Jaguar Health, Inc. (NASDAQ:JAGX) Q1 2023 Earnings Call Transcript May 15, 2023

Operator: Greetings and welcome to the Jaguar Health Investor Webcast. [Operator Instructions] Before I turn the call over to management, I’d like to remind you that management may make forward-looking statements relating to such matters as continued growth prospects for the company, uncertainties regarding market acceptance of products, the impact of competitive products and pricing, industry trends and product initiatives, including products in the development stage which may not achieve scientific objectives or meet stringent regulatory requirements. Forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements.

These statements are based on currently available information and management’s current assumptions, expectations and projections about future events. While management believes its assumptions, expectations and projections are reasonable in view of the currently available information, your question not to place undue reliance on these forward-looking statements. The company’s actual results may differ materially from those discussed during this webcast for a variety of reasons, including those described in the forward-looking statements and Risk Factors sections of the company’s Form 10-K for the year 2022 which was filed March 24, 2023 and its other filings with the SEC which are available on the Investor Relations section of Jaguar’s website.

Except as required by law, Jaguar undertakes no obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events or otherwise. Additionally, please note that the Company supplements its condensed consolidated financial statements presented on a GAAP basis by providing non-GAAP EBITDA and non-GAAP recurring EBITDA. Jaguar believes that the disclosure items of these non-GAAP measures provide investors with additional information that reflects the basis upon which Company management assesses and operates the business. These non-GAAP financial measures should not be viewed in isolation or as substitutes for GAAP net sales and GAAP net loss and are not substitutes for or superior to measures of financial performance in conformity with GAAP.

Today’s conference is being recorded. At this time, it’s my pleasure to turn the call over to Lisa Conte, Jaguar Health’s, Founder, President and Chief Executive Officer. Lisa, the floor is yours.

Lisa Conte: Thank you. Thank you for the very comprehensive forward-looking statements as well. Thank you all for joining our first quarter 2023 earnings webcast and welcome to you all. And as you just heard, my name is Lisa Conte and I’m the Founder, President and CEO of Jaguar Health. While this is an earnings webcast, our overreaching theme for this morning’s discussion is patient voice and its importance in every aspect of drug development including labeling in regulatory approval, raising awareness of non-infectious diarrhea, preparation for promotion related to the potential introduction of crofelemer for prophylaxis and mitigation of cancer therapy related diarrhea and commercialization to provide comfort and treatment, the meaningful share of the affected population.

We are prioritizing, learning from and listening to patient voice to bridge from the HIV community through the cancer community. And to refer to crossing the chasm to take a phase from Geoffrey Moore has said anybody is familiar with that book. We can do better by co-creating awareness with the patient community through education around crofelemer’s potential entry to the cancer market to provide a better solution to the comfort, the dignity and treatment outcomes to cancer patients with chronic diarrhea. We believe this will allow us to best serve these important and collected comorbidities. The potential patient reach is much larger for the cancer community than the HIV community, both in terms of the number of patients affected by non-infectious diarrhea and of emerging relevance with a paradigm-shifting cancer care to long-term targeted treatments that often results in chronic secretory diarrhea.

We have two short video interviews, one from an oncologist, who is a thought leader in the field and one from a well-recognized patient advocate on this important issue which we will play for you in a moment and I think you will enjoy and find really important. First, however, I want to address our sales performance for the first quarter 2023. We have to own this and submit after five consecutive quarters of prescription product net sales growth, we’ve now seen in Q1 a decrease in prescription product sales compared to the prior quarter and compared to the first quarter of 2022. Let me say it again, this is a learning moment for the organization and likely a wakeup call that we have perhaps loss side of the debt reach and importance of patient voice to facilitate expansion of the care crofelemer can provide into the HIV community the current approved indication.

Over the past 18 months or so as we shifted to a specialty pharmacy distribution model and incorporated other aspects of a patient access program. We facilitated the difficult process of gaining prior authorization for patient reimbursement and we improved gross-to-net revenues significantly by decreasing distribution costs and improving our payer mix. The population of adult living with HIV-AIDS is an aging population and according to the National Institute of Health nearly 50% of those living with HIV in the United States are age 50 and older and have had the virus in their gut for over 10 years, a trend we have seen over the last two years is a decrease in net sales in the first quarter of the year over the prior year quarter, due mainly to commercial and Medicare plan deductibles resetting which results in a much higher out-of-pocket cost to patients during this time period, the first quarter.

The Inflation Reduction Act a specific Medicare provision that start to take effect in 2024 that will reduce prescription abandonment in the first quarter of the year due to significantly lower out-of-pocket expenses for patients. We believe the provisions in this legislation should benefit the Mytesi brand in the Q4 to Q1 dip when implemented. We also believe that higher co-pays in Q1 account for about half of the decrease in net sales in the first quarter of this year over the Q4 2022. To help address the additional shortfall, we at Jaguar are taking diagnostic steps to understand how the voice of the people in the HIV community needs to be incorporated further into our patient access activity. It appears we’ve lost our reach to some of the patients.

