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. Should you need any assistance at that time, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then one on your telephone keypad. To withdraw a question, please press Star then two. Please also note that this event is being recorded today. I would now like to turn the conference over to Gordon Dunn, the Chief Financial Officer. Please go ahead, sir.
Thank you. 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 1st 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 will then hand the call back to Michael for closing comments. We'll 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. 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 release issued this morning for more information. It's 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 U.S. 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. 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 continued 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. 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, 2 weeks for them versus 12 weeks for us.
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 over that 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 pre-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 planned commercial infrastructure in the U.S. and Europe, coupled with the commercial partnership next network we have established in 60 countries outside of 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 and runway. As of March 31, we had approximately $17 million in cash and marketable securities, compared to $12.9 million as of December 31. We expect that will be sufficient to fund our office 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 is 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 pre-clinical 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. Our team is extremely focused on pursuing 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. To ask a question, you may press Star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star then two. 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? Also, do you have any color or could you provide any color on what percentage or how many of those patients are adult, versus children and 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. You'll get a sense. This study is all a-adult. Both of our ongoing clinical studies, we're testing in adults only. The next phase of the registrational study will be a-adults and children, and primarily children. With regard to the age range, you know, it's across the board, like 20 to 50, give or take. I mean, that's the, you know, these are all adults.
Got it. 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. To be honest, it's something that we have discussed among ourselves. No decision on that yet. Again, I would say stay tuned, and there may be an update on that. It's certainly a conversation we're having.
Got it. I guess my next question is on the scleroderma 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? 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 endpoints. Bear in mind, you know, a bit like Netherton Syndrome, there really is no approved trea.ment for this, so there's no validated endpoints, really not a lot of precedent here. What we and, in particular them, are looking to do is see what the best endpoints will be. 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.
As a reminder, to join the queue for questions, you may press star then one. Our next question will come from James Molloy with Alliance Global Partners. Please go ahead with your question.
Good morning. Thank you for taking my question. I had 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 to Phase 3, mostly children trial up and running here second half 2023?
Yeah. That's still the plan, Jim. Thanks for the question. You're spot on. The open label will read out earlier, followed by the first part of the registrational study and then obviously the second part. That continues to be the sequence of events.
Excellent. A little earlier stage, the RDEB and the QRX007 for Netherton Syndrome and QRX008 for scleroderma. Are those still progressing in trials? How do you prioritize between progressing those versus potentially you bringing in a transformative asset?
We don't see that as mutually exclusive. You know, our plans for zero eight and zero seven for scleroderma and Netherton respectively, those have been well established. QUT in Australia are doing all of the work. 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. Those programs are continuing. As you said, look, these are earlier stages, 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. You know, 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 gonna be a lot of important data points come out. Krystal, for example, we'll see if they get approval. There's other companies that have potentially pivotal clinical data coming out. As we've said before, if we see an opportunity, we'll be prepared to move very quickly, but we're not gonna throw $ at this unless we're convinced that it makes sense. If you're third or fourth into that market, there is no market. Long way of answering, you know, 007 and 008 up and running, moving along.
you know, we continue to put a high priority on, bringing in additional assets and we feel like we have the capacity to do that.
Excellent. It sounds like an active acquisition market. Do you characterize it as a buyer or seller's market, given the depressed 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. You know, 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. I think what we're seeing is very healthy. For us, this is really exciting. You know, 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 exciting start to the year for us. We will continue to do our diligence. We're thoughtful, systematic. We've 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, 'cause we know that doesn't exist. We wanna make sure that whatever decisions we make really are the best in the long run for the company. Stay tuned. Hopefully, there'll be something to announce on that.
Very good. The last question from me, and I'll hop back in the queue. Any thoughts on, I know you guys are pretty clear that this is a market that you could self-launch into with a fairly reasonably sized sales force? Have there been any discussions with any potential partners who've come forward as to potentially partner this rather than self-launch?
Oh, we're approached all the time, Jim Molloy. We get constant approaches from companies who are either looking for U.S. rights, European rights or both. That's part and parcel of our daily existence almost. 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. Look, never say never. If somebody comes and makes an offer that sweeps us all for a fee, then we'll obviously have to have a conversation. Right now, we remain committed and focused to establishing our own commercial infrastructure in Europe.
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.
That concludes our question and answer session. I would like to turn the conference back over to Dr. Michael Myers for any closing remarks.
Well, I just wanna say look, thank you for 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. Feel free to reach out at any point in time. 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.