Q2 2020 Adamis Pharmaceuticals Corp Earnings Call
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Please note. This conference is being recorded I would now like turn the conference over to your host Dr. Dennis.
Neil.
Maybe get.
Thank you good afternoon welcomed pharmaceuticals second quarter 2020 earnings conference call and Dr., Dennis Klatt, President and CEO Adam.
Joining us today for an update and welcome to our shareholders analysts than anyone taking an interesting.
Joining me today is our chief financial Officer, Rob.
Our Chief Medical Officer Dr. Ron.
Our chief business Officer, Dave maybe earlier.
Once again the format for this call will consist of so many more dramatic.
How about an opportunity for your question.
[music], yes, it will be available for replay in the Investor section of website.
Those big those statements speak only as of today and except as required by law.
We do not assume any duty to update in the future any forward looking statements made today.
Of course, any forward looking statements involve risk and uncertainties and our actual results could differ materially from those anticipated.
Any forward looking statements that we make today.
Additional information concerning factors that could affect our business over the next results is included in our most recent annual report on form 10-K, what Securities and Exchange Commission and other subsequent filings that we make up you have you see.
Our available at the Fccs website.
[music], they're calling me, California, scolded restrictions have eased somewhat and there are no longer required to work really however, we continue to take measures and safeguard and safety where customers and employees.
No like those businesses Adam is that the negatively impacted by both the pandemic.
It's really locked down, but we continue to try to minimize the impact as best we can and things appear to be improving.
[music] getting now like to discuss a few points from our second quarter results highlight a few items.
As we discussed last earnings call, we supplemented our M.D.A. for I guess the lost some caught a green light and the M.P.A. has provided us with a target action date of November 15th.
We feel that the increased number of drug overdoses reported over the last few months and the ingredients that no underscores the need for a high base the lock some products such as the one we are individually.
I feel confident that the FDA will prove R&D I have it includes getting their review and I feel very confident the U.S. World, Matt will do an excellent job in selling and marketing or high goes to lots on product.
[noise] shifting to suggest that you during the second quarter, we announced our agreed to terminate our marketing and distribution agreement the Sandoz.
We assign those rights to yes, well, Matt under a new commercialization agreement.
I was in the U.S. well, that's also entered into a transition services agreement with Sandoz with the goal of enabling a smooth transition from sadness to U.S. warm that's.
Why do you expect to complete the graduation over the next couple of months.
I'm very happy to report that in August skirt U.S. walnuts with 30 field reps in the field. The details can Pepe eat sales Rep was given the names of the top 50 prescribing doctors in each of their specific territories.
In addition, there as well as it's currently in country in contract negotiation with numerous customers and multiple channels, both on the institutional and retail side of the business.
Well I can't Overemphasize, how pleased I am what their progress in such a short period of time.
I'm looking forward to our next Investor Conference call My that I believe I'll be able to give you some more clarity and additional information regarding the topics I just discussed.
In June we entered into a license agreement with matrix biomass collections rights relating to capital.
[noise] exclusive why doesn't think worldwide views on the license patents for the fields of Cobiz 19 section as good respiratory syncytial virus infection and was injection.
Additionally, the likelihood of use of capital as a therapeutic for introducing radiation induced dermatitis and patients undergoing treatment for cancer.
In July we submitted a pre I'd request that you have the aim for guidance on recent example for the treatment Okay would like Pete.
You're now on the prices of the peering applications for government and other forms of finding good luck clinical trials and intend to work closely what do you have to be able to golden expediting the testing.
Yeah, well get a subject of numerous publication as one study extensively by many.
Any different in many different areas.
Demonstrate an inflammatory and acquired.
And you know how could that actually I hope that Catholic important solution to the current endemic.
We expect the development of traveled to be had significant value driver for Adam is going forward.
If you do have the potential role in controlling somebody took over 19.
Definitely has also been shows are positive.
And reducing radiation dermatitis and patients undergoing treatment for cash [laughter] currently design phase three study is being undertaken.
It's interesting to note the current European Commission or Dr., Steven on that's first hand experience with Keppel and that he showed in publish that temple protected against their laws in patients undergoing bring radiation.
I missed Dr., Mark will provide a more significant description of capital and their clinical plan, but first I'd like to turned over to our CFO, Rob Hopkins realized some highlights from the second quarter financial well.
