Q3 2020 Opiant Pharmaceuticals Inc Earnings Call
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Greetings and welcome to the Opiates Pharmaceuticals third quarter Twentytwenty earnings Conference call.
At this time all participants are in a listen only about a brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference.
Please press Star zero on your telephone keypad as a reminder, this conference is being recorded it.
It is now my pleasure to introduce your host Ben Affleck.
I kept the VP of Investor Relations Communications of Opiate Pharmaceuticals. Please go ahead.
Thank you operator, and thank you all for joining us this afternoon.
With me on today's call <unk>, Chief Executive Officer, Dr., Roger Crystal and Chief Financial Officer, David too.
Good afternoon Olympian issued a press release announcing financial results and providing a business update for the third quarter ended September 30th Twentytwenty.
Please note that certain information discussed on the call today is covered under the safe Harbor provision of the private Securities Litigation Reform Act.
We caution listeners that during this call opiate 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.
Thats are qualified by the cautionary statements contained in opioids news releases and SEC filings, including in our annual report on form 10-K for the year ended December 31st 2019, and subsequent filings this.
This conference call also contains time since.
Steve information that is accurate only as of the date of this live broadcast November 12 Twentytwenty.
Okay 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.
Ill turn the call over to Roger.
Good afternoon, and thank you for joining us today we.
We are pleased to share today's results that reflect the progress of our lead program in opioid for those.
And the overall essential value proposition of our mission to treat addiction and overdose as well as our strong.
Ash position.
We will begin with an update on our lead development program, then our CFO David No two who will review our financials.
With a focus on strong execution, we've achieved important progress in further advancing our lead development program or PNC. There is there are three nasal now.
Murphy in for opioid overdose.
As announced recently, we will use up to our farmers proven unit dose nasal spray device or apparently there is nearly three.
It's nasal spray device has already been approved by the FDA with many other drug products currently marketed in the United States, including.
Okay nasal spray.
Developing now mophie nasal spray using the EPS our unit dose device aligns with the FDA is focused on proven device safety and help mitigate device related risks to the program.
We have also made recent advancements with our us based development and manufacturing partner.
Some bio sciences to manufacture our non machine at nasal spray.
Importantly, the summit facility has successfully passed the FDA inspections and has commercial capacity.
Commented on track with the production of the clinical and registration batches.
Adding to the moment.
In sum, we will meet with the FDA in December to review the protocol of our planned pharmacodynamics study in healthy volunteers as well as the overall data generation and fivexfive be two submission strategy.
We look forward to sharing further details following receipt of formal feedback from the agency.
We continue to expect with our NDA submission to the agency will occur by the end of 2021.
Moving on I should highlight that the need for improved treatment to help prevent that's from opioid overdose as further amplified this quarter.
And his latest provisional data published in the step.
I was in September.
CDC reported an increase in fatal drug overdoses and the first three months of Twentytwenty when compared to the year before on the most from opioids and Randy from synthetic opioid.
Is the us on pace for a record year drug overdose deaths during the ongoing Corona.
Virus Pandemics.
The trajectory of America's opioid crisis is also rapidly evolving fueled by the availability of personnel and related synthetic opioid.
Let's now is around 50 times from within Harlem.
Very small amount approximately just a few grain of salt can kill.
In July the San Diego based laboratory Millennium Health analyzed 500000 year in drug test and found that there was a 32% increase in the national usage of non prescribed defense sales.
Presence of fentanyl and other synthetic opioids in the U.S. drug markets should be caused concern.
People use it without knowing they are getting it.
When people get something that is more potent than what they previously been using it overwhelms that tolerance and can cause the risk version depression that leads to opioid overdose death.
Compounding this public health challenge to the fact that despite the effectiveness of naloxone in risk.
Rescuing individuals from opioid overdose, the risk of overdose and Thats from a synthetic opioid remains very high even after rescue witness Roxanne.
There are numerous studies, suggesting that multiple sequential doses of milk and are needed from the new synthetic opioid era.
These circumstances underscore.
While the NIH as close a stronger longer acting formulations of opioid antagonists.
By potentially providing an effective and longer duration of protection following rescue from an opioid overdose nasal now Murphy could proven and ultimately approved.
Significant improvements over the Loxo.
So.
With radio ligand binding and functional assays have demonstrated that the potency of now machine is more than IFO higher analog so thats new opioid receptor.
Moreover, it's reported plasma half life is up to eight hours significantly longer than the long term, which is less than two hours.
This longer duration reduces the likelihood of green occupies a patient with a victim has taken a long acting opioids like Sentinel, which has a half life is seven to eight hours.
We believe this potential will be further borne out in our upcoming PD and PK studies.
With that I will now ask David to discuss.
Discuss our financials in more detail.
Good.
Thank you Roger we had another solid quarter with royalties from Narcan nasal spray, increasing our continued focus on minimizing expenses.
For the three months ended September Thirtyth 2020, opiate recorded approximately nine point.
Point $1 million in revenue compared to approximately $20.6 million during the corresponding period of 2019.
For the three months ended September Thirtyth 2020, we recorded approximately $8.6 million of revenue from our license agreement with EPS for the sale of knockdown.
Compared to approximately $20.5 million in the same period of 2019.
Which included a final milestone payment of 13.5 million as sales of Narcan nasal spray exceeded to 200 million for 2019.
Third quarter 2020 sales of non again.
Or approximately $88.8 million as reported by EPS.
Which is a greater than 20% increase from the second quarter of 2020.
DNA expenses for the quarter were $2.7 million compared to $3.2 million for the same period in 2019.
The decrease.
Primarily attributable attributable to lower legal and professional fees.
Point $8 million, partially offset by an increase of $8.3 million in personal and related expenses.
Research and development expenses were $2.8 million compared to $1.8 million in.
The third quarter of 2019.
This 1 million dollar increase was due to external development expenses as well as personnel and related costs.
Sales and marketing expenses were zero point $9 million compared to 100000 in the third quarter.
It was EUR of 2019.
The increase of 800000 was due to pre commercial efforts related to Opn T 003 nasal now mophie.
Royalty expense for the second quarter was approximately $2 million compared to $4.9 million for the same period in 2019.
Team.
Royalty expenses for payments that we make to our net profit partners on the royalties we receive from the net sales of non-GAAP.
Net income for the third quarter was approximately 700000 or 17 cents per basic and 15 cents per.
Quarter to chair.
This compares to net income of approximately $10.7 million.
Or to $2.64 per basic and $1.97 per diluted share for the comparable period of 2019.
For the nine months ended September Thirtyth 2020.
Opiate recorded $19.7 million in revenue compared to $32.9 million during the corresponding period of 2019.
This includes $19.1 million of revenue from our license agreement with EPS for the sale of in our 10.
Compared to approximately $30.4 million and the compare.
A deliverable period of 2019.
The decrease the decrease in revenue of $11.3 million was primarily attributable to a milestone payment of 13.5 million earned in the third quarter of 2019 offset.
Offset by increased royalties for the current quarter compared to the third quarter of 2000.
Care team.
Sales of New York and for the nine months ended September Thirtyth 2020 were approximately $233.8 million as reported by EPS.
EPS also slightly adjusted their guidance for sales of Narcan for the year full year 2020.
Increased.
In the lower end of their range from $285 million.
$295 million and keeping the higher end of the range of 315 million.
DNA expenses for the nine months ended September Thirtyth, 2020 were $8.1 million compared to $9.4 million in.
The comparable period of 2019.
The decrease of $1.3 million was primarily due to $1.5 million decrease in legal and professional fees.
Partially offset by a zero point $2 million increase in personnel and related expense, including stock based compensation.
R&D expenses were $4.8 million compared to approximately $7 million in the comparable nine month period of 2019.
The decrease of 2.2 million resulted from a decrease in third party clinical trial and development expense of $2.5 million, partially offset by an increase in personnel.
And related expense of zero point Threemillion.
Sales and marketing expense were $3.7 million.
Compared to a $100000 during the same period in 2019.
For the nine months ended September Thirtyth, 2020, personal and related expense, including stock based.
Ill up insatiable was zero point $9 million.
A further $2.8 million related to third party expenses for various pre commercial activities, including market research and assessments and strategic planning.
Royalty expenses were $4.3 million and $6.1 million during.
It's come nine months ended September Thirtyth, 2020, and 2019, respectively.
Again royalty expenses for payments to net profit partners or the royalties received from the net sales have not yet.
Net loss for the nine months ended September Thirtyth 2020 was approximately one.
During the $2.2 million or a loss of 28 cents per basic and diluted share.
This compares to net income of approximately $10.6 million or $2.64 per basic share and $1.98 cents per diluted share for the comparable period of 2019.
As of September Thirtyth, 2020, Opn had cash and cash equivalents of approximately $31.1 million compared.
Compared to approximately $31 million at December 31, 2019.
The current cash balance does not include the full impact of the knighted grant of approximately seven point.
$7.4 million or the BARDA contract of approximately 4.6 million.
For the full year 2020, we have increased our production of royalty revenue to approximately 28 million.
In addition, we now expect to end 2020, with a cash balance of approximately $30 million.
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 you would like to ask a question. Please press star one on your telephone keypad a confirmation total indicate your line is in the question queue. You May Press Star two if you would.
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Our first question comes from Brandon Folkes with Cantor Fitzgerald. Please go ahead.
Hi, Thanks for taking my questions and congratulations on the progress.
Like just during the quarter at first and maybe just on the AP product is by.
And then probably make it David I'd love to get your input. If you think that this actually creates less friction when the product and lock it intends to switching just given that it will be a device that having a fishing official spawn to China.
Hey, all familiar with and then maybe just staying on that.
Can you just get stability any app using this device and did you have that sort of the people for any color. There would be helpful. And then losses, what are the gating factors between now and filing and be April there's Eric.
Thank you.
Thank you Brian on the.
So just on deal.
The last question first as I gave the gating does all of this upcoming FDA meeting.
Two years ahead yet.
On the price of PD study enough of it too much.
Ministration stress.
Digi.
The other two gating item.
The.
Pivotal PK studies, so we already have some very encouraging initial PK data as you know and it's reflecting that in the larger groups of healthy volunteers.
The Eagle eye into a patient prudent at the end of this year.
Total debt proven to the end of this year for that asset.
The Q on 2021 activity.
And Ben on the basis of that FDA meeting then.
On the head to not make study also in Q on on the healthy volunteers.
So those are the gating activities and then the final on that then relate to us.
Okay and question around facilities. So because we are using a different device what were using before we will need to.
Generate sufficient stability data in this new device.
Before we can submit the NDA.
However, it's essentially using the same formulation that was used in the previous device.
So we have high comps.
And.
There will be an issues have never know until you actually slumps rule that was nonetheless.
And.
Once we have the 12 month stability data.
And that's in the.
Gating item before one could submit the NDA so those visitors the key activities.
Well and in terms of the Apple device in the familiarity.
I mean the.
Differences between the initial device, we're using on the outside advice.
In terms of the functionality are very similar.
Single shot.
Devices.
The net nasal spray devices that can be used in a multi directional manner on the 70 priming. So.
So it's not necessarily the there's a significant change in the usability and familiarity some.
It's more around that because this upside device has seen you.
And is approved in most two FDA approved product.
That we believe is a significant opportunity to de risk. The program now that this out by unit. This device has been made available to us.
So that's not the key change.
Thanks for the question.
Great. Thank you very much its very helpful. Correct me if I can one more.
If I may add.
Not.
Very little discussion about the rest of the pipeline today or in the press release is that just given current rate I know you have talked about.
The impact and the cost or is that a strategic decision to focus on very territory.
In the near term until we get that.
Over the line.
That's a great question I mean, the headline is fitted out are you still in the program. We are still ascertaining when we can kick that off.
There's not a decision not to do it at this stage as a matter of.
