Good afternoon, ladies and gentlemen, and welcome to the TFF Pharmaceuticals’ Second Quarter 2020 Financial Results Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Mr. Paul Sagan of TFF Pharmaceuticals, Investor Relations. You may begin your conference..

Thank you, operator. Hello everyone, and welcome to TFF Pharmaceuticals second quarter 2020 financial and business results conference call. With me today is Glenn Mattes, President and CEO of TFF; Kirk Coleman, Chief Financial Officer; Dr. Bill Williams of the University of Texas at Austin; and Chris Cano, Vice President of Business Development.

A press release announcing our Q2 results is available on the TFF Pharmaceuticals’ website. Please take a moment to read the disclaimer about forward-looking statements in the press release. The earnings release and this teleconference both include forward-looking statements.

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 the disclaimer and in our filings with the U.S.

Securities and Exchange Commission, including the risk factors section of our 2019 Annual Report on form 10-K filed with the SEC. And now, it’s my pleasure to turn the call over to Mr. Glenn Mattes..

Good afternoon and thank you for joining us today to review the company's second quarter operations and recent highlights. During this call I will provide an update of our clinical and corporate progress and then I will ask our Chief Financial Officer Kirk Coleman to review the company's financials. We're also happy to have Dr.

Bill Williams from the University of Texas at Austin who will talk about some of the exciting progress we're making in applying our Thin Film Freezing technology to biologics and Chris Cano our Vice President of business development will also update us on that key aspect of the company and then we'll open up the lines for your questions.

Well, as you have seen from this afternoon's press releases we've had an enormously productive and active second quarter and this activity has continued on into the recent weeks culminating just today with the announcement of a strategic licensing deal with Union Therapeutics. I will discuss this very significant development in more detail shortly.

And in another important development earlier this week we announced the closing of a $25.9 million private financing, supporting by some of the premier life sciences investors in the country.

This funding will enable the company to accelerate development projects which will continue to focus on compounds that we can bring to market via the 505(b)(2) regulatory pathway.

We believe this funding is a strong validation of our Thin Film Freezing technology platform and reflective of our track record in meeting our business and clinical milestones.

Nowhere is this more evident than in the progress being made with our two internal development programs which have maintained momentum despite the most challenging clinical environment and generations due to the COVID-19 pandemic.

A lead program for a Conazole Inhalation Powder successfully completed phase 1 trials and our Tacrolimus Inhalation Powder program is enrolling patients in Australia in the phase 1 trial. The start of this program was unavoidably delayed in Australia due to concerns about the spread of COVID-19 on that continent but subsequently proceeded on pace.

TFF Tacrolimus also received the important and valuable orphan drug designation from the U.S. FDA. Updating our development efforts in the cannabinoid space the partnership between the intermediary company and PLUS Products is proceeding well. PLUS Products is a working production line and is testing product now.

They also report positive concept testing with consumers. PLUS Products hopes to be on the market sometime in the fourth quarter of this year. And finally earlier in the quarter Dr.

Williams and his team at the University of Texas at Austin reported important progress in repurposing the closamide an existing broad-spectrum antiviral agent using Thin Film Freezing and other techniques to enhance its effect on COVID-19 therapy and more recently his team reported similar progress in reformulating Remdesivir believed to be one of the most important COVID-19 therapeutics into a form that has the potential to make treatment more potent, easier to administer and more broadly available.

It's important to note that this work was done in the span of less than a month by Dr. Williams and his team responding to the societal need caused by the global pandemic. This is remarkable real world proof of the capabilities of our platform; capabilities that continue to evolve.

We believe we have a disruptive technology that allows us to rapidly investigate prototype and develop a wide variety of compounds. This should give us the flexibility and capability to meet market demands well into the future.

To sum up briefly this quarter we've demonstrated our company's unique ability to be very nimble in responding to market conditions and to be able to take advantage of opportunities as they arise, which is a great competitive capability. We're very gratified that the investment community and potential partners are recognizing this capability as well.

So now I'd like to take a closer look at today's exciting announcement about our partnership with Union Therapeutics. This is a worldwide license agreement to use our Thin Film Freezing technology in combination with niclosamide, an existing drug in use for more than 40 years has been shown to exhibit potent antiviral activity against SARS COVID-2.

This transaction capitalized on our Thin Film Freezing technology and allowed us to enter into this partnership with significant monetization milestones and potential.

We are particularly excited about the prospects of this partnership as Union has worked with niclosamide as a potential treatment for a range of inflammatory and infectious diseases for a number of years.

