Jaguar Health, Inc. (NASDAQ:JAGX) Q3 2023 Earnings Call Transcript

Jaguar Health, Inc. (NASDAQ:JAGX) Q3 2023 Earnings Call Transcript November 14, 2023

Operator: Good morning. 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 Contenued 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 of future events.

While management believes its assumptions, expectations, and projections are reasonable in view of currently available information, you are cautioned 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 of 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.

A scientist in a lab coat holding a vial filled with a blue glowing liquid, representing the clinical-stage biopharmaceutical company’s research in rare diseases.

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 very much. I’m glad we didn’t miss that opportunity to hear the very important forward-looking statements. Thank you all for joining. My name is Lisa Conte, and following my comments this morning, Carol Lizak, our Chief Financial Officer, will provide a detailed recap of the key financial results for the third quarter of 2023. Although I will preempt Carol to say that we’re pleased to report that net revenue increased 5% in the third quarter of 2023 versus the second quarter of 2023. However, this is a momentous time for Jaguar and hopefully a momentum time. The most important takeaway from today’s webcast is regarding the potential opportunity to expand the current indication of our FDA-approved product Crofelemer, under the trade name Mytesi, from the current specialty indication of non-infectious diarrhea in adults living with HIV/AIDS on antiretroviral therapy, specialty is a very important indication.

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Q&A Session

It was fast tracked priority reviewed by the FDA, though it’s a relatively small indication in the United States. And we’re looking to potentially expand it to the much more profound and frankly much larger neglected need for the preventative treatment of diarrhea in adult cancer patients with solid tumors receiving targeted therapy with or without standard chemotherapy. Topline results from our pivotal Phase 3 trial, referred to as the OnTarget trial, which is investigating safety and efficacy for this indication of Crofelemer, are expected to be out before Thanksgiving 2023, so literally around the corner. This trial is studying an indication we also refer to as preventative treatment of chemotherapy-induced overactive bowel. If you’ve ever heard the terms chemotherapy-induced nausea and vomiting, chemotherapy-induced pain and neuropathy, chemotherapy-induced overactive bowel, which includes symptoms such as unpredictable and/or chronic debilitating diarrhea, looser watery stools, and urgency.

We believe Crofelemer represents a paradigm approach and mechanism of action, a new way of treating and potentially preventing treatment-limiting diarrhea, cancer treatment-limiting diarrhea associated with cancer therapy in these patients. And this varying in terms of the potential patient benefit, for patient comfort, patient dignity, potential patient quality of life, and the opportunity to expand dramatically the number of people that can access and benefit from Crofelemer. I’ve recently been conducting a listening tour of patient advocacy groups, particularly the metastatic cancer patient population. The metastatic patient voice is becoming more and more prominent. They’re living longer, five, 10, 20 years, with the amazing breakthroughs in targeted therapies.

So, as I’m hearing and learning at what cost to quality of life with side effects from cancer therapies, targeted therapies they will be on for the rest of their life. I had the founder of a cancer patient advocacy organization tell me yesterday that she has no doubt most of her patient members would prefer to have a shorter survival time with less severe side effects. In fact, a patient and caregiver survey that was published this past August in the Journal JCO Oncology Practice, indicated that quality of life was the number one topic of importance to patients. Quality of life ranked higher than survival, ranked higher than access to care, ranked higher than cost of care. What are some of these side effects? More than 80 targeted cancer therapies are FDA-approved, many of which cause diarrhea in 50% to 100% of patients.

In addition, cancer patients suffer from pain, neuropathy, muscle cramping, nausea, fatigue, alopecia, rashes, itching, and more. Patients want to live, not just exist, and at the same time recognizing that their lives are likely to be different. As an example, one patient I spoke with has unpredictable diarrhea incontinence. She almost didn’t know if it should be called diarrhea because it doesn’t happen to her every day, not even every week, which is another issue, trying to gain a common understanding of the definition of diarrhea. Anyway, the unpredictability causes her to wear a diaper when she leaves home. She also mentioned when she’s on a long Zoom call anyway, when she leaves home, she feels particularly vulnerable when she’s walking for exercise, which used to be a daily activity of hers along with her friend hiking tribe.

However, a common story that I hear is that friends without cancer can’t face the reality of their now metastatic friend and often find excuses to not be there. So, this woman had a bit of a happy story, for animal lovers. She got a dog to hike with, Herman. We know dogs don’t mind stinky things, so she’s comfortable with the unpredictability when she’s with Herman. This is patient reality, diapers and dogs. When clinical studies refer to manageable toxicities, patients ask, manageable for whom? You can hear more of my patient quality of life stories from a video podcast series I initiated in which you can view on Jaguar’s social media channels. So, Crofelemer, back to Crofelemer, is the active ingredient in Mytesi, our prescription drug product that’s already commercially available, FDA-approved, and the OnTarget trial is evaluating the same formulation, the same dose of Crofelemer that comprises Mytesi.

