TFF Pharmaceuticals, Inc. (NASDAQ:TFFP) Q2 2023 Earnings Call Transcript

TFF Pharmaceuticals, Inc. (NASDAQ:TFFP) Q2 2023 Earnings Call Transcript August 15, 2023

TFF Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-0.14 EPS, expectations were $0.2.

Operator: Good morning, ladies and gentlemen, and welcome to the TFF Pharmaceuticals Second Quarter 2023 Corporate Update and Earnings Conference Call. As a reminder, this conference is being recorded. I will now turn the call over to your host, Corey Davis of LifeSci Advisors. You may begin your conference.

Corey Davis: Thank you, operator. Hello, everyone, and welcome to TFF Pharmaceuticals second quarter 2023 corporate update and earnings conference call. With me on the line this afternoon are Dr. Harlan Weisman, Chief Executive Officer of TFF Pharmaceuticals; Dr. Zamaneh Mikhak, Chief Medical Officer; and Kirk Coleman, Chief Financial Officer. Before we get started, I would like to remind everyone that this call will contain forward-looking statements, including, without limitation, statements about the anticipated timing of achievement of clinical milestones, the potential to see positive effects in our Phase 2 studies, the number of treated patients necessary to make our decisions in regards to moving to Phase 3 studies, the market opportunity for our product candidates, and the expected time frame for funding operations with cash and cash equivalents.

These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from the statements made. Factors that could cause actual results to differ are described in all of our findings with the U.S. Securities and Exchange Commission, including the Risk Factors section of our 2022 annual report on Form 10-K filed with the SEC. And now, it’s my pleasure to turn the call over to Dr. Harlan Weisman. Harlan?

Dr. Harlan Weisman: Thank you, John, and good morning, everyone, and thank you for joining us for our second quarter 2023 Corporate Update and Earnings Conference Call. On today’s call, I’m going to review the significant progress that we’ve made over the first half of 2023 and then provide an outlook on what we expect to achieve for the remainder of the year. Following my remarks, our Chief Medical Officer; Dr. Zamaneh Mikhak will provide an update on TFF clinical stage programs. Our Chief Financial Officer, Kirk Coleman, will then review our financial results for the second quarter. We’ll then open up the call for Q&A. In early February, soon after my appointment as TFF’s permanent CEO, we held an investor call to review our corporate strategy and outline our objectives for 2023.

On that call, we expressed our commitment to grow shareholder value by prioritizing the advancement of our clinical stage assets, TFF VORI and TFF TAC. We also expressed a desire to remain opportunistic with respect to signing new partnerships that show the potential to create long-term value while also minimizing internal costs to our company. It’s been nearly 6 months since that call, and I can say that I’m proud of the Company’s progress on both fronts. Under Zamaneh’s leadership, our clinical development team has made considerable progress across a number of key areas to help build physician and patient awareness of TFF VORI and TFF TAC. Based on the continued success of these efforts, we anticipate reaching key clinical milestones by year-end, each of which could serve as a major catalyst for our company.

In a moment, Zamaneh will provide greater details on each of these rare disease programs. We will also have sufficient capital to reach these milestones. As announced earlier this morning, TFF raised additional capital through an equity financing. Importantly, no warrants were issued to investors in this transaction. Considering the ongoing challenges in the capital markets, our ability to close this financing while minimizing dilution to our existing shareholders, in my view, reflects a growing recognition of the attractive risk/reward of our two clinical programs. In contrast to programs and opening new chemical entities, TFF VORI and TFF TAC, couple significant innovation with reduced clinical development risk. The innovation is driven, of course, by our Thin Film Freezing technology that enables efficacious levels of voriconazole and tacrolimus to be delivered directly into the lungs.

Through this improved delivery, we expect to see strong efficacy, but with lower toxicity and drug-drug interactions compared to systemic delivery. Physicians have told us that they would welcome these types of solutions to improve overall care in these highly vulnerable patient populations. We also believe each program bears significantly less clinical risk compared to other development stage programs. By improving the delivery of two well-established first-line FDA-approved drugs, we expect to see positive treatment effects for most of the patients enrolling in our ongoing Phase 2 trials. For this reason, I believe TFF represents a compelling opportunity for investors who seek an optimal balance of innovation, coupled with lower overall clinical development risk.

Developing new therapies like TFF VORI and TFF TAC that can efficiently deliver an effective drug while lowering systemic toxicities is likely to have a significant positive impact on overall patient health, clinical outcomes and health economics. Given the size of the patient population, the level of unmet need, the economic burden of each disease and the anticipated impact of TFF VORI and TFF TAC on clinical outcomes, we believe each product represents a $1 billion-plus market opportunity. While advancing our pipeline remains our primary strategic objective, I’m also pleased to note that business development at TFF remains quite active. We announced three separate government collaborations during the quarter, which provide third-party validation of the value of our Thin Film Freezing technology.