The Union is currently conducting a phase 2b study with niclosamide in atopic dermatitis patients and has built expertise knowledge and intellectual property rights around the compound class so their interest in our Thin Film Freezing technology is very well informed and very concrete.

We believe this agreement will help speed up efforts to investigate the promising use of niclosamide for potential COVID-19 therapies using our breakthrough TFF technology platform to provide a viable therapeutic option with a new delivery method, maximizing the likelihood of getting the best possible product to as many COVID-19 patient segments in the shortest achievable time frame.

And now I'd like to turn the call over to Kirk Coleman for review of our financials..

Thank you very much, Glenn. For the quarter ended June 30, 2020 research and development expenses for the company were $2.6 million compared to $1.3 million in the second quarter of 2019.

The increase in research and development expenses during 2020 was due to the ramp up of research and development activities following the completion of our IPO in October 2019.

The ramp up includes our preliminary analysis and testing of dry powder formulations of other certain drugs and vaccines we believe have the potential to become product candidates. General, administrative expenses for the second quarter of 2020 were $1.3 million compared to $889,000 in 2019.

The company reported net loss to the second quarter of $3.8 million compared to a net loss of $2.2 million in 2019. As of June 30, 2020 we had total assets of approximately $22.5 million and working capital of approximately $21.8 million. At the end of the quarter our liquidity included approximately $21.9 million of cash and cash equivalents.

And with that I'd like to turn the call back to Glenn..

Thanks Kirk and now I want to turn the call over to Dr. Bill Williams who will talk about some of the groundbreaking work we're doing using our Thin Film Freezing platform in the broad field of biologics including mRNA, siRNA, microphages and other platforms.

This is an area where our technology is unique in and its ability to reformulate these biologics into inhalable dry powder.

Bill?.

Thanks Glenn and good afternoon everyone. This is indeed a very exciting and groundbreaking area of research and development for us to apply our Thin Film Freezing platform to the delivery of biologics.

Biologics which include monoclonal antibodies messenger RNA, small interfering RNA, plasma DNA as well as live organisms including bacterial phages, viruses and bacteria are increasingly being used as active ingredients in pharmaceutical drug development especially highlighted by the hunt for a COVID-19 vaccine and other therapeutics to treat COVID-19.

The problem for delivery of biologics is that they are predominantly formulated as a solution that must be refrigerated to maintain activity and subsequently administered by needle based injections.

Therefore due to their poor stability in liquid form it is desirable to convert them into dry powders for reconstitution just prior to administration to the patient.

The cost and medical errors associated with point-of-care reconstitution, refilling of syringes, change of needles and the invasive injection itself all pose a significant pharmaceutical healthcare challenge.

We imagine these challenges being amplified in parts of the world that do not have the infrastructure to store refrigerated and distribute liquid-based biologics. TFF Pharmaceuticals is applying its Thin Film Freezing technology to directly address these challenges.

In other words we are studying Thin Film Freezing technology to directly solve these delivery challenges of biologics. We have confirmed that we can produce a dry powder form of these biologics that can be administered as a needle-free dry powder form.

Thin Film Freezing technology generates highly porous brittle matrix powders with excellent aerosol performance properties making them ideal for needle-free pulmonary and intranasal administration.

Importantly, there is a need to deliver these biologics locally into the lungs to treat diseases such as viral infections like COVID-19, biofilms associated with cystic fibrosis and other inflammatory diseases.

TFF Pharmaceuticals in collaboration with the University of Texas at Austin have validated that Thin Film Freezing technology is directly applicable to inhaled delivery of monoclonal antibodies, plasma DNA, SiRNA, mRNA, bacteriophages, bacteria and other vaccines.

In addition to these important advancements in delivery of biologics using Thin Film Freezing and as Glenn alluded to earlier we have made important advances in applying Thin Film Freezing to insoluble difficult to deliver drugs. We are continuing our studies of inhaled and oral niclosamide as a therapeutic against COVID-19.

Thin Film Freezing produces highly wettable and aerosolizable dry powders of niclosamide that are ideal for delivery to the lungs.

Also in the quest for therapeutics against COVID-19 we have most recently published as a preprint paper in bioarchives demonstrating application of Thin Film Freezing to form aerosolizable dry powders for inhalation of high potency Remdesivir and we are completing our studies now with the intent to publish in a peer review journal.