The continued learning of how to effectively navigate the HIV market is foundational to our preparations for the potential introduction of crofelemer to the much larger US oncology market for our target indication of prophylaxis of cancer therapy related diarrhea much larger here when I say much larger oncology market is referring to the estimated 1.8 million patients newly diagnosed with cancer each year in the United States. Additionally, annually in the United States, there are an estimated 1 million cancer patients on targeted therapies organically with an average rate of non-infectious diarrhea of 80%, the most common side effect, an estimated 40% of patients have their therapeutic dose, their cancer therapeutic dose reduced or go off their life-saving targeted therapy because of the side effect of diarrhea.

With the now fully enrolled Phase 3 OnTarget trial, we are addressing this paradigm shift of prophylactic treatment of cancer therapy related diarrhea with crofelemer and I do want to say that again, fully enrolled OnTarget trial which we’re very excited about. This is analogous to what already occurs in the supportive care cancer world with chemotherapy-induced nausea and vomiting as referred to as CINV, guidelines and protocols that incorporate prophylaxis for CINV typically the first three days of cytotoxic chemotherapy. That global market is projected to reach $3.9 billion by 2029 according to a report from iHealthcareAnalyst, Inc. and there is a good portion of that market that is addressed with generic products. With targeted cancer therapy, we’re talking about chronic diarrhea for several months to several years in both the metastatic and curative scenarios and nothing tested or approved specifically for cancer therapy-related diarrhea, crofelemer would be the first entry to this market.

We’re going to place two short recent videos for you consisting of segments from interviews regarding the neglected comorbidity of cancer treatment-related diarrhea with two amazing women, both of whom are members of Jaguar Scientific Advisory Board. Dr. Sandy Swain, who’s a Professor of Medicine at Georgetown University and former President of ASCO, the American Society of Clinical Oncology. She served as the senior investigator of the investigator-initiated HALT-D trial, Phase 2 trial evaluating crofelemer for preventing chemotherapy-induced diarrhea in HER2-positive breast cancer patients which was published last October and the peer-reviewed urinal breast cancer research and treatment. The other video features Dr. Kelly Shanahan, a metastatic breast cancer patient, who is now a full-time independent patient advocate, who made a shared decision with her oncologist regarding chronic targeted therapies, specifically to avoid the side effect of chronic diarrhea.

And she so eloquently says that she could live, not just exist. Following the videos, Carol Lizak, Jaguar’s Chief Financial Officer, who’s having a little trouble connecting, so hopefully, Carol Lizak, Jaguar’s Chief Financial Officer will provide a more detailed recap of key financial results for the first quarter of 2023 and we will review the clinical milestones we have coming up in 2023 this year that we feel will be transformative in terms of value inflection for the company. We’ll now move forward with the two videos and I’ll turn it over to Pete. I’m Lisa Conte, I’m the Founder, President and CEO of Jaguar Health.

Sandra Swain: Hi, I’m Dr. Sandy Swain, I am a breast cancer medical oncologist and Professor of Medicine at Georgetown.

Lisa Conte: So Sandy, tell me, first of all, being a woman President of ASCO, how common was that and tell me some of the achievements that you feel that particularly proud of as President of ASCO?

Sandra Swain: I was President in 2013 of the American Society of Clinical Oncology which is what ASCO was. It’s an international organization, really the biggest in the world for oncology. We have now 45,000 members. So what I did in 2013, I started women who conquered cancer as part of the Conquer Cancer foundation to raise money for young women investigators.

Q&A Session

Lisa Conte: That is quite incredible. Congratulations.

Sandra Swain: And then I went to the National Cancer institute to do my training and really, really liked breast cancer.

Lisa Conte: All right. So tell me about cancer care back then?

Sandra Swain: Well, at the NCI, we were some of the first to do things like the Olympic to me. And though at that time, we didn’t have a lot of chemotherapy drugs that were that effective. And so early on in my career, I just saw that some of our treatments weren’t that effective, especially in patients with metastatic disease but the toxicities were pretty significant.

Lisa Conte: And so what does that interaction like with the patient?

Sandra Swain: Well, I think that every patient or a person coming with the cancer diagnosis is scared to death. I think it’s gotten harder for women in many ways. I just see women for the most part because there are so many choices and I think that makes it harder because you want to make the right choice but as a person who’s never dealt with Cantor before, you have no idea what the right choice is. So you have to trust that person that you’re talking to the physicians. So I really try to build up the trust with them so they can feel comfortable and that we are together making the right decision for their treatment. Fortunately, in breast cancer, we’ve had extraordinary advances where HER2 specifically is something that I work on.

And patients are surviving. With that being said, it’s really important to pick the best treatments for the quality of life. So, I’ve been always interested in that and interested in the cardiac toxicity. The other big toxicity because I work on HER2 targeted therapy is diarrhea which is a significant problem for many patients on the standard treatment regimen. So we did a study called HALT-D and we use a drug called Crofelemer to try to decrease diarrhea in these patients. And we did show that the episodes of diarrhea were decreased.

Lisa Conte: So tell me about chemotherapy-induced nausea and vomiting?