All patients enrolled in the OnTarget study are solid tumor patients on targeted therapies. We focus the enrollment criteria on targeted therapies that cause diarrhea in more than 50% of patients with or without cytotoxic chemotherapy. That number of targeted agents is 24, the more than 80 approved targeted therapies. This is what’s referred to as a basket trial designed to bring benefit to as much of the patient population as possible. Mytesi is already in commerce. We plan to file a supplemental new drug application for Mytesi. Mytesi is approved under a new drug application for its HIV indication. We plan to file a supplemental new drug application for the prevention of cancer therapy-related diarrhea based on the OnTarget results. While most new drug applications fail or get delayed because of a safety issue or manufacturing issue, Mytesi is already approved for its HIV indication, which is a chronic indication, and therefore chronic safety testing has already been completed, and the drug, of course, is available from a network of specialty pharmacies throughout the United States.

So, what we’re focused on with the topline results before the end of – before Thanksgiving, so what we’re focused on with these topline results of the OnTarget trial is statistical significance of the primary efficacy endpoint to support a potential expanded label and expanded educational and promotional activities. This brings me to the second key takeaway for today’s webcast, second key clinical takeaway, Jaguar is supporting investigator-initiated and investigator IND proof of concept studies of a different formulation of Crofelemer, a powder formulation of Crofelemer for administration as liquid oral solution, which is a distinct product. It’s distinct from Mytesi, and it’s for the rare disease indications of microvillus inclusion disease.

I’m going to refer to that as MVID, which is a congenital diarrhea disorder, and short bowel syndrome. I’m going to refer to that as SBS, with intestinal failure. And we’re supporting these trials on three different continents, US, Europe, and the Middle East, North Africa regions. Crofelemer has been granted orphan drug designation by both the FDA and the European Medicines Agency, which is called the EMA, for MVID and SBS with intestinal failure. And we expect to have proof of concept data coming from six different third-party proof of concept studies on three different continents between the end of the year and the beginning of 2024, again, just around the corner. In accordance with the guidelines of specific European countries, published data from such clinical investigations could support reimbursed early patient access to Crofelemer for SBS and/or MVID for these catastrophic and often lifelong conditions.

And we’re looking to – we’re targeting by late 2024. This is a program, the early patient access program, the reimbursed early patient access program, that does not exist in the United States. By forming Napo Therapeutics in 2021 in Italy, we put a commercial footprint in Europe to be able to take advantage of this opportunity while the product is going through a full global development program. MVID is a severe – it’s actually an ultra-rare infant disease characterized by intestinal failure, diarrhea, malabsorption, acid base instability, bottom-line requiring intensive parenteral support for nutritional and fluid management every single day. There are currently no approved drug treatments or any other therapeutic agents in development that we’re aware of for MVID.

Intestinal failure is a catastrophic health situation that often inflicts patients with short bowel syndrome as well. In a short bowel syndrome patient, a typical gut is about 20, 25 feet. For a normal person, a short bowel might be five feet or less. It could be due to congenital reasons. It could be due to surgery. It could be due to an accident. In this situation, there’s not enough intestinal surface area to absorb the nutrients of light proteins, carbs, vitamins, and minerals, et cetera. These patients typically end up on parenteral nutrition seven days a week, 20 hours a day, an absolutely catastrophic situation, as I mentioned, and a significant opportunity also for infections and complications. This need for daily IV intervention has high morbidity, unfortunately, high mortality, and high expense.

It can cost from $0.5 million up to $1 million a year to take care of these patients and the resulting complications. There is a product approved for short bowel syndrome, which is called teduglutide. It’s not the standard of care, and it’s utilized in a small percentage of patients. It’s basically a growth hormone. And everything in the pipeline that we’ve been able to find in this category, is in the category of a growth hormone where you’re attempting to grow the gut a bit so that parental nutrition can be reduced by about 15% to 20%. And now you have an accepted regulatory endpoint. What we’re looking to do with Crofelemer is to decrease the secretions through a novel antisecretory agent to hit that regulatory endpoint of decreasing the need for parental nutrition by about 15% or 20%, as well as benefits stool formation.

As you can imagine, with a short gut, it’s like a sieve. What goes in comes right out. When we go back to the growth hormone approach, they also have no benefit in a situation where the gut is fully intact but not functioning, which is the case in several different congenital diarrheal disorders like MVID. The gut is fully intact, but there is intestinal failure. So, there’s nothing to grow. There’s no benefit of a growth hormone approach. And there’s other limitations with the growth hormone approach. For example, if the patient has cancer or risk of cancer or some abnormal hyper proliferative disease, you don’t want be giving a growth hormone. Patients recovering from surgery, which is the case for many of these patients, typically need 15 to 18 months for bowel adaptation where they can’t be administered a growth hormone.