In May, we signed a Cooperative Research and Development Agreement, or CRADA, with the National Institute of Environmental Health Sciences part of the National Institutes of Health to develop dry powder formulations of hyaluronan to prevent and treat respiratory diseases. NIEHS and TFF will evaluate the pharmacokinetics and therapeutic efficacy of TFF hyaluronan formulations, using in vitro and in vivo models of select respiratory diseases with a primary focus on chronic obstructive pulmonary disease, or COPD, and viral respiratory diseases caused by SARS-CoV-2, influenza virus and/or respiratory syncytial virus or RSV. Also in May, we signed a contract extension with Leidos that provides additional funding to advance next-generation personalized protective biosystems under the Personalized Protective Biosystems Program managed by the Defense Advanced Research Projects Agency, more commonly referred to as DARPA.

The goal of the program is to develop lightweight materials using Thin Film Freezing technology that protects military and healthcare personnel from exposure to chemical and biological threats. In June, we announced an agreement with the National Institute of Allergy and Infectious Diseases, also part of the National Institutes of Health, that awarded TFF Pharmaceuticals, a direct to Phase 2 Small Business Innovation Research, or SBIR grant of approximately $3 million to continue development of a shelf-stable universal influenza mucosal vaccine using the Company’s Thin Film Freezing technology. The aim of this program is to develop a vaccine that is at least 75% effective against symptomatic influenza virus infection. Importantly, these agreements are largely funded by our partners, and provide an important source of external validation for our technology.

I’d now like to turn the call over to Dr. Zamaneh Mikhak to discuss the TFF VORI and TFF TAC clinical programs. Zamaneh?

Dr. Zamaneh Mikhak: Thank you, Harlan. As Harlan mentioned, I’m pleased to share with you the considerable progress we’re making to advance enrollment in our two Phase 2 trials of TFT TAC and TFF VORI. Over the last several months, our clinical development team has undertaken multiple initiatives to advance these programs. I’ll start by providing an update on TFF VORI. As a reminder, TFF VORI has been formulated using our Thin Film Freezing technology to deliver antifungal drug voriconazole directly to the lungs. TFF VORI is being developed for potential treatment of pulmonary fungal infections, including pulmonary aspergillosis, starting with invasive pulmonary aspergillosis or IPA. IPA is a life-threatening fungal lung infection that primarily impacts immunocompromised patients.

Even with standard-of-care therapy, the 12 weeks mortality rate from IPA is approximately 30%, which represents a significant unmet medical need for this rare disease. Oral voriconazole is first-line therapy for treatment of IPA, but because of the drug’s narrow therapeutic window, attaining efficacious concentrations often requires dosages that cause significant toxicities. By administering TFF VORI directly into the lungs, we hope to improve efficacy by delivering high local concentrations of the drug, while lowering systemic exposures and, therefore, systemic toxicities and drug-drug interactions, problems commonly associated with oral administration. As Harlan mentioned earlier, we have made considerable progress over the last several months.

We established weekly goals for our CRO and weekly meetings with CRO upper management, to improve accountability and overall execution, and these changes have helped considerably. For example, we now have 16 of our 19 clinical sites activated compared to only a single site when I first joined TFFs back in January. We expect additional sites to be up and running this quarter. The experience [ph] of the TFF VORI program is growing amongst hematologists oncologists, infectious disease physicians, pulmonologists and transplant physicians as our active clinical sites and their referral networks, which in turn is leading to an acceleration in patient prescreening and screening activities. As a result, our rate of prescreening has increased nearly fivefold in the past four months compared to the first four months from 9 to 44.

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And we now have two patients enrolled in our study. Additionally, we have amended the study protocol to improve patient access to TFF VORI. For example, based on feedback from our investigators, we have expanded eligibility to allow real criteria used for the diagnosis of IPA. In a disease with high unmet need, in which first-line therapy is associated with high mortality, toxicity and drug-drug interactions, patients often choose to participate in a clinical trial with the hope of receiving an investigational drug with potential for improved efficacy and toxicity. To improve the chances of receiving TFF VORI, we have also increased the ratio of patients receiving TFF VORI to those receiving oral voriconazole from 1:1 to 3:1 in this study. While we’re developing TFF VORI for the potential treatment of IPA by conducting clinical trials, we understand that in some cases patients who have exhausted available therapeutic options, may not qualify for participation in clinical trials.

