Q4 2019 Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the PLX Pharma fourth quarter 2019 earnings Conference call.

At this all participants I know listen only mode. After the speaker presentation, there will be a question and answer session.

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And now they tend to compensate speaker today, Lisa Wilson Investor Relations for PLX Pharma. Please go ahead ma'am.

Thank you do well welcome to PLX Pharmas Q4, 2019 earnings results call. This is Lisa Wilson of insight Communications Investor Relations for PLX.

With me on today's call or Natasha Giordano, President and Chief Executive Officer.

And read a O'connor Chief financial Officer of PLX, you can also accessed the webcast of this call.

New investors section of the PLX web site at PLX pharma Dot com.

Before we get started I would like to remind everyone that any statements made on today's conference call that express a belief expectation projection.

Forecasts anticipation or intent regarding future events and the company's future performance, maybe considered forward looking statements as defined by the private Securities Litigation Reform Act.

These forward looking statements are based on information available to PLX Pharmas management as of today.

And involve risks and uncertainties.

Including the noted in our press release issued this morning, and <unk> filings with the FCC.

Such forward looking statements are not guarantees of future performance.

Actual results may differ materially from those projected in the forward looking statements.

I will ask specifically disclaims any intent or obligation to update these forward looking statements, except as required by law.

The archived webcast will be available for 30 days on our website PLX pharma dot com.

For the benefit of those who maybe listening to the replay or archive webcast. This call is held and recorded on March 13, 2020. Since then PLX may have made announcements related to the topics discussed. So please reference the company's most recent press releases in FCC filings.

With that I'll turn the call over to feel like to CEO.

Natasha Giordano.

Thank you Lisa.

Good morning, everyone and thank you for joining our call today I'd like to begin with an update on our regulatory progress our regulatory path and supplemental NDA submission not dependent on providing data to the F.D.A. to support the changes we made and suppliers in the formulation of the approved 325 milligram.

And the addition of a new 81 milligram dose strength.

I just want discussions continue with the F.D.A., we now have a clearer understanding of the data requirements for both dose strengths. The vast war 325 and 81 milligram.

The data necessary in the San Diego include the typical manufacturing related information to demonstrate that the new formulation of ads War is commercially scalable. This morning, we announced that we plan to conduct a bio equivalents or be east study, whereas one 325 milligrams to support the at San Diego.

Filing we look forward to confirming the be east study design with the F.D.A. in a meeting currently scheduled for late April.

Once we are aligned with the FDA on the study design. We can provide an estimated submission date as we previously announced we've agreed with the FDA on the requirements for their review on the Bachelor 81 milligram at San Diego, which will be filed following the 325000 war submission we remain calm.

Student about or regulatory path and look forward to bringing back the water market.

We're excited the park west our largest stockholder and new institutional investor to Peel that MSP partners have committed to a financing of 8 million that will help support our commercialization and regulatory efforts. We will provide you with the details of the finding things in a few minutes as a reminder, we've.

Received approval for updated labeling of South were 325 milligrams in December for over the counter products. The package is considered to be the labeling by the FDA, we've invested significantly in market research involving the consumer unincorporated feedback from retailers and the FDA and the development of the tax.

Aging design for example, or our plan is to acquire the improved 325 milligram labeling to the 81 milligram dose string we consider our labeling unique and differentiating for example, or a new and innovative aspirin. We're delighted to have on you packaging approved at this time because this is.

Julian important achievement appeal X.

I'll now turn the call over to our CFO read O'connor to discuss fourth quarter results. Rita. Thank you Natasha discussing the results of the fourth quarter of 2019, we recognize revenue of approximately $24000 in the fourth quarter of 19 compared to revenue of $300000 in the fourth quarter 2000.

18.

All the revenue recognized is attributable to work performed under an award of a National Institute of Health Grant, which is nearing completion.

Research and development expenses were approximately $900000 in the fourth quarter of 2019, roughly flat with the fourth quarter 2018.

The expenses in both periods included continued development and manufacturing activities for bad for.

Spending in the fourth quarter of 2019 was related to continued stability and dissolution testing of the registration batches, we manufacture last year.

Overall R&D spending for the first quarter of 2020 will decrease from the fourth quarter as we're wrapping up testing on the registration batches, but that spending will be replaced by spending on the B.E. study starting in the second quarter.

General and administrative expense totaled $2.8 million in the fourth quarter 2019, compared to $1.9 million in the fourth quarter 2018.

This increase is due to sales and marketing related activities of approximately $700000 to prepare for the launch of bad or as well as a noncash charge of around $200000 for stock based compensation.

DNA expense is expected to remain at current levels for the next few quarters as we selectively spend on prelaunch sales and marketing activities and we continue our presence at medical conferences.

Developing professional consumer messaging and planning for retail trade merchandising and support.

Other income that was down $3.7 million to $1.8 million of net other income in the fourth quarter of 19 due to $3.8 million.

Lower noncash income from the change in fair value of the warrant liability.

Primarily due to fluctuations are common stock price.

As a reminder, a decrease in the stock price at the ended the quarter compared to the previous quarter end causes a decrease to the liability that's an increase in income.