In this paper we will demonstrate the real world benefits of the TFF process for creating a dry powder inhalation form of Remdesivir. Lastly we have recently published key and seminal findings on using Thin Film Freezing to deliver high potency drugs like Tacrolimus; meaning that little to no inactive ingredients are required.

This means that we will be able to reduce the amount of inactive ingredients delivered to the lungs using Thin Film Freezing; a definite benefit to inhale drug delivery. Indeed this is exciting research with important implications.

And now I'd like to turn the call over to Chris Cano, TFF Pharma's Vice President of business development who can update you on some of the real world progress that the company is making in these areas. Thank you..

Thanks Bill and good afternoon everyone. Last earnings call I shared with everyone a high level perspective of the ongoing efforts of the TFF business development team and are laser focused on three key areas of growth for the company. These are, one, growing the TFF pipeline internal development programs.

Two, our pharma partnering efforts and three, our government contracting and foundation efforts. We continue to make great strides in each of these key areas. For today's call I will focus on our pharma partnering efforts, the process we use and provide everyone with a few exciting updates.

The BD process as we define it at TFF includes the following steps. First we enter into a confidentiality agreement with the partner. Then we collaborate and agree on a compound for testing.

Next, we enter into a material transfer agreement, a statement of work and upon receipt of the partner's proprietary materials we perform initial formulation work, perform some characterization work, do some aerosol testing, optimization work and collaborate with the partner on the selection of an optimal formulation and/or formulations.

We then run a batch of dry powder samples, deliver the dry powder samples to the partner, the partner then performs in-vitro or cell culture knock down testing to confirm the activity, immunogenicity and/or transfection as the case may be for their compound in our dry powder technology.

To give you a flavor of the work we have been performing and the status of our BD process with some of our partners here are a few examples. Just earlier this week we delivered TFF dry powder samples of [phage] to our partner.

We were able to successfully formulate our partners proprietary phage product candidate into a dry powder which showed superior aerosol properties. We eagerly await the results of our partners ongoing viability testing to confirm the activity of the [phage] before and after the TFF process.

In addition, we are expecting in the next week or so the readout of ongoing plaque assay testing being performed at a third party lab. They are currently testing our TF dried powder samples of our partner's proprietary plasmid DNA. We are very eager to receive the results of this testing.

We are very hopeful that these results will not only confirm and validate that our technology was effective but that this confirmatory testing will also support next steps which will include a licensing and collaboration agreement between our respective companies.

Just to give everyone one more example, early next week we will be delivering to our partner dry powder samples of their proprietary monoclonal antibodies. We were able to successfully formulate our partner's proprietary [maps] into a dry powder which showed superior aerosol properties for delivery to the lung.

In summary, we are working with multiple partners on various proprietary products such as mRNA, SiRNA, plasmid DNA, monoclonal antibodies, bacteria, bacteriophage and vaccines. We are formulating their proprietary biologics into a TFF dry powder for inhalation delivery directly to the lungs.

We are very excited for the future of these potential collaborations. Upon successful feasibility work our goal would then be to enter into a full-blown collaboration and development agreement with each of these respective partners.

These arrangements would include granting the partner a license to our Thin Film Freezing technology and in turn would include an upfront payment, development milestones and royalties to TFF pharma. While I have this opportunity, I think it is critical to thank our strongest partner and collaborator.

All of these business development efforts are supported by the tireless efforts of our collaboration partners at the University of Texas at Austin. With the support of Dr. Bill Williams and his research team we continue to expand the applications of the Thin Film Freezing technology into new and innovative areas of drug delivery.

In closing, from a BD perspective we are very excited about the growth opportunities of our technology and of our company. We believe we have only scratched the surface of the many applications of the Thin Film Freezing technology. With all that said, I will now hand it back over to Glenn. Thank you for your time..

Thanks very much Chris and thanks Bill as well. This has been quite a quarter of activity in progress for TFF. Our team continues to respond remarkably well to the challenge of the global pandemic in ways that can have a real impact on society. I'm so proud of everyone's efforts.

As always we appreciate the support of our investors and our partners as we look to further the potential of our technology and our company and we look forward to updating you on our progress in the coming quarters. And with that I'd like to turn the call back to the operator and open it up to questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from Jonathan Aschoff with ROTH Capital Partners. Your line is now open..

Thank you. Hi guys. Congrats on the Union deal and overall progress. I've got a couple of questions.

What do you intend to do with the capital raised specifically as it relates to new internal projects?.

Hi Jonathan this is Glenn. Thanks for the question. So Jonathan the plan has always been to try and capitalize on the technology to do more internal development following the same strategy that we've had looking for compounds that could be advantaged with the technology and also following the 505(b)(2) platform.

So plan would be to take this capital and start to invest in some prioritized projects that we've been sort of have a list of and do more Voriconazole, Techrolimus work in the TFF technology. So that's the plan. So we've gotten pretty good at knowing how to bring these products along.

So we'll certainly invest a fair portion of that capital into doing more internal development..

Okay. Thanks.

Secondly what must Union only apply your technology to COVID-19 or do they have the freedom to pursue niclosamide more broadly and if yes what pathogens might Union also pursue and I guess in conjunction with that question are all the potential payments to TFF related only to COVID-19 successes?.

Thanks again for that question. So now we have in the license the ability to expand beyond COVID-19. So the niclosamide we believe has a lot of different applications for example as other viruses like Zika.

There is some other thoughts around looking at niclosamide in some oncology applications and Union actually is probably the most accomplished company in experience with niclosamide. They've got some pretty advanced work in the dermatologic space. So for us to partner with Union is really a real plus for us. They're a great company.

They've got a lot of expertise and this is one of those situations where one and one equals much more than two. So this partnership can go well beyond just the application of the technology for niclosamide in the COVID-19 space..

And the milestones of the 210 is that covenanting success only or that can be paid to you for other successes?.

It goes beyond COVID-19 and we don't get specific on the metrics but now there is into the agreement you can go beyond just the just the COVID-19 application..

Okay. And I was curious about the PLUS Products. Are the excipients that you will use or that PLUS will use for the cannabis applications genuinely safer than current vaping excipients? Basically how aggressive are you being with developing? Actually scratch that question.

Given the absence of vaping or combustion that's in your press release about this deal actually it's back in the first Q on the lease can I assume that you're starting with a THC that's already been subjected to some sort of heat to decarboxylate it and therefore to make it psychoactive?.

Bill can you answer that question about what you think the formulation ultimately will look like in the THC containing product. If not I could give you what I can what I can contribute here..

Yes. So we've tested in the laboratory in a series of exploratory formulations different and held dry pattern held and then we've tested them in animals and accumulated quite a bit of data. So that's what I believe it'll be in the dry powder insulation form of these pretty difficult to deliver cannabinoids..

Okay. But I mean they have to be subject to some source of heat before they're psychoactive. So if you're just inhaling them I'm assuming that you're dealing with some sort of THC they've already decarboxylated.

Is that true?.

Well the theory here Jonathan is that you won't need heat there. So yes I guess from a formulation standpoint it would be as you've described..

Okay. Can you work with anyone else in the space or is PLUS Products exclusive deal..

That is not an exclusive deal..

Okay.

One little weird question now without having bought back shares which I do not think you did how can you possibly have 19.1 shares as an average over the second quarter but fewer shares as of August 8 than your 10-K?.

Kirk?.

How is that possible?.

Wait. Repeat, that's a good question Jonathan. Repeat the question again..

Yes. The first page of your 10-Q says 18.7 million shares as of August 8 but your average over the second quarter is 19.1. This is kind of [indiscernible]..

Let me, let me get back with you on that and I can address that offline. Never mind..

Okay and then lastly what's the actual net you raised and how long will that cash last?.

The net we're not providing guidance yet on this point with regards to the net and the cash will last us well beyond the next year..

Okay. So into 2022 would that be..

Yes. Well I mean again Jonathan the intent here is to invest the capital into further development projects which really accelerates the growth of the company.

We're doing well and we're going to get a lot of revenue in through these business development transactions but being able to accelerate our internal development ideas just catapults the company so much forward now that we really our process is just going so well on Vori and Tac , Voriconazole and Tacrolimus the team is executing flawlessly.

So we're going to keep throwing the coals on the fire to do more projects internally. So those will be identified and communicated as those projects are launched..

Okay. Thank you very much guys. Congrats again..

Thanks Jonathan, thanks for the questions..

Thank you. Our next question comes from Daniel Carlson from Tailwinds Research. Your line is now open..

Thanks guys for taking my questions and congrats on all the progress. It's quite compelling from my perspective. There is a couple of questions. First off a real quick one regarding Union. I see they have an option.

I was wondering if there's any upfront payment involved in this contract that you can talk about?.

Yes. So we don't again Daniel we don't disclose specific terms. So the options are tied to some very near-term milestones that we feel will be able to be executed against fairly quickly..

Okay. That's great. And then you haven't talked too much this call on vaccines but that's one area where I really am excited about the potential of TFF.

So I was wondering if you could maybe talk about the work being done with the [army] specifically and Georgia and also any part of the phase two vaccines for COVID that you might be involved with if you could talk about anything going on there?.

So Chris I'll let you talk about USAMRIID and University of Georgia and I'll come back and talk about some future thoughts..

Sure. Thanks Stan for the question. So when it comes to USAMRIID and working with John Dye’s research group there, things are moving very-very well.

We're working with John’s [labs] and so we are going to be delivering back the [labs] to us for some in vitro testing and we're going to be partnering with you USAMRIID to try and get additional funding for the next set of studies. So we're very excited how that is going. We haven't started undo USAMRIID the vaccine work yet.

We haven't received the materials yet, so we expect to be receiving those materials in the next few weeks. With the university of Georgia and Ted Ross's group things are going very well. We formulated their proteins and the adjuvants.

We've delivered them to Ted Ross's group that I think on our last call we described there is a mouse study that's being done. So we expect to receive results from that mouse study by the end of this month. So we'll have some results in the beginning of September.

So both projects are on track going extremely well and we're very pleased with those relationships..

And then Glenn..

Yes, going forward Daniel, we certainly are excited about the potential to apply to the technology for all vaccines and I think what we have to be realistic about is that companies that are developing vaccines right now for COVID-19 are doing what they need to do and what they know how to do.

I think when you think about second generations of vaccines in the COVID-19 space if needed I think that's where we'll get some more involvement and some more opportunities to partner and there will be improvements certainly on the starting vaccines depending on whether they need to be boosted or not. So that's where I think we come in.

We've certainly reached out and have that interest but frankly I think it's much better for these companies to get first version of the market. I think our application in the therapeutic space is a lot more initial immediately, has a lot more immediate potential for us than perhaps the COVID-19 vaccine..

Got you and then one last question for me I mean I think what really got you on a lot of radar screens with your press release about reformulating Remdesivir and I was wondering has there been any further development along the lines of that? Is that something you're pursuing actively or in any status update there?.

Yes. So Bill did a nice job first of all of describing the work that went into that we've done thus far in Remdesivir and what he has planned going forward.

We believe that our platform technology can certainly enhance the delivery and the efficacy and even safety related to delivery of Remdesivir and we think it will be a real potential benefit to patients in treating physicians.

We really have no further update since our comments made in that release that you alluded to Daniel we don't comment on speculating on specific business development activity prior to an agreement being reached and you can see Chris [filed] on the the same, the same platform there. So that's what I can really say about that at this point..

Okay. Well thanks guys. Very great progress and congrats and I will jump back in the queue. Appreciate it..

Thank you..

Thank you. [Operator Instructions] Our next question comes from [indiscernible] - a private investor. Your line is now open..

Okay. Good afternoon Glenn. Congratulations to you and the team. Great going. Great news on that this afternoon.

A curious question I’ve recently saw a video interview of Bill Gates and he was talking about inoculating almost everybody in the world for a variety of viruses and other things in corona as well and I'm just curious whether he or maybe his foundation people may have contacted TFFP for their input, their technology possibly going to use on some of his plans?.

We have had a conversation with the Gates Foundation. They're aware of our technology and those conversations continue..

Okay. They're still progressing then is what you say..

Yes. We've had some interesting on a lot of different levels, not only the COVID-19 space. There is a lot of potential interest in application there but we have no further comment in terms of the status of those conversations but we have had conversations with the Gates Foundation..

Sure. Understandable. Okay. Thank you very much..

Thanks [indiscernible]..

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Glenn Mattes for closing remarks..

Thank you operator. Well, thanks to all of you for dialing in and I will tell you that we're just having a really wonderful time here at TFF. The business is moving ahead. It's just in a tremendous fashion. If you listen to the words that Chris shared and what Bill shared, we have the potential to apply this technology in so many interesting areas.

It's truly ubiquitous in its application. We're just at the really beginning stages of where we think we'll have opportunities to partner and develop more assets. Internally we're very grateful to the investors that we have.

We're excited about bringing on the new investors in the recent round that we just did and we really are looking forward to the next quarter and then the next call to be able to keep you up to date on the progress that we're making. So I hope you all stay well and stay safe.

Enjoy the rest of the summer and we will talk to you again with third quarter results. Thank you..

Ladies and gentlemen this concludes today's conference call. Thank you for participating. You may not disconnect..