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Jaguar Health, Inc. (JAGX)

Q3 2022 Earnings Call· Mon, Nov 14, 2022

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Transcript

Operator

Operator

Before I turn the call over to management, I’d like to remind you that management may make forward-looking statements relating to the matters as contained 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, thus forward-looking statements are subject to risks 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 the 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 the Risk Factors sections of the company’s Form 10-K for the year 2021, which was filed March 11, 2022, and in 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’s supplement, its condensed unconsolidated financial statements presented on the GAAP basis by providing non-GAAP EBITDA and non-GAAP recurring EBITDA, Jaguar believes that the disclosure items of these non-GAAP measures provides investors will additional information that reflects the basis upon which the company management assesses and operates the business. These non-GAAP financial measures should not be viewed in isolation or as substitutes for GAAP net sale 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, and at this time, it is my pleasure to turn the call over to Lisa Conte, Jaguar Health Founder, President and Chief Executive Officer. Lisa, the floor is yours.

Lisa Conte

Management

Thank you very much, and thank you for those comprehensive forward-looking statements. Welcome all. As you just heard, my name is Lisa Conte, and I am the Founder, President and CEO of Jaguar Health and our wholly owned subsidiary in the United States, Napo Pharmaceuticals. For those of you who can only participate for a short time, here are the key takeaway messages from this webcast regarding upcoming potential momentum drivers. Combined net revenue for our prescription products increased in the third quarter of 2022 for the fifth quarter in a row, growing 8.2% in Q3 versus Q2 of 2022 and increasing approximately 412% over Q3 2021. Next, we expect the successful completion of our ongoing Phase III OnTarget clinical trial of Crofelemer for cancer therapy-related diarrhea to potentially expand the indication of Mytesi with enrollment in the trial targeted for completion in the second quarter of 2023, with an analogous market opportunity in chemotherapy-induced nausea and vomiting of approximately $3 billion for comparison purposes. As we recently announced, the full results of the investigator-initiated trial named HALT-D evaluating Crofelemer for preventing chemotherapy-induced diarrhea in breast cancer patients was published last month in the peer review journal, Breast Cancer Research and Treatment, the principal investigator and author of that was Dr. Sandy Swain, who is the former president of AASCO. Next point, Dr. Mohamad Miqdady, Division Chief of the Pediatric Gastroenterology Division at the Sheikh Khalifa Medical City in Abu Dhabi in the UAE is leading an investigator-initiated proof of concept trial of Crofelemer for short bowel syndrome, which you may hear us refer to in this discussion as SBS, and also congenital diarrheal disorders which we may refer to as CDD, publication of proof of concept data from this and other expected investigator-initiated trials could support early patient access…

Carol Lizak

Management

Thank you Lisa, and thank you all for joining our webcast today. I’ll begin my review of our financials for the third quarter of 2022. Prescription product net revenues during the third quarter of 2022 was approximately $3.1 million and $2.9 million in the second quarter of 2022, an increase of about $200,000 or 8.2% quarter over quarter, and an increase of approximately 412% over prescription product net revenue in the third quarter of 2021. Mytesi prescription volumes increased approximately 3% in the third quarter of 2022 over the third quarter of 2021. Prescription volume differs from invoiced sales volume, which reflects, among other factors, varying product buying patterns among specialty pharmacies in the closed network as they manage their inventory levels. For the third quarter of 2022, the loss from operations increased by $400,000 from $9.5 million in the third quarter ended September 30, 2021 to $9.9 million during the same period in 2022. Non-GAAP EBITDA for the third quarter of 2022 and the third quarter of 2021 were a net loss of $8.5 million each respectively. For the third quarter of 2022, the net loss attributable to common shareholders increased by approximately $300,000 from $12.2 million in the quarter ended September 30, 2021 to $12.5 million in the same period in 2022. In addition to the loss from operations, interest expense increased by $600,000 from $2.1 million in the quarter ended September 30, 2021 to $2.7 million for the same period in 2022, primarily due to interest from the royalty and [indiscernible]. Another one is the change in fair value of financial instruments and hybrid instruments designated as fair value options, or FVO, increased by $700,000 from a loss of approximately $600,000 in the three months ended September 30, 2021 to a gain of about $200,000 for the same period in 2022, primarily due to fair value adjustments in liability classified warrants and notes payable designated as FVO. Other expenses also increased by about $100,000 from $20,000 in the quarter ended September 30, 2021 to approximately $200,000 for the same period in 2022, and that’s largely due to foreign currency transactions. That concludes my recap of high level financials for the third quarter of 2022. I will now hand the discussion over to Ian Wendt, Jaguar’s Chief Commercial Officer.