Sandra Swain: Well, with the nausea and vomiting, there are several classes of drugs that have been approved over probably last 20 or 30 years. So we’re very aggressive about prophylactically treating for nausea and vomiting very aggressive. As I mentioned before, the diarrhea is one of the things I’ve been very interested in because of the regimen that I worked on. That is really disruptive and that’s why I did the HALT-D study, especially in breast cancer. We have now the CDK4/6 inhibitors. There are three of them, palbociclib, abemaciclib, Ribociclib and they all have different toxicities. The abemaciclib causes diarrhea and that’s significant for patients. You can’t reduce the dose but there’s not a whole lot else you can do because the opioids, they don’t really treat the cause. They’re just causing you to have constipation essentially.

Lisa Conte: So you are remarkable in the approach that you have to hearing the patient’s voice in your individual meetings with them, in your patient treatment and the research, the leadership roles that you have.

Sandra Swain: So I think it’s just — the patient voice is very important and we fortunately in breast cancer, we have a lot of great patient advocates who are very vocal and that’s really helpful. When I was ASCO President, we also looked at this exact issue.

Lisa Conte: Do you find that there’s a cultural difference, perhaps Asia, Europe, the U.S. in the role of — we’re going to use the word for now supportive care, the role of supportive care in oncology care.

Sandra Swain: I think in Japan, for example, they don’t like any kind of toxicities. In Europe, my experience, it’s not homogeneous of many different countries, is it tends to be — in some countries more paternalistic but it can be that way in the U.S. to…

Lisa Conte: How do you feel about the terms, tolerable toxicity, manageable toxicity?

Sandra Swain: I think those are the worst things you could ever say and I try to strike them out of any paper that I ever write because manageable for whom I think the interaction with the nurses is very helpful because they will tell more to the nurses and the nurses are very nurturing and really do help with some of these side effects.

Lisa Conte: How do you bring the nurses into your care for a patient?

Sandra Swain: Well, they do the treatments, always, always dependent on the pharmacist. And I would always be in there asking them questions and making sure we were doing the right thing for that patient.

Lisa Conte: I’m Lisa Conte. I’m the Founder, President and CEO of Jaguar Health and I’m sitting here with an amazing patient advocate, Dr. Kelly Shanahan.

Kelly Shanahan: Hi. I’m Kelly Shanahan, former OB-GYN, now not dead yet with metastatic breast cancer since 2013.

Lisa Conte: I am here with Dr. Kelly Shanahan, amazing women, mom, wife, leader, physician, who targeted just an amazing life for herself and that got thrown a little, got a thrown a little branch into the next year.

Kelly Shanahan: Thank you, Lisa, for inviting me here. I was living my life, going about my business in 2008. I had a nine-year-old daughter. I was a dinosaur at that time, solo practice, OB-GYN, up in Lake Tahoe. When my office manager scheduled me for a slightly overdue mammogram and much to my surprise, obvious cancer, being the primary breadwinner, taking care of my very active, very involved daughter. I chose to come down to San Francisco and have a bilateral mastectomy, so an OB-GYN, I was a surgeon, I like surgery. And I went about my life driving my daughter to rehearsals, she was a theater kid and going wine tasting with my husband and traveling as much as we could. When five years later, I developed sudden back pain.

And I thought, okay, Kelly, you’re in your 50s now, you probably herniated a disc. I’ll go have an MRI, prove that I have a herniated disc. I’ll have a pet scan while I’m at it because we did have cancer and there was a voice mail on my phone. Kelly call me. I went back and I looked at the images with the radiologist and I had metastasis in every bone in my body. And the reason I had back pain, I had actually broken her break. And this oncologist said to me, the National Coalition Cancer Network, the NCCN guidelines are to go on an aromatase inhibitor and when that fails, go on a second and when that fails, go on a third but I think if we put you on this crazy IV chemo, two drugs, we can cause your cancer to get to regress. So I did that for 14 months, my scan showed no evidence of active disease within four months but he’s like, let’s just keep doing it.

Lisa Conte: Tells us about your liking the time, are you working?

Kelly Shanahan: So I went back to work but I did develop permanent neuropathy numbness in my hands and in my feet. And I realized that I would never, ever, ever be able to do surgery again. You don’t want somebody wielding a scalpel if they can’t fill their fingers and that was a huge blow. So I started becoming involved with various advocacy organizations, primarily METAvivor.

Lisa Conte: What are your goals in being a patient advocate?

Kelly Shanahan: I mean there are selfish goals and that is the feeling of software. And then as I got involved in the advocacy community, when you have a disease that will kill you prematurely, there is no time for all the usual things that happen when you develop a friendship. It’s like we are — it’s instant bonding. In the metastatic community, it is — friendships are like love at first sight.

Lisa Conte: All right. So tell me about, you educated me on terminology that we should use that you are living not just existing. What does that mean?

Kelly Shanahan: So with cancer of any type and often with the treatments for cancer, the treatments are sometimes I think worse than the disease itself and it’s just a matter of just existing, just making it to the next day. But I do get to choose every day how I deal with it. I can wake up with the attitude that’s not dead yet and do as much as possible, keep on living. So a lot of people say they call them self survivors, they call themselves drivers. I like to say like it is. I am living with metastatic breast cancer.

