Jaguar Health, Inc. (JAGX) Earnings Call Transcript & Summary

Good day, and welcome to the Jaguar Health investor webcast. Today's conference is being recorded. Before I turn the call over to management, I'd like to remind you that management may make forward-looking statements related to such matters as continued growth prospects for the company, uncertainties regarding market acceptance of products, the impact of competitive products in pricing, industry trends and product and technology initiatives, including products in the development stage, which may not achieve scientific objectives or meet stringent regulatory requirements. 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 or expectations and projections about future events. While management believes that 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 in this call 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 ending December 31, 2020, which was filed March 31, 2021, 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 Health undertakes no obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events or otherwise. At this time, it's my pleasure to turn the call to Lisa Conte, Jaguar Health's President and Chief Executive Officer. Lisa, the floor is yours.

Thank you. Thanks very much, and 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, Inc. And I am a Board member of our wholly owned subsidiary in Italy, Napo EU, which has licensed rights to Jaguar's lead plant-based gastrointestinal first-in-class product crofelemer for the European territory. Tuesday, June 1, there was a first funding of the Italian company called Dragon SPAC with the name target Napo EU. This was a private financing of the private Dragon SPAC Company. What does that mean? Private financing of Dragon SPAC Company in the year 2020, when roughly 200 SPACs went public in the United States, raising about $64 billion in total funding, nearly as much as all of last year's IPOs combined, resulting in shell companies seeking to provide capital to potential merger acquisition targets that have great technology, great growth opportunity yet are unidentified at the time of the public offering of the SPAC. I'm going to take a step back and attempt to shed some light and understanding of the Dragon SPAC plus name target Napo EU private transaction. My explanation starts with an admission of my guilty pleasure during the pandemic, which is writing captions for the New Yorker Cartoon Contest every 2 weeks. It's a contest. And not only have I never won, I've never even made the runner-ups. However, it does cause me to dig into the New Yorker Magazine immediately each time it comes in the mail. This week, there was an article in the New Yorker termed the Pied Piper of SPACs, Chamath Palihapitiya. He's a venture capitalist among other identifiers. SPACs typically are a shell of a company taken public, seeking a private company to merge with or acquire within a 2-year time frame of going public. At the time, they are information, an ideal private company would have a value-enhancing event, a transformative event in around 2 years or less for the SPAC to target and merge with. The SPAC cannot identify the target before raising public funds for the SPAC. Palihapitiya, who is a rapid fire Twitter-using social media, Bitcoin, unapologetic self-made, self-promoting billionaire investor, and he is the sponsor of 6 SPACs in the U.S., including 4 just this week. He promotes his SPACs as tools with features, assets for democratization of asset to high-growth opportunities, for the ability to take a private emerging company public faster and with public attention and investors attracted to SPAC terms. At the same time that he's launching 4 new SPACs just this week, these public shows are a bit out of favor at the moment trading down, in part due to some uncertain regulations in the United States. Some of the criticism is focused on SPACs taking too long to find and identify a valuable target private company with which to merge within 2 years, as I mentioned, a private company that ideally would have a value-enhancing event within that 2-year period. Without the completion of an acquisition or a merger with a private target within 2 years, the SPAC does not meet its requirement and has to return money to its public investors. Other criticisms of SPACs is that the sponsors are a bit too lavish in structuring their own compensation, meaning, they are a bit greedy when it comes to their own return compared to those who invest in the SPAC. Well, if there was a cartoon depicting Dragon SPAC, I would caption Josh Mailman, the founding sponsor of Dragon SPAC, as the pied piper of the private SPAC. Josh Mailman is a well-known impact investor, focusing on the interchangeable goals of company mission, company cause as well as return. He's also a long-time investor in Jaguar and crofelemer. He has created, I believe, the first private SPAC vehicle. And by doing so in Italy, he's been able to be completely transparent in the upfront identification of the target for merger, Napo EU. Italy is the only country that allows for a SPAC to identify its target at the time of formation and funding of a SPAC. By creating the Dragon SPAC investment vehicle, Josh is, of course, aiming to reward sponsor investment with access to potential high-growth opportunity represented by Napo EU and in a manner that is investor friendly to the SPAC investors, certainly on a comparative basis as his sponsor return is in part linked to investor return. And we believe this is expected to be valuable to Jaguar, the parent corporation, in furthering our mission to bring crofelemer to all territories, all patient populations in need. With Napo EU as a name target for a private merger upon the completion of the Dragon SPAC financing, Josh has addressed another key feature of SPACs, a private company that expects to have an important transformative event. In the case of Napo EU, a clinical trial result in about 2 years, at which point is expected that the combined company formed by the merger of Dragon SPAC and Napo EU will likely seek a public listing liquidity event. The same time frame that public SPACs have for identifying and acquiring or merging with a target this 2-year period time frame is relevant to the Dragon SPAC and Napo EU transaction. Dragon SPAC and Jaguar have brought on financial advisers, Equita Group and Cantor Fitzgerald, respectively, as capital market advisers. Napo EU's initial clinical focus is on the devastating and catastrophic condition of short bowel syndrome. I'm happy to introduce a video clip from an interview Josh Mailman and I filmed with Jane King early this week as part of her Innovators program. We will have a brief Q&A segment after the video plays to address questions, and I can see that there are some written questions that have already come in, which I will be addressing. And others who want to submit questions, you can do so via the webcast link for today's event, which appears on the Events & Presentations page of the Investor Relations section of Jaguar's website. The URL for Jaguar's website is jaguar.health. We'll now proceed with the video, which I hope you enjoy. And Peter, can I turn it over to you to run that video?

Yes. Lisa, we're launching the video now. Thank you.

Okay. [Presentation]

Okay. I'm back on. Peter, can you hear me? Yes?

Yes. Loud and clear, Lisa. Thanks.

Thanks, everybody, for -- who's still on and watched the video, and we'll now open the floor for written questions. And I can see some of the questions here, so let me hold it, start pulling them up. I'll read the question, and then I'll do my best to answer it. What does the marketing authorization actually mean in lay terms? A lot of people are very confused about this. So very simply put, it's the regulatory approval to be able to commercialize your product, to be able to sell your products. So market authorization in the United States is FDA approval. And in Europe, it's EMA approval. Okay. That was a good question. We have lots of terms we use. Can you let people know that COVID long-hauler is still something you're looking into as people seem to think you've completely dismissed this? So as I said in the end of the video, we're watching long-hauler right now. So there are -- just as it was interesting when long-hauler was first defined, there were just reports -- individual patient reports that had the same experience that were popping up all over the world. And then it was sort of stitched together to create the definition of a syndrome, which was first adopted in Europe before the syndrome was adopted as a syndrome or defined as a syndrome in the United States. And now we're starting to see similar things with the reduction or the elimination of symptoms as patients get vaccinated. And so we are watching this. If we have a chronic, lifelong diarrhea, long-hauler syndrome that has emerged after most of the world has been vaccinated, we are there. If this initial phenomenon that seems to be appearing from the amelioration of symptoms in vaccinated patients continues, we didn't want to jump into an indication that -- where the population would go away both for clinical trials and for commercialization. At the same time, short bowel syndrome has been an indication that has been under investigation, under investigation in terms of due diligence, what does the patient need, how does our mechanism of action match to that, what is the commercial opportunity, where would clinical trials be run. And so the parent corporation was getting very excited about this and learning more about it at a time when it then could naturally fit with conditional approval as well and a return opportunity that quite likely is even more substantial than the long-hauler as an initial indication to pursue with Napo EU. Next question is can you remind people about cancer results and whether you will disclose this or whether the third-party will publish. Okay. So there's 2 cancer studies right now. There's the cancer study that Jaguar Health is sponsoring. This is a single pivotal trial to support the label expansion of Mytesi. This is being run with Mytesi in the United States for cancer therapy-related diarrhea. It's a prophylactic study. And that study will be completed. It's about 250 patients, a little bit more, placebo-controlled, double blind placebo control, more pharmaceutical industry lingo. And that's expected to be completed around the end of 2022. There's no interim look there. So you go into clinical trials, and you're in clinical trials until they end. Separate from that, there is an investigator-initiated trial going -- which is, I think, what this question is referring to. An investigator-initiated trial is as those words are defined. It is initiated by an investor. There is a request from the sponsor, usually, for some sort of support. In our case, the support was Mytesi. And the -- it's in breast cancer, the patients are being treated with products from Genentech. Genentech is paying for the study, being run at Georgetown. An investigator-initiated trial is controlled by the investigator. We can't see the data. We can't analyze the data. We can't do anything until those results come out, unless we are requested to do something. So the trial did get a bit delayed during the pandemic when there are a lot of cancer services that were not being done in the hospital. I'm happy to say that all the patients are now enrolled and completed the trial, so the data is in the hands of the Georgetown investigators and statisticians. There was some transition of [indiscernible] study, so we're making sure that somebody else is picking up the helm here with urgency. And I would expect that data to come out in the next month or 2. Again, we don't have any control over it. But I can tell you that it is the full plan and expectation of a situation like this, investigators like this to publish. So they were trying to get it done in time for ASCO, but that didn't happen because ASCO is going on next week. And these are not regulatory trials. They do not help us get the labeled indication for cancer therapy-related diarrhea. But with the publications and with the prestige of the investigators in the site, they provide pre-education, pre-promotions for the oncology community before our product comes out. I have a question about any update on potential acquisitions and a nice compliment. Thank you for the compliment. So we haven't spoken specifically about any acquisitions. But most pharma companies, particularly those that have a commercial sales force, it's always nice if you can fully utilize the asset that you have as a sales force. Can you put another product in their bag? So it would make sense that any commercial company, and we are a commercial company in the United States, we keep their eyes open for other products that could match and fit with the sales force skill set and targets, targets being health care providers that they have. And this actually brings up another thing that I do want to say. We have a shareholder vote that's going on right now. And one of the items of the proxy is the increase in the authorized shares that we have available to utilize. And one thing that shares are really good for is if you do find another commercial asset and you want to bring it in and you don't want to use your cash because you have your cash budgeted and allocated for the clinical programs that you have going on, shares can be another way to go about that. And right now, we don't have -- we have essentially no available authorized shares. So it's a very, very important vote for us to get for just future opportunities, to be able to make the most of future opportunities. So my official statements would be, we encourage all eligible stockholders who have not yet voted their shares as of the record date or provide voting instructions to their broker or other record holder and to do so prior to the annual meeting, which is next Friday. So participation is important. We need to get to a quorum there. Question about how are -- I make the typo all the time. How are the trials? How are the happy trails? How are the trials? The cancer trial is enrolling nicely. So that's -- we are in the midst of the Phase III clinical trial. The time frame that I gave you to complete that trial about the end of 2022 is already taking account of some of the slow-up that we had during the pandemic. So we had started the trial, I believe, in the fourth quarter of 2020. And a cancer trial, as any trial, it was just a lot of, right, a lot of health care providers, and we're doing what they had to do in an emergency. But taking that into account, things are really opening up now, and we expect that to be completed by the end of 2022. When will the SPAC financing complete? So the first funding occurred just 2 days ago. And I expect that this will -- in talking to Josh, who is the sponsor of the SPAC, that, certainly, as an Italian company, this is expected to be completed before the August holidays. I would expect sometime in the first half of July. And it's interesting, this was all -- has occurred, Napo EU and Dragon SPAC incorporated in Italy and all the activities going on in Italy, and none of us have been able to travel to Italy yet. So that's one of the reasons why things took a little bit longer than I know some investors were looking for. Okay. What about developments in different parts of the world other than U.S. and Europe? Thank you for that question because we are committed to bring this product, crofelemer, to all the different indications. You've seen our pipeline and our product, it's like 7 or 8 different indications, all the different populations, all the different countries in the world and regardless of social or economic status. And so in other parts of the world, we are looking at classic out-license opportunities. So we are handling development and commercialization in the U.S. right now. Napo EU will be doing that in Europe. And there are discussions going on in Asia, in the Mid East. And it's been interesting, as we have waited a little bit longer, put another potential indication into clinical development, the Phase III trial for cancer therapy-related diarrhea, defining the value of crofelemer's mechanism of action, the potential value, potential clinical opportunity, it creates even more value for those licensing opportunities. What is the time frame for EMA fast-track process for short bowel syndrome? So that is being put together right now. We need to have some regulatory discussions with the EMA or European Regulatory Agency. Our previous discussions and our previous work there had been focused on the COVID long-hauler. As an orphan indication, short bowel syndrome, crofelemer for short bowel syndrome qualifies for a conditional approval, so a similar pathway to the long-hauler. We do have orphan drug designation for crofelemer for short bowel syndrome in the United States, so we need to file for that in Europe. And another important factor is you want to be -- these patients are really sick. I mean it's really a catastrophic event when they lose a good portion of their bowel or perhaps born with a short bowel and -- which can be congenital or due to a premature baby. And you want to be -- you want to have all the good stuff and none of the stuff that could potentially cause damage, meaning a different formulation, a concentrated liquid formulation. So we don't have any excipients, we don't have the pill going in there. And so developing that formulation, and there's already been work going on for a liquid formulation, getting stability and getting that optimized is part of the time frame to start the clinical trial and then complete the clinical trial in accordance with the requirements for conditional approval. So that's what we're looking for and need to have a meeting with the regulatory agencies on this topic as opposed to the COVID topic. Will the vote yes for more shares mean there will be an offering soon? Or is it just -- so as I -- this is a question about what are those shares for. And as I said, it's for flexibility. Merger -- well, merger acquisition, product acquisition, you just can't run a company without having shares. You never know what you might need those shares -- you never know what opportunity is going to come your way, and you may need to have some shares. And we essentially have no authorized shares right now, so it's a very, very important vote. Is the SPAC merger going to be completed by the end of June? I can tell you that the merger, the financing, the final funding of Dragon SPAC will be done sometime around the end of June, beginning of July. And so they're just how fast investors move on that one. The merger will be about 30 days thereafter because once the funding is done of the SPAC, there needs to be the signing of the merger agreement, and those terms need to go through an Italian authority. So it takes about 30 days for that to happen. That is technically the completion of the merger. What is the update on Canalevia FDA conditional use approval? Oh, good, a well-informed Jaguar investor. So Canalevia is crofelemer for dogs. And conditional approval is like orphaned indication. It's a rare disease for dogs. And this is chemotherapy-induced diarrhea and exercise-induced diarrhea. So those -- all the pieces of those applications are in front of the Center of Veterinary Medicine of the FDA right now, and we expect to have that response by the fourth quarter of this year and, therefore, are preparing for the launch of the conditional approval for Canalevia for dogs, for CID and EID. Is Napo still going to be listed by the end of this month? If you mean listed on NASDAQ, of course, we're going to still be listed on Nasdaq by the end of this month. How are the Parkinson's and other disease expirations for the neurological drug you're developing going? So this is Entheogen Therapeutics Initiative. This is our drug discovery initiative, looking at second-generation psychoactive, psychedelic compounds to work in mood disorders, CNS disorders, neurodegenerative diseases. And we have brought on a person who is focused -- this is a business development effort, so we're going to do what is in our core strength, our wheelhouse, the identification of plants, many of which are already in our library, working with world-renowned ethanol botanist, ethanol pharmacologists that we've worked with in the founding of [ Xamen ] to identify their favorite plants, that they've had experience with or seen [ Xamen ] working in the field to have the CNS effects. We have one compound that's already identified, that it appears to be a novel mechanism of action for schizophrenia. And what we're looking to do is partner with some of the many very well-funded companies that have the skill sets and are building the infrastructure to do clinical trial and regulatory activities and, ultimately, commercialization in this area. They're pretty much all chasing the same 7 compounds right now, the Psilocybin, the MDMA, the Ketamines. So we're the next generation and new ways think about treating and curing these diseases. It's very exciting, and at this point, it is a major business development effort, and those conversations are progressing really nicely. Let's see. What is the information you'll be presenting at the ASCO Conference? So there are third-party investigators. There are 2 papers that are published, and one is a poster that has -- and the investigator there, Dr. Pablo Okhuysen from the MD Anderson, has given some nice interviews in some journals. And in general, the 3 of these -- 1 poster, 2 publications, cover a similar topic. It was looking at payer data to show what is the cost of not treating diarrhea in a patient receiving cancer therapy. And it comes from hospitalizations, IVs, rehydration necessary, so the cost savings of being able to manage diarrhea and then also patient outcome. And what does patient outcome mean? The patient, by managing the diarrhea, is able to better stay on their life-saving dose without having to take interruptions in their cancer therapy, their adjuvant therapies or long-term therapy or without having to go on dose-deescalation regimes. So by doing that, they're able to have a better health outcome, really, really important data. And diarrhea is the most common side effect in cancer therapy-related treatments, but there are not a lot of publications because there are no agents out there. There's nothing that's been tested. There's nothing that's approved specifically in cancer therapy-related diarrhea. So these types of publications done by third parties, key opinion leaders, influencers, are really important to start to build the awareness before we get the label expansion or are able to educate and promote Mytesi for cancer therapy-related diarrhea. So the last question I have here is -- oh, that's nice. I had a nice message. Thank you. Last time you were talking about a Phase IV trial completion. Is there other -- any update on the data release? Yes, the Phase IV study, this is a microbiome study that was done on label. So it was done in HIV patients, and it was looking to see if crofelemer can provide restoration of a healthy biome, which is such an important topic, such a hot topic right now. So biomes, the best I can explain this, there are -- and I don't know what the word is. I don't know if it's hundreds of thousands or tens of thousands, but there's lots of bacteria in your gut. And so the amount of data is -- this is a large data analysis, a large data issue going on right now. And we do have an expert statistician in our company, an expert in working with biome who is sorting through this data. And so we are on it, and we're very exciting, but we've got to get it right. So there's just a lot, a lot, a lot of data to go through. And so that will be reported out sometime soon. I would expect that in the cancer data -- what are we in? We're in, in June. Certainly, this summer, I think both of those results should be out. And that is the end of the questions. We've gone on for a long time. So thank you. Those of you who are still on, this concludes the webcast and the questions for today. Thank you all for joining. Thank you all for your interest in Jaguar, Napo, Napo EU, crofelemer, Mytesi, Canalevia, everything that we have going on. We will be back with the final funding of Dragon SPAC. And keep your eyes out for a caption contest at the Jaguar Health community at the Instagram page, my little guilty pleasure. Thanks, everybody. Have a good and healthy and happy day.

This concludes today's call. Thank you for your participation. You may now disconnect.