Welcome to the Talphera First Quarter 2024 Financial Results Conference Call. This call is being webcast live via the Events page of the Investors 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 strictly prohibited. As a reminder, this webcast is being recorded. You may listen to a replay of this webcast by going to the Investors section of Talphera's website. I would now like to turn the call over to Raffi Asadorian, Talphera's Chief Financial Officer. Please go ahead. Thank you for joining us on the call today. This afternoon we announced our First 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 likely 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 also be found on our website within the Investors section at www.talphera.com. I'll now hand the call to Vince. Thank you, Raffi. Good afternoon and thank you for joining us on the call. Today I'll provide a status update of our NEPHRO CRRT study evaluating nafamostat's use as an anticoagulant in the extracorporeal circuit. Later we'll provide some other corporate updates and Raffi will update you on the financial results for the quarter. Since our last call was just two months ago, we'll keep our prepared remarks brief so we can move directly to any questions you may have. Before we begin, I'm thrilled to welcome Dr. Shakil Aslam to the Talphera team as our new Chief Development Officer effective May 20th. Dr. Aslam has over 20 years of clinical research experience specializing in the field of nephrology. He'll support Dr. Palmer and the rest of the team in the development of Niyad and support the preparation of Niyad for commercialization. Dr. Aslam joins us from BioCryst Pharmaceuticals where he was the 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 11 years with a focus on clinical services with acute and chronic kidney disease, hypertension, renal transplantation, and other nephrological diseases. His extensive experience across industry and academia as a renal expert is impressive and is a true asset to our organization. Welcome, Dr. Aslam. Now moving to our study update. As a reminder, this FDA-agreed registrational study will enroll only 166 patients at up to a limit of 10 sites. Once sites are activated, we expect enrollment and completion of the study will be rapid, particularly since the design of the study calls for the primary endpoint to be achieved within 24 hours with a patient completed after only 72 hours. We have finalized the negotiation of clinical trial agreements with five large academic institutions and just await these sites to finalize their internal administrative activities prior to beginning patient enrollment, which is expected to start this quarter. We're also advancing clinical trial agreements with the five remaining potential sites. The principal investigators inform us that they remain eager to initiate the NEPHRO study and that they continue to believe the trial will be quickly enrolling. These PIs estimate that up to 80% of their patients currently on CRRT would meet the inclusion criteria in the study protocol, and they continue to support us in our efforts with their respective administrations to finalize their institution's requirements. Furthermore, the number of patients receiving CRRT continues to increase as evidenced by our quantitative market research published in the journal Renal Failure, estimating the number of patients undergoing CRRT has increased by roughly a third since COVID and remains at this heightened level. Therefore, we don't believe patient availability will be a concern that limits enrollment. As stated in today's press release, as a result of the initial administrative delays, we expect that our previous guidance of having top-line data available by September 30 will be revised. Once patients begin enrolling, we plan to provide an update on our expected study completion and PMA filing dates. Importantly, with the PIs' feedback about rapid enrollment, a 24-hour primary endpoint, and 72-hour timeline for patient completion, we expect the timeline for a PMA filing will not be significantly delayed, and we plan to provide new estimates once we have better information available. Now, separate from the NEPHRO trial, we continue to make positive advancements in our manufacturing and related efforts for Niyad. All active ingredient and finished drug production to date have met our specifications, and we are now in the process of collecting extended stability data on our GMP-grade product to support shelf life for commercial launch. Our manufacturing partners have done an excellent job achieving timelines, specifications, and the cost expectations we've set for them. We're excited to continue to work with them as we prepare for a commercial launch expected in 2025. To gain further insight beyond the market research already performed, we recently completed some additional qualitative market research with a group of nephrologists, intensivists, and pharmacy directors on the attributes of nafamostat. These participants emphasized nafamostat's strong safety profile over the past 30+ years, particularly for patients with liver impairment or contraindications to heparin and citrate. Specifically, the participants commented on nafamostat's safety attributes such as its ultra-short half-life, allowing it to be rapidly cleared from circulation and potentially avoiding unwanted complications seen with longer circulating agents such as heparin and citrate. In