Talphera Q2 2024 Earnings Report

Talphera EPS Results

• Actual EPS: -$0.15
• Consensus EPS: -$0.22
• Beat/Miss: Beat by +$0.07
• One Year Ago EPS: N/A

Talphera Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Talphera Announcement Details

• Quarter: Q2 2024
• Date: 8/14/2024
• Time: N/A
• Conference Call Date: Wednesday, August 14, 2024
• Conference Call Time: 4:30PM ET

Talphera (NASDAQ:TLPH), a specialty pharmaceutical company, focuses on the development and commercialization of therapies for use in medically supervised settings. Its lead product candidate is Niyad, a lyophilized formulation of nafamostat, which is under an investigational device exemption as an anticoagulant for the extracorporeal circuit. It is also developing LTX-608, an anti-inflammatory and antiviral potential for the treatment of multiple conditions, including disseminated intravascular coagulation (DIC), acute respiratory distress syndrome (ARDS), and acute pancreatitis; Fedsyra, a pre-filled ephedrine syringe; and PFS-02, a pre-filled phenylephrine syringe. The company was formerly known as AcelRx Pharmaceuticals, Inc. and changed its name to Talphera, Inc. in January 2024. The company was incorporated in 2005 and is headquartered in San Mateo, California.

Talphera Q2 2024 Earnings Call Transcript

Key Takeaways

• Telferra has finalized clinical trial agreements with 8 academic sites, expects the last 4 site initiations to complete this month, and secured FDA approval to expand the NEFPRO study to 14 sites to accelerate enrollment.
• Co-founder and CMO Dr. Pam Palmer will retire in October but remains an adviser, while new Chief Development Officer Dr. Shaquille Aslam brings 20+ years of nephrology trial experience and is driving site initiation and training.
• As of Q2, Telferra holds $14 million in cash and investments, reported $4 million of cash operating expenses, and lowered its full-year expense guidance to $19–21 million.
• Major investor Nantahala committed to provide adequate funding toward PMA approval and is amending the timing of its second financing close to align with trial milestones.
• Market research highlights NIAID’s strong safety profile and competitive cost versus citrate, supporting a potential $200 million peak sales opportunity across hospital and outpatient settings.

Presentation

[Operator]

Welcome to Talphera's Second Quarter 2024 Financial Results Conference Call. This call is being webcast live via the Events page of the Investor section of Talphera's website at www.talphera.com. This call is the property of Talphera, and any recording, reproduction, or transmission of this call without the express written consent of Talphera is prohibited. As a reminder, this webcast is being recorded. You may listen to a replay of this webcast by going to the Investor section of Talphera's website. I would now like to turn the call over to Raffi Asadorian, Talphera's Chief Financial Officer.

[Raffi Asadorian, CFO at Talphera]

Thank you for joining us on the call today. This afternoon, we announced our second quarter 2024 financial results and associated business updates in a press release. This press release can be found within the Investors section of our website. With me today are Vince Angotti, our Chief Executive Officer, and Dr. Pam Palmer, Talphera's Founder and Chief Medical Officer. Before we begin, I want to remind listeners that during this call, we will make forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties regarding the operations and future results of Talphera. Please refer to our press release, in addition to the company's periodic, current, and annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward-looking statements. These documents can be found on our website within the Investors section.

[Raffi Asadorian, CFO at Talphera]

I will now hand the call over to Vince.

[Vincent Angotti, CEO at Talphera]

Thank you, Raffi. Good afternoon, and thank you for joining us on the call. Before jumping into the updates for the quarter, I'd like to congratulate Dr. Palmer on her decision to retire this coming October. Pam was the co-founder and Chief Medical Officer of the company, as well as a dedicated leader for nearly two decades. Dr. Palmer is a renowned physician, pioneer, and longtime entrepreneur with a mission to improve care for patients in the medically supervised setting. Pam has made her mark in the world of pharmaceuticals and healthcare and mentored countless people along the way who will continue her legacy. While she may be retiring, Dr. Palmer will continue to advise Talphera and support Dr. Shakeel Aslam until the NEPHRO study has been completed and the potential FDA approval of Niyad is received.

[Vincent Angotti, CEO at Talphera]

So please join me in wishing her all the best in her retirement. I'm happy to report that we now have multiple site screening patients in the study. We had a busy quarter continuing to work through the administrative processes encountered at the academic institutions where the NEPHRO study will be conducted, and we have finalized clinical trial agreement terms now with eight large academic institutions, including our potentially highest enrolling sites. The final four site initiation visits of these initial eight institutions are scheduled to be completed this month. While each institution has had their own unique upfront administrative activities, once enrolling, we do not expect additional delays as the protocol dictates how the study is conducted. Niyad's breakthrough designation has continued to prove valuable in our interactions with the FDA.

[Vincent Angotti, CEO at Talphera]

Our ongoing real-time communications with the FDA regarding the study have been efficient, and we expect this to continue as we progress the study over the coming months. For example, we recently requested and promptly received the FDA's approval to increase the number of NEPHRO study sites to a maximum of 14. We sought this approval to, one, expedite study completion by increasing the number of high volume CRRT institutions, and two, maintain access to a broad patient population to inform healthcare providers on the use of Niyad, if approved. Dr. Aslam's nephrology expertise and established professional network has already proven invaluable in identifying this expanded base of potential clinical sites in support of the study. As communicated on the last call, Dr. Aslam joined Talphera as our new Chief Development Officer on May 20th. Dr. Aslam has over 20 years of clinical research experience specializing in nephrology.

[Vincent Angotti, CEO at Talphera]

Dr. Aslam joined us from BioCryst Pharmaceuticals, where he served as Vice President, Clinical Development, Nephrology, and Rare Diseases. He's held development roles at Angion, Fresenius, and Amgen, and was an assistant professor at Georgetown University Hospital for 12 years, focused on clinical care of acute and chronic kidney disease, hypertension, renal transplantation, and other nephrological diseases. Dr. Aslam's extensive experience across industry and academia as a renal expert, particularly in the design and conduct of both drug and device clinical trials, is impressive and a true asset to our organization. Immediately upon joining Talphera, Dr. Aslam immersed himself in establishing and fostering Talphera's relationships with our selected nephro institutions and research personnel, including personally conducting site initiation activities and training of the institutional teams.

[Vincent Angotti, CEO at Talphera]

Importantly, the balance of our eigth sites, including our potentially largest enrolling sites, should be enrollment ready in the coming weeks. And while we're not prepared to provide guidance on expected study completion and PMA filing timelines, our engagement with the principal investigators remains high, and we believe the study will enroll efficiently at the sites. Recall that the primary endpoint of activated clotting time is measured over 24 hours, with the patient completing the study after activated clotting time is assessed at 72 hours, which is also a secondary endpoint. These relatively short study time points, combined with a patient study population of only 166 patients and now expansion to 14 study sites, should support efficient completion of the study once fully underway. We expect to provide an updated timeline for study completion, PMA filing, and anticipated PMA approval on our next quarterly call.

[Vincent Angotti, CEO at Talphera]

While the clinical study is ongoing, we've been working on pre-launch commercial activities in preparation for the commercial launch of Niyad, again, if approved. This has included further market research with a group of nephrologists, intensivists, and pharmacy directors. The participants in our research group highlighted nafamostat's strong safety profile over the last 30-plus years, particularly for patients with liver impairment or contraindications to heparin and citrate. Specifically, the participants commented on the nafamostat's safety attributes, such as its ultra-short half-life, allowing it to be rapidly cleared and potentially avoiding unwanted complications seen with longer circulating agents such as heparin and citrate. In addition, our research continues to support the potential commercial uptake of Niyad at a competitive price as compared to the total cost of citrate anticoagulation, which includes the cost of calcium and the required monitoring of calcium levels.

[Vincent Angotti, CEO at Talphera]

These results reinforce our belief that the peak sales estimate for Niyad in the hospital setting approximates $100 million, while a potential opportunity in outpatient dialysis settings could add at least another $100 million of peak sales. We remain focused on the hospital opportunity as this is where our current NEPHRO CRRT study is being conducted. In addition to the progressing clinical study and commercial preparation, we continue to make positive advancements in our manufacturing and related CMC efforts for Niyad. All active ingredient and finished drug production to date have met our specifications. We're collecting extended stability data on our GMP-grade product to support shelf life for our potential commercial product. Our manufacturing partners have done an excellent job achieving timelines, specifications, and the cost expectations we've set for them.

[Vincent Angotti, CEO at Talphera]

And before handing the call over to Raffi, it's important to know that our largest investor, Nantahala, remains supportive and with continued progress in the clinical study, committed to ensuring Talphera has adequate funding to reach potential PMA approval of Niyad. This continued support is highly appreciated, and as a result of the extension of the original timeline, both parties agree on the need to amend the timing of the planned second close of our financing, which was originally expected to occur by September 30th of this year. Now I'll hand the call over to Raffi to take you through the details of our second quarter financial results. Raffi?

[Raffi Asadorian, CFO at Talphera]

Thanks, Vince. We continue to control operating expenses while prioritizing investments that will facilitate the timely filing of our Niyad PMA. This emphasis on expense containment has helped us close the second quarter with $14 million in cash and investments. Our cash operating expenses or combined R&D and SG&A expenses, excluding non-cash stock-based compensation of $0.2 million in the second quarter, totaled $4 million, compared to $3.8 million last year. While we incurred certain expenses related to the NEPHRO CRRT study in the second quarter, we expect these costs will increase for the remaining quarters of the year as study enrollment accelerates. The estimated range of cash operating expenses for the year has been reduced to $19-$21 million from the previous range of $21-$23 million accordingly.

[Raffi Asadorian, CFO at Talphera]

As mentioned earlier, we plan on amending the date of the planned second closing from our January 2024 financing that was contingent upon achieving the pivotal trial milestone by September 30 of this year. We expect this amendment to be completed before filing our next quarter 10-Q. I'll now turn the call back to Vince.

[Vincent Angotti, CEO at Talphera]

Thanks, Raffi. I'd now like to open the lineup for any questions you might have. Leeway?

[Operator]

Thank you so much. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you're using a speakerphone, please lift the handset before pressing any keys. Our first question comes from the line of Ed Arce of H.C. Wainwright. Your line is now open.

[Ed Arce, Senior Research Analyst at H.C. Wainwright]

Hi, thanks for taking my questions, and congrats on the progress. I have a couple of questions, but first, I just wanted to add my congratulations to Pam. I've been covering the company for 12 years now, worked with Pam since the very beginning, and wanted to offer my hearty congratulations to a very well-deserved retirement.

[Pamela Palmer, Funder and CMO at Talphera]

Thanks, Ed.

[Ed Arce, Senior Research Analyst at H.C. Wainwright]

You're very welcome. So I know it's coming up in the next call for the timeline update, but I wanted to get a sense for where we are now, if possible, in terms of the number of patients that have completed the study, or perhaps, and/or, patients that have been screened, to date to go into the study?

[Vincent Angotti, CEO at Talphera]

Yeah, I can help answer that. Ed, this is Vince. So as it relates to screening, the screening has just begun within the last several weeks, and primarily done at what I'll call our lower enrollment potential sites. These sites were selected because of the quality of the care at their particular institutions, and in particular, you might say, why would you have a lower potential enrolling site involved? The quality of the PI at these sites and the diversity of patients at these sites, which makes them, by nature, lower enrolling potential. Dr. Palmer, maybe you can comment on the characteristics of the patients at these particular sites.

[Pamela Palmer, Funder and CMO at Talphera]

Yeah, they just happen to be the ones that got up and running more quickly. But, these-- yeah, these particular sites, we need to see Niyad's efficacy and safety in a sort of broad spectrum of patients, different ICUs, surgical ICU, medical ICU, patients with liver failure, younger patients, you know, younger adults versus older adults. And so these two sites were put in the mix for that reason. They just happened to get up and running more quickly than the others, but we're not expecting a lot of patients from them. So even though they have started prescreening and screening, they, you know, The more recently screening site that we've gotten up and running is considered to be a much bigger heavy hitter.