Thank you Dennis as Dr., Carl mentioned I want to highlight a few items from our second quarter financial and I also encourage everyone to review our form 10-Q, four additional details the disclosures.
First I'd like to emphasize a corporate Nike continues to have a negative impact on U.S. compounding sales.
The most part hospitals and clinics still remain close to our business and needs for the most part or the greater contributors to our sales numbers.
Your today revenues were approximately 8.6 million and 10.7 million for the six month ended June 30, 2020, and 2019, respectively.
Selling general and administrative expenses for the year to date period, ending June 30, 2020 was 11.7 million compared to 50 million for the Sainsbury to 2019, the single largest contributor for that because these decreases was wages benefits and other compensation expenses.
Research and development expenses were approximately 5.1 million and 5 million for the period year to date, 2020, and 29 seen respectively.
[laughter] cash and equivalents at the end of the second quarter total approximately 7.9 million.
We have targeted our cash expenditures to be into for $3 million to $4 million per quarter range, but due to the impact of corporate 19 on sales the three to 4 million could very well approached 5 million or greater.
As I stated earlier, please review our form 10-Q, four additional details and disposals I.
I will turn it over to our Chief Medical Officer, Dr. <unk> for an update on our regulatory and pipeline development.
[laughter] Thanks, Rob.
First I'd like to provide an update on our high dose now walks on injection product called them high.
As you're aware now walks on remains the treatment of choice for opioid overdoses accidental Ob opioid overdoses continue to be a significant public health problem in the U.S. and death due to the more potent synthetic opiates such as fentanyl continue to rise.
Recent data showed significant increase in opiate related deaths due to the indirect effects of the covert 19 pandemic. This is why we believe there is a public health need for higher dose naloxone products in high.
As Dennis mentioned, our team resubmitted the M.D.A.T.D.F.D. on May 15th and we were provided a PDUFA date of November 15 to 2020.
We continue to work with the FDA and abstracts to public health importance of commercializing this much needed product as soon as possible.
Regarding our newly licensed Kemple, we have made much progress and preparing for a phase two study.
Temple isn't antioxidant that metabolize is the harmful reactive oxygen species that caught systemic inflammation in many different diseases, including cobot 19.
In July we submitted a pre R&D package to the FDA, which included the scientific rationale for the use of temple and early Colgate infection.
In addition, we provided a detailed protocol for.
Study to examine temple and early Cobra infection. This concept focuses on the role that simple me claim and preventing inflammatory manifestations of cobot night team and therefore, the goal is presenting complications of the disease, including the need for hospitalization.
The feedback from Ftn or proposed program with extremely valuable and necessary in that it now allows us to apply for government partnerships, which have mainly to date been focused on vaccines. We now have the identified a government contract to operation warp speed that fits our strategy for temple.
We will apply through a formal process for up to operation Warp speed, which includes a pre submission proposal. In addition, now that we have the FDA feedback. We will also apply for a presentation to be given to the government's Corona watch program in order to provide greater visibility of temple to the government.
Furthermore, we have received multiple proposal from clinical research organizations operationally conduct this study once funded.
In addition to the larger study that I've. Just described we also will be applying which we will be applying for funding. We're also in discussions regarding a smaller proof of concept study of temple uncoated positive patients that we are hoping we can implement rapidly after ft a review.
Lastly, with regard temple for radiation induced dermatitis, we're in discussions with a large oncology group consortium regarding the casting and funding of capital for the indication of radiation induced dermatitis.
At this time I will now turn this over to David Marguglio for an update on our partnering programs.
[noise]. Thank you Ron.
Dennis previously mentioned during the second quarter, we finalized our agreement terminating Sandoz commercial rights to some Jeff.
We also entered into a new commercial agreements with U.S. world nuts in which they assume marketing and sales responsibility for some JP in the U.S. as well as Jim I upon receiving FDA approval.
As part of the termination agreement with Sandoz Optimists, and U.S. will match entered into a separate transitional services agreement with Sandoz.
We'll take a smooth transition of some JP sales and distribution.
So let us do you guys well mats.
In parallel we have been working closely with U.S. world Mats as they prepare for commercial launch it semi such that they will be.
Ready for <unk>.
Please proceed with a with a launch.
Closely on the heels other approval.
Yes, we hope well Oh, we will obtain in the fourth quarter. This year, such that we would be able to turn around and launch the product before year end.