addition, the research continues to support uptake of Niyad at a competitive price to the total cost of citrate anticoagulation. This total cost of citrate anticoagulation includes the cost of calcium and the required monitoring of calcium levels. Importantly, the additional market research reinforces our belief in the estimated peak market sales potential for Niyad exceeding $200 million across CRRT and intermittent hemodialysis. Our initial focus is on CRRT, and the estimated peak market sales potential approximates half of this amount, or $100 million. On the IP front, we filed multiple patent applications for the Niyad product candidate in the U.S. and other major pharmaceutical jurisdictions worldwide. During and after study completion, we expect to continue to pursue additional patent rights to enhance our patent position. In addition to our focus on Niyad development during the quarter, we successfully closed on two separate transactions to fund this development. Two existing investors, led by Nantahala Capital Management, supported the company with $18 million in total proceeds structured with $6 million at the first close earlier in the quarter and $12 million in committed capital at the second closing after achieving the pivotal trial milestone. Now, importantly, Nantahala remains supportive and committed to ensuring Talphera has adequate funding to reach PMA approval of Niyad. Given the potential extension of the original timeline, this support is highly appreciated. Also, during the quarter, we agreed to partially monetize the DSUVIA royalty and milestone streams with XOMA Royalty, which provided us with $8 million in cash to focus on Niyad development. This non-dilutive financing allows us to participate equally in certain royalties and the milestones after XOMA has achieved their specified return. Now, before handing the call to Raffi, I wanted to mention that last week we received a court's order in the class action securities litigation granting our motion to dismiss with prejudice on all claims. We're pleased the court has granted the motion to dismiss, and while it's taken a long time to receive this order and the plaintiffs have an opportunity to appeal the order with a higher court, we're happy with the outcome. Now I'll hand the call over to Raffi to take you through the details of our First Quarter financial results. Thank you, Vince. After completing the XOMA royalty transaction in January, all DSUVIA royalties and milestones earned will be paid to XOMA until they reach their agreed return. Only royalties earned from DoD revenues will be recorded in revenues going forward. There were no revenues recorded during the First Quarter. Royalties earned on commercial DSUVIA sales going forward will have no revenue impact due to the accounting for the transaction. Further, we have recorded a $6.3 million liability on our balance sheet related to the transaction, even though there is no recourse to Talphera or obligation to repay the proceeds received from the transaction should DSUVIA sales not result in achievement of the agreed return. Our cash operating expenses, or combined R&D and SG&A expenses in the First Quarter, excluding non-cash stock-based compensation of $0.3 million, totaled $3.9 million compared to $4.8 million last year. The decline from 2023 is due to the reduction in headcount and other costs related to DSUVIA that was divested in April 2023. Full-year 2024 cash operating expenses are expected to be at the lower to middle end of the previously provided range of $21 million-$23 million. Cash and investments totaled $18.6 million at the end of the First Quarter. As mentioned earlier, we completed two separate financings during the quarter $8 million received from a partial monetization of our DSUVIA royalties and milestones, and $6 million received from the first closing of our equity financing with Nantahala and Rosalind. The second closing of this equity transaction is committed upon the achievement of the pivotal trial milestone. While the delay we have experienced in initial enrollment may impact the timing of the completion of the clinical trial and therefore the achievement of the pivotal trial milestone, our lead investor, Nantahala, has expressed their continued financing support as required to ensure the company is appropriately funded through at least an approval of Niyad. We are grateful for the commitment demonstrated by Nantahala as we aim to rapidly enroll and complete the Niyad study. I'll now turn the call back to Vince. Thank you, Raffi. I'd like to open the line up for any questions you might have. Alan? Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Ed Arce of H.C. Wainwright. Your line is already open. Great. Thanks for taking our questions, and let me add my congratulations to Dr. Aslam. I have three questions for the team. First, on the timeline delay, you mentioned the PMA filing delay would not be significant. At this point, out of the 10 possible sites, you have now 5 finalized agreements. I'm wondering if we can reasonably assume top-line results this year. That's first. Second, the opportunity size in CRRT, you mentioned that CRRT is up about a third since COVID and has remained elevated. I'm wondering if you can give some range or quantify what numbers we're talking about here in terms of those procedures. And then lastly, around the cost for Niyad, or excuse me, the price, you mentioned the total cost of citrate. I'm