For such cases, we have launched an Expanded Access Program, or EAP, offering TFF VORI to patients with all forms of pulmonary aspergillosis, including both invasive and chronic pulmonary aspergillosis, allergic bronchopulmonary aspergillosis, aspergillus tracheobronchitis and aspergillus bronchoanastomotic infections. Patients with other voriconazole responsive pulmonary infections also qualified for this program. The patients who enter our EAP have limited or no treatment options or in some cases, have had an unfavorable response to standard-of-care therapy. The EAP program builds on the positive efficacy, safety and tolerability results in two such patients with pulmonary fungal infections who were previously treated with TFF VORI on a compassionate use basis.

I’m also pleased to note our collaboration with Durbin to help us implement EAP for TFF VORI in the U.S. Canada, Australia, UK and select countries in the EU. Durbin has a long track record of executing Expanded Access Programs across the globe for large and small pharma companies. And we are confident that through this partnership, we will be able to provide expanded access to TFF VORI to eligible patients. In fact, I’m pleased to note that we have already enrolled our first patient in this new program. As Harlan mentioned, we expect to see a majority of patients who receive TFF VORI therapy to show a positive treatment effect due to the well-established activity of voriconazole as an antifungal medication. Given the availability of considerable historical data on the safety, tolerability and efficacy of voriconazole, and in line with what is generally customary in rare disease indications, we believe no more than 10 patients treated with TFF VORI may be necessary to provide us with enough clinical data to make a go/no-go decision on entering the Phase 3 trial.

Initial data from our ongoing Phase 2 trial in EAP are expected by the end of 2023. Now, let me turn to discussing the TFF TAC Phase 2 program. Similar to TFF VORI, the TFF TAC program addresses an area of significant unmet medical need in another rare disease indication. TFF TAC is being developed for prevention of rejection in lung transplant recipients, a patient population with five-year mortality rate as high as 50%. The 50% five-year mortality in lung transplant comes largely from the narrow therapeutic window of available immunosuppressants where too little immunosuppression leads to acute or chronic rejection, whereas too much immunosuppression leads to infection, chronic kidney disease and post-transplant lymphoma or other malignancies.

To overcome these deficiencies, TFF TAC has been formulated using our Thin Film Freezing technology to deliver the first-line calcineurin inhibitor immunosuppressant drug tacrolimus directly to the lungs. The direct delivery of TFF TAC to the lung is poised to potentially address multiple contributing factors to the 50% five-year mortality seen in lung transplant. With local delivery to the lungs, the ratio of lung exposure to systemic exposure increases. Therefore, lung concentration sufficient to drive efficacy locally can be achieved at lower doses compared to oral administration, leading to lower systemic exposures to minimize systemic toxicity. The improved lung to systemic exposure achieved with TFF TAC is predicted to address the fine balance needed for immune suppression.

The improved concentrations in the lung, the site of inflammation would address acute and chronic rejection, while diminished systemic exposures would address potentially fatal complications, such as infections, chronic kidney disease and post-transplant lymphoma or other malignancies. It should be noted that presence of systemic exposure, albeit at lower levels compared to oral tacrolimus is predicted to suppress systemic inflammation to further prevent rejection. In our Phase 2 trial, we have gained considerable insights at our active site in Australia in transitioning lung transplant patients from oral tacrolimus to the inhaled form TFF TAC. The transition from oral to inhaled tacrolimus is a delicate process given the risk of rejection and toxicities.

We have been pleasantly surprised by the low doses of TFF TAC needed to date to match overall clinical outcomes from oral tacrolimus. To date, three patients have enrolled in the Phase 2 study at our active sites. We expect to activate additional sites in Australia in the coming months. Since our selected sites have a large database of lung transplant patients that could be considered for potential enrollment in our study, we expect a steady flow of patients in our TFF TAC study. Similar to the TFF VORI program, given the availability of considerable historical data on the safety, tolerability and efficacy of tacrolimus, and in line with what is general practice in rare indications, we believe meaningful clinical data from approximately 10 patients treated with TFF TAC will be sufficient to guide a go/no-go decision for entering a Phase 3 study, and we expect to report initial data from the ongoing Phase 2 study by the end of 2023.

I’ll now turn the call over to Kirk to review our second quarter financial results.

Kirk Coleman: Thanks very much, Zamaneh. Our cash and cash equivalents as of June 30, 2023, were $7.7 million. The additional proceeds from the financing transaction announced earlier today will ensure that we have sufficient resources to reach anticipated upcoming clinical milestones and will extend our cash runway through the first quarter of 2024. Research and development expenses for the second quarter of 2023 were $2.7 million compared to $5.1 for the comparable period in 2022. $2.4 million decrease year-over-year is primarily a result of reduced clinical and manufacturing expenses. General and administrative expenses for the second quarter of 2023 were $2.7 million compared to $3.7 million for the comparable period in 2022.

