2022. We've also made significant progress on the identification of high-potency small molecule antagonists of GPR84, including potential selected candidates for development from different structural classes to those GPR84 antagonists for which data has already been published. Work on selecting a lead product candidate to advance into the clinic is ongoing from the company's current lead compounds, and is progressing well with plans to finalize candidate selection later on in 2022. Similar to the GPR84 antagonist program, we're also making good progress on developing potential OXR1 antagonist candidates. And although there are a number of biologics, primarily antibodies approved for the treatment of certain eosinophilic driven diseases, a small molecule approach to this pathway may provide a differentiated small molecule therapy. So moving forward, we have multiple opportunities for growth in the year ahead. And in summary, we're focused on value creation for patients, our shareholders, and our employees. At this point in the presentation, I'll hand over to Nicole Rousseau, who will talk us through our financial and operating results for the quarter ended March 31st, 2022. So Nicole, over to you.
spk00: Thank you, Bruce. Slide six is a quick reminder that this part of today's webcast is based on the interim consolidated financial statements for the first quarter ended March 31st, 2022. All figures are prepared under international financial reporting standards and the full annual information and other important information can be found online at sec.gov and cdar.com. Our financial information is presented in Canadian dollars and all references during the webcast to dollars means Canadian dollars unless otherwise specified. For simplicity, some numbers being discussed have been rounded. Moving to slide seven, 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, expenses from continuing operations was $4.4 million for the three-month period ended March 31st, 2022, compared to $4.9 million for the comparable three-month period ended March 31st, 2021. The net $500,000 decrease in R&D expenses is largely attributable to decreased clinical trial costs relating to physagiopause as the Phase I MADS study wrapped up in the current quarter. The decrease in R&D is partially offset by a recognition of an upfront payment made during the current quarter of 400,000 regarding a royalty stream agreement, as well as the absence of government grants, including the COVID-19 related Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy Program. Administration expenses from continuing operations decreased 3.2 million from 8.1 million in the comparative period to 4.9 million during the current three month period ended March 31st, 2022. The decrease was mainly attributable to lower directors and officers insurance costs of two and a half million dollars starting in the fourth quarter of 2021 as a result of the relocation of our registered office from Quebec to Ontario. The decrease is also due to lower share based payment expenses, 0.6 million in the first quarter of 2022 compared to the same period in 2021. Finance costs increased by $200,000 for the quarter ended March 31, 2022, compared to the corresponding period in 2020-21, reflecting a higher interest expense as a result of the unwinding of the discounting on the provision, which has been recorded since June 30, 2021, and a loss recorded on the modification of a lease as the inflation index in 2021 caused the lease payments for that lease to increase. This is partially offset by a reduction of interest expense on the long-term debt as our self loans were outstanding for only half of the quarter ended March 31st, 2022 compared to the prior year quarter where they were outstanding for the full quarter. Net loss from continuing operations, net of taxes decreased by 2.6 million during the quarter ended March 31st, 2022 compared to the corresponding period in 2021. This was mainly driven by the reduction in administration expenses of $3.2 million as the company continues to streamline the business and improve operating efficiencies, and a $500K decrease in R&D expenses, partially offset by a $600K increase in FX loss given fluctuations in currencies over the quarter. Net income or loss from discontinued operations net of taxes decreased by $7.7 million during the quarter ended March 31, 2022, compared to the corresponding period in 2021. This decrease was partially due to the fact that we had the full operations of the plasma-derived therapeutic segment during the quarter ended March 31st, 2021, where during the quarter ended March 31st, 2022, our discontinued operations, income or losses are mainly affected by changes in the CDMO lease liability and provision caused by increases in inflation and variations in the discount rate. Moving to slide 8, I'd like to walk through the major elements that impacted our cash and cash equivalents throughout the quarter. These cash flows include both the continuing operations as well as the discontinued operations. We started 2022 with $108.5 million of cash and cash equivalents. During the quarter, the company repaid its secured first and second term loans of $39.4 million, thereby terminating both the Consolidated Loan Agreement and Royalty Stream Agreement with Structured Alpha LP, or SELP. Canceling the outstanding warrants held by CELP issued pursuant to the 2019 restructuring agreement and releasing the security granted in favor of CELP over the company's assets, including our intellectual property. The company used $7 million of cash on operating activities during the quarter, all of which were incurred to support the small molecules business segment. And at March 31, 2020, the company had $61.2 million in cash and cash equivalents. I will now turn the call back to Bruce for some closing comments.
spk02: Great. Thanks very much, Nicole. So we've got multiple opportunities for growth in the year ahead if we move to slide nine. For FasagiPras, as I mentioned earlier on, we've initiated work to conduct the phase 1A SAD clinical trial and expect, subject to receiving the usual approvals, to commence the phase 1 study in the second quarter of this year. As mentioned, we expect to have data which will support whether or not to continue developing FasagiPras as a nitrogen scavenger and anticipate to provide an update on the outcome of this additional research in the third quarter of 2022. Similarly, we expect to nominate a preclinical candidate for our GPR84 program in 2022 with our OPSR1 preclinical candidate to follow in 2023. As I described, the potential for these programs is quite exciting, and of course, we look forward to providing further updates on these potential opportunities as data becomes available. Although it seems we are beginning to see a slow return to some form of normality, given the ongoing unpredictability of the COVID-19 pandemic, for 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 the COVID pandemic may affect these operations, including clinical trials. We continue to work towards opportunities for the disposition of our remaining non-core assets to provide additional funding for ongoing operations and programs beyond 2022, and are focused on delivering on our highest priorities for 2022 and 2023, as described on this slide. At this point, we'd now like to address any questions that any of our financial analysts may have. As mentioned by Sonal in the introduction, Mr. Patrick Sartori, our president, will also be joining for the Q&A session. So operator, we can open now for the question and answer session.
spk06: Thank you. As a reminder, we will only be taking questions from financial analysts. If you would like to ask a question via the phone lines, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star 1 to ask a question. We will pause for just a moment to allow everyone an opportunity to signal for questions.
spk05: And we'll go ahead and take our first question from Ed Arth with H.C. Wainwright.
spk04: Great. Thanks for taking my questions. Can you hear me okay? Yeah, very clear, Ed. Morning. Good morning, Bruce. A couple questions for me. Firstly, with the ZADRA-PRAZ, obviously awaiting further data from the phase one ZADRA study and a decision in the third quarter If indeed you decide to move forward, I'm wondering if you could give us a bit more detail on how you think about moving forward in the two main areas for nitrogen scavenging, those being urea cycle disorders or hepatic encephalopathy. And then secondly, if in fact you decide that the decision is to no-go for fasagiopraz and you look towards GPR84 as your next clinical candidate, understanding that this program really addresses chronic inflammation, wondering if you could give us any more clarity onto the types of indications that you might want to pursue. Thanks so much.
spk02: Great. Thanks, Ed, for those questions. So let's take them one at a time. In terms of the physagioprase program, what we will intend to do, once we have clarity on the data, I think we'll be clear about which of the areas that we'll focus on in the first instance. So we'll be clear about whether it's urea cycle disorders or hepatic encephalopathy, and we'll will elucidate the shape of the program moving forward from there. But the reality is that if we see results which justify us moving forward, then we'll continue with the clinical program. We'll move, as you would expect us to, from an initial SAD head-to-head study with sodium phenylbutyrate into a kind of more traditional interweaved phase one SAG-MAD study and ultimately then into a group of disease patients. We'll then look at a phase two program, which is built around the indication that we choose to go after. You're right, we identify that we haven't said anything yet about which of the indications we think we would pursue. And I think it would be premature of us to do that until such times as we have actually made the decision as to whether or not we're moving further forward. On GPR84, I think, again, you rightly indicate that this would be something that is focused on chronic inflammation. Again, at this stage, we've not actually said anything yet. I think you can expect us to talk a little more as we move forward and nominate the candidate about where we expect that to go. The final work that we're doing right now will help elucidate which of the indications that we might choose to go after. But I think it's a pretty wide field. We could be looking at anything from inflammatory conditions of the kidney into NASH or indeed other indications. We're not making any specific projections about that until we've got the candidate, but we will do as soon as we've got the candidate.
spk03: Great. Thanks for taking my questions. No problem. Thank you.
spk06: And it appears there are no further questions at this time. Mr. Pritchard, I would like to turn the conference back to you for any additional closing remarks.
spk02: Excellent. Thank you very much, Operator, and thanks to everyone who's dialed into the call today. We look forward to obviously continuing to update on our progress and look forward to our next conference call in a quarter's time. So thank you all for joining this morning, and I wish you all a good day.
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