Talphera, Inc.

Welcome to the Telfera 4th Quarter and Full Year 2024 Financial Results Conference Call. This call is being webcast live via the events page of the Investors section of Telfera's website, .telfera.com. You may listen to a reply of this webcast by going to the Investors section of Telfera's website. I would now like to turn the call over to Raffaele Zadorian,

Telfera's Chief Financial Officer. Please go ahead.

Thank you for joining us on the call today. Today we announced our 4th quarter and full year 2024 financial results and associated business updates in a press release. With me today are Vince Angati, our Chief Executive Officer,

Dr. Shaquille A. D. and Before we begin, I want to remind the listeners that during this call we will likely make and uncertainties regarding the operations and future results of Telfera. Please refer to our press release in addition to the company's periodic, current and annual

reports. These documents can also be found on our website within the Investors section. I will now hand the call over to

Vince. Thanks Raffaele. Good afternoon and thank you to everyone joining our call today. We made strong progress in 2024 and anticipate furthering that progress in 2025 with the We have a number of important updates to share with you today, all of which support the timely development of NIAID and the planned submission of a PMA in the first quarter of next year. I'll first provide an overview and then hand it over to Dr. Aslam to provide additional improvements being made in the study and with the clinical sites. First, as announced earlier today, I'm pleased to highlight an agreement with existing and new investors for a private placement investment of up to $14.8 million in gross proceeds should all milestones be achieved. I want to thank Nantahala Capital and Roslyn Advisors who remain committed investors supporting the company. This financing should provide us capital to a potential completion of the study by the end of the year. Raffaele will provide additional details on the financing later in the call. I'll now provide key updates we've made to the NEPHRO CRRT study. As a reminder, the Famistad has been approved and used for multiple indications in Japan South Korea, including as an anticoagulant for the extracorporeal circuit for well over 30 years. This extensive clinical use demonstrating its safety and efficacy in those territories, as well as multiple studies performed outside the US, we believe

will be corroborated by the data being produced from the NEPHRO CRRT clinical study. NIA has become the only FDA approved NEPHRO CRRT study. The regional NEPHRO CRRT study is an anticoagulant for US during continuous reuse. The NEPHRO CRRT study will be impactful given the many disadvantages of the currently used products. Importantly, we announced

that the FDA approved our request for a reduction in the size of the NEPHRO trial from 166 patients down to 70. And even with this significant study size reduction to 70 patients, the primary endpoint remains powered at 90%. This was a major step forward for the timely development of NIAID. We're thankful the FDA continues to meet or exceed the statutory timelines in responding to our requests. The FDA's responsiveness has been a key benefit of NIAID's breakthrough designation. During the same meeting held with the FDA in January where we discussed the study size reduction, we also requested and the FDA approved two major protocol changes to the inclusion exclusion criteria. At a high level, one, we're now allowed to enroll patients that have been on CRRT for over 48 hours. And two, the inclusion criteria requiring documentation of heparin intolerance has been removed for institutions that do not use heparin as part of their protocol, which importantly is applicable to six of our seven current sites. All of these changes to the NEPHRO study are crucial modifications that support our projected timeline to complete the study by the end of the year. Dr. Asim will provide more details on what these changes mean and how we believe they'll impact enrollment. In parallel to our work on the regulatory front making changes to the study protocol, we've also been focused on adding new clinical study sites. Not only is the number of sites important, but also the site profile. Specifically, again, one, the type of intensive care unit

where the study will be performed For example, medical ICUs, instead of surgical or cardiothoracic ICUs, we'll be using the NEPHRO pathologist as a primary lead for selection. And three, the efficiency of the NEPHRO study. The NEPHRO administration is working with the NEPHRO administration to initiate a new study at their institution. Dr. Asim, I'd like to identify these site characteristics through review and learnings from assessing the existing site. The NEPHRO system is critical to success for the NEPHRO system.

