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spk_0: they play in welcome to and the therapeutics fourth quarter two thousand twenty one funny it's was both into the that they call at this time advocates that analysts long about after the speakers presentation they'll be a question it's assassin that the question don't assassin really depressed or than one and it's had so telephone it didn't want requires that they send a car thief i started he was written operator as a reminder this call may be recorded i like the color with the day and dolan debris the chief financial after he met again
spk_1: thank you and good afternoon everyone welcomed in the british conference call and webcast were live in discussing the fourth quarter twenty twenty one earnings and providing a business update the slasher today's presentation of posted on the company's website www dot in a breather dot com and can be found under the investors tab the events and presentation section we recommend that refer to the presentation as will be using those slides for today's discussion pro it again on slide to i like to remind everyone that this conference call and webcast will contain forward looking statements about the company these statements are subject to risks and certainly the cause actual results to differ please know that these for looking statements reflect our opinions only as of the date of this call we were undertake no obligation to revise or publicly released the results of any rivers revisions to these forward looking statements in light of new information or future events factors that could cause actual results or our comes to differ materially from those expressed in or implied by such for looking statements are discussed in greater detail in our most recent filings on form ten k and are other periodic reports on formed thank thankyou and ak filed with the se si trying to fight three let's briefly run through the that and and agenda ted schroeder in a breather ceo will start with a business update and present an overview of the commercial highlights from the quarter doctor stage alone or president and chief operating officer will provide an overview of our regulatory strategy related to can tipo and then i'll provide financial review before ted comes back with some final commentary and leads are q and a session i will now turn the call over to the breeders chief executive officer had schroeder
spk_2: thank you dan and thanks to everyone joining or call this afternoon let's start on slide five we are pleased with the progress we've made in the fourth quarter and how we accident the year last year the team continued to lay the groundwork on t operational drivers focused on creating sustainable long term value let me start with the launch of our own nbc for said backstroke and april twenty twenty one as you recall this allowed us to recognize one hundred percent of that product sales force of extra which has provided a positive impact tortilla now we continue to see ongoing moment and force of dextro and are happy to report another quarter of subscript of sequential prescription growth next we transitioned development and commercialization rights and left amulet in greater china to sumitomo pharmaceuticals sumitomo opted to pursue with family mulan that compliment their existing anti fact that product portfolio in china sumitomo is already a dominant player in the anti in fact that states in the greater china region putting them in a solid transition to launch the family one once approved we announced in november at the end the april a fabulous in greater china has been accepted by the regulatory authorities and we look forward to providing updates when available as a reminder we are entitled to low double digit royalties on net sales as well as payments of up to eighty six million dollars upon the achievement of certain sales and regulatory milestones the first milestone of which is due upon approval in the region as previously mentioned we'd expect it's approval to be within eighteen to twenty four month from when the regulatory authorities accepted the new drug application in november twenty twenty one moving to our second commercial products and letter we continue to make progress and making the product more accessible and convenient for patients in the us in november of last year we launched the tent camp or pack or x pack which allows for improve patient access and the opportunity to further brought availability in retail channels next we partnered with dizzy it's pharmacy network to expand visibility of the i the formulation as and let it in hospitals disagreement a ports and letter the support of the busiest network through their hospitals systems by increasing awareness and said letter as an alternative antibiotic treatment option and for community acquired pneumonia we believe this could be a good opportunity present letter as a transition of care alternative given it's i'd the an oral formulations we continue to explore additional uses of and ladder and have advanced with cystic fibrosis program we're making good progress with the cf trial and they anticipate the first patient dosed with within the next month the phase one safety and pk data are expected and twenty twenty three or optimism for this program is based on that potent anti staphylococcal activity as and let it against strains of step arias isolated from see patients in october we published data in a peer reviewed journal plus one demonstrating left ambulance has anti inflammatory properties in in vivo and and beach role models the anti inflammatory aspects of with samuel and has potential wide ranging applications to various factions including cap and cf the combination of the potent anti microbial and potent anti inflammatory properties of what family is very encouraging for the cystic fibrosis patient population in particular lastly we continued