Q2 2020 Opiant Pharmaceuticals Inc Earnings Call

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The stars there on your telephone keypad. Other am I know this conference is being recorded it's now my pleasure to introduce your host then I guess, Vice President of Communications and Investor Relations for albeit pharmaceuticals thinking the Frac as you may begin.

Thank you operator, and thank you all joining us this often they.

With me on todays call, our Chief Executive Officer project, Crystal and Chief Financial Officer, David I too.

Good afternoon, Opiates issued a press release announcing financial results and providing a business update for the second quarter ended.

Do you think that 2020.

Please note that certain information discussed on the coal.

Today is covered under the Safe Harbor provision private Securities Litigation Reform Act, we caution listeners that during this call. It <unk> management will be making forward looking statements actual results could differ materially from those stated or implied by these forward looking statements due to risks and uncertainties.

Associated with the company's business.

These forward looking statements are qualified by the cautionary statements contained in appearance news releases and FCC filings, including <unk> Annual report on form 10-K for the year ended December 31st 2019 and subsequent filings.

This conference call also contains time sensitive information that is accurate only as of the data. This might broadcast August 620, frenzy opiates undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this conference call.

Now I'd like to turn the call if it's Roger.

Good afternoon, and thank you for joining us today.

Perhaps more than any other health economic crisis in memory Peroni virus is exposing people every day to triggers of substance use disorders.

The numbers bear this out, particularly in our opioid epidemic is I will highlight in a moment.

I mean, it's very difficult periods that people around the world. We believe our mission to treat addiction and overdose as an important investments the future well health care now more than ever before.

As a development stage company. We are focused on pressing ahead with all lead program Oh PNC. There is there were three nasal boumediene opioid overdose.

We have pipeline programs in alcohol use disorder that you kind of you know, we got a bit dose and opioid use disorder.

Importantly, we lead our work so my strong financial position $30.5 million, Oh, Gosh I'm, David will provide you with a more detailed financial update later.

With that let's review our pipeline progress.

Turning first to opioid overdose.

Let me begin with a sobering analysis of the ongoing and in many ways worsening opioid epidemic.

I do this because I believe it helps put in perspective, just how urgent the need for better overdose therapies truly is.

Well the Crossamerica, there's clear on building evidence.

Social health economic consequences of the Terabit 19 pandemic, our exacerbating the opioid epidemic.

In Wisconsin for example, preliminary figures from emergency Department said that there were 325 suspected overdoses from March through July compared with 150, when the time same time span in 29 team.

Federal data from ambulance teams hospitals I'm pleased suspected overdoses nationally jump, 18% in March 29% in April and 42% in May.

The American Medical Association or Am I recently issued a warning, citing reports from officials in 38 states in regard to rising overdoses I didn't particular increased spread a synthetic bugs.

In response, we are seeing a growing assets to emphasize need easy access to naloxone.

In fact emergent Biosolutions stated on its earnings all last week the demand for knock on nasal spray in May and June trend is higher than pre type levels, along with standing order volume rising 27% since may.

Moreover, in order to drive awareness to knock on other analog said products you have to issue. They mandates to prescription manufacturers to include information on the oxide in the labels that opioid painkillers and opioid use disorder products.

As the original develop often knock a nasal spray opiates remains incredibly proud of the role it plays in saving lives now more than ever.

Yes, while knock on and other naloxone based products are critically important we need to come from an essential stock highlighted by the I may and its statement.

The nation's drug overdose epidemic is now being driven by much more powerful synthetic opioids.

Chemical makeup of synthetic opioids like defense mill allow them to act faster last longer than heroin.

Indeed, fentanyl is 50 times more powerful and heroin.

In July the CBC released new provisional data for drug ever does that's in the United States for 29 Pete.

The report stated that 51000 Americans died from an opioid overdose last year record high.

Of those three and four people died by an over dose related to synthetic opioids like fentanyl further confirming that America is in the firm grip they fit synthetic wave if the opioid epidemic.

From the beginning of 2015 to the end of 2019, that's involving synthetic opioids increased from 5076 to 36509.

These brutal statistics drive our sense of responsibility.

To develop an advanced Opn sees there there are three nasal now mifid has a potential new treatment for opioid overdose based on its profile on its phase one trial results. We believe opium Tees. There is there are three but prove uniquely suited to treat synthetic opioid overdoses three important ways.