[Vincent Angotti, CEO at Talphera]

Yeah, I think importantly, to your point on that, while no one has completed the study, the third site that Dr. Palmer mentioned that just came up become enrollment ready and screening over the course of I think it's the last 1.5 to 2 weeks, the first day after started screening patients. So they immediately got on to the PI is highly involved and excited about the study. And the balance of our sites are all the highest enrolling sites, and they all should complete their site initiation visits this month as scheduled and be enrollment ready as the go by the close of this month. And then we'll start to really see the ramp in the cadence on the screening versus completions.

[Ed Arce, Senior Research Analyst at H.C. Wainwright]

Okay, that's helpful. Two others, if I may, these four are for Raffi. I think you mentioned in your prepared remarks that the cost for the remainder of the year, operating costs, would be expected to increase, which is, as one would expect with an enrolling phase III. Wondering if there's any sort of quantitative color that you could provide on OpEx. And then, the other question was around the financing, and, I missed what exactly you said about September and what's happening there in your plans to re-refinance that. Thanks.

[Raffi Asadorian, CFO at Talphera]

Yeah, sure. So the new guidance, Ed, for the year, we reduced. This is for cash operating expenses, has been reduced to $19 million-$21 million. So if you take that $19 million, we've had about $8 million year to date, so we can expect around $11 million for the second half for cash operating expenses, given that range. So it increases a bit from the, we've had about $4 million of cash operating expenses in the previous for each quarter, $4 million for Q1, about $4 million for Q2. So expect that to increase, you know, if you forecast that pretty evenly, that remaining $11 million for the second half of the year. Does that answer that question?

[Ed Arce, Senior Research Analyst at H.C. Wainwright]

Yeah, that's helpful. Thanks.

[Raffi Asadorian, CFO at Talphera]

Okay. Yeah. And in terms of the Nantahala amendment, I mean, that's the focus here really is to work on amending that date. And we've already had some initial discussions, but amending that September 30th date to a new date that you know works for both parties in terms of the study completion and announcement to get to that pivotal trial milestone. I don't want to forecast what that date will be, but that's the real focus on our discussions with Nantahala to get that done as kind of the first priority.

[Vincent Angotti, CEO at Talphera]

I'll make a comment about Nantahala just quickly. I just want to remind you, they're on our board, Abhi Jain, as a representative of Nantahala, and they're highly active with the management team, and in the know on how the study is being conducted in the pace. So, there's very good alignment.

[Raffi Asadorian, CFO at Talphera]

Yeah, which has been very helpful to have, with, with them.

[Ed Arce, Senior Research Analyst at H.C. Wainwright]

Right. Got it. Thanks. Thanks for all the perspective. Appreciate it.

[Raffi Asadorian, CFO at Talphera]

Sure.

[Operator]

Thank you so much. Your next question comes from the line of Naz Rahman of Maxim Group. Your line is now open.

[Naz Rahman, Analyst at Maxim Group]

Hi, thanks for taking my questions. First, I also want to extend my congratulations to Dr. Palmer on her work and her well-earned retirement. I just have a couple questions, if I may. So seeing how you mentioned that you're expanding the number of study sites to 14, what gives you confidence that you could initiate the new and additional sites in a timely manner? Do you think you can get that done in, by the end of 2024, considering what happened to the prior sites? And how long do you think it would take to initiate the additional sites?

[Vincent Angotti, CEO at Talphera]

Yeah, I think that's a really good question, and a couple things, then I'm gonna turn it over to Dr. Palmer. So I think it's important to understand why we did that with the FDA. And while we've got 8 sites now that we feel are prepared to be enrollment-ready by the close of this month, and again, I'll emphasize the highest enrolling sites, the highest potentially enrolling sites within that group occurring in August. We've always been sourcing sites to get up to the original 10, and so of course, you sourced many more sites than that. I think what we've learned along the way is that the facilitation of the contracting process and administrative process, in combination with the quality of the sites, is the key element moving forward.