Lisa Conte: Okay. So you wake up every day, you make choices, you’ve made choices also about your treatment?

Kelly Shanahan: At that point, the only thing that mattered to me was living long enough, even existing long enough to get my daughter through high school. But my goal is a change now and so now I am all about quality of life. Most people might get 18 months to 24 months but I got six years.

Lisa Conte: It did not fail you for a long time?

Kelly Shanahan: Right.

Lisa Conte: Surprisingly long time.

Kelly Shanahan: I was on it for six years. And I had my very first progression of my cancer in 2021 and I see an incredibly brilliant world-renowned metastatic breast cancer expert here in San Francisco that you may know as well, think everybody knows her, Dr.Hokru Go [ph]. I went to see her and she said, I want to put you on a CDK4/6 inhibitor. We want to change that aromatase inhibitor, you’ve developed a mutation that makes aromatase inhibitors not effective anymore. And we’re going to put you on this injection called fulvestrant.

Lisa Conte: What sort of side effects are you having? How are you feeling?

Kelly Shanahan: So on just my aromatase inhibitor, I had arthritis type symptom stiffness in my joints. I walked like a 100-year-old person when I got up. But if I kept active, if I kept moving, those symptoms were not too bad.

Lisa Conte: So there are multiple reasons staying active and being able to get that was very important.

Kelly Shanahan: Very important to me and I also live in a beautiful area, I’d like to hike. I am not going on a medication where I really need to be near a bathroom. And she goes, well, we can put you on a drug on a medication to deal with that side effect and like, well but that causes constipation. And I don’t want to take a medication to deal with the side effect and then sometimes another medication to deal with the side effect the — side effect medication. I could be put on a drug that would make me bald, I don’t care. I could be on a drug that makes my skin turn purple and I say I wouldn’t care although if I was purple, maybe I really would. That doesn’t bother me. I cannot stand vomiting and I really cannot stand diarrhea.

Lisa Conte: But let’s — let’s talk about Diarrhea…

Kelly Shanahan: The inter motility drugs, the holy grail for patients is a highly effective treatment that does not have unwanted side effects. If there’s a medication to mitigate a side effect that itself does not have side effects that need additional mitigation, then yes, that would be acceptable to me a quality of life is so much more important to me as I’ve gotten my daughter into young adulthood.

Lisa Conte: What do you want to achieve as a patient advocate at this time?

Kelly Shanahan: I want to make the path easier for the people who follow me. I attend scientific conferences and I tweet usually about the finding so that other people can understand it. And I can spread that information to people who don’t have the ability to go to these big cancer conferences and sit in the room with the thousands of oncologists and researchers, either because they can’t financially or they can’t because they’re too ill to travel or it’s just not their thing. I also — I’m on the Board of Directors of METAvivor which raises funds for metastatic breast cancer research.

Lisa Conte: And what advice would you have for other patients?

Kelly Shanahan: You have to find the right care team. Here’s what my goals are. You’re advocating for yourself. If you’re that PTA parent, who always was raising money for your kid’s school, he’d be great at fund raising for various organizations.

Lisa Conte: Okay. So tell me about the growing metastatic voice — are you unique? Is this a growing population? What’s important to this voice?

Kelly Shanahan: So I think my friend Elaine Schattner has recently written a book called From Whispers to Shouts, about cancer advocacy. People never talked about cancer and I think that’s really important. Breast cancer doesn’t just affect women, men get breast cancer, men die at a higher rate. Blacks die at a higher rate than whites. And I think we all have to use our voices and I think we are doing that.

Lisa Conte: Do you find a difference when you’re at meetings in Europe, meetings in Asia?

Kelly Shanahan: I think there is a difference, I haven’t been to any meetings in Asia but I was talking with a friend recently and who is of Asian descent and he said, we don’t talk about things like this in Asia. We don’t talk about side effects. We don’t complain. So we don’t — we’re not the winy woman and that is in the U.S. at least, that is absolutely changing.

Lisa Conte: That’s — I want to ask you, I’m going to ask you two cross question. Supportive care is cancer care?

Kelly Shanahan: Absolutely. ASCO has a position paper out a guideline that every patient with advanced metastatic cancer should be offered supportive care, aka Palliative Care, although I like the term supportive care better.

Lisa Conte: How prevalent is that in the treatment community?

Kelly Shanahan: It’s not offered anywhere close to what it should be partly because of a lack of enough providers of supportive care services. And in some institutions, they reserve referring patients to palliative care because the resources are limited. Now I would really like to say thank you for the opportunity to spread some knowledge and awareness about metastatic breast cancer that, yes, it is a life-shortening disease but it is not an immediate de sense.

Lisa Conte: What percentage of dollars go to metastatic research versus preventative in early treatment?

Kelly Shanahan: Not nearly enough, supportive care, quality of life, softer issues and research into metastatic breast cancer only comprises about 10% of research dollars. And that’s up from 3% to 5%, about three to five years ago.