At

the end of

2024, we had five enrollment-ready sites, four of which were inherited relationships from our acquisition of law therapeutics. And upon Dr. Asim's review, do not meet our ideal site profile moving forward. The fifth site identified by TALFARA meets our target site profile and has enrolled five of the six patients who have completed the study. The principal investigator at this institution is an nephrologist and is enrolling patients from the medical ICU. We added three new sites in the first quarter, two of which are just now starting to screen patients for a total of eight sites that are now enrollment-ready. We expect to bring five additional sites on by mid-year. Before I turn the call over to Shaquille, I want to reiterate our belief that the three critical risk elements, clinical, regulatory, and commercial, for the NEPHRO program are low for a number of reasons. First, with over 30 years of use as an anticoagulant during CRRT in Japan and South Korea, we know in the Famistats track record of efficacy and safety minimizing the clinical risk. The trial design has been agreed with the FDA, including broader inclusion criteria and a reduced number of patients, all of which help minimize execution risk. Second, we have a clear regulatory path, including breakthrough designation from the FDA, which has provided us with efficient access to the agency, leaving the quick review and response times. Lastly, while we know there's always commercial risk, we believe this is mitigated given the disadvantages of the products currently being used for anticoagulation of the CRRT circuit, namely heparin and citrate. In fact, we recently attended the 30th annual AKI

in CRRT in San Diego, where a number of physicians asked us if they could have access to the NEPHRO program. It was a compassionate use of the program. Neither heparin nor citrate meet their needs. An alternative to the call over to Dr. Aslin, who is named as Health Ferris, Chief Medical Officer of the Health and Human Services Administration, has been critical to the major changes to the protocol, as well as the site management and selection process. Thank you, Kevin. We have been

busy making changes to the study protocol, as well as evaluating the characteristics of clinical sites to improve the study enrollment. I'm happy to say, as Vince highlighted, we have had success on both fronts, as the FDA has approved the changes we requested. We now better understand the profile of an ideal clinical site for our registration trial. The three newer sites have our target profile with a higher CRRT volume, and two of these sites are just beginning to screen patients. This brings our current total enrollment-ready sites to eight, seven of which are screening today. Before providing more information on the study site, I would like to elaborate on the reasons why we believe the FDA agreed with our request to significantly reduce the study size from 166 patients to 70. With 166 patients, the study was overpowered with over 99% power to meet the primary endpoint. Despite a significant size reduction, it's important to note that even with 70 patients, the study has at least 90% power to meet the primary endpoint. You are probably wondering why this study was so overpowered in the first place. It is our understanding that Lawal Therapeutics proposed a study size of 166 patients to assure the FDA that a sufficient number of patients would be exposed to NIAD from a safety perspective. In our meeting with the FDA in January, we presented the safety data from the existing large safety data sets and the public literature on the real-world use of nephamostat across multiple indications in Japan and South Korea for over 30 years. We were able to assure the FDA that nephamostat had a well-characterized safety and a favorable benefit-risk profile based on over three decades of use across multiple

indications, including CRR. Based on the screening data, we were able to ensure that the nephamostat had a well-characterized safety data. From our active study size and input from our CI, we identified two early disabilities which were responsible for several screening failures and could be modified without the The first was an exclusion criterion which excluded patients from the study if they had been exposed to the nephamostat for more than 48 hours. The size informed us that many patients who were started on CRR at the late Friday or over the weekend were no longer exposed to the nephamostat by the time the study team returned on Monday.

The FDA allowed us to remove this exclusion criterion agreeing with our rationale that the time on CRRT before study enrollment had no impact on the primary end point. 15 patients were excluded from the study because of this criterion. We believe this protocol change will be impactful to the enrollment speed going forward. The second change we requested was the inclusion criterion that required the site to document either intolerance or contraindication to have pain. We found this requirement irrelevant and restrictive because many institutions, including most of our study sites, do not use heparin during CRRT. The FDA agreed to remove this requirement for these sites. Ten patients were excluded from the study because of this criterion. As a note, only one of our current sites uses heparin for anticoagulation during CRRT. And this dissatisfaction with heparin is universal amongst the physicians we speak with. In addition to these protocol changes, we analyzed the screening data to understand the study site profile that would predict better patient enrollment. We identified an ideal site profile based on the type of ICU, the specialty of the principal investigator, and the time to complete the startup paperwork. The startup activities were the main bottleneck in site activation previously. As part of our strategic review, we identified that nephrologists-led sites were an important differentiator, since nephrologists effectively decide on CRRT use and study enrollment. The other key factor was the type of ICU. We determined that medical ICUs were the most appropriate type of ICU for study enrollment. In contrast, our initial less productive sites relied on the cardiothreatic and general surgical ICUs, where the most