[Vincent Angotti, CEO at Talphera]

So Dr. Palmer, maybe you can comment on what we've learned to date and how we're gonna apply that to the next set of sites. I do believe that we might not have them all up and rolling by the end of the year, and they likely won't affect the first half of enrollment. We certainly expect them to affect the second half of the 166 patient enrollment.

[Pamela Palmer, Funder and CMO at Talphera]

Yeah. It's really an insurance policy. I mean, our site feasibility questionnaires were focused around volume of CRRT patients, the type of CRRT patients, at these different academic centers. This new set of sites that we're evaluating is really gonna be focusing not only on that, but on the rapid ability to contract and budget. You know, that, that is just absolutely critical for them to be able to quickly get on board and give us an insurance policy so that the last half of the enrollment will be a lot faster than the first half.

[Naz Rahman, Analyst at Maxim Group]

Hi, just on that point, could you, I guess, give more color or context around the scale of these additional sites? Are they closer to, like, the high enrollment sites or closer to, I guess, the lower enrollment quantity sites?

[Pamela Palmer, Funder and CMO at Talphera]

No, definitely the higher, but it's not just their CRRT volume and their ability to enroll, but it's also going... We're gonna be selecting, for rapid, you know, paperwork processing universities, sites that really can streamline that.

[Vincent Angotti, CEO at Talphera]

We've already started our initial contact with an additional 20 sites.

[Pamela Palmer, Funder and CMO at Talphera]

Right.

[Vincent Angotti, CEO at Talphera]

We're going out pretty large to funnel it down, to get to the ultimate 14 number. Again, they early assessment is they know fairly quickly and respond fairly quickly where the contracting process can be facilitated in an expedited manner or not.

[Naz Rahman, Analyst at Maxim Group]

Got it. Thanks for taking my questions, and once again, congrats on your retirement, Dr. Palmer.

[Pamela Palmer, Funder and CMO at Talphera]

Thank you.

[Operator]

Thank you so much. Our next question comes from the line of James Molloy of Alliance Global Partners. Your line is now open.

[James Molloy, Managing Director and Biotechnology and Specialty Pharmaceuticals Equity Research Analyst at Alliance Global Partners]

Hey, guys. Thank you for taking my questions. Congratulations, Dr. Palmer, on your retirement as well. Could you walk through a little bit... I don't know if Dr. Aslam is on the call. I'd love to get his thoughts, if he is, on the changes that were instituted on coming in to sort of get this thing going, hopefully in the near term. And then, I think you highlighted the eight sites being the highest enrolling sites. What does that mean since no one's been enrolled yet?

[Vincent Angotti, CEO at Talphera]

Yeah, so I can comment on the last part. So it's a total of eight sites. The final four site initiation visits are occurring this month, meaning August, so then they'll be enrollment ready. Of these final sites, they are the highest enrolling sites, so they'll be enrollment ready by the close. Our goal is by the close of August. The first initial sites that are now-

[James Molloy, Managing Director and Biotechnology and Specialty Pharmaceuticals Equity Research Analyst at Alliance Global Partners]

What does the highest enrolling sites mean in a trial that hasn't enrolled anybody? I don't mean to pick on it, but what do you mean highest enrolling sites? You think they'll be the highest enrolling?

[Vincent Angotti, CEO at Talphera]

Yeah, well, these are the non-specialty sites. So as we mentioned earlier, the initial two of the three are specialty sites that are focused on maybe cardiothoracic surgery, maybe younger patients, where the patient flow is gonna be much lower, and the screening process and volumes can be much lower. The balances of these sites are unlike those two original sites, where the volumes in both screening and enrollment will be higher just based off of the pure patient population that they have that fits our criteria. Also based off of the feasibility of the study parameters that they filled out in order to be included within the study. So that's according to them and our assessment of them. Beyond that, I think your question, James was: What are some of the changes or modifications that might have been occurred since Dr. Aslam has joined the company?

[Vincent Angotti, CEO at Talphera]

Dr. Palmer-

[Pamela Palmer, Funder and CMO at Talphera]

He's not on the call.

[Vincent Angotti, CEO at Talphera]

Yeah, and he's not on the call.

[Pamela Palmer, Funder and CMO at Talphera]

He is not on the call this time, but yeah, he's really he knows some of these folks. You know, he comes from this world. I'm an anesthesiologist, pain specialist. He, he's a nephrologist, knows CRRT extensively and knows a lot of folks in this area. So he's really handholding a lot of these sites and getting them you know, just pushing and urging and getting them through this contracting budgeting phase so that we can get on to the more fun, you know, enrollment part of things. So and that, that's just a critical part of this, is relationships and just his deep knowledge in this, in this field.

[Raffi Asadorian, CFO at Talphera]

James, did that answer your question on the first part of your question, though? I wanna make sure we answered that, in terms of highest enrolling, because the highest enrolling haven't started screening yet. That's coming at the close of this month. Is that... Just make sure we're answering that question.

[Raffi Asadorian, CFO at Talphera]

Yeah. I guess, I guess the highest enrolling is sort of an aspirational name for them. I guess they will be the highest enrolling once you start enrolling.

[Vincent Angotti, CEO at Talphera]

Well, I can give you an idea. Based on the feasibility study, these particular institutions feel they have the ability at 400% times what I'll call the low enrolling sites would be.

[Pamela Palmer, Funder and CMO at Talphera]

Yeah, their site questionnaire-

[Vincent Angotti, CEO at Talphera]

One.

[Pamela Palmer, Funder and CMO at Talphera]

Yeah. I mean, all the sites had to fill out their feasibility questionnaires at the beginning of the study, and these were the ones that we asked, you know, "How many CRRT patients, you know, are you seeing per week that would fit into your, you know, inclusion/exclusion criteria, the protocol?" So we already knew ahead of time. Again, just a little bit unlucky that the two sites that we knew would be low enrolling happened just to be the ones that got up and running first.

[Raffi Asadorian, CFO at Talphera]

Right. So it's not our guess, James. This is based on their feedback to us and the questionnaires that we sent to them, when we get this process started with a, with an institution. Does that make sense?

[James Molloy, Managing Director and Biotechnology and Specialty Pharmaceuticals Equity Research Analyst at Alliance Global Partners]

Yes. Yes, I guess in that respect, it does. I appreciate very much the clarification, gentlemen and lady.

[Vincent Angotti, CEO at Talphera]

I think it's also important, James, that you might ask, and if I was an investor or someone evaluating, so well, why would you again - and we'll reiterate what we said before, why would you include potentially some lower enrolling sites? It's again, because of the quality of the PI, the influence of the PIs, their involvement with international guidelines and domestic guidelines, the fact that they are the key thought leaders in this, even though they might have a smaller patient population that is streaming through their particular facility. That's one. And two, with some of these, in particular, these two, they give you the diversity of patients that I think will be important in the data set. It is interesting, as Dr. Palmer mentioned, that of these two more unique sites, that they were the first two up and ready to screen.

[James Molloy, Managing Director and Biotechnology and Specialty Pharmaceuticals Equity Research Analyst at Alliance Global Partners]

Thank you very much.

[Vincent Angotti, CEO at Talphera]

Thank you, James.

[Operator]

Thank you so much, and there are no further questions at this time. I would like to turn it over to Vincent Angotti for closing remarks.

[Vincent Angotti, CEO at Talphera]

Yeah, thank you, Leeway. And again, thanks to all of you who are joining us today and for your continued support. We remain absolutely focused on controlling our spend and driving shareholder value through the execution of the Nephro study, and to make Niyad available to healthcare providers and their patients again, if approved. Please feel free to contact us, contact us after the call if you have any additional questions, and we look forward to sharing our future developments. We have high expectations moving forward. Thank you.

[Operator]

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating.

Participants

Executives

• Pamela Palmer, Funder and CMO
• Raffi Asadorian, CFO
• Vincent Angotti, CEO

Analysts

• Ed Arce, Senior Research Analyst at H.C. Wainwright
• James Molloy, Managing Director and Biotechnology and Specialty Pharmaceuticals Equity Research Analyst at Alliance Global Partners
• Naz Rahman, Analyst at Maxim Group