Lisa Conte: All right. Thank you so much. Thank you, Lisa. Thank you, Peter for showing those videos. I hope everybody had an opportunity to see those. It’s impossible to overstate how inspirational and powerful these women are in all the advocates from the health care profession, as well as patient advocacy in the cancer community, in part learn some patient advocacy in the HIV community can now back full circle from the cancer community to bat to the HIV community. So we’re so honored to have them on our Scientific Advisory Board. As a company, we went to great lengths to incorporate this patient voice and to design a first-of-its-kind Asian centric clinical trial for the investigation of the prophylactic use of crofelemer in cancer therapy related diarrhea and this is the OnTarget trial which has now completed enrollment, ensuring patients reported outcomes as the primary endpoint.

In support of our goal of obtaining FDA approval for a paradigm shifting first oral anti-diarrheal drugs for the management of CTD. OnTarget is the first trial of its kind to include participation of adult cancer patients with a diversity of solid tumor types, it’s also the first clinical trial to include multiple targeted therapies that have more than 50% all-grade diarrhea with or without standard chemotherapy. In the first prophylactic trial of targeted therapy with concomitant and chronic crofelemer administration, prophylactic chronic crofelemer administration. Our goal and the reality is the enrollment of a diverse population of cancer patient. The trial includes clinical trial sites not only in the United States but also Georgia the country, Serbia, Argentina and Taiwan.

This phase, the OnTarget trial is conducted with the same dose and formulation of crofelmer as our Mytesi product. Crofelemer has a GMP supply chain in place from the rainforest to our distribution network of specialty pharmacies across the United States. As a reminder, safety and manufacturing are the two most common reasons that new drug applications fail. These activities are completed for crofelemer from a regulatory perspective with the commercial approved product we already have on the market which is being utilized in the Phase III clinical trial. A new near-term development goal for the company focuses on something called microvillus inclusion disease, I’ll refer to it as MVID. This is an ultra-rare pediatric congenital diarrheal disorder often referred to a CDD, congenital diarrheal disorder.

MVID in short bowel syndrome with intestinal failure are our two prioritized rare disease investigative indications for a novel formulation of crofelemer. MVID is a catastrophic, medical situation for pediatric patient and there are currently no approved drug treatment. We are planning to submit an investigational new drug application to the FDA for MVID in the second quarter of 2023, literally right around the corner, we’re in the second quarter of 2023. For the European market, MVID and other CDD patients could potentially participate in revenue generating early access programs targeted for 2024. In accordance with the guidelines of specific European countries, European Union countries, publications of data from proof-of-concept trials could support participation in early patient access programs for Crofelemer for these patient.

Participation in early access programs which do not exist in the United States provides an opportunity for reimbursement while impacting the morbidity and the high cost of care for these chronic unmet needs. So to recap, in 2023, we expect to have — this year, we expect to have top line results from our Phase 3 trial for prophylaxis of cancer therapy-related diarrhea or OnTarget trial and the initial proof-of-concept evidence for patients with either Short Bowel Syndrome and intestinal failure and/or for CDD which may include MVID in support of potential early access program for this patient in certain European countries with reimbursement. These programs are sufficiently resourced from Jaguar. We are prioritizing for 2023 these late-stage clinical development programs and we are prioritizing the learning and listening to patient voice to bridge the chasm from the HIV community, how we need to do better there and prepare to co-create the education around crofelemer’s potential entry to the cancer market to provide a better solution to support the comfort, the dignity and the treatment outcomes, the cancer treatment outcomes of cancer patients with chronic diarrhea.

Before I hand the discussion over to our CFO, Carol Lizak, who was able to connect, I’d like to tell all of you participating today that we’re going to have a brief Q&A segment at the end of the webcast to address if there’s not any questions submitted in writing, Ian Wendt Jaguar’s Chief Commercial Officer is also on today’s call as well as Dr. Pravin Chaturvedi, Jaguar’s Chair of the Scientific Advisory Board and Chief Scientific Officer and they can respond to any submitted questions that may be relevant for their functions. Questions can be submitted via the webcast link for today’s event that appears in the Events & Presentations page of the Investor Relations section of Jaguar website. The URL for Jaguar’s website is jaguar.health. We’ll now move along to the key financial results for the first quarter of 2023.

Carol, are you on?

Carol Lizak: Yes, I am. Thank you, Lisa and thank you all.

Lisa Conte: Thanks, Carol.

Carol Lizak: Yes. Thank you all for joining our webcast today. I’ll begin my review of our financials for the first quarter of 2023. Prescription product net revenue was approximately $2 million in the first quarter of 2023, representing a decrease of 40% compared to prescription product net revenue in the fourth quarter of 2022 which totaled approximately $3.3 million and a decrease of approximately 25% over prescription product net revenue in the first quarter of 2022 which totaled $2.6 million. Mytesi prescription volume decreased approximately 9% in the first quarter of 2023 compared to the fourth quarter of 2022 and decreased 1% in the first quarter of 2023 compared to the first quarter of 2022. Prescription volume differs from invoice sales volume which reflects among other factors, varying buying patterns among specialty pharmacies in the coast network as they manage their inventory levels.