wondering again if you could quantify exactly either a point estimate or some sort of a range for that. Thanks so much. Yeah, this is Vince. We'll take each of those three in sequence. From a time delay, again, we don't expect significant delays. I know I'm repeating what has already been commented, but we hope to provide better guidance on our next earnings call. I think something that's important you've continued to hear as a theme on this call is the rapid enrollment and how the PIs continue to communicate that to us. Just to give you an order of magnitude of the size of some of these sites, Dr. Palmer has spoken to or been at many of these sites. Dr. Palmer, you can just talk about the number of machines some of these sites have and the fact that on the high end of those numbers, those sites are actually involved with the first five we finalized agreements with. Yeah, these are all large academic institutions. I mean, some of them have over 30 CRRT machines. So they're massive, massive ICUs, large number of beds, plenty of CRRT going on. They just feel like patients qualifying for this study is not going to be a limiting factor. And so we definitely have enrollment scenarios that do have us playing into what you mentioned as far as top line still this year. That's absolutely within the realm of our enrollment scenarios. Ed, I think importantly, on average, and this was an interesting data point for us, when you look at all 10 sites that we either have ready to go or in the process of ready to go, about 20 machines per site, CRRT machines. And again, some sites have over 30 machines, and some of those larger sites are already involved with those initial five we've identified. The second question, I want to be sure we understand what you're asking relative to CRRT and the $100 million and the range of procedures. Can you question that one more time, Ed? Yeah, I think you were referring to the number of procedures annually and that since the start of COVID, it's up one-third. So are we supposed to assume it's $133 million a year, or? No, no, no, no, no. So I think the point of what we stated in the prepared remarks is to give everyone comfort that this study will be rapidly enrolled. It's not like CRRT procedures are declining and there's not enough CRRT machines at these large academic institutions and that the study is going to be long. So we wanted to give you comfort that we believe this study and through our discussions with the PIs that this will rapidly enroll. And that's the point. So I mean, I think our procedures that we've outlined in previous discussions of CRRT, the 165,000 patients, and increasing at a relatively good rate. It's not increasing year-over-year, 33%. But the COVID definitely had an impact on the number of procedures. That $100 million was the same estimate we had post-COVID when we realized that the number of procedures had increased. We're reiterating that. Yeah. So there's been no change to the market for CRRT specifically. And then, Raffi, Ed's third question was about the comment we made off of the market research reinforcing the customer's perspective that competitive pricing would revolve around the total cost of anticoagulation with citrate. Can you comment further on that for Ed, please? Yeah. So we may have stated this earlier, but the total cost that we are and through the secondary market research that we've just performed—sorry, let me restate that. It was primary market research, but a second qualitative study that we performed supported what our assumptions were of having the cost of nafamostat or the price of nafamostat at a price that is, I would say, between parity to about a 10% premium to the cost of citrate. And that cost of citrate includes the cost of the calcium that has to be infused on the back end as well as all the monitoring. We've not included any additional HR and personnel for the nurses and a bunch of other costs, but we've just focused on those direct costs. So where that's gotten to us right now, it's going to price around $47-$49 a vial for nafamostat. Obviously, we will continue to work on pricing and additional commercial launch prep during this year. That's where we think we'll end up pricing. Great. Appreciate it. That's helpful. Thanks, Ed. Your next question comes from James Molloy of Alliance Global Partners. Your line is already open. Great. Good afternoon, guys. Thanks so much for taking my questions. I'd love to walk through. Have you guys elucidated what some of the main reasons for the delay? Are there particularly one or two main reasons, or is it a variety of issues that it's sort of been a perfect storm that's kind of pushed back the delay a little bit? I agree it should run very quickly once it gets up and running, but obviously, focus on getting it up and running. And then the OpEx levels, pretty good levels here. I presume those will be coming. What sort of change do we expect as the trial gets up and running through 2024? And then I have a follow-up from there. We'll have Dr. Palmer start, Jim, with the examples of the delays, Raffi, and you handle on the OpEx. Yeah. I mean, there are some consistent factors. I mean, the budgeting offices and the contracting offices of these massive institutions are understaffed, basically, and have a lot of different you line up in a queue for their attention. Luckily, we've been in that queue for a while. So as you heard, half of our sites, we've already