to strengthen our financial position with negotiations on our contracts with oh beyond our third party manufacturer of force and letter and our debt agreement with hercules these amended agreements along with the strong performance from said backstroke extended are cash runway well into the fourth quarter of twenty twenty two moving to flight seven we're excited with the accomplishments today but more importantly with what we see is the key value drivers that lie ahead for the company we believe we have multiple significant catalyst over the near term that can benefit patients and enhance shareholder value as we maximize each of our core franchises with roughly forty eight million of cash on hand as of december thirty one twenty twenty one we have now extended our cash runway well into the fourth were of twenty twenty two our strategy is based on the strong survive extra foundation which continues the search shows solid growth in the us yes this progress gives us confidence to reaffirm our guidance that of extra sales will reach historical peak sales levels by need twenty twenty two fully fund the our commercial efforts and a portion of our g and a cost while helping to further reduce our overall cash burn as far as and letter we are continually seeking ways to optimize the access for patients and healthcare practitioners as we said before the cat market as large with approximately two million potential adult patients in the outpatient setting we recently held a positive interaction with an advisory board a pulmonologist to understand and see the value in a product like than letter the advisory board provided significant insight as we continue to evaluate and assess the value proposition present letter in the and biotic market it's important to remember that we have an extensive pat runway out until twenty thirty three giving us time to raise awareness and create value woods and let up for patients and for healthcare practitioners additional opportunities for as and letter include potential use and cystic fibrosis which we estimated could potentially generate one hundred million dollars of incremental sales the phase one trial as a small investment to determine if the non clinical data translate clinically and it's so oh we believe this could be a major catalyst for the company lastly with the letter we continue to explore partnership opportunities outside the united states this is another research which which has the potential to provide the company with additional nine deluded bundy we have existing partnerships in canada and china and are actively negotiating in other regions including europe moving on we remain committed to bring in people to the market we believe there is still a large unmet need in the united states are treating patients with infections caused by multi drug resistant or nbr organisms estimated three million people in the united states are trade it for suspected were confirmed and the are turning to slide eight sub extra posted another quarter of said sequential growth and the second straight quarter where we saw more than one thousand said backstroke to our exes in addition the executing commercially with our experience sales thing we're demonstrating the ability to gross of backstroke back towards historical peak sales with our country commercial infrastructure now well established the organization has shown the capability to drive patient access and utilization for established brands likes of extra shifting to them letter on slide nine we continue to see a lot of potential for the product with it's novel mechanism in broad coverage we held an advisory board with pulmonologist earlier this year which reinforce and let as positive characteristics and differentiated positioning one of the main take away was the ongoing need for cap treatment options the about the availability of ivy and world formulations allows for the efficient transition of care from hospital to community more importantly the availability of an oral option male out for treatment in the community to help avoid hospitalizations the short five day course a therapy is another positive attributes feedback from the advisory board also supports interest in the potent anti inflammatory properties as and letter we continue to learn more about the and letter from ongoing interactions with community based hc teams gain insights from providers about how they view the drug and it's utility as a first line in paris agent this is especially important as we plan a framework for explore expand the usage for some ladder and areas such as cystic fibrosis switching to can tape on slide ten or up optimism for the prospects of can see both continue the be bolstered by the reality that the science silent pandemic of and microbial resistance is becoming more prevalent and negative patient outcomes continue to be more common based on a recent publication and lancet it was estimated that a staggering one point two seven million deaths were attributed to am are in two thousand and nineteen globally to put that into perspective deaths attributed to attributable to am are now outnumber the annual deaths from
spk_0: hiv breast cancer or malaria globally importantly the six leading pathogens for deaths associated with resistance or he call i followed by staff arias club cl and the mony a streptococcus pneumoniae a as the need of actor bad
spk_2: money and pseudomonas aeruginosa and these pathogens accounted for just under one million deaths attributable to am are as you are most likely aware can see bill has a novel mechanism of action and has been shown to be highly active in vitro against several these commonly resistant pathogens can see bill has been demonstrated to be well tolerated and effective against the call i and club cl and the modi monet in our pivotal trial for complicated you and i am and pilot the friars in addition id fossil my son is approved for multiple indications and used extensively outside the united states for many years now as a result many us positions are already aware of the drugs to potential benefits and we believe there is a unique opportunity for can seep out as a potential treatment option for patients with suspected or confirmed multidrug resistant infections in the united states for the next part of the presentation i'd like to turn it over to doctor states alone our president and chief operating officer for a brief update on the status of the can tipo and the i stayed thanks ted as you may recall you have the a communicated the need to conduct onsite inspections in are far manufacturing facilities that are located in italy and spain before the agency could potentially granted approval for can keep up based on external disclosures by the f the a approximately fifty new drug applications were pending review as of the end of twenty twenty one due to the agency's inability to travel abroad secondary to decode pandemic most recently the agency has communicated that it does play the resume far inspections but thus far has not signaled how pending applications will be prioritized as a result and given the uncertainties of the timing of on site infections and our manufacturing partners the breeder requested an extension of the deadline to resubmit the kid people and the a which the f b a has granted this extension of the deadline for resubmission of the and the a provides the brave with the flexibility to submit at any time up to and through july twenty twenty three we believe the resubmission extension enables us to avoid the scenario where in a breather resubmit the can people and da by ft eight is unable to complete the required inspections within the six months ago for review timeframe
spk_3: which would most likely prompt a complete response letter
spk_2: we continue to keep the lines of direct communication with the fj open and we are closely monitoring multiple products manufactured by rcm of partners that have near term action dates which may provide further insight into fps approach to inspecting these facilities at the observations that the agency made were general gmp observations that apply to all products manufactured at these sites
spk_3: it's also noteworthy that the end the a resubmission extension has no impact on can keep us market exclusivity as the eight year market exclusivity does not begin until marketing approval was granted
spk_2: this continues to be a dynamic and fluid situation and i can't stress enough that we're working diligently with their may factory partners any a agency to obtain agreement on timing of the required on site inspections at our partners facilities in italy and spain and if we are poised and ready to resubmit the can people and a once we have assuredness that the on inspections can be completed during the and the a review site we remain committed to commercialize a get people in the u s and look forward to providing you an update on a future caught
spk_4: i'll now turn the presentation over to and on our chief financial officer who provide the financial review dan
spk_1: thanks steve as we turned aside fourteen i'd like to touch on some key highlights for the fourth quarter and full year twenty twenty one total revenues of nine point three million dollars in the fourth quarter consisted of net products hours of eight and a half million dollars representing a present sequential growth compared to third quarter twenty twenty one we ended the full year twenty twenty one with approximately twenty nine million dollars in total revenue up twenty four million compared to the prior year given by civic stone a product sales during the fourth quarter we saw continued improvement in our operating leverage and slower cash burn kevin vice of extras performance we also realize the benefit of renegotiating or third party manufactured contract with whole the on present lotta which provided near term cashflow flexibility this allowed for investment and by creating opportunities with a focus on driving topline growth and twenty twenty one we also strengthen the balance sheet by renegotiating er det agree with hercules further extending our interest only payment period additionally we entered into an equity line of credit agreement with lincoln park capital this partnership provide additional optionality for the company we exited the corner with cash and cash equivalents of approximately forty eight million dollars providing us cash runway well into the fourth quarter of twenty twenty two moving on to five fifteen we look at our quarterly operating burn and as you can see operating cash for has steadily declined each quarter and twenty twenty one driven by strong of extra performance and the near term benefit of our renegotiate agreements with whole the on and hercules while the trend and twenty twenty one is reflected on the subject or ndc launch an improved operational execution within the business we do anticipate the typical one time payment in the first quarter of twenty twenty two consistent with prior years including annual insurance prepayments and other annual subscription renewals additionally we will continue to purchase of extra supply from mark as needed which will fluctuate from quarter to quarter moving to five sixteen this reflects the quarterly view of our revenue and expenses for twenty twenty one the main focus as we age of twenty twenty one is the fact that net products hours of a half million dollars in the fourth quarter continue the trend of growth since the launch of us have extra ndc in the second quarter of twenty twenty one as ted mansion so vector remained on track to achieve our guidance of historical annual run rape rosales highs by the middle of the sheer subjects or continues to provide a solid foundation for the company to drive operating leverage in the near