Loss from operations decreased by $2 million from $11.8 million in the quarter ended March 31, 2022 to about $9.8 million during the same period in 2023. Non-GAAP recurring EBITDA for the first quarter of 2023 and the first quarter of 2022 were a net loss of USD9 million and USD9.4 million respectively. Finally, net loss attributable to common shareholders decreased by approximately $6 million from $18 million in the quarter ended March 31, 2022 to $12 million in the same period in 2023. That concludes my recap of high-level financials for the first quarter of 2023. I will now hand the discussion back to Lisa Conte. Thank you.

Lisa Conte: Thanks, Carol. Okay. We at Jaguar, Napo, Napo Therapeutics we’re energized about all of the important initiatives underway in 2023 and beyond. And as you can see from the numbers working very efficiently with these very important near-term late-stage clinical activities. The company’s current cash position and less reported cash at the end of the first quarter is approximately $14.3 million. And the current cash position also includes gross proceeds from a PIPE transaction concluded in the second quarter of approximately $1.86 million, involving the issuance and sale of approximately 3.4 million shares of unregistered, unregistered Jaguar common stock and approximately 6.85 million warrants, not exercisable until January 1st of 2024.

This financing involved a small group of dedicated long-term Jaguar investors. Pursuant to the terms of the PIPE purchase agreement, each participating investor agreed not to sell or transfer any Jaguar equity securities for a period commencing on the signing of the agreement which was very recent last week and ending six months after the PIPE closing. There is no anti-dilution, no resets, no variable pricing rights, nothing toxic associated with the securities issued in this PIPE. We believe this financing illustrates the confidence that the participating in well-educated investors have in the company and the expectation that both the OnTarget trial and our focus on development of proof-of-concept data for crofelemer for the rare disease indications previously discussed will prove transformational in 2023 for Jaguar value inflection and recognition.

Lisa Conte: So we’ll now open the floor for written questions that have come in. I’ll repeat the questions. Okay. Questions? Well, here is a very detailed question. How many shares are currently outstanding? How much cash is on the balance sheet, what is the monthly net burn? So just to recap some of the numbers that we just went through, the last reported cash at the end of the first quarter is approximately $14.3 million and last part of this question, I’m sorry. What is the expected date of readout from the OnTarget trial? Okay; last reported cash, $14.3 million. The PIPE which closed in the second quarter approximately $1.9 million. If you look at the first quarter average monthly burn is about $3 million per month and that’s pretty heavily into Phase 3 clinical trial operations.

The expected reported date for top line results from the OnTarget trial is in October of this year. So we’re talking probably a little less than six months away. So we’re confident as I said about our resourced ability to get there and we have about 19 million shares outstanding right now. I have another question about the Chewy deal that we just announced and this is for — we did not talk — I didn’t talk in my comments about just to be efficient. We have a small business, very important business in animal health. We have a conditionally approved product for chemotherapy-induced diarrhea in dogs called Canalevia conditional approval is how you work with the center of veterinary medicine of the FDA to get a product out there for an important unmet medical need.

And Ian, if you are on the line, would you mind speaking a little bit about how Chewy can expand the opportunity for pet parents to be able to get access to Canalevia?

Ian Wendt: Yes, sure, happy to. Thank you, Lisa. Yes, Chewy, as a major retailer, including a lot of different pet-related products but including prescription products and supplements. And this just gives another very convenient option for oncologists or any vets who would prescribe Canalevia CA1 to be able to utilize our services and it makes it more convenient for the vet but also more convenient for the pet owner. And so if a vet doesn’t have stock on hand of Canalevia, they can e-prescribe to Chewy very easily or even the pet owner can initiate the prescription and Chewy will reach out to their vets to fulfill the prescription. So it just gives additional options, a different additional channels of distribution just to make the lives more convenient as I said of the pet owners and the vet.

So we’re really happy with this relationship that we have with Chewy. We’re already getting good feedback from both pet owners and vets about this. And at the end of the day, it makes the product more broadly available and more easily available for all the stakeholders that we believe are so important.

Lisa Conte: Thank you, Ian. And you know while you’re talking, there’s a question here about the first quarter impact that many companies deal with on the donut hole. So could you talk a little bit about the — what that’s like in the U.S. reimbursement health care system, particularly with Medicare and government paid programs and how that is likely to change in 2024?

Ian Wendt: Yes, yes happy to. So yes, every Q1 for Mytesi and this is common among most prescription brands. There are some challenges that are seasonal and little bit unique to Q1 each year. And the main reason that occurs, it really impacts mostly commercially insured patients and Medicare Part D patients. As many on the line here may have experienced your deductibles reset in the new year sometimes plan changes occur with your employer during the new year and can cause a little bit of disruption. So for those individuals that are on a chronic medication and through the end of Q4, so the preceding quarter, they may have met their deductibles and what the result there is often that their co-pays are very low or maybe 0 for their medications at that time.