$1 million decrease year-over-year is primarily related to decreased professional fees and patent expenses, insurance, consulting, market research, and payroll and payroll-related expenses. Net loss for the second quarter of 2023 of $5 million compared to a net loss of $8.7 million for the comparable period in 2022. As Harlan noted previously, we have been focused on spending responsibly as we progress our clinical trial programs. I’m proud of the team for successfully reducing spending in areas that were not part of the primary strategic objectives. I’ll now turn the call back over to Harlan.

Dr. Harlan Weisman : Thank you, Kirk. Before opening up the call for questions, I would like to express my sincere thanks to Zamaneh and her team for all of their hard work and dedication, which has enabled us to make significant progress across multiple fronts in our TFF TAC and TFF VORI program. Since becoming CEO six months ago, my confidence in the therapeutic and commercial value of these two assets has only continued to grow. By improving drug delivery with our Thin Film Freezing technology, the VORI and TAC programs have the potential to demonstrate a transformative impact in two rare disease indications by effectively restoring the full efficacy potential of life-saving medicines. Moreover, each addresses areas of significant unmet medical need in rare disease indications with sizable patient populations and substantial market opportunity.

If we succeed in this endeavor, I’m equally confident that the value of our technology platform, internal pipeline and partnerships will be increasingly recognized in the market, providing investors with the opportunity to reassess the value of our company in the months ahead. That concludes our formal remarks, and I’d like now to open the call up for the question-and-answer session. Operator?

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Q&A Session

Operator: [Operator Instructions] First question comes from Jonathan Aschoff of ROTH MKM. Please go ahead.

Jonathan Aschoff: Thank you very much. My first question, guys, is about VORI. Given there’s only 2 patients in the trial, what gives you the confidence that you can meet that 10-patient expectation by year-end? And I guess this explains the 2:1 ratio of sites to intended patients.

Dr. Harlan Weisman: Jonathan, hi, and good morning. And thank you for the question. The clinical trial has been ramping up since Zamaneh took over as Chief Medical Officer. And it is a process that takes a while to overcome the initial inertia in the clinical trial. But we’re now, as Zamaneh went over in her remarks, seeing that progress. And I’ll ask Zamaneh to comment further on answering your question.

Dr. Zamaneh Mikhak: Hi Jonathan. Thanks for the question. As I mentioned, we have made a significant level of progress. We now have 80% of our sites activated, 16 sites in Europe in 5 different countries. Our investigators are engaged. Our protocol eligibility has been expanded to allow patients that need real-life criteria for diagnosis of IPA. And because we’ve changed the randomization schedule such that instead of 1:1, patients have the opportunity to receive TFF VORI with a 3:1 chance, the trial is a lot more inviting to patients who would consider participation. All of this momentum, we believe is setting us up to bring the number of patients that we are projecting and to have initial data by the end of the year.

Jonathan Aschoff: With the [Technical Difficulty] can you tell me, I mean, up fivefold in the past four months, but to only have two patients, what’s the explanation for so few patients qualifying for this trial?

Dr. Zamaneh Mikhak: That’s a good question. IPA is a fatal disease. So, one of the things that we’re noticing is that because it’s such a severe disease, you have severe fungal infection on top of, for example, hematologic malignancy. This is a patient, say, with leukemia, type of leukemia, who now has a fungal infection. So, quite a fatal disease. What we’ve noticed is that many of the patients who are considered for the clinical trial actually end up in hospice or palliative care. They’re quite ill and that’s why they don’t qualify. Another reason that they might not qualify is that the diagnosis ends up not being as aspergillus or not being exactly IPA or they’re not meeting the very specific and very narrow criteria for diagnosis of IPA, based on the original diagnostic criteria that was in the protocol, which we’ve capped, but again, we expanded that to include real-life criteria.

And we believe that improves eligibility and study participation. As I mentioned, we have a lot of sites active now and the investigators are quite engaged. But at the end of the day, we want to make sure we get the right patients in this study. And I think the other thing to really keep in mind is that what do you accomplish — what can you accomplish while you’re setting things up and what can you accomplish once you have set things up. So, we have brought in the number of patients that we brought in as we’ve been activating sites, as we’ve been putting in an addendum, as we’ve been putting in an amendment. But doing that requires a lot of steps to actually implement these changes. Now, we’re at a point where the sites are active.

The amendment is in place and approved in almost every country. These sites are familiar with these broadened eligibility criteria, and they understand how that impacts their evaluation of patients. So, that’s why looking at the activities on the ground and the information we have, we’re comfortable to project that we’ll be able to have initial data by the year-end.

Jonathan Aschoff: Thanks for that. What was flawed about 40 patients as an enrollment number for VORI such that 10 can allow you to come up with a go/no-go decision for Phase 3?