Crofelemer should not have any of these limitations. We’re looking to have Crofelemer become the standard of care in the treatment of intestinal failure broadly, whether it’s due to short bowel syndrome or involves a fully intact gut, which seems to be about 50% of the market. Now, if we go back to cancer and our OnTarget trial, when we talk about prophylaxis for cancer therapy-related diarrhea, it’s important to note that cancer is the number one side effect associated with cancer therapy. If we think about an analogous situation, as I had mentioned with chemotherapy-induced nausea and vomiting, where there are agents approved, agents are typically used prophylactically for just the first three days in cytotoxic chemotherapy, as opposed to the chronic diarrhea that we’re talking about with these targeted therapies that patients are on often for the rest of their life.

But to go back to chemotherapy-induced nausea and vomiting, the market is expected to be valued at about $4 billion in 2029. And this is according to third-party market research, iHealthcare Analyst. And easily half of that market is priced and valued as a generic – there are generic products available. When we’re talking about prophylaxis for cancer therapy-related diarrhea, the targeted therapies that are taking long-term and chronically often for the rest of the patient’s life in a metastatic situation, we’re talking about a much more profound situation for number of patients and how long they can benefit. The standard of care for cancer therapy-related diarrhea is, believe it or not, to take the patient off their cancer therapy, or to go to a subtherapeutic dose, or to start at a subtherapeutic dose.

When we think about IMODIUM loperamide agents that you can get at the pharmacy, these are opioids and opioid-based, and you can’t use an opioid-based, such as IMODIUM and loperamide, on a chronic basis. They haven’t specifically been tested or approved for cancer therapy-related diarrhea. And when we think about a patient being taken off their cancer therapy, now we’re talking about an impact on the outcome of the cancer care. And in some cases, once you go off of therapy, you then have to move on to another one. So, you start to run out of options. One of the reasons why we designed the OnTarget trial as a prophylactic trial is to address the problem before it happens so the patient does not have to adjust their cancer therapy regimen, their life-saving cancer regimen because of diarrhea.

With the OnTarget trial, there are different aspects of the study that I think resonate with different audiences, different benefits. First, there’s the goal of supporting the comfort and dignity of patients, the supportive care aspect of preventing diarrhea in these patients that are on targeted therapy, and what could be more important than patient quality of life? That’s what it’s all about in the pharmaceutical industry. Next, though, there is a third-party study in fact authored by Dr. Pablo Okhuysen, who is also the national principal investigator for our OnTarget study. And his study indicates that patients with cancer therapy-related diarrhea are 40% more likely to discontinue their chemotherapy or targeted therapy than patients without cancer therapy-related diarrhea.

And that may be something that resonates loudly with the oncologists, as we mentioned, the opportunity for patients to stay on their cancer therapy and have an impact on the outcome of their cancer treatment. And then thirdly, there’s also an independent third-party study authored by Dr. Eric Roeland, a member of Napo Scientific Advisory Board, that shows that it costs about three times as much to take care of a cancer patient with diarrhea compared to a patient without diarrhea, due to the need for diarrhea-related visits to the hospital for rehydration, office visit prescriptions, certainly of interest to reimbursement organizations. So, these different aspects, these different potential benefits, patient quality of life, keeping the patient on their cancer therapy, cost, are all important.

They may have different levels of priority and recognition of importance with different audiences. The cancer treatment landscape has radically changed. We are in the age of targeted therapies and essentially most targeted cancer therapies work by a mechanism that induces the type of chloride ion channel diarrhea that is specifically addressed by Crofelemer. Crofelemer is novel. It’s a first-in-class antisecretory gastrointestinal chloride channel modulator, normalizer. Crofelemer normalizes gut function. There’s no agent that’s been specifically tested for this type of diarrhea. And when I say normalizes gut function, if a patient is in a normal situation and takes Crofelemer, nothing happens. So, it’s active and normalizing and providing its benefit in an abnormally active secretory situation, which occurs often in cancer patients on targeted therapy.

When we get to the rare disease and/orphan indications of intestinal failure that are associated with short bowel syndrome, with congenital diarrheal diseases such as MVID that I described, you also have an agent here, Crofelemer, that has demonstrated safety in order to be used on a chronic basis. The global short bowel syndrome market is projected to reach a value of $4.6 billion by 2027, and that’s according to a third-party report, Vision Research Reports, and it’s because of the significant morbidity, mortality, expensive interventions, complications necessary to maintain these patients, typically on parenteral nutrition, seven days a week, 20 hours a day. And as I mentioned, with that administration comes those complications. So, our goal is to introduce a completely new approach in standard of care to the management of intestinal failure and the reducing the chronic need for parental nutrition in this patient population.