term the performance of extra more than fully formed a commercial investments from our overall cash burn and for other enabled investments to raise awareness as and ladder in there near term for cap and invest in medium to long term life cycle management opportunities such of the investment in our phase one trial for cystic fibrosis twenty twenty one was in line with our expectations around how the piano would evolve found the launch of our own ndc for said extra in april of twenty twenty one we have demonstrated sequential revenue growth quarter over quarter and continued operating leverage improvements with an infrastructure that will support stable operating spend heading and twenty twenty two turning the five seventeen in summary we saw positive trend on the piano and a corresponding positive and on cash was as we exited twenty twenty one the lots of us have exo ndc in april resulted in an immediate positive impact on our piano and cashflows looking specifically at the fourth quarter twenty twenty one we thought improvement in our operating cash burn of over fifty percent to just six point one million of cash burn vs thirteen point four million of cash burn and que four of twenty twenty given his father trend on the piano a for front combined with our cash and cash equivalents on hand at the end of twenty twenty one and a very manageable amount of that we are well positioned as we head into twenty twenty two this allowed to continue to invest aggressive extra and unlocked value ins and letter
spk_2: i will now turn the presentation back over to ted for the next part of the car tebow make some closing remarks and then we'll head into a q and a session tab thanks dan in summary we are excited by the team's efforts and twenty twenty one and a strong momentum heading into twenty two we believe the company as well positioned for growth and at our current results coupled with our upcoming catalyst have the ability to create incremental value to shareholders we already have to cover for drugs from be marketed with the revenue fully subsidize in the cost of the commercials of the it's the up trial works us an opportunity to that incremental task while with little to no additional investment in the commercial infrastructure that's already in place we continue to negotiate partnerships for as and letter which will provide the company with multiple revenue streams from their respective countries and or regions and lastly we are committed to can seep out and look forward to bringing the product to the market and adding this as a third product in our portfolio on top of all this we are well positioned to add on additional assets that would leverage our existing commercial infrastructure
spk_0: i'd now like to turn to call back over to the operator so that we can open the line for your questions as a reminder to ask a question please faster than one if your question has an answer and you like to remove yourself from the queue press the pound key
spk_2: i first question comes from the call burns with my capital your line is open great thanks to the question and congratulations on their part your progress am i have two questions the next and are no get back and oh hush i know your bag and few i'm so little gross profit margin or cause either way it looks like there was a bit of a jump of between the fourth quarter the third quarter pound calculating this correctly i'm wondering if there was anything that was anomaly in that
spk_5: and what will your expecting tensions and are going forward on gross profit
spk_1: margins
spk_6: daniel it take that question yes your carl thanks to the question yeah so this is specific to to then let our we it it was more of an anomaly we had some one time troops in the fourth quarter related to minimum purchase commitments on the ivy side of the business so it did cause
spk_1: little bit of a
spk_2: one time charge in the fourth quarter related to the cost of goods impacting margins
spk_1: and then the so similar to what you saw in the third quarter that maybe a world that large and from the scale is it would that be current
spk_7: ah i'm sorry so the margins from the third quarter going forward is that your question no i think of the third quarter that was the third adjustments as similar type of adjustment
spk_1: because of the mother is a mother or yeah of values
spk_2: sorry i the third quarter we took the real returns adjustment we had a we had a true for their turns just because some of the tablet product was expiring so we we switched out the the bottles for the new blister packs so that was more of a net sales impact in a cost of goods
spk_1: it's a little gold for basis what my you expect normalized gpm the look like
spk_2: yeah we've given guidance of extra and in canada mid fifty percent range and then than ladder and kind of hard to get our arms around the wheatley expected that to have a higher margin so depending on the maxi always somewhere between mid fifties and powered mid eighties
spk_1: got it thanks her elbow and then eludes i got your argue expenses turning down the fourth quarter of the expect that to recur going for a given that you've got that the see essays on trial or and potentially hazardous is is unclear
spk_8: pop
spk_0: yeah i think that some some of that reduction was in in in non clinical activities and some some other external consulting so i think you know going for the trial and roles at my wax and wane a little bit but nothing as super substantial to be relatively stable with some feeding issues problem with phasing timing spend that's great and i'll the back in the queue times
spk_9: i can't ask a question please press star than one i'm next question come from at odds with a see why why your line it up and
spk_2: i go out there they've ruined the of asking questions for at ah of first hats or cake older your expectations for as the back row and twenty twenty two beyond the to go to reach historical pixels trend or by that year ah sure of thomas where i'm so so vexed has been a great addition to the to the portfolio and ah as you recall when we brought the product over from mark the sales had been declining they had stop promoting it some time in advance and to have been doing the transaction with us and so during last
spk_10: year we successfully reverse the decline in the had it back as a growth product so it's set our sights on kind of the first step of that
spk_2: growth target has to get back to where mark was and then from there we do expect that there's upside potential for the product of it's a it's nicely position i entered has the early the advantage of a once a day therapy that so only get them for six days which is both convenient for pace and sen yeah it really helps with compliant so we expect that will see growth beyond the that the return to oz the peak sales and you know
spk_9: with continue promotion that that the products highly promoted the sensitive it does have some season out associated with it you might expect that they there are more skin and skin structure infections in the warmer months then in there in the colder months or but it it says we think's gonna be a solid performer for the for the right group of patients so we're on we're looking forward to seeing growth from said backstroke over the yeah the next several years
spk_2: gotta that that the make sense and that that that perhaps a more along that line can you discuss sir at a any adjustments are updating your closer treasury for tabasco and also for some leather especially as circle that restrictions circuit or cathy to be lifted in the united states yeah it's a yeah as those are good questions i will i will tell you that access to physicians offices continues to be disrupted i think that's a general i industry wide trend but we are seeing some relaxation of have access so that certainly helps of i think the good news about to backstrom is there is an existing prescriber based on some of those are either a kind of specialist like podiatrist and dermatologists and so we are increasing our efforts are on those specialties i think as you see it see people return to work especially in jobs where there are on their feet ah a lot will see increased activity from to dietary so ah putting the effort their as we move into the summer season as the respiratory season starts the wayne we will increase our effort on on slack straub are a and then present letter as we talked about in his in the script there's there's a we think there's a real opportunity among the pulmonology community other patients tend the be somewhat more complicated having a highly effective therapies like some letter that's not a quinn alone
spk_11: that can be dose for a short period of time and may have the opportunity to keep those patients hell of a hospital
spk_9: pullman i'll just find that extraordinarily attractive there also are quite impressed with the anti inflammatory properties and and let us so and increase focus on pulmonology specially as we move forward we think well i will continue the drive activity rounds and mother got it sounds good then one last question path switching gears to learn
spk_2: your partnership with sumitomo and china can you remind us what are the upcoming milestones and know twenty twenty two after after the regulatory a submission late and know twenty twenty one so we haven't specifically disclose the milestone but the the at what we have disclosed that the royalty associated with sales in china will be an old will be a low double digit loyalty and that our first smiles non payment will be on approval ah we expect approval
spk_9: by that standard in china has set is somewhere between eighteen and twenty four months house the acceptance of the and the a that happened in november
spk_2: so it's possible that we could see an approval and nine twenty two but likely it'll be a twenty it'll be out later than that i'd given the yeah the usual review cycle in china
spk_0: does that you'll get kind political questions and i look open for to progress and twenty twenty two
spk_2: yeah thanks thomas proceed the yeah the interest
spk_7: next question is a follow up from the call burned with north and capitol hill on is open
spk_1: thanks without i'll just a real quick question on the out of line of equity the you have was lpc the looks like get you into the the above that down the for clerk can you caught that out and also of the the share kind of the of the quarter thanks
spk_12: sure a yeah so it this
spk_1: he had a quarter what we we were active and with lincoln park i think it was to the tune of of a three three million shares or so
spk_2: and we exited the air
spk_13: the the year and right around sixty million shares outstanding
spk_2: got it thanks and just on the same serve our topic
spk_1: how much that remains
spk_2: accessible and of of lincoln park with you agreement and if i recall cubicles out the september twenty three were going here is that's additional sourced of to fun he said the test pathway
spk_0: yeah yeah you're right we have about eighteen months left on the agreement to this point we we have we've we've drawn down a little bit on it but we are we have a pretty good amount left on the capacity it's it's in the teens i think the mid to high teens millions left
spk_2: great thanks for a helpful there are no further questions like to turn the car back over to ted turner cynical go month
spk_0: thank you and thank you everyone for joining us this afternoon as you can tell by the town of that today's call we're excited about the that twenty two were excited about the progress we're making with our products particularly with the growth the said backstroke and look forward to updating you as the as the your progress
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