Finally, our Australian partner merge health submitted a regulatory dossiers for some jeffe, which was accepted by the TJ in the second quarter. The TG Ace review could pick up to a year. However, given recent shortages of after that bring in Australia. It is quite possible that submission will receive an accelerated.
Thank you and we will update investors accordingly.
With that I will.
Turn it back over to Dennis to open up for questions.
Thank you.
Let's.
Before we conclude we'll open up the questions and we haven't questions.
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Our first question comes on line Elliot Wilbur with Raymond James. Please proceed with your question.
Thanks. Good afternoon, maybe just a quick quick financial questions for Rob upfront, specifically looking at performance trends in the U.S.C. business and they sterile injectable component of that.
Can you just maybe give us a little bit better sense of.
Maybe how things have trended.
Excluding the quarter and over the last couple of weeks, obviously, the business was quite soft in the quarter.
But just trying to get a sense of maybe where we are in terms of a revenue recovery trajectory in that segment and also maybe just some commentary on the gross margin performance in the U.S.C. businesses as well no. It's relatively low in the second quarter I know there were some one offs.
That impact that but just trying to get a sense of.
How much of the how much of the softness was due to the one offs versus under utilization product mix, maybe just some color commentary on on that.
That particular item.
Sure Yeah happy to happy to answer those.
As you can imagine the transition from March we started to see as a follow up towards the end of March but April really crater individually for the month for us compounding and we've seen a steady trend upward in May and June July was relevant we can't report on July yet because that we haven't finished the quarter but.
Quarter ended.
630, we did see continued increases from April may into June.
Currently you know again, we're hopeful for increased.
Increased and improvements over the third quarter.
But again the set expectations.
We just have to be very cost were cautiously optimistic that the business will recover to previous level previous covert 19 levels.
To talk about your second second part of your question and gross margins. Yes. You are you targeted exactly what I was going to say, we because of the slowdown our inventory dating caught up with us and we had significant.
Write downs, well within the quarter and it showed up in it.
Dramatically.
Uh huh.
Hurt our gross margins. So I think we've gotten the production lined up with current trends going forward, we shouldn't see as significant write down.
All in that in the third quarter and we got to just caught everybody off guard and not enough for nothing within the compounding space. The greatest stating that we can we can have anyone product. We've made there's only 180 days. So you don't see a traditional dating as you do within with enough did it.
No problem.
Okay. Good that that was helpful. Thanks, and then for Ron in Andorra, Dennis just a couple of questions on both as well so in thinking about this compound I'm wondering if as all the data that's been generated to date.
Ben.
Entirely based on the topical formulation in.
Radiation deduce and dermatitis or have there been other studies of of other dosage forms.
Hi, This is Ron actually there's been studies in all dosage form.
So the dermatitis an hour patient studies have use the topical the Mucositis studies, which are well advanced have use the oral formulation for cobalt 19 were quite focused on the oral formulation and for radiation induced dermatitis, we're focused on the topical of course.
Okay, and then with respect to cope with 19, I mean, what do the.
I mean, what do they animal models suggest in terms of where this would be administered in the course or the disease I mean, everything it seems to be coming out lately is suggest that earlier is better but just curious what youve, what you've seen in kind of what you're thinking about there.
Sure. That's a good question what were we there's a lot of data on temple in terms of its ability to decrease inflammatory cytokine markers and we totally agree with the concept. The treating currently so our proposal to F.D.A. is to treat early and to look at the rate of hospitalization.
So with a goal here is to prevent.
Buildup has been flat systemic inflammation with temple and prevent the need for hospitalizations and more severe disease progression.
Okay.
I just want me so this would be for.
Any all patients that that test positive done the endpoint is prevention optimization or.
Prevention or diminish or gauge worsening yeah.
Thanks, and have Hospitalisation, which is except it end points by the FDA and we would look at a coated positive patients early but who are at risk co morbidities and risks factors, there for making them a greater risk of being hospitalized in the near term.
Okay. So this is basically just that.
It is basically just an oral pill test positive year, an Irish group and then the goal is to prevent hospitalization simple.
Correct, correct and we will of course also measure inflammatory markers to demonstrate the mechanism of action.
Okay.
And given that dish.
Potentially could be very significant program for the company and the level of attention being paid to therapeutics in the area. What are so what are the next.
Data points or milestones that you're going to be able to to disclose in terms of giving us a sense of.
Of the direction of that program.
Yes so.