patients from CRRT received systemic health care. The one initial site that has been identified as a CRRT site is the nephroclinical. The most productive has been the nephroclinical. Nephroclinical is a nephroclinical site that is a nephroclinical site that is a nephroclinical site. Nephroclinical is a nephroclinical site that is a nephroclinical site that is a nephroclinical site. Nephroclinical is a nephroclinical site that is a nephroclinical site that is a nephroclinical site. The first two sites target nephrologists as a PI and draw patients primarily from the medical ICU. This includes the two new sites that just began screening. The second is the additional sites. The next site is the nephroclinical site. All of which are similar in profile to our current highest enrolling site. The most productive current site has about 20 CRRT

patients per month, while the three new enrollment-ready sites range historically between 90 and 100 CRRT patients per month, with many of the additional sites planned by mid-year having even higher monthly CRRT volumes. Because of our selection of sites with a quick administrative timeline, we have experienced a much shorter time for their activation. For example, our most recent site took us less than four months to activate, compared to over a year for some of the initial sites. In summary, we expect to have 13 sites enrollment-ready for mid-year, and we continue to pursue additional sites up to the limit of 14. And with that, I'll turn the call

over to Vince.

Thank you, Dr. Aslam. I'd like to highlight Dr. Aslam's expertise in CRRT and experience both drug and device trials during his accomplished career that have facilitated these enhancements to the program. I'll now hand the call over to Rafi for a financial update.

Thanks, Vince. As mentioned, we have been highly focused on delivering a completed nephro study by the end of this year. Accordingly, we have reduced our operating expenses to reflect this objective. Also, as announced earlier today, we signed agreements with investors regarding a private placement financing with existing and new fundamental investors led by Nantahalla Capital and Rosalind Advisors, who remain committed and supportive shareholders. The amount of the financing is expected to provide capital to support the targeted completion of the study by the end of 2025. The financing was structured in three equal tranches of $4.925 million, with the first tranche received at the initial closing expected shortly here in April, and the two additional tranches based on achieving an enrollment of 17 patients and

35 patients, with the stock trading above $0.73 per share. In total, the $14.8 million commitment is expected to be achieved later this year, as we expect acceleration in enrollment rates, and to give out all the changes made to the nephro scheme, the RRT study, and the new sites that are coming online. As mentioned, the financing is expected to be combined with the $8.9 million in cash at December 31, 2021, and the $24.4 million supports the completion of the study anticipated by the end of the year. The combined R&D and SG&A expenses for the fourth quarter of 2024 total $3 million, compared to $4.6 million for the fourth quarter of 2023.

Excluding non-cash, stock-based compensation expense, these amounts were $2.8 million for the fourth quarter of 2024, compared to $4.3 million for the fourth quarter of 2023. The decrease in combined R&D and SG&A expenses in the fourth quarter of 2024 was primarily due to reductions in personnel expense and other general and administrative expenses. We expect cash operating expenses, or SG&A and R&D, excluding stock-based compensation, to be in the range of $18-19 million in 2025. I'll now turn the call back to you Vince.

Thank you, Rafi. Before we open the line for questions, I reiterate that we've made significant improvements in the study design in concert with the FDA. We now have an improved trial design with the right types of ICUs as operating sites. I look forward to showing our progress on the NYET registrational trial over the course of the year. I'd like to open the line up for any questions you might have. Operator?

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number 2. If you are using a speaker phone, please lift the handset before pressing any keys. One moment please for your first question.

Your first question is from Ed Arce from H.C. Wainwright. Please go ahead.

Hi, everyone.