The decline in other income was offset by $100000 of lower interest expense due to the pay down of our term loan combined lower interest rate.

The principal balance over 7.5 million dollar term loan with Silicon Valley Bank was paid down to $4.4 million as 12 31 19.

Net loss attributable to common stock holders in the fourth quarter of 19 was $2.3 million or 25 cents per basic and diluted share compared to net income attributable to common stockholders of $2.9 million or 34 cents per share for the for the fourth quarter of 18.

In addition to the increase in operating loss of $1.2 million. The fourth quarter of 19 also included a noncash gain of $1.9 million were 20 cents per share compared to a gain of $5.7 million or 65 cents per share in the fourth quarter 2018.

Related to the change in the warrant liability.

The fourth quarter of 19 also included a charge of $317000 or three cents per share for preferred stock dividends related to the $15 million series, a convertible preferred stock financing completed in February 2019.

As of December 30, Onest 2019, we had cash cash equivalents, a $14 million or overall net cash burn from the fourth quarter was a little over $4.5 million, which reflects $3.8 million up operating expenses included 938000 of debt principal payments.

Partially offset by about $162000 of net proceeds from the issuance of our common stock under equity distribution agreement for ATM.

It's in touch you mentioned, we entered into a purchase agreement with park West asset management and MST partners to purchase 8000 shares of series B convertible preferred stock for gross proceeds of $8 million.

The preferred stock will be issued a thousand dollars per share and will be convertible into common shares at a conversion price $3.10 per share.

Holders of the preferred stock will be entitled to an initial dividend rate of 8% per annum, which will stop accruing at the date on the date of the FDA approval of the Sndk for about two or 325 and 81 milligram.

The dividends or compound a quarterly and payable in cash for preferred stock appeal axes option.

Another note, while we issued warrants along with this financing the warrants or canceled when we receive stockholder approval.

This financing is very similar to the series a convertible preferred stock we closed on in February of 19 with the main difference being an increase in the conversion price.

We expect a transaction to close in the second quarter 2020 subject to stockholder approval and the satisfaction of certain customary closing conditions.

We intend to set a date for stockholder meeting to prove the transaction and once it is scheduled we will send to notice and a definitive proxy statement.

This financing in addition to our current cash balance should provide a cash runway until the end of the first quarter 2021.

As we progress on a regulatory pathway, we plan to seek additional financing once we submit the S in deejays.

The timing of submission and the amount of additional capital raised will determine the level of pre launch marketing spending and commercial inventory build prior to the approval about war.

With that I'll turn the call back over to Natasha. So she can share more details about our recent activities Natasha.

Thanks, Rita and these next critical months, we'll focus on meeting or regulatory requirements to support our submission although conducting a b study will impact our timeline. We believe this will result in a stronger at San Diego filings to support vast war.

For those who may be on familiar with that well. Let me briefly she has some highlights of why we believe in whole such promise for health care professionals in such a large patient population.

As long as the first liquid filled ashwin capsule unimportant innovation in a category that has not had anything new in decades.

As long as a new better and more reliable aspirin therapy for the treatment of vascular disease.

Our addressable market includes vascular patients, which is comprised of people who have had a heart attack stroke or vascular procedure. This market also includes diabetics, who have a higher risk of having an initial vascular event and whose doctors recommend aspirin therapy. These two patient groups.

Together represent more than 40 million people in the United States and a potential $10 billion retail market.

Central to our launch strategy is to raise awareness amongst the medical community and communicate bazemore scientific results, we continue to invest and engage with thought leaders in cardiology, neurology and gastroenterology to ensure that we understand their clinical needs and they understand the unique benefits of our innovative.

Aspirin therapy in the treatment of vascular disease.

And essential component of commercialization is the execution of our publication strategy in February and original poster entitled Bioavailability of aspirin and fasted and fed stage of a novel formulation of a pharmaceutical lifted asked from complex was presented at the 2020 intern.

National stroke conference the Premier meeting dedicated to the science and treatment of cerebral vascular disease and brain health.

This study was simultaneously published in the journal thrombosis and Thrombo license.

The results establish that basketball or may be code administered with food without significant impact on Aspen bioavailability. The fact of vascular can deliver aspirin reliably irrespective of whether it is taking on an empty stomach well with food is clinically significant.

The feedback was extremely positive and there was genuine enthusiasm for a better products in the aspirin category.

We're excited that two other abstracts have been accepted for presentation at HCC.

The first is entitled improved pharmacologic profile of a novel liquid Aspen formulation compared with enteric coated aspirin a pooled patient level one ounces of two randomized crossover study.

And the second its impact the weight on the anti platelet effects of Aspen results of a pooled analysis of two randomized crossover studies, comparing a liquid aspen formulation within Terry coded Aspen.

Although the HCC conference has been canceled we are waiting for confirmation on whether or not these meetings will be held on line.

In December we participated in panel discussions with the cardiovascular clinical trial. This forum in Washington, DC, which is a unique interactive meeting for leading global experts in cardiovascular clinical trials in January we attended the neurology update and stroke intensive review 2020 meeting which folks.

This is on developments in the diagnosis and management of neurologic disorders.