I mentioned, we've had discussions with FDA part of the guidance that FDA they've reviewed our protocol our plan.
So our next step right now now that that thoughts. This checks is to apply for funding and we have identified a specific.
Grants contract through operation Warp speed that is targeting that we believe.
Paul and our goal would fit into so our net our next.
Plan here is to submit a pre submission.
Document to the operation Warp speed for review it that is seen as positive then we will be requested to to submit a complete submission.
Yes.
Okay, all right there.
That's for example for coal that 19 the other.
Area that we're we're developing temple as you know it's for dermatitis radiation induced in dermatitis and we are discussing in discussions with a large oncology consortium, where they would fund the trial and we would provide them topical temple and to examine a phase two slas phase three trial.
Looking at the effects of temple and radiation dermatitis as you know a phase two study.
On radiation dermatitis has been completed and matrix that we license the drug from has had discussions with the FDA in the phase three design.
Okay, and then obviously everything within operation more up speed is is it's moving quickly by design, but are there specific.
Timeframe is associated with some of the steps that you need to take in order to.
Determine whether you can that you can get funding.
Yes, well, yes, so I think the steps that we're taking as I mentioned is the pre submission proposal or white paper that will be submitted shortly the papers written or revealing and then they will review and then the next step is.
They will let us know, whether we should submit a full proposal it will be very optimistic if they do ask us to submit a full proposal my understanding is most.
Submissions that go to that level do get funded.
Okay and it is there or are there a statutory timelines are they operate under in terms of.
Issuing those or is it just it.
Assessed and based on.
The workload, that's there just trying to get a sense of how is this something that could take six months or three months.
This this particular.
Political that we're looking at which just came out is an open proposal. There is no specific deadlines or timeline to the rolling proposal. So we're hoping to get our white paper in very shortly could be there very early in the funding process.
Okay, and then last question, perhaps for sure for Dennis Show you gave some.
[music].
Commentary around you SWS.
Marketing efforts behind some JP and I think you said that the the reps basically just began detailing the product I think in.
Early August so I don't know if I misinterpreted your comments or if thats in fact.
Correct, but seems like at least over the last six or seven weeks, there's been a fairly noticeable uptick in the prescriptions for the product I think last week was actually.
In all time high so.
Whatever whatever they're doing initially seems to be seems to be working but just want to get a little bit more insight, perhaps into kind of where they are in terms of the rollout of sort of a new marketing push behind the product.
Elliott as I mentioned, they just started the first week along as they put the 30 sales reps in the field and the ink sales Rep was given the top 50 prescribers in that space in their specific area. So we're excited about what you're doing I can't go into details that I know there developing new contracts with.
Very large prescribers. So we're we're excited I think the sales people are excited I'm getting feedback from the sales grew about in the field when is the doctor.
The doctor's offices that are out of our open not all are opened as you know at the ones are open there. They didnt know about sungevity, there's burning about some jeffrey and they're starting to write prescriptions. I mean, one sales guide told me season, just wanted to see a doctor the new learning about some Jeff goal invalidity loved it murder prescription right. There. So we think that.
This coming year next year 2021 is going to be very good for some Jeffrey Andreson. Alonso. These guys are very aggressive very good sales and marketing I mean, I'm excited about what I know what's going on.
Okay. Thank you for taking my questions.
Okay.
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Yes.
Uh huh.
During the course.
Our next question comes on line of Nahs Roman with Maxim Group. Please proceed with your question.
Okay.
Hi, guys. Thanks for taking my question on them High I was curious.
Do you guys are you guys expecting a manufacturing plant on reinspection or has that been respected recently.
Yes, the plant was very well inspected not long ago.
Okay, you guys didn't receive any 43 is there anything right.
Nothing at all now we're pretty confident that the lost some will be approved either onto the data before they've gone okay. The feedback from the FDA.
Okay. So once approved is there any additional work that would have to be done prior to the warrants like would you guys have to manufacture any validation batches or anything or is there any additional work whatsoever that has to be done.
No we've been actually working on it.
All along so we are ready once we get approval you will see that's going to be out in the field almost.
Rapidly very rapidly.
Okay.
Okay. That's my question, thanks for taking questions.
Thank you very much well that's all we haven't questions today, so I want to thank everyone for attending and we look forward to our next conference call. Thank you.
This concludes todays teleconference. You may now disconnect your lines at this time. Thank you for your participation have a wonderful day.
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