There’s very few cost barriers to fulfilling and getting your medication. And then in Q1, all of that resets and we all have to meet our deductibles again which can present challenges for patients. Now on the commercially insured side, we have a great co-pay program in place to really assist those patients. It’s a very generous program and very few patients have significant out-of-pocket if they take advantage of that program. So we really work hard to make sure that all those commercially insured patients know the program exist, so they can take advantage of it. And most commercially insured patients are going to pay $0 in out-of-pocket even in Q1, although there are some exceptions with some patients that have catastrophic insurance plans and things like that.

The bigger challenge is with the Medicare Part D patients. So federal law prohibits us from offsetting the out-of-pocket costs for those patients. This is true for every branded product manufacturers would love to help those patients but we’re just not allowed to do that. And for those patients, this is a pretty big impact. And this is something that occurs every year, as I said, it disproportionately impacts the Medicare Part D patients. And we see a dip in prescription refills for those patients in Q1 and over 50% of our patients are Medicare Part D. And then when they meet their deductibles, usually around the February-March time frame, we see the prescriptions pick back up again because their deductibles are now lower or more manageable.

The other positive news here, though, is the Inflation Reduction Act has some provisions and it’s specific to Medicare Part D. And there’s a lot of complexity in there but the main thing that we focus on and that we’re excited about is that starting in 2024 and then really ramping up in 2025, there’s going to be a cap to out-of-pocket co-pays for Medicare Part D patients in 2024, the capital will be about $3,250 in 2025, it will cap out at $2,000. So this is good news for all of our Mytesi patients current and future Mytesi patients because when you think about CTG [ph] and our potential future indication there, about 65% of those patients are Medicare Part D. So the timing shouldn’t be better from our perspective and having this legislation take effect right around the time, we’ll be launching into the therapeutic area.

Lisa Conte: Thank you, Ian. We all learned something about Medicare today. Pravin, are you on the line?

Unidentified Company Representative: Yes, I am.

Lisa Conte: Okay. There is a question about — we had mentioned at some point in the past about COVID-related diarrhea, long-hauler diarrhea. And that is a program that we are not going forward with. It’s still not defined well enough for us to be sure we have a mechanistic match. Also, as I mentioned, we are focused very much for this year, let’s be realistic about the financial environment in general and specifically about small-cap, medium cap biotech companies on those events that we feel can be transformed this year late-stage clinical events that lead to near-term revenue generation. Pravin, perhaps you could talk a bit about the – in efficiently, the mechanistic rationale for crofelemer for cancer therapy-related diarrhea and how that links to mechanistic rationale that for the current approved indication in HIV related diarrhea?

Unidentified Company Representative: Oh, absolutely, happy to. Thanks, Lisa. So we think that Crofelemer does mechanistically is it regulates the secretary function of ion channels. And ion channels, in general, are responsible for brain activity, harsh activity, gut activity. And so those of us who experience epilepsy or have family members or friends who have that, they have exact balance of ion channel regulation because it’s a constitutive function in the body that’s necessary for normal homeostasis and function of the body. So just like the heart or the brain, you don’t want to have a full stoppage of either of those organs because that would be very detrimental. And so Crofelemer does the same thing for the CFTR chloride channels which exist in the gut and it regulates it and slows it down to the appropriate level so that we have from stools and diarrhea is like a manifestation like epilepsy is of ion channel firing.

In HIV patients, the diarrhea results from two factors. One is they have gut inflammation. HIV basically goes, inflames the gut and changes the cytokine level that leads to dysregulation of the chloride ion channel. And the second factor is the type of antiretroviral therapy that they get. Now the approved package inserts for all the drugs nowadays only list Grade 3 and Grade 4 diarrhea and other AEs adverse events. And so, we — when we think about what is Grade 1 and Grade 2 and just like you heard from Dr. Swain’s video, Grade 1 diarrhea is three watery stools every day, imagine having that every day for the rest of your life. While it’s not considered bad, it is absolutely impactful on the activities of daily living. And that’s because of the inflammation that’s caused by HIV, as well as combination of the drugs.

In cancer therapy-related diarrhea, you get the same inflammation in the gut because cancer is a reflection of inflammation. It’s a disease of inflammation and aging. You have dysregulation of your cytokines and therefore you also have from cancer, you have diarrhea. And then if you get targeted therapies, some of them actually are more impactful in the EGFR epidermal growth factor regulation which has a direct effect on another channel that crofelemer also affects and same way dysregulates that causes secretory diarrhea. So exactly analogous to the HIV indication is the cancer therapy-related indication and crofelmer has been around for centuries, the Shaman’s were using it in a different form. And so we were able to draw the analogy and work with the FDA and our clinical advisers and scientific Board members to effectively design a trial that leverages the approved package insert and go after the second chronic non-infectious diarrhea indication in cancer patients.

It’s a very high and neglected or morbidity in cancer patients that really tethers them to a toilet and impacts them. So we have a lot of interest in this trial as well and we’re very excited that we finished our enrollment and are moving towards the filing with the FDA later this year. Back to you, Lisa.

Lisa Conte: Thank you. Okay. And here’s a related question, I’m going to let you comment on kind of the medical perspective, Pravin. How do you feel the approved — when we finish the trial and if we’re able to get crofelemer might introduce to the cancer therapy related diarrhea market, how would that impact the ability to utilize cancer therapies in their patients for them for their adherence?

Unidentified Company Representative: Oh, it will only make it better because the way, as you heard from Dr. Swain’s Video and from Dr. Shanahan’s video, the way currently oncologists manage the AEs, particularly related to GI and lower bowel movement which is diarrhea and is by actually reducing the dose of the cancer therapies. So what they do is they either give a drug holiday and we used to do that for HIV drugs as well back in the ’90s and early 2000s and/or discontinue or switch their regimen. And since cancer is like running a marathon, you got to have the right shoes on and basically have enough runway to go through one regimen and then to another because you might be progression-free or you may be in remission for a few years and if you’re lucky for several years.

But then when the cancer comes back, you need to go to a new regimen. And so in terms of using your regimens well and at the right dose, by not having so much diarrhea, as I said, even Grade 1 is 3 watery stools every day. You are able to stay on your regimen and not have to suffer dose reductions and/or dose discontinuations. We’re going to analyze that data as well in the ongoing Phase III study. So we will have more information on that. I hope that answers the question?

Lisa Conte: It does. And I hope this answers the question that was posed here about and we’re focused on the impact to the patient care, all aspects of it, including, as you just heard from Pravin, the outcome on the — the cancer outcome for these patients. The question was about the revenue impact for these cancer therapeutic manufacturers and therefore the potential business opportunity with Jaguar. So where there is a positive financial impact to the pharma industry, yes, there is absolutely an opportunity for business discussions. And as I said publicly many times, those discussions are ongoing right now. And we would expect that with the top line data released from the OnTarget trial expected in mid-October of this year, there would be — that would further those business conversations.

There is a question about the Entheogen Therapeutics initiative program that we have, that is a program, an early-stage program within Jaguar, that is focused on psychoactive and psychedelic plans for the treatment of novel treatment of mental health disorders, mood disorders following in a movement now of silicide and MD&A, LSD, a lot of these psychoactive and psychedelic products to look at new ways of treating and potentially curing mental health disorders. Most of the companies that are very well financed, a lot of resources are chasing after these seven same compounds and products and approaches. We’re looking at the next generation. What can we do like we did with crofelemer finding new mechanisms of action, focusing on plant-based botanical products that have some more efficient opportunities to get into clinical trials quickly.

And so the way that we’re pursuing that is in a joint venture with a company called Filament Health of the joint venture which is funded with outside dollars, is called Magdalena Biosciences named after the beautiful river flowing through the country of Colombia. And the initial therapeutic focus is on adult attention deficit disorder and we do have several plans that have been prioritized based on the symptomatology that has been seen in the field, working with healers, working with Shaman’s, bringing our expertise on botanical drug development, natural product, sustainable supply, novel mechanisms of action, everything that we did successfully with crofelemer is what we’re bringing to bear to Magdalena. Magdalena has a post-money valuation from expenditure funding of $5 million.

We own approximately 40% of that joint venture. The goal here is to bring the [indiscernible] plant-based product likely at ADHD might be in depression or schizophrenia, bring it into clinical development and then bring on a partner to — that is really focused with the resources and the expertise on the regulatory and the clinical activities to take it all the way through to market and we’re well on our way on that business plan and earlier-stage activity, leveraging a resource and an asset that we already had developed in the company established in the company over 34 years. So taking very, very little effort currently on the part of the company. As I said, we’re very well resourced to focus on our 2023 late-stage clinical activities but bringing more value and more diversity into the company.

And the last question, then I’ll conclude was, there was a question about ATM and the announcement that we made on ATM utilization. ATM is after-market facility. It is probably one of the most — according to investment bankers these days the most efficient and least costly way to raise money for the company. We have agreed with the investment that we just did the price investment that we just did not to utilize the ATM, not to put additional shares into the market without certain extraordinary circumstances. And as I said, if we look at our last cash position, the funds that we brought in from the PIPE, the historical burn rate, the target that we have certainly for the OnTarget trial of top line results in mid-October, we feel that we are resourced to get to that as well as likely the proof-of-concept concept data for MVID, the rare disease initiative.

So with that, I will conclude. Thank you very much for your participation. Thank you all from Jaguar who participated on this call. And I do want to say that it was international day of plant health as proclaimed by the food and agriculture organizations in the United Nations, it was last Friday. So you want to take this moment to express our deep dedication as a company to protecting and celebrating all of the world’s plant life. Healthy plans constitute the foundation of all life on earth, as well as core ecosystem function, food security and nutrition. According to the U.S. Forest service, a full 40% of the drugs behind the pharmacist counter in the Western world are derived from plants that people have used for century, including the top 20 best-selling prescription drugs in the United States today.

And we at Jaguar understand that plants are precious and irreplaceable resource and that human’s health is inextricably linked to their health and that includes our webcast for today. Thank you again for joining.

End of Q&A: