Good morning and welcome to the Quoin Pharmaceuticals First Quarter Financial Results and Business Update Conference Call. All participants will be in a listen-only mode for the duration of the call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions.

[Operator Instructions] Please also note that this event is being recorded today. I would now like to turn the conference over to Gordon Dunn, Chief Financial Officer. Please go ahead, sir..

Thank you, and good morning. We appreciate you joining us on today's conference call. With me on the call are Dr. Michael Myers, CEO; and Denise Carter, COO. We're pleased to provide an update of our progress in the first quarter of 2023, as well as discussing our Q1 2023 financial results.

Please note that our operational and financial results press release is now available on Quoin's website. In keeping with our normal procedure, to begin, Michael will provide a corporate clinical and operational update following which I will review our Q1 financial results. I'll then hand the call back to Michael for closing comments.

We will be pleased to answer any questions at the end of the call.

Before we begin, I'd like to remind everyone that statements made during this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially from the information expressed or implied by these forward-looking statements.

For more information regarding such risks and uncertainties, please see the risk factors outlined in the company's filings with the SEC. Any forward-looking statements are made only as of today, and we disclaim any obligation to update these forward-looking statements other than as required by law.

Please see the forward-looking statements section in our financial results press release issued this morning for more information. It is now my pleasure to turn the call over to our CEO, Michael Myers..

Thank you, Gordon and good morning, everyone. I'm very pleased to report that Quoin has had a very strong start to 2023. Both of our Netherton Syndrome clinical trials, which are being conducted under an open IND are fully up and running, actively recruiting and dosing patients. We look forward to providing clinical data later this year.

Our commercial partners in 60 countries outside of the US and Europe continue to make progress in their respective territories as they engage with regulatory authorities, key opinion leaders and advocacy foundations to deepen their understanding of the requirements, both for entry into early access programs as well as for full regulatory approval.

Our partners are also working with insurance providers and reimbursement experts to ensure that once our product is approved, a smooth and efficient commercial rollout will occur with established pricing and reimbursement criteria.

As you know, there are currently no approved treatments for Netherton Syndrome anywhere in the world, so these interactions by our commercial partners with various regulatory agencies and insurance providers are the first of a kind, which is why the work has been performed in advance of approval.

Our earlier stage programs with Queensland University of Technology, or QUT, in Australia continue to advance during the quarter.

While these programs are at an earlier stage of development than QRX003 for Netherton Syndrome, we continue to believe that they are important components of our development portfolio and have the potential to generate significant downstream shareholder value.

During the quarter also, we successfully completed a capital raise of $7 million prior to fees and expenses. I think it is worth noting that the terms of this raise were more favorable than those obtained by a majority of companies in our peer group that also completed a capital raise this past quarter.

As we have previously discussed, a primary reason for conducting this raise was to strengthen our balance sheet and provide the company with additional firepower as we actively pursue M&A opportunities to broaden our product portfolio beyond rare skin diseases.

We are particularly interested in late stage assets in the rare and orphan disease space that are underpinned by strong clinical data and highly favorable commercial opportunities based on readily identifiable competitive strengths.

We are actively considering a range of therapeutic areas beyond our current rare skin focus with the primary evaluation criteria being the path to commercialization and the scale of the commercial opportunity thereafter.

This current market environment has proven to be highly challenging for many companies and as a result, we have had an opportunity to assess quite a large number of potential M&A opportunities throughout the past quarter, and that momentum has been maintained into this quarter.

Our team has deep experience in M&A and we employ a systematic and thorough approach to due diligence across a number of important metrics.

While there can be no guarantees that a transaction will be consummated, I can tell you that we are in advanced discussions with a number of companies regarding several very exciting opportunities, including some that could potentially be fundamentally transformational for Quoin.

We look forward to updating everyone if and when we have an announcement to make, but I do want to reiterate that broadening our product portfolio through M&A is a key priority for Quoin this year. On a different note, we are frequently asked questions about the competitive landscape for QRX003 in Netherton Syndrome.

We are aware that another company has filed an IND with the FDA and received a study may proceed notification to initiate the clinical development of their product as a potential treatment for Netherton Syndrome. I do want to take a moment now and highlight a number of key differences between their clinical program and ours.

Principally their study is at a much earlier stage than ours as it has been labeled by the company itself as a Phase 1b study. Please recall that we are currently testing our product in what is potentially the first part of a registrational study.

In addition, their study differs from ours in terms of dosing duration, two weeks for them versus 12 weeks for us, and according to publicly available information, their clinical endpoints appear to be somewhat different than the true efficacy endpoints being assessed in both of our ongoing clinical studies.

Finally, again, based on publicly available information, we believe our well-defined cost-effective and reproducible manufacturing process may configure significant advantages overlap of the other company.

As of now, it does not appear that the company has initiated their clinical study and to the best of our knowledge, Quoin remains the only company conducting clinical trials in Netherton Syndrome under an open IND.

Whilst acknowledging the presence of a potential competitor in this space, we believe the advanced stage of our clinical program coupled with a well-established cost-effective manufacturing process provides us with substantial first mover advantage, and we believe we are on track to obtain the very first regulatory approval for a product to treat Netherton Syndrome.

As outlined previously, the combination of our plan commercial infrastructure in the US and Europe, coupled with the commercial partnership next network we have established in 60 countries outside those territories will enable Quoin to affect what is essentially a global launch of QRX003 once approved.

We know of no other company in our peer group that could make a similar claim. With that update on our operational progress, let me turn it over to Gordon to discuss our first quarter financial results..

Thank you, Michael. As Michael highlighted earlier, in February, we completed a $7 million public offering, which further strengthened our cash position the runway.

As of March 31, we had approximately $17 million in cash and marketable securities compared to $12.9 million as of December 31, and we expect that will be sufficient to fund our operations into late 2024. Our operating loss for the first quarter was $2.8 million compared to $2.2 million for the first quarter of 2022.

The increase in operating loss was primarily due to increased R&D costs associated with our clinical studies of QRX003 and our research collaborations with QUT, as well as non-cash stock compensation expense.

Our net loss for the first quarter was $2.6 million compared to $1.7 million for the first quarter of 2022, which included $490,000 in exceptional income items. I will now turn the call back to Michael to make some closing remarks and begin our Q&A..

Thanks Gordon. As outlined, we have had a very productive and indeed a very exciting start to 2023. Operationally, we continue to advance the development of our preclinical and clinical programs as we work to lay the foundation for a strong commercial rollout of our lead assets in anticipation of approval.

We are excited by the quality and scope of the M&A opportunities we are seeing, and our team is extremely focused on pursuing a transaction -- R&D transactions that could be major inflection points for our company. We will, of course, keep you fully apprised of our progress across all of these fronts once we have news to share.

With that operator, we are now ready for questions..

We will now begin the question-and-answer session. [Operator Instructions] At this time, we will take our first question, which will come from Naz Rahman with Maxim Group. Please go ahead with your question..

Hi, guys. Thanks for taking my question and on the progress so far. I just want to start on the open label portion of your study.

Could you provide some color as to how many patients have already enrolled? And also do you have any color of -- which providing color on what percentage or how many of those patients are adult versus children in like the rough age ranges?.

Hey, thanks Naz, for the question. With regard to the first question about the number of patients, could I ask you just to stay tuned, you will see an update on that very shortly. So you'll get a sense. And this study is all adults, so both of our ongoing clinical studies are being -- we're testing in adults only.

The next phase of the registrational study will be adults and children and primarily children. With regard to the age range, it's across the board like 20 to 50, give or take. I mean that -- these are all adults..

Got it.

And based on -- I guess, on the interest you've seen in the study thus far, have you considered potentially expanding the study for more than 10 patients?.

That's a really good question, Naz. And to be honest, it's something that we have discussed among ourselves, so no decision on that yet. But again, I would say stay tuned and there may be an update on that, but it's certainly a conversation we're having..

Got it. And I guess my next question is on the [indiscernible] asset.

Could you sort of talk about what I guess the study design might be for the -- I guess initial study that your partner might conduct? And also like what kind of data are you looking for, or would you be looking for?.

Yeah. We really can't give any information on that as of yet, Naz. They are working on the protocol and the proper endpoint. Bear in mind, bit like Netherton Syndrome, there really is -- there is no approved treatment for this, so there's no validated endpoints, really not a lot of precedent here.

So, what we, and in particular them, are looking to do is see what the best endpoints will be. But I really don't have anything to share at this stage. Hopefully for the next conference call, I'll be able to provide you with more color on that..

Got it. Thanks for taking my questions..

Thanks Naz..

[Operator Instructions] Our next question will come from Jim Molloy with Alliance Global Partners. Please go ahead with your question..

Hey, good morning. Thank you for taking my question. I have a quick question on -- sounds like the progress is advancing rather swiftly on both the open label and the Phase 2, 3.

Are we still anticipating the open label to finish first and Phase 2, 3 here second half 2023, and then potentially getting the Phase 3, mostly children trial up and running here second half 2023?.

Yeah. That's still the plan, Jim. So thanks for the question, but you're spot on. The open label will readout earlier, followed by the first part of the registrational study and then obviously the second part, so that continues to be the sequence of events..

Excellent.

And then, a little earlier stage, the RDEB and the 007 for Netherton and 008 for Scleroderma, are those still progressing in trials? Or -- and how do you prioritize between progressing those versus essentially bringing in a transformative asset?.

Yeah. So, we don't see that as mutually exclusive. Our plans for 08 and 07 for Scleroderma and Netherton, respectively, those have been well established. QUT in Australia are doing all of the work and it's -- as you know, it's very cost effective to do work done in Australia because of the -- almost 50% rebate you get from the Australian government.

So, those programs are continuing. And as you said, look, these are earlier stage. But they will get into the clinic and we think they have the potential to provide significant value downstream. Our position regarding EB remains the same, Jim. This is a market that we are continuing to evaluate.

We're continuing to stand to one side and see how things break out for -- I don't know. I mean the 6, 7, 8 companies that are actively pursuing clinical studies this year, there's going to be a lot of important data points come out.

Crystal, for example, we see if they get approval, there's other companies that have potentially pivotal clinical data coming out. So, as we've said before, if we look -- if we see an opportunity, we'll be prepared to move very quickly, but we're not going to throw dollars at this unless we're convinced that it makes sense.

If you are third or fourth into that market, there is no market. So long way of answering, 07 and 08 up and running, moving along. And we continue to put a high priority on -- bringing in additional assets and we feel like we have the capacity to do that..

Excellent.

And it sounds like, an active acquisition market, do you characterize it as a buyer or seller's market that given the pressed stock prices a number of companies are seeing out there?.

I would have to say, it seems like it's a buyer's market, Jim. And look, companies are making sensible decisions. They're realigning their portfolios, making sure that the assets that they're keeping really make sense in this difficult environment. And I think what we're seeing is very healthy. And for us -- this is really exciting.

We're very energized by what we're seeing, the quality of the opportunities, the breadth of the opportunities. It really is -- has been a very, very exciting start to the year for us. So, we will continue to do our diligence. We we're thoughtful systematic.

We walked away from opportunities that initially looked very promising, but on further due diligence, we felt they weren't the right opportunities for us. We're not looking for perfection by any means, because we know that doesn't exist, but we want to make sure that whatever decisions we make really are the best in the long run for the company.

So, stay tuned. Hopefully there'll be something to announce on that..

Very good. Then the last question for me, I'll hop back in the queue. Any thoughts on -- I know you guys have pretty clear that this is a market that you could self-launch into with a fairly reasonably sized Salesforce.

Have there been any discussions with any digital partners have come forward to potentially partner this rather than self-launch?.

We're approached all the time, Jim. We get constant approaches from companies who are either looking for US rights, European rights, or both. That's part and parcel of our daily existence almost.

But we remain convinced that given the size of the patient population, the limited number of treating physicians, the access to patient registries, the best long-term value we can do for this company is to self-commercialize in these territories, leveraging our own experience in selling products into these markets. So, look, never say never.

If somebody comes and makes an offer that sweeps us off for our feet, then we obviously have to have a conversation. But right now we remained committed and focused to establishing our own commercial infrastructure in Europe. And as you know, we have worked very effectively to establish a global distribution network outside of those territories..

Thank you for taking the questions..

Thanks Jim..

And that concludes our question-and-answer session. I would like to turn the conference back over to Dr. Michael Myers for any closing remarks..

End of Q&A:.

Just want to say, look, thank you for participating here, participating here today. We appreciate you taking the time to be here. If there are any further questions outside of what was covered on the call, we are always available to answer them. So, feel free to reach out at any point in time. In other than that, have a great day everybody. Thank you..

The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines..