Q3 2020 Adamis Pharmaceuticals Corp Earnings Call
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I would now like to turn the conference over to Dr., Dennis Carlo President and CEO.
Go ahead.
Okay. Thank you.
Good afternoon welcome glad this pharmaceuticals third quarter 2020 earnings conference call I'm, Dr., Dennis Carlin, President and feel that.
Thank you for joining us today with the update and welcome to our shareholders analysts and anyone taking an interest in that.
Joining me today is our Chief Financial Officer, Rob Hopkins.
Our Chief Medical Officer, Dr. Rhonda Mark.
And our team. This is all for all of their favorite Mcgraw Hill.
Once again the format for this call will consist of some remarks from management, followed by an opportunity for some questions.
This call is being webcast and will be available for replay in the investor section of the website admin pharmaceuticals Dot com.
I just wanted to take note that in today's call. We will make certain forward looking statements regarding our business based on current expectations and current information.
These statements speak only as of today and except as required by law, we do not assume any duty 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 by any forward looking statements that we make today.
Additional information concerning factors that could affect our business and financial results is included in our most recent annual report on form 10-K, with the Securities and Exchange Commission and other subsequent filings that we make with the FCC.
These are available at <unk> website.
[laughter] since our call in August government restrictions, having even in California. We continue we continue to make measures to safeguard the safety of our customers and employees.
Now regarding the locks so we.
We eagerly await the FDA action on or Ed our India for a high dose the locks on products in line.
The FDA has provided a target action date of November 15th we don't know what impact could that my team will have if any on the FDA meeting that date.
Everyone should realize that November 15th is a target date, not one that is actually since though we.
We still strongly believe the spike in drug overdoses. This year underscores the need for our hired those blocks on product I remain confident in a positive outcome for India.
Currently U.S. wall Meds is putting a great deal of effort and preparing for the walks and launch.
She thinks is an objective since the termination of their marketing and distribution agreements Sandoz and reassigning right, yes, well Miss you.
I've seen a marked increase in unit sales.
With the full transition from Sandoz U.S. wasn't as occurring last week, we expect 2021 to be a breakout year for this product as.
Yes, well meds is fielding a sales force visiting prescribing doctors and in addition, they are currently working on contracts with various institutions and pharmacy chains.
On our last quarterly call, we introduced the new acquired asset in temple.
As a reminder, under our exclusive license relating to this call down we have rights to develop temple for the treatment of severe respiratory infections, such as global lighting as well as therapeutic for reducing radiation induced during the guidance in patients undergoing treatment for cancer.
I am hopeful that helpful can be part of the solution to the current pandemic and that capital will be a significant value driver for Adam is going forward.
Dr. Morris will expand on this and describe some work we are currently conducting in collaboration with Stanford University.
As previously mentioned in addition to its potential critical role in controlling some of the effects of code like Jean Temple has already been shown in a phase two clinical study to have a positive impact in reducing radiation dermatitis in patients undergoing treatment for cancer.
Since our last call we've been in contact with the University of Pennsylvania, and a clinical cancer consortium that is funded by the National Cancer Institute.
The goal is to have one or both groups fund the phase two three clinical study utilizing travel for the treatment of radiation induced dermatitis.
Currently there are approximately 1.8 million new cancer cases diagnosed annually in the United States.
And 60% of those patients want to go radiation treatment.
As a 28 in the global market size of radiation treatment is about $5.6 billion.
The cumulative few moments Dr. Mark will provide a more substantial update on our development plan for example, but first I'd like to turn it over to our CFO, Rob Hawkins revived some highlights from the third quarter Rob.
Thank you Dennis does Dr. Carlo mentioned I want to highlight a few items from our third quarter financials and I also encourage everyone to review our form 10-Q for additional details and disclosures.
First revenues for the third quarter decreased 27% from $5.9 million in the same quarter in 2000 $19 million to $4.3 million in the latest quarter.
This decrease was primarily attributable to the impact of the corporate Knights of COVID-19 on sales at U.S. comp.
However, third quarter revenue increased 10% over the second quarter. So it is trending positive.
Selling general and administrative expenses for the third quarter 2020 was 5.8 million compared to $5.3 million during the third quarter of 2000 I think.
The single largest contributor to this increase was wages benefits and other compensation expenses.
As you know <unk> expenses for the first three quarters of Twentytwenty was down 14% compared to the first nine months of 2019.
Research and development expenses were approximately 1.7 million and 3.3 million for Q3 of 2020 and 2019, respectively.
The decrease in spending was primarily due to the suspension of clinical development activities for APC 1000, and they've Tc 5000.
Year to date, R&D revenues were down 18% compared to the first three quarters of 2019.
Cash and equivalents at the end of the third quarter total approximately 12 million. This amount included an equity offering completed in September which netted $10.7 million.
We are targeting net cash expenditures that has cash used in operating investing activities in the range of 4 million in Q4.
Assuming that we can meet that target and depending on the outcome of the FDA decision on them high and.
And future revenues from product sales among other factors. We currently expect that we will have sufficient operating capital to carry the company at least through the second quarter of 2021.
As I stated earlier, please see our form 10-Q for additional details and disclosures.
I will turn it over to our Chief Medical Officer, Dr., Ron loss for an update on our regulatory and pipeline development.
Thank you Rob as Dennis mentioned, we are awaiting action from the FDA on a resubmitted NDA Bergin high which has the producer date of November 15th 2020.
Although of course, there are no assurances we remain confident in the approval for this much needed product.
We also continue to work with our partners at U.S. World men as they prepare for the commercial launch of Zimmer.
We have been providing scientific support for many meetings with key opinion leaders government and non government group to help them with this launch.
Some progress has also been made regarding our development of Temple Temple as Denis mentioned earlier, the antioxidant that metabolizes harmful reactive off you can see that cause systemic inflammation.
Unfortunately, you therapies and been successful so far for the treatment of profit 19. It is now apparent that message is that the immune system called cytokine.
Gravy during and after COVID-19 thats in there.
The release of multiple harmful cytokine causes mortality and damage that can be lifelong if one provides the initial infection there.
There is a clear need for treatment of the so called cytokine storm that hit the third recovered nicely.
In new preliminary results from a study in collaboration with Stanford University Temple appears to exhibit the release of multiple cytokine an activated immune cells COVID-19 pacing.
This new data now provides the additional scientific rationale needed to conduct clinical study in early April the patients with temple. We're currently identifying sites to conduct this trial.
As discussed previously we had identified a government contract who operates in warp speed that fits our strategy.
Now with the additional data from this study at Stanford we will submit a white paper has been unusual requested the government to fund the temple COVID-19 clinical study.
Lastly, our discussions with a large clinical cancer conformed. Some continue to evolve on the funding and design of the clinical study to examine the effects of the temple for the treatment of radiation induced dermatitis.
We are also in discussions with the radiation oncology group at the University of Pennsylvania.
This is the same group previously under the direction of Dr., Steven on who is currently the Sps listener that conducted successful studies that sample for the treatment of radiation induced our pizza.
At this time I will turn it over to David Marguglio for an update on our partner program David.
All right. Thank you Don.
As Dennis mentioned before during the third quarter, we worked closely with US world Meds to facilitate the transfer of sales and distribution of course inject be away from Sandoz some to us while meds.
Pleased to announce that that transition is now complete as of the end of October and as such US World Meds is fully responsible for all sales and distribution of some JP.
Yes, well meds is now positioned to execute a number of new initiatives. They have been planning to drive growth and brand awareness within both the institutional and the retail channels.
We remain very pleased with our efforts to date and.
With their path now clear, we expect to see those efforts translate into.
Further increase sales.
With the possibility of Xin high approval and then yes, we'll med sales team has been developing a commercial launch plan and it's been high as approved by year end, we would expect the commercial launch in early.
2021.
Lastly, our Australian partner merge health, which was acquired by J.C.
In June.
Continues to navigate the regulatory process, which we hope will result in some JV being approved in Australia in the first half of 21, we are now in discussions with several companies for ex US commercial rights for both some Geoffrey and Xin high, but we do not expect to conclude any of those discussions during the remainder of this year.
With that ill turn it back over to Dennis for some additional remarks.
Thanks, David.
I'll close by saying that we are I am very excited and enthusiastic regarding the milestones. We believe we can accomplish through the remainder of this year and 2021.
I would like to go over six milestones with you number one we believe then why the only high dose the locks on product will be approved and launched in early 2021.
Through all the efforts that us World Meds has put into the planning of the launch both companies believe that substantial sales will be generated.
Number two.
We believe there will be a significant increases in jeopardy sales Brandon warrant wherein as is being created both the institutional and retail markets. Finally, the positive attributes of some JP will be communicated and realize.
Number three.
David Thats in Jeopardy approval in Australia, and the generation of additional revenue to Adam as expected in 2021.
Number four we expect to announce we partners for us in jeopardy in semi outside the United States.
Number five clinical studies with Campbell encoded 19 patients will be completed and published data from these studies will be used for grants admissions none.
Number six we will complete a phase two phase III clinical study using capital to protect against radiation dermatitis and I'm as I mentioned is a very large market.
In conclusion, I believe that the completion of these six objective should make 2021, a good year for Adams and his shareholders I.
I would like now to open up for questions.
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The first question is from Elliot Wilbur from Raymond James. Please go ahead.
Thanks, Good afternoon, just a couple of financial questions upfront for Rob specifically looking at trends and the sterile compounding business, obviously saw a sequential improvement in the quarter. Just wondering if you could talk about how the business trended over the quarter and specifically.
Anything you may be seeing.
In the current period, just trying to get a sense of whether or not.
The real resurgence of the pandemic in many locations has had a.
Noticeable negative impact in terms of the recovery trajectory of that business and then second.
Just looking through the Q here.
And focusing specifically on.
Some JP gross margins.
Yes, it looks like Cogs continues to be around one and a half million a quarter. So you've got negative margin. There just wondering if if thats essentially.
Just an absorption issue or if there was any sort of inventory write off or something else that may have impacted that number.
Thanks, Elliot so yes, the first part newest compounding.
We over the last several quarters since the pandemic began we've noticed that the bounce back with stronger on the client side versus the.
Human side that trend continues.
We have not seen any negative impact here in the first and the beginning of the fourth quarter due to the resurgence nor would we expect that.
It's really a function of hospitals and clinics, allowing us to actually detail the account.
And get back into the same mode that we were pre cobot.
So that basically is where we're at on the on the U.S. compounding side.
The second when you are talking about some jumpy gross margins, we do not report.
A distinction between those two in the financial statements, but I will I will say that.
Some Japanese sales as David had mentioned, we talked earlier have trended upward.
And just to remind everyone remind everybody on the call that there are two components to some Japanese sales one is manufacturing and the other is direct unit sales and so all of that.
That also has a way of skewing that data so while sales are up.
We did not have the same increase in manufacturing as we did in 2019.
Okay. Thanks, Rob then a question for Ron I guess with respect to either the.
Dermatitis study or.
Any this mission programs under warp speed for for COVID-19, any more granularity you can provide in terms of.
In terms of the.
The timing there, particularly with respect to initiation of any cobot related trials is is that something you think you could see.
[noise] Green light on before year end.
Yeah. This is Ron thanks for that question, yes, well based on the urgency of calls that we're hoping to initiate a study and koby patients by year end.
With the dermatitis studies that may be initiated next year, some time and that is no go.
Going through the cancer can source and the University of Pennsylvania.
We're confident that we'll also have a dermatitis steady ongoing as well.
Okay, and I guess last question would be for David can you just.
Maybe in sort of a general terms kind of outline what you think maybe sort of the international.
Licensing opportunity for high dose lock, so guess im less familiar with the usage of the product in opioid overdose outside the U.S. and specifically whether or not there is there's.
On an already established market for high dose or or not.
Yes, it's.
Difficult question to answer at this point Elliot we.
A lot of those discussions for Xin high specifically are fairly early in the process.
However, this.
Opioid issue, although certainly worse than the United States than most places is not exclusive to the U.S. and so there is a considerable amount of usage ex us and so I think it's going to be really driven by by the companys specific as far as.
There.
What their area of focus is and so what that might translate into as far as opportunities within that territory, but.
The ideal situation, obviously with these both of these products being built on the same device would be to identify partner or partners that would be interested in.
Partnering on both devices.
Both both products.
And so that is certainly.
Our our lead sort of strategic path right now for ex us.
Okay. Thanks, David those are my questions. Thank you.
[noise]. The next question is from Jason Mccarthy from Maxim. Please go ahead.
Hey, it's not on for Jason. Thanks for taking the question guys I just had a few and use your products on some jeopardy. The conversation world men's is having one institutional institutional groups could you give more color on that are are they more government groups or private sector groups and one could be.
Packed potential contracts to be written and impact your financials.
Well thanks for the question this is David.
I'll take a shot at this and then and sales can fill in the additional color but the.
Yes, I can tell you that without getting into any granularity as far as the the.
Groups that theyre actually speaking to that the the targeting is both.
Institutional and and retail and that the.
Timing is such that.
I don't know if we completely articulated this on prior call that.
Yeah, that's what I meant is certainly been conducting discussions.
With these efforts to contract, but has not been able to.
Fully executed or even finalized those agreements while technically in sales we're still under the umbrella of Sandoz. So now that theyve cleared that hurdle. They have you know that the next several months to try to finalize any of those agreements and that's.
More or less at the point of dentists. His comment about we really expect to see more meaningful uptick in sales and 21.
And then we've seen thus far so I guess in summary, I'd say that the contract work is in process, but couldn't even couldnt, even finalize any of those agreements until the transitional consent as was completed.
Okay, I understand that some JV has a different devices and high but.
Sorry.
No I was just want to expand on that I think will be yes, woven as we'll be announcing of a large retail chain store retail some deal sometime in early 2001.
Okay.
I guess, that's in Japan, as an i. different products, but is there a potential those institutional contracts could potentially read throughs am I, assuming approval I could you potentially a contract the same organization. So also acquire than high.
Yes.
Sure I those discussions for Zimmer I, obviously are are much earlier stage than some JP.
And those can't really get any traction meaningful traction until after the approval, but yes, I would say that those are the ideal would be too.
Put both of those products on the same contract.
Okay now on them I, obviously, you guys have a PDUFA date later this week on the manufacturing plant does then my is produced and what's that re inspected recently and as the cgmp compliant or were there any are there any 43 is there anything.
No. There are no 43, no 43 is none whatsoever and it is GM okay.
Right.
Okay. I know you guys are saying you're on launching in early 2021, but whats look exactly the lead time the manufacturing lead time for them high once you guys have approval.
Well.
Lead time for manufacturing in general is around three months, but I can say that we've we've teed up a lot of that work in.
Advancing expectation of receiving an approval. So that's why we're fairly confident that you gave.
To be able to facilitate a U.S. weldments launch and really 21 based on.
Some of the some of the work weve already done to to be able to get the product very quickly on the heels of rule.
But on your manufacturer was your manufacturer impacted by covered in terms of sourcing <unk> or any of the necessary materials to produce to make finished goods.
No in fact, the good news is that several of these items that make up the.
The.
Yes necessary.
Sourcing material.
Our longer lead time items. So there was something that has been sourced in quantity.
Long before it though that so we've got plenty of ipi plenty of.
Of syringes, Nutter and other materials to facilitate manufacturing for.
Probably at least a year or more.
Okay and my final question is on temp all.
How much how much what actual cost Oh, what's your estimated cost to run on the Covance study and the cancer study.
Okay.
Well.
It really depends on the size of the studies as you know the cost for the Temple study, we're looking at anywhere from a proof of concept study to up to 300 patient.
The cost for that including the CRL just off the top of my head is anywhere from $4 million to $12 million and Thats why we are seeking government support for the larger sample.
Simple study for the dermatitis study, we actually also helping to get those studies funded completely by the cancer consortium, a university of Pennsylvania. So we're hoping that most of these studies.
We'll be funded independently from the company.
Okay. Thank you thanks for taking my question.
Yes.
I think that's well I think thats all the questions, we'd like to thank everybody and.
We look forward to 2021.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating in today's presentation.
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