First it's high a binding affinity the opioid receptor is opn teams there is a three high potency.

Second it's longer half life reduces the potential for renal could tie they should.

Hi, good it's fast absorption, which is important due to the shorter window to save a life from a synthetic like Sentinel.

As we look ahead, we believe the potential of Opn Tees. There is there are three will be further borne out in a complementary pharmacokinetic and Pharmacodynamic studies, we intend to conduct later this year and included as part of a robust or the if they do we expect to submit without new drug application for Sta review and Twentytwenty wall.

Okay.

Ill now move to the rest of our portfolio focused on the treatment of addiction and overdose.

We are pleased to have now kicks off our collaboration with the National Center for advancing translational science is to formulate opn teams there is very for Trinity.

Human studies for acute cannabinoid overdose or a CEO.

We expect to begin these studies in Twentytwenty Rob.

As Weve discussed previously asias can be caused by the overconsumption of edible cannabinoids I'm through the use of synthetic cannabinoids.

Commonly known as K, two Spice, Oh, Hey, we synthetic cannabinoids are cheap ausley artificially manufactured recreational drugs have emerged as a major public health threat in various regions of the United States.

Study of 30 patients published in Jama in July concluded that ingestion of synthetic cannabinoids can lead to life, threatening complications, including severe toxic and kept philosophy acute respiratory failure and even that.

We estimate that there are over 1.7 million hospitalizations annually I see it.

Regarding our PNC is there is here to Israel now tracfone for alcohol use disorder in the face of a resurgence in the Caribbean 19 pandemic in Europe, and subsequent resumption of restriction on business I'm travel in certain regions, we are maintaining our temporary pause on initiating the phase two study.

We will begin patient recruitment and the impact of cobot 19 sufficiently subsides.

In July we entered into an agreement with summit Biocides is to support the development and manufacture of an additional nasal spray device today with us.

Potentially other development programs.

We use a device delivery system previously evaluated this positive other.

Hey approved nasal spray products.

Finally, let me also provide you with some additional corporate updates.

Lastly on the Teva patent litigation in June.

District courts in New Jersey ruled in favor of the defendant have a pharmaceutical validating various knock on patents.

We disagree with this ruling.

Together with emergent Biosolutions filed an appeal to the U.S. posted an appeal headroom circuit.

I would also like to share some senior staffing updates.

We're very pleased to welcome to open under our senior leadership team, Brian Coleman, our new General Counsel.

Brian brings extensive expertise and experience in the life Sciences industry.

He was most recently vice President and assistant General Counsel at Endo Pharmaceuticals.

All of that Brian spends more than 10 years collectively at Astrazeneca and why Pfizer.

Subscribes show sparing building teams and advising on a broad range of matters across multiple therapeutic areas.

Comic rapidly and changing environment.

Also our chief commercial officer as these multi wall I will be leaving open for personal reasons.

During his tenure at Opiate. These has built a strong foundation and senior commercial team and he leaves us in a good position to further expand our commercial infrastructure.

As easily integrate poly moves on with all of our best wishes and support for his future endeavors.

We will begin to search for new Chief commercial officer in due course.

With that I'll now ask David to discuss our financials in more detail David.

Thank you Roger.

The strong balance sheet ongoing government support for clinical development programs and a steady royalty stream from net sales of nor can we continued to have the resources to focus on advancing our pipeline of potential new treatments for addiction and overdose.

I'll begin with a brief discussion of the results for the second quarter ended June Thirtyth 2020.

We recognized approximately 6.3 million in revenue compared to approximately 6.8 million during the corresponding period.

2019.

The approximate 6.3 million of revenue this quarter represent represented royalties from our license agreement with EPS for the sale of Narcan nasal spray compared to approximately 6.1 million in the same period of 2019.

Second quarter 2020, net sales of nor can we are approximately 72.8 million as reported by either yes.

General and administrative expenses for the second quarter were approximately 2.8 million essentially flat as compared to the same period in 2019.

Research and development expenses were approximately <unk> 0.0 point sixmillion as compared to approximately 1.6 million in the second quarter of 2019.

The 1 million decrease was primarily attributable to.

0.8 million dollar UK R&D tax credit.

0.4 million decrease an external costs related to clinical trials offset by an increase of 0.2 million in personnel and related expense. During the three months ended June Thirtyth 2020.

Paired to the three months ended June Thirtyth 2019.

Sales and marketing expenses were approximately 1.7 million compared to non during the second quarter of 2019.

Personnel and related expense, including stock based compensation was 0.5 million and 1.2 million was related to third party expenses for various pre commercial activities, including market research and assessment and strategic planning.

As opiate continues to advance Opn T 003 towards potential market approval.

We anticipate that our sales and marketing expenses will increase in several areas.

Support the development of a commercial platform I would allow opium to potentially commercialize Oh PMT is arrows oaktree as well as future pipeline products.

Royalty expense for the second quarter was approximately 1.4 million compared to 0.9 million for the same period in 2019.

Royalty expense represent payments to net profit partners for the royalties received from the net sales of nor can.

Net loss for the second quarter was approximately 216000 or a loss of five cents per basic and diluted share.

Compared to net income of approximately 1.6 million or 39 cents basic and 31 cents diluted share for the second quarter of 2019.

Now turning to the results for the six months ended June Thirtyth 2020, where the first half of 2020 Opn recorded approximately 10.5 million in revenue compared to approximately 12.2 million during the corresponding period of 2019.

We recognized 10.4 million of royalty revenue from our license agreement with DBS for the sale of North again compared to 9.9 million in the first half of 2019.

Net sales of New York and for the six month ended June Thirtyth 2020 were approximately 145 million as reported by you'd be us.

General and administrative expenses for the six month ended June Thirtyth 2020 were approximately 5.4 million compared to approximately 6.2 million in the comparable period of 2019.

The decrease of 0.8 million was primarily due to zero point, Sixmillion decrease and legal and professional fees.

And as 0.2 million decrease in personnel and related expense, including stock based compensation expense compared to the six months ended June Thirtyth 2019.

Research and development expenses for the six month ended June Thirtyth 2020 were approximately 2 million compared to approximately 5.2 million in the comparable period of 2019.

This resulted from a decrease in third party clinical trial and development expense of 4.1 million.

Which 0.8 million was attributable to our UK R&D tax credit.

Offset by an increase of 0.1 million in personnel and related expense during the six month ended June Thirtyth 2020.

Sales and marketing expenses for the six months ended June Thirtyth 2020 were approximately 2.8 million compared to nine during the same period in 2019.

For the six months ended June Thirtyth 2020, personal and related expenses included stock based compensation was 0.8 million and 2 million was related to third party expenses for various preeclampsia pre commercial activities, including market research and assessments and strategic planning.

Royalty expense was approximately 2.3 million and 1.2 million during the six months ended June Thirtyth, 2020, and 29 gene respectively.

The increase of 1.1 million is primarily attributable to know third party license fee expense used to determine net profit partner income for the six months ended June Thirtyth 20, pointing compared to the six months ended June Thirtyth 2019.

Net loss for the six months ended June Thirtyth 2020 was approximately 1.9 million or a loss of 45 cents per basic and diluted share.

This compared to a net loss of approximately 158000 or a loss of four cents per basic and diluted share for the comparable period of 2019.

As of June Thirtyth, 2020, Opn has cash and cash equivalents of 30.5 million compared to approximately 31 million at December 30, Onest 2019.

As we have discussed our lead program Opn T 003, it's funded through a night a grant of approximately 7.4 million and the BARDA contract for approximately 4.6 million.

In addition, with DBS has reiterated in our can't 2020 sales guidance range of 285 million to 315 million, we still expect 2020 royalty revenue of approximately 26.2 million.

This keeps us in a strong financial position with a number of cash resources to develop and advance our lead program Opn T 003, and broader pipeline addiction and overdose.

With that I will now ask the operator to open the call up for questions operator.

Thank you we will now be conducting a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad a confirmation Tony will indicate your line is in the question Q.

You May press star to if he would like to remove your question from the Q for participants using speaker equipment. It may be necessary to pick up your heads up before petco Starkey is one moment. Please while we poll for questions.

Our first question comes from the lineup Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.

Hi, Thanks for taking my questions and congratulations on all the program.

Firstly just on there is there are three.

Should we think about when that product comes to market that we had Nick so positioning.

All market pitch to break it would be.

Aimed at defense know every day and then from their get widespread use terms of your pharmaceutical alright, great overdoses.

Im incessantly well the just on R&D I saw that it was quite low in the quarter.

Can you just elaborate a little bit about it's called it was to continue and.