We believed that our presence at these prestigious forms with experts in the field of vascular disease is a key component of our preparation for commercial launch as we engage with these special is it is evident that robust scientific data is critical to their understanding of our product and ultimately to establish basil or.

One component in the treatment of vascular disease.

Our pre commercialization efforts continue to include productive discussion with the retail trade and developing marketing plans aimed at consumers, who ultimately make the purchasing decision.

Together these three constituents health care professionals retailers and consumers are key to our pre launch activities and commercial strategy with that I'll open the call for questions. Operator. Please go ahead with the instructions.

Thank you as a reminder to ask a question you'll need to press star one on your telephone to withdraw your question passed the pankey. Please stand by all the compiled it kinda roster.

Our first question comes from Elliot Wilbur with Raymond James.

Let's now open.

Thanks, Good morning, I'm, just a couple of additional a follow up questions on the be each study.

I thought the update back in early January essentially sort of gave you the clarity you needed in terms of.

Bridging the new and the old 325, and then eventually bridging the 325 to 81 milligram formulation. So I'm curious maybe first kind of what has changed or evolved in the agencies thinking. Since then it has kind of lead you down this somewhat a new path then the.

The B study itself.

What exactly is the or did you competitors in the the study is it the new 325 versus the old 325 or is it 325 versus some other reference drug and then.

Would you.

Walter will include in 80 wanting to be or is it simply the 325 I'm just trying to basically bridge short of what has to happen going forward on the two strikes using the new be protocol versus what.

You had expected to occur back in early January.

Okay. Thanks Elliot.

So we have continued our interactions with the FDA pretty regularly and we have been discussing data modeling approach as well as we announced back in January.

And we could continue down that path. However, they have recommended that we do Bioequivalent study a very simple cross over Bioequivalent studies is was there a device to us.

And so we plan to continue those discussions we have the scheduled meeting in the in the end of April two really aligned on the Bioequivalency study design. So am I, probably won't comment on what the comparative bizarre until we do aligned with the with the FDA, but we feel very confident that this approach.

Just going to strengthen our submission, but also confident because the F.D. I will be in alignment and their approach typically is to recommend a a bio equivalency study.

So to answer your question on on whether or not we'll be doing this study on both doses. We plan to do that Bioequivalent study of simple one for simply the 325 milligram dose and again to bridge back to our approved originally approved 325 milligram.

Formulation and then we've already aligned with the FDA on what they require for the 81 milligram dose, which is supplying them with information in the manufacturing related type of information that would cross reference and bridge back to the 325 milligrams.

Did I answer all your component.

Okay, well I, just I mean, it sounds like basically to be study is comparing the the new formulation versus the prior is that.

Is that fair.

Well like I said, we have submitted a proposal to the I see a on what we think the study design and the comparative should be and once we on line with them on that Elliot, we're going to come back to you and let you know what that is and that should be shortly since were meeting with them a at the end of April.

Okay.

And then.

I guess I mean, obviously it should be relatively quick study, but baby from.

Kind of start to finish in terms of what you're thinking is around the timeline and.

Obviously these are relatively low cost, but maybe where you read it could just comment on any incremental expenditures necessary to complete this based or what you now no.

Yeah. So in terms of the study you're right. It is a relatively simple study probably standard like most be studies are are conducted I think that we'll have better insight. Once we understand the study design you know if they agree that the FDA agrees with is simple design.

I know we've proposed then it should be like any other standard bioequivalence study. When you took in terms of the cost yeah. It should be relatively inexpensive compared to other studies and so we've kind of built that into the cash burn forecast. So the good news is we're gonna be spending less on.

Manufacturing testing that will be replaced starting in the second quarter with the cost of the B study. So it's going to kind of come out to us relatively similar levels that we've been spending on R&D.

Okay.

Those were my questions. Thank you.

Thanks Elliot.

Thank you as a reminder to ask a question you only need to press star one on your telephone.

Our next question comes from Estar, Hong with Janney. Your line is how often.

Hi, good morning, So can you provide any updates on the stability testing that was taking place has this already been completed thanks.

Sure Esther Trita. So yes, so we actually are in the process now we've completed the stability and good news is it's much more stable than the old formulation, which again was one of the reasons that we decided to go with this formulation and we're going to continue doing a stability testing, which is normal for protocol.

Three months six months nine month, and then ultimately 12 month. So we've completed what we need for the filing and we'll be able to be ready for this submission once the the B study is completed.

Great and are there any other gating factors.

Prior to a asante submission.

Just completing completing the B study of course, and then completing the data package that that forms the CMC portion of the supplement which we've been working on all along so we anticipate that we'll have all the pieces.

To make this a a strong submission for the FDA.

Thank you.

Thank you estimate.

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

[noise]. Thank you we're excited to continue to advancing our regulatory and commercial efforts. The Pos management teams on a mission to bring a new and better Aspen alternative to health care professionals and to millions of patients at risk for vascular disease that.

The world has the potential to disrupt and transform the aspen market and become the new standard of care. Thank you again for your time and have a great day.

Ladies and gentlemen, this concludes todays conference call. Thank you for participating you may now disconnect.

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