Ian Wendt

Management

Thank you Carol and good morning to all. As Carol stated, Mytesi total prescription volume, a metric we believe to be the best indicator of patient demand, increased approximately 3% in the third quarter of 2022 over the second quarter of 2022. As previously announced, the transition we completed throughout the end of 2021 and into the beginning of 2022 to a limited distribution network of specialty pharmacies resulted in a meaningful reduction in Mytesi distribution costs as well as a higher average net price. I’m very pleased to report that we significantly outperformed the industry gross to net average in the third quarter of 2022 as we did in the three previous quarters as well for sales of our human prescription product. This improvement in our gross to net was largely a result of the efficiencies realized by the transition to a closed network of specialty pharmacies. This transition assists in the preparation of the company’s U.S. commercial distribution network for potential future indication expansion of Crofelemer to other populations of patients with complex medical needs, such as CTD, inflammatory bowel disease, SBS and CDD. As Lisa mentioned, Q3 2022 is the fifth consecutive quarter of growth in Mytesi net revenue, which we’re also very pleased about. I’m also pleased to report that our innovative, recently launched programs that further support patients connecting to care and medication access services are continuing as planned. The first program is our telehealth initiative, which went live in May. This enables patients seeking help with their HIV-related diarrhea to be linked immediately to a provider for assistance with their medical needs. This new capability prevents patients from having to wait until their next scheduled doctor visit to get help with what is a really urgent problem. Our second recently launched program delivers digital…

Lisa Conte

Management

Great. Hopefully I did go off mute here, and thank you Ian and Carol. We are all energized about all these important initiatives underway, proud of what we achieved in 2022, very excited about what’s coming up really just around the corner in pharmaceutical terms, six to nine months in 2023. A few questions have come in, and I will take a look at those - okay. One question is the current ATM - at the market that is in use, how much is left to sell? Let me tell you something about a company like ours having the gift of qualifying and having an ATM in place. We have about $10.7 million, approximately $11 million in cash reported at the end of this Q, and to be sure that we have sufficient funds to get to the end of, for example, our cancer trial, there may be a need to bring in more funds. Right now if you look at the financings for companies that are in our range and our market cap, they’re terrible - they are structured, there are warrants, they really are highly toxic to current investors. What the ATM gives us the opportunity to do is bring in cash at the market, no warrants no bells or whistles down the road when necessary, so we’re pleased that we qualify for one and we do have about $50 million capacity on the ATM. That doesn’t mean we’re using $50 million of the ATM, but we do have capacity for $50 million on our ATM. What are the key catalysts you are focused on in the upcoming year? Which of these catalysts do you think are most underappreciated by the street? How do you think the macro environment may affect your business? Okay. I think so much…

Carol Lizak

Management

On the-yes, it’s on the 10-Q, yes - the Canalevia, because we have human health and animal health.

Lisa Conte

Management

And do you know what that number is?

Carol Lizak

Management

The revenue--yes, I’m looking at the moment. Just a second.

Lisa Conte

Management

And remember, this product was launched in the end of the second quarter, and that’s when the load-in occurs to the distributors.

Carol Lizak

Management

About $150,000 for Canalevia.

Lisa Conte

Management

Great, thank you. That is all the questions, so thank you all very much for listening. We’ll look forward to 2023 and we will look forward to speaking to you again when our K results come out, and that will be in 2023 as well. Bye bye. End of Q&A: Thank you. That will conclude today’s conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.