finalized the CTAs with. In addition to CTAs and budgets, there is nurse education. There is pharmacy work that needs to be done to bring in investigational products, get it sort of storage locations, get it on their computer systems, etc. So there's common things and also unique things at each site. But once we get through these, and clinical trials are never easy, especially when they're in large academic institutions, the enthusiasm of the PIs and the sheer number of patients that need anticoagulation for CRRT on a daily basis leads us to believe that we're through the painful part of this clinical trial and that we'll hopefully be smooth sailing very, very shortly. Second question, Raffi. Yeah. James, so the OpEx levels we had this quarter were on a cash basis $3.9 million. The guidance for the full year, we've given a range of $21 million-$23 million. We'll probably end up in that $21 million-$22 million range. So you can see it's going to ramp up a little more as the clinical study starts enrolling much quicker. So I think it's similar to the guidance that we've given, but probably in the lower to mid of that range, if that's helpful. Great. Thank you. It's very helpful, actually, because I'd heard the 21, 23. I was wondering what you were referencing earlier. So thank you very much for clarifying that for me. Some more on Ed's question from earlier. You mentioned the 47-49 per vial. Rough estimate of how many vials per patient you anticipate you'll be using? And then I know that back in December, the KOL call, the KOLs on your call are estimating that if approved, nafamostat could replace all of the 30% of the citrate market in CRRT and almost half of the heparin market. Sounds like you guys have done some additional research on that. How about those numbers sort of change or stay the same given what you guys have seen subsequent to last December when we had the KOL call? Yeah, I can take the first part of that on what the assumption is that we use in terms of number of days. So we've assumed about 10 vials a day and 6 days on therapy. So it ranges 5-7 days on a CRRT therapy. So yeah, 10 per day and about 6 days of therapy is what we've assumed. Is that good? Yes. Thank you. Okay. And then the comment was about replacing citrate and half of heparin, etc. Yeah. Yeah. That's actually been consistent feedback, but we're remaining what I'll call measured communications on the peak sales at the $100 million. Depending on which physician you speak to, every institution's different. Some have a standard of care of no anticoagulation. And the rationale for that is they find heparin and citrate to be dirty drugs as it relates to this particular use and the training required and the risk involved for the patients. Others have opposite use where they'll use citrate as a standard of care. Now, clearly, citrate comes with limitations. It's particular based off of training of the staff. Anybody with compromised liver function, you can't use it. So there is a clear opportunity for simplicity if the study achieves what we certainly expected to achieve based off the 30 years' use outside the US. And then to your point on heparin, heparin has been an old standby in what I'll call there's been tolerant use of it where they can use it because of the longevity of experience with it. But it's often used at risk in patients where they prefer not to. And we all know that in the ICU, the risk of bleeding can be high. These are very fragile patients. There's significant mortality rates involved with them. There's complications. So depending on the institution you speak to, some could say it could take more than half. Some will say it'll take half. Some might say a little bit less. But there's clearly a high medical need for this alternative. And I think I'm going to leave it at that. Our guidance to the $100 million remains where it is, but the receptivity toward this product is extraordinary. As a matter of fact, I was on a call with one of our clinical sites this morning, one of our large academic institutions. Again, as we had mentioned, the eagerness of the PI and what was interesting to me, the entire nephrology team and intensivist group's interest in this product to get it into their clinic was extraordinary. As you hear them comment on the safety profile of our product versus what they're using as a standard of care, their standard of care happens to be heparin. Thanks, Jim. We appreciate the question. Was there an additional question, Jim? Sorry. There are no further questions at this time. I would hand over the call to Vince Angotti for closing comments. Please go ahead. Again, thank you to Ed and Jim for being on the call today and the continued interest and sharp questioning relative to our commentary. I also want to thank the balance of you for joining us today and your continued support. Look, we remain absolutely focused on driving long-term shareholder value, especially on the execution of the nephro study to make Niyad, which we certainly believe is a very promising product candidate to be made available to patients who can have a real change in standard of care for these patients undergoing CRRT. If you have any additional questions after the call, please don't hesitate to contact us through our investor line, and we certainly look forward to sharing with you our future developments and progress. Alan, thank you for the call. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.