This is Thomas. We have been asking a couple of questions for Ed. Thank you so much for the kind of questions. So first, regarding the changes and the inclusion criteria, those formally included

now by the FDA. Sounds like it makes a lot of sense. But could you discuss what would be the original plan of the law for excluding these nations in the previous year? So we'll have that over. There's two key levels. Again, the question is changes in the inclusion criteria. What were the original thoughts on the movement to exclude New York Thomas? Why that protocol was written originally? Was it with law? Yes. That's where I'm at. Thank you. Okay. So, Shachir, you want to answer that? That's relative to the half-hour doctrine and relative to the 48-hour course on CRRT. And why they were originally excluded that way? Sure. Since I was not part of the initial protocol development,

I can only guess the reasons that make medical sense from my point of view. So 48-hour restriction perhaps was done if you were to look at some important clinical endpoint. And my thinking on this was since we are not really looking at clinical endpoint as a primary efficacy endpoint, time on CRRT had no impact on how somebody is going to respond to NIAD. So that's why we changed it. But my understanding is that because of impact, that longer duration on CRRT, for example, could have patients who are longer on CRRT, they may take longer time to recover their kidney function or they may have higher mortality because they're not recovering their kidney very quickly enough. So that's my guess that that was the reason. The second in terms of contraindication to use of heparin, FDA's position has been that heparin is FDA approved for this indication, and it is and perhaps should be used or at least offered to every patient who starts on CRRT. As we approached many of these sites and activated these sites, we did not find that to be the case. What we found was most of the sites were not offering heparin at all to their patients. So as a result, it didn't really make any sense for us to require these sites to document contraindication to use of heparin. FDA, as Vince mentioned, also agreed to remove that restriction. Does that answer your question?

Yes, thank you so much for the clarification.

Thank you,

Dr. Keele. Can I ask you also to quickly elaborate

on why have these institutions

decided not to use heparin for the most part? In your clinical experience and discussion with these sites, what has been their main rationale for those? They understand why they're not using the heparin even though it's indicated for this condition. All right. So there are many reasons. I think overall, most institutions do not feel that the risks from heparin are significant. It justifies the use of heparin routinely in all patients. I have seen this kind of difficulty used in this patient population. In the population, number one, it has a long half-life of approximately three to three hours. And the half-life can change within the same patient population. So that makes it very difficult to use. And the titration of heparin is quite

difficult. It takes a while before you titrate to the target therapeutic activated pro thrombin time, which is the marker that we use in the clinic. And I think the most important thing perhaps is that it's a systemic anticoagulant. So you are trying to prevent clotting in a circuit which is outside the body. So there really is no justification to expose the whole patient to anticoagulation because these patients are very high risk of bleeding from many organs. And so this increases their risk of systemic bleeding. So those are, I think, my top few reasons why I never like titratation and

most physicians don't. Thanks, Shikhyo. Thank

you so much. Perhaps a couple of questions regarding the private placement that was announced today. Just wonder the second and third milestones tied to the patient enrollment, 17 and 35 patients respectively. Is there any time limit tied to these achievements of

the milestones?

No, there not.

Okay, so just to

be clear, the funding will trigger as soon as both the number of patients being enrolled and also the share price hitting the 5-day average.

That's correct, and some normal closing conditions. But yes, that is correct.

Okay, okay. And then one final question also on the private placement. Just wonder if you have disclosed which member management team participated and also what the amounts?

Yeah, I mean, we didn't, but it's Vince. That would be me, Thomas.

The E-member of management. And you'll see the amount. So just to specify, I'm going to include the file. I'll add more of them. Okay. Thank you so much. So let's get a quick look at the questions we've got. Looking forward to hearing from you. For this study. Thank you, Thomas. The next question is from Jim Moller. And global partners, please go ahead. Hey, guys. It's Matt. Hi, I'm Matt. I'm on the team for Jim. Congrats on the quarter and the private placement this morning. First question, I want to follow up

on the private placement for those milestones. So, we're expecting kind

of mid-year for the first one and the third quarter or so for the second one.

Gotcha.

And then, as far as the existing sites, do you have any plans to shift the PIs to nephrologists and maybe make those sites look a little bit more like the highest enrolling? Is that a possibility?

Yeah, I'm going to turn that one over to Shaquille and just preface it by Shaquille. Can you also include in your answer, you know, as we continue to find highly productive sites that really meet our criteria with a high number of CRRT patients, one, would you ever consider deactivating the unproductive sites? And two, especially with the demand that we're starting to see to get into the trial, and two, for those sites that we have been very close with, which is all of them, the work you're doing to potentially shift those PIs over to the specialty that most fit our needs.

Absolutely. So, yes, that is the case. We are in discussions with these PIs to see if either they can shift the primary responsibility to a nephrologist or they can broaden their patient population by including medical ICUs. In terms of closing any of the sites that are not being productive, I think that's possible. Once we recognize or close to getting the 14 sites up and running, and by then if any of these sites have not performed, we would like to swap them for better performing sites. So right now we have a lot of interest in joining this study, and we are activating those sites as quickly as we can.

I think it's an important additional call to add on that is, you know, the sites where the ones that are really not performing well are the ones that are not performing well. So, we brought forward our attention to the challenges that they were experiencing with the protocol on the two particular sites. So, a good notice to them, even though they haven't been as productive on the engagement and enthusiasm, I think you have to remember that these are very

prominent sites around the country related to the reputation of the institutions. And the PIs are extraordinary, but these

are the same PIs that work with the foundation company, Lowell. And prior to that, Lowell, you were on GEOpresence, which is the major preser in that study.

And I think that Lowell and La Jolla leaned on those relationships, extraordinary talents, but might not be the best fit, as Dr. Azim explained, for many reasons, for this particular study.

Okay, thank you for the call, I appreciate that. And lastly, do you have any clues yet to the enrollment rate with this new revised criteria? And or should we assume those six patients that have completed the study are the six patients fully that have been enrolled as of right now?

Yeah, yeah. So, those are the original six. Again, I reiterate, we said in the script that five of those six are coming from one of the institutions that we had identified to add into the study. That really met the criteria that Dr. Azim has framed out moving forward. Got it.

And any clues to the enrollment rate going forward based on these new criteria that have been agreed upon by the FDA, or is it too early to tell?

No, I think it's too early to tell. Again, I'll reiterate what we said that we had 25 patients excluded since the enrollment started the trial for these two criteria. Ten on one and 15 on another. I think it was 15 on the 48 hours, 10 on the Heparin exclusion. So, you can see a number of patients were screened out from these original sites based off of those two criteria. We expect those original sites to have some production moving forward, but we really expect that change in the criteria to more heavily affect these higher potential sites. Remember, as Dr. Azim said, our most productive site to date is average in about 20 CRRT patients

per month.

With the site that Dr. Azim just activated, we just started to see some of the new cases. So, you see the magnitude of potential penetration. So, you see the magnitude of potential penetration. And then the additional sites that Dr. Azim has engaged that we planned on having by mid-year. Some of those are even longer than we had planned. Some of those sites are larger than those sites that are averaging 90 to 100 CRRT patients per month still. So, we're seeing the full of patients

we can pull from. And that should work in concert with the inclusion and exclusion criteria the FDA just granted us.

All right, great. Thanks for the call, guys. Congrats on the progress and thanks for taking my

questions. Thanks, Matt. The next question is from

Naz Rahman from Maxim Group. Please go ahead.

Hi, everyone. Thanks for taking my question and congrats on our progress. I guess in context of everything that's happened, what ultimately gives you confidence that you could have the phase three data by the end of the year? You're saying that it still takes four months, give or take, to initiate a site, which is faster than before, but that still seems like it would take a while to initiate

additional

green and initiate additional sites, which kind of takes us into mid-year. All that, what gives you confidence you could have the data by the end of the year?

Yeah, so I can start on the answer to that question, Shaquille. Maybe you can add some additional color. So, of our original seven sites you mentioned, we have two more we plan on adding here actually in April. So, it's very early on. It's not an additional four months from here. And then the balance of the sites to get us to the 13 that we're currently engaged with will be by mid-year. So, it's not four months starting from now. We're already well into it with two of the sites and then fairly far along with the additional sites to get us to the 13 by mid-year. When you just do the math on that, Nas, I mean, you're looking at 13 sites with a balance of 64 patients left to enroll. So, one to one and a half patients per month with exponentially larger populations, as I just outlined. I think from an engagement standpoint or other, maybe Shaquille, you can add some color

on the new sites, the engagement, the teams in the profile that we've kind of already reiterated. Okay. Okay. There you are. Thank you. Yes.

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