We hope to do it by now kick it off and then with the UK being the main country that the safety.
Studies and they said.
Again.
See that going into the first national locked down as well as is.
Like the first time, we'd hope to kick it off with March April time, where the publicity than they are.
Moving on to getting even worse than they were then that does.
Thats the base the decision.
Therefore, we are actually progressing so way how this collaboration will then.
Yes.
The NIH.
And work is underway to reformulate that as a an injectable that could be taken into clinical development.
Well some of the use in the art to reverse kind of annoyed overdose.
Great. Thanks, very much Roger.
Our next question comes from Karl Berg with Northland Securities. Please go ahead.
Great. Thank you congratulations on the great results.
I'm wondering if you can quantify the remaining balances on the night and BARDA grants and also if you can talk to the anticipated timing of recognition from those grants over the next.
For five quarters or whatever timeframe that you're comfortable discussing and then also if you have any.
Comments with respect to cash requirements for 2021, great. Thanks much.
Karl Thank you for the question.
Your first question around the night, a grant and BARDA contract.
Most of that the both the grant and the contract imbalances.
I will be incurred over 2021, because they are for the.
But basically the development program the.
PK and PD studies, and the FDA filing fee. So all of that money, primarily a good portion of it.
Not going to quantify it exactly Carl.
Okay.
Good portion of it will all be generate our will be considered as income and will draw it down from Knight and BARDA. It next year.
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And then your second question around.
Cash requirements for 2021.
One.
At this point in time, we're in a very strong cash position and as we go into 2021.
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I believe that Narcan sales and EPS believes that Narcan sales will continue at a.
Unfortunately at or.
Quick pace.
And so our royalties for next year.
It will give us some cash coming in the door.
And until we get through the PK and PD study, we aren't going to really be deciding on what we're going to do as far as commercialization of 003.
That will be.
In the latter part of next year as we get closer to an anda filing and so the cash requirements for this upcoming year.
At this point in time, we're in a very strong position.
Great. Thanks again.
Once again, if you would like to ask a question. Please press star one on your telephone keypad. Our next question comes from David about with Zacks Investment Research. Please go ahead.
Hey, good afternoon, everyone.
Roger I'm curious about Aptar pharma.
Unit dose systems since that had been used for.
Narcan nasal spray why what is it not being used originally for over three.
Simply put because we weren't it wasn't accessible to us the recently.
We went with another buyer.
It was it an IP issuer.
That was an agreement that allowed other company.
Use it to this.
That agreement has now been.
Right. So so it allows the company to use them.
Okay, great appreciate that.
And I'm curious so over the next year, if you have any insight into how many additional states.
In the U.S. May pass code.
Co prescribing laws.
Yes. Thanks. This is your question because when we talk about describing laws.
We have seen new Jersey at an example.
Let me go through formal.
The legislation and how they are.
That turned the general and that.
Like emergency legislation names on the COVID-19, so they have if you like a temporary co prescribing.
Mandate.
And so.
You just mentioned.
Well that might be formalized loans.
And it might be that we see other state.
To take this as we see further growth in opioid overdose death.
As a result of 19, if we didnt have COVID-19, so there wasn't this potential for.
Immersion they're not.
Then there are about.
About five states who have.
Having like on the ledge docket.
Or just one.
Dequincy again some of that.
Being delayed again, because it 19, but in a yes. So this five states.
2020, no guarantee that.
All of them.
We will fully take is on.
One of those days for example, as New York.
Significant base in terms of the size of the population to clearly see the merits of doing that.
Yeah, Okay. Great appreciate you taking the questions.
Thank you I would like.
Kind of floor over to Roger for closing remark.
Thank you operator thank.
Thank you for joining us today and for your interest in Nokia.
We believe that our opportunities for value creation remain compelling given the significant medical need and the diseases we are pursuing.
Forward to keeping you updated on our progress.
In the months ahead.
Enjoy the rest of your day and please stay healthy thank you.
This concludes today's teleconference. You may disconnect. Your lines. This time and thank you for your participation.
Okay.
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