You know we may get a certain way how should we think about your ability to run that there's there are three trial could this be impacted AD and then lastly, with the sales and marketing spend and should we expect us to continue thank you.

So when we talk about thanks, Ryan and thanks for your question.

Nancy said when you ask about the how I guess.

Entry of their their history in the marketplace, how we think about positioning it I mean, we will be providing a more detailed updates based on the dates we get from a pharmacokinetic study only to say that we view this relevant for all opioid overdose.

But particularly well suited and tunnel I given it.

Thank you differentiated profile.

So I think that's how we really consider considered this and our view is that this.

Fentanyl crisis will continue to get worse ways.

For example, a greater amounts defense no being even manufactured illegally on U.S. soil. So that's how we see this.

Addressable market growing.

Dave because of the second question on.

I'm talking about.

Okay. Good question I can answer as well I mean says it only 19 and its impact on the there's redevelopment.

Because it.

The different things that.

Are impacted by coded that we learn day by day, what I will say.

So far.

Is the CR rise we've identified to conduct the study our standalone units as opposed to being associated with the hospital and therefore, if I know the situation whereby.

Hospital was overwhelmed.

That wouldn't directly impact the ability to conduct these trials. However, we've experienced some impact already for example through the delivery.

Machinery and the availability of engineers in Europe.

Needed to travel.

In an anti com accurately say that we won't be impacted future. It just depends on the nature of.

Kind of it in terms of location and cigar C.

Dave counts your third question.

Brandon Thanks for the question and thanks for joining.

As far as sales and marketing.

We are we're going to continue to spend to get ready for a potential commercial launch.

But at the same time, we're going to diligently and.

Look at the spend to make sure that and we don't ramp up that spend until we get to closer to an anda filing.

And so the sales and marketing cost that we have for the second quarter.

That will be in the range of where we will be for the next couple of quarters until we get closer to an end da filing.

Great. Thank you very much.

Thank you. Our next question comes from line of David That's what stack small cap research. Please proceed with your question.

Hey, good afternoon guys.

Roger I'm curious if there's been any data generated on the percentage of overdose patients that have required more than one dose of naloxone as the that would probably give some good information on it would be best served by something like now my team.

Yes, I mean.

Does that is actually quite all the data in the literature that show I mean, this didn't know if you like national data that supports that.

We have done.

Alright, and private market research that.

Support multiple dose, but also in on average being needed.

But literature include for example, cohorts of patients who have.

Overdosed on Fentanyl on for example required not just.

Multiple doses upon.

The arrival of emergency services, but also wants transferred hospital they've requires continuous intravenous infusion of naloxone Oh no oxide.

So the.

Substantial evidence I'd say the population certainly.

They are impacted the head the other consideration is it's very hard to act.

Who is going to need multiple doses until it happens and then it might be too late.

If you don't have certainly multiple doses available or if you are willing to wait.

The long to see it said that doses required so there's really.

You are kind of bringing in an element of clinical uncertainty.

And.

Yes.

And then experience first responder or perhaps a lay bystander.

We could eliminate that.

Judgment call by giving it comes as much higher dose initially.

Yes at all.

The other thing is you don't know what some of the overdosed on so it's not someone.

Hi, the signs, saying I only everyday so heroin.

Because of the data.

I was at an extensive hope you David that okay that that's in 2019.

In both fentanyl Juan statistically has to see you have to see the west.

Okay, Great now Youve previously discussed the potential for over three.

To be put into a national stockpile in case, the chemical attack I'm. Just curious if you could walk us through what the process would be to get the drug into the stockpile.

Yes. So I you know, we're not able to provide detail because we're still at the development stage.

So I don't want to be overreaching and suggest that we automatically have any entitlement whatsoever to be not position. However, BARDA have supported passes the development costs for there there are three and it's absolutely for the reason that ultimate desire and interest is to be able to stockpile.

Product such as nasal now machine for emergency situations involving mass casualties, where there might be a sensible chemical attack.

Okay.

Thanks for taking the questions.

Thank you David.

There appear to be no further questions at this time I'd like to turn the floor back over to management for closing comments.

Thank you operator, thank you for joining us today and for your interest in Opiods, We believe there's opportunities for value creation remain compelling given the significant medical need in the diseases, we are pursuing.

We look forward to keeping you updated on our progress in a months ahead.

Enjoy the rest of your day and please stay healthy.

This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.

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