Other upcoming catalysts at this momentous time for Jaguar include the very prestigious San Antonio Breast Cancer Conference, which is early in December, where the results of our pivotal OnTarget trial have been accepted for poster presentation. Because this is a basket trial where enrollment includes all solid tumors, we’ll be able to put out that topline data this month and have the scientific presentation in December focus on the breast cancer participants, and then also be able to present results at upcoming cancer conferences in 2024, focusing on, for example, the lung cancer patients, the liver patients, ultimately ASCO, which is typically in May, which is the grand annual cancer conference. We expect to simultaneously be pursuing the regulatory track.

With positive data, we would plan to file a supplemental NDA for the current approved Mytesi to expand the indication to prophylaxis of cancer therapy-related diarrhea, with the goal of achieving approval and having the product available to cancer patients in 2024. We are certainly manufacturing to that goal right now. So, again, I can’t say it enough. In November, we’ll have topline data from the OnTarget trial released, and there’ll be a continual flow of data and news from this very rich trial thereafter. I’ve indicated the most important clinical events that we feel are momentum drivers and can be transformative for the value recognition of Jaguar. It’s a very, very tough time in the biotech industry. We don’t know any other company our size, our valuation, that has this type of late-stage clinical data, certainly on a product that is already approved that could really bring some recognition to the pipeline and the strength and the neglected need and the opportunity for all our stakeholders, including the shareholders in the company.

We have a lot of news coming up. We’re a very high-volume traded stock. We don’t have any structured deals in our capitalization currently. We don’t have any warrants that anybody’s trading around. So, we feel like we’re in a good position to not only have value for the patients, which is what it’s all about, their quality of life, yet also the coincidence benefit that comes to, as I mentioned, all the stakeholders in the company as well. Before I hand the discussion over to our CFO, Carol Lizak, I’d like to tell all of you participating today that I know with important pivotal data around the corner, we will not be hosting a Q&A segment at the end of this webcast. We do expect to have another webcast with the OnTarget pivotal data release, as I mentioned, around the corner.

We’ll now move to the financial results for the third quarter. Carol, are you there?

Carol Lizak: Webcast today.

Lisa Conte: Carol?

Carol Lizak: Yes.

Lisa Conte: Okay, good.

Carol Lizak: Yes, I am. Can you hear me?

Lisa Conte: Yep.

Carol Lizak: Very well. I’ll begin my review of our financials for the third quarter of 2023. The combined prescription net revenue for Mytesi and Canalevia-CA1, was $2.8 million in the third quarter of 2023, representing an increase of 5% compared to the combined net revenue in the second quarter of 2023, which totaled approximately $2.7 million, and a decrease of approximately 11% over the combined net revenue in the third quarter of 2022, which totaled approximately $3.1 million. Mytesi prescription volume remained unchanged in the third quarter of 2023 compared to the second quarter of 2023, and decreased approximately 7.5% in the third quarter of 2023 compared to the third quarter of 2022. Prescription volume differs from invoice sales volume, which reflects, among other factors, varying buying patterns among specialty pharmacies in a close network as they manage their inventory levels.

Loss from operations decreased by $1.1 million from $9.9 million in the quarter ended September 30, 2022, to $8.8 million during the same period in 2023. Non-GAAP recurring EBITDA for the third quarter of 2023 and the third quarter of 2022, were a net loss of $6.2 million and $8.5 million, respectively. Net loss attributable to common shareholders decreased by approximately $4.7 million from $12.6 million in the third quarter ended September 30, 2022, to $7.8 million in the same period in 2023. That concludes my recap of high-level financials for the third quarter of 2023. I will now hand it back to Lisa. Thank you.

End of Q&A: Thank you, Carol. And as you can see in our Q filing, our, our current cash position is over $6 million. To recap, while the market for small cap biotechs is in a horrible state at present, we at Jaguar are fortunate that we have two major and what we feel are transformative clinical events coming up shortly, literally around the corner, with the potential to take pipeline opportunities to major blockbuster opportunities. And these are clinical efforts that started many years ago. So, as I mentioned, fortunate that they’re concluding this year. These are two major opportunities to help address important, significant, neglected medical needs for patients. What follows from a focus on patients are the benefits to all the stakeholders in the company.

We at Jaguar and our family of companies, including Napo Pharmaceuticals, so you often hear Napo and Jaguar used interchangeably, are highly energized about these important near-term initiatives. Thank you for your attention and interest, and we expect to have another webinar shortly this year. Thank you.