Q4 2020 Opiant Pharmaceuticals Inc Earnings Call
Greetings and welcome to the Opiate Pharmaceuticals fourth quarter and full year 'twenty 'twenty earnings conference call. At this time, all participants are in a listen only mode.
Most of the nurses session will follow the formal presentation.
Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note this conference is being recorded.
Now I'll turn the conference over to your host Ben Atkins, Vice President of Investor Relations you may begin.
Thank you operator, and thank you all for joining us this afternoon.
With me on today's call are Chief Executive Officer, Dr. Roger Crystal and Chief Financial Officer, David to.
This afternoon <unk> issued a press release announcing financial results for providing a business update for the fourth quarter and the school year ended December 31st 2020.
Please note that certain information discussed on the call day is covered under the safe Harbor provision of the private Securities Litigation Reform Act.
The listeners that during this call 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 <unk> news releases and SEC filings, including in our annual report on form 10-K for the year ended December 31st 2020 and subsequent filings.
Conference call also contains time sensitive information that is accurate only as of the date of this live broadcast much for 2021.
Undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the day of this conference call now I'd like to turn the call over to Roger.
Good afternoon, and thank you for joining us today.
He used to have this opportunity to provide an update on our progress and answer your questions.
I'll begin by offering brief remarks, and then hand off to David O'toole, Chief Financial Officer to provide an overview of the financial highlights.
Turning to our lead asset <unk> T zero, there of three nasal nalmefene for opioid overdose.
Made good progress on multiple fronts with this program during the fourth quarter and into early 2021.
As we announced in October we will use of tough for them has proven unit dose nasal spray device, which has already been approved by the S. T. A with the other drugs currently marketed in the United States, including Narcan nasal spray.
Working with our manufacturing partner summit Bioscience as.
We completed production of the clinical and registration batches, which are necessary to generate the 12 months of stability data required for inclusion in our NDA submission.
In December we met with the FDA to review the protocol for <unk>.
Pharmacodynamic study in healthy volunteers and the update the agency on our overall base of generation and five of five P. Two submission strategy.
Building on the manufacturing and regulatory momentum in February we dosed the first cohort of patient enough come for matrix Pharmacokinetic study and anticipate full enrollment in April.
The study will confirm the pharmacokinetic profile of Pmt's areas area of three compared to the intramuscularly injected nalmefene.
Our objective is to confirm the results generated in our pilot study we.
We anticipate the availability of these data in June.
Today I am pleased to expand on these developments.
We have filed the study protocol for a Pharmacodynamic study in healthy volunteers with the FDA and.
I'd have received other received.
Institutional review Board approval.
The anticipates commencing patient dosing in mid March.
We look forward to the results of our studies and remain on track to complete our NDA for FDA review by the end of 2021.
If approved by the S T a.
The launch of Pmt's areas area of three in 2022.
The rapid absorption and long plasma half life of OPM cheese. There is there of three seen in our initial PK study together with the well established five fold higher affinity of Nalmefene at Mu opioid receptors compared to the naloxone. If confirmed that has the potential to establish a new treatment standard for opioid overdose.
Yes.
This is particularly timely as America confronts the rapidly rising threat of synthetic opioids like fentanyl.
In December the C. D C issue the health of the network advisory to substantial increases in drug overdose deaths across the United States.
According to the CDC.
For the 12 months, leading up to July 2020, 61000 day reported opioid overdose deaths occurred in the USA.
This is a huge increase from the previous 12 months reporting period and importantly, the C. D. C notes synthetic opioids appear to be the primary driver.
Indeed, close to 82% of all drug overdose deaths attributed the synthetic opioids.
The increasing prevalence of synthetic opioids risk complicating the provision of rescue medication for opioid overdose.
Yes.
From our discussions for the U S medical community of first responders E. M. S teams the emergency room physicians because the parents that's multiple sequential doses of naloxone are often required the help of patients recover from a single overdose.
This is not the new trend using data from the National Emergency Medical services information system. The search of Examinant examine data from 2012 for 2015, the determined trends in patients receiving multiple naloxone administration.
That study, which was published in 2017 showed the frequency of multiple naloxone administration was growing over time and it was like the associated with the locations where opioid potency was increasing.
Okay.
Historically, that's involving illicitly manufactured fentanyl I've been concentrated in the 28 states east of the Mississippi River.
In contrast, the largest increases in synthetic opioid deaths from June 2019 to May 2020, and 10 Western States.
This puts the threat of a synthetic opioids at national epidemic levels.
I'll focus on OPM teaser there of three therefore, having just the critical time when the nation considers how to best confront the dangerous new phase of the Americas opioid epidemic.
As a reminder.
Minutes of OPM Ts the areas there of three supported by neither in the contracts with BARDA.
In December we were pleased to announce this an additional an additional by the commitment of up to $3 $5 million.
Also in the center, we secured the debt financing of up to $50 million, which would fund the commercial launch of both entities. There is every three.
All opioids, it's easier for the three remains at the forefront of our pipeline we have additional exciting development programs.
On the preclinical front.
Immense development studies for an injectable formulation of Brinavess in collaboration with and Cats, a division of the NIH.
As a reminder, we are developing been event of Pmt's areas area for as a potential treatment the emergency reversal of the acute cannabinoid overdose.
There are currently no FDA approved treatments for this condition.
And cats has engaged aerospace to develop the injectable formulation and manufacturing for both.
I N D, enabling studies at the early stage clinical studies.
Finally, our phase two study of opiate in theory, there to nasal naltrexone for alcohol use disorder remains on temporary hold due to the ongoing COVID-19 pandemic for.
Fortunately, we continue to see further change for the <unk>.
It is.
The COVID-19 across the countries, where I'll study aims to enroll patients.
In summary, we.
We are extremely pleased with the recent progress of cheese and further advancing our mission to bring new medicines to patients suffering from addiction and drug overdose.
Building opened pharma and for a leading specialty company.
More importantly, we're excited about the multitude of value creating opportunities that lie ahead.
With that I will now turn the call over to David Oakes too.
Chief Financial Officer.
David.
Thank you Roger.
I'll start with an overview of opiate sports the quarter, followed by our full year financial results.
Additional detail about the fourth quarter as well as our annual financial results can be found in our form 10-K that was filed with the SEC today.
For the three months ended December 31, 2020, opiate recorded approximately 10 million in revenue compared to approximately 7.7 million during the corresponding period of 2019.
We recorded approximately $8 3 million of revenue from our license agreement with emergent bio solutions for the sales of Narcan.
Compared to approximately $7 2 million in the same period of 2019.
Fourth quarter 2020 sales of Narcan, where approximately $77 4 million as reported by E. B S.
G&A expenses for the quarter were approximately $3 6 million compared to $2 8 million in the comparable period of 2019.
The 0.8 million increase was primarily due to $1.2 million in administrative expenses associated with O P. N T zero-zero three.
Offset by a zero point for million decrease in personnel and related expenses.
R&D expenses for the fourth quarter were approximately $4 5 million as compared to approximately 2.22 million in the comparable period in 2019.
The $2 5 million increase in R&D expense is primarily attributable to an increase for third party expenses associated with our R&D programs.
Sales and marketing expenses for the quarter were approximately 0.9 million compared to 0.5 million a year earlier.
The increase of 0.4 million was attributable to government affairs expense and the initial pre commercialization market research related to Oh P. M. P 003.
Royalty expense for the three months was approximately one 9 million compared to approximately $1 6 million in the comparable period of 2019.
The increase was due to payments to net profit partners for the royalties received for.
From the net sales of Narcan nasal spray.
Net loss for the fourth quarter was approximately 0.6 million or a loss of 16 cents per basic and diluted share compared to a net income of approximately $1 1 million or 26 cents per basic share and 20 cents per diluted share for the comparable period of 2019.
Yeah.
Turning now to the full year 2020 for the 12 months ended December 31, 2020, opiate recorded approximately $29 6 million of revenue compared to approximately $45 million during the corresponding period of 2019.
This included approximately $27 4 million of revenue from our license agreement with EPS for the sale of Narcan compared to approximately 37 six.
$6 million in the same period of 2019.
Our revenue from Narcan in 2019 included the final milestone payment of $13 5 million of.
Sales of Narcan nasal spray exceeded 200 million for that year.
Full year 2020 sales of Narcan were approximately $311 million as reported by the UBS.
G&A expenses for 2020 were approximately $11 7 million compared to approximately $12 2 million in the comparable period of 2019.
The decrease of 0.5 million was primarily due to a decrease of $1 1 million in third party spend and personnel and related expenses offset by an increase of 1.2 million in administrative expenses associated with zeros for PMT zero-zero three.
We will continue to focus on cost containment in 2021, as we move for toward an anticipated NDA filing for O. P. N T 003 at the end of the year.
R&D expense for the year ended December 31, 2020 were approximately $9 2 million compared to approximately $9 1 million in the comparable period of 2019.
Sales and marketing expense for the year were approximately $4 7 million compared to zero point $6 million in the same period of 2019.
This increase was due to personnel and related expense, including stock based compensation as well as Governor of Affairs and then the show pre commercialization market research related to O P. M. T 003.
The royalty expense for the year ended December 31st 2020 was approximately $6 2 million compared to approximately $7 7 million in the same period in 2019.
The $1.5 million decrease was due to lower net royalty revenue in 2020 in the prior year.
Which was primarily attributable for the final milestone of $13 5 million received during 2019.
Net loss for the year ended December 31st 2020 was approximately $1 9 million or a loss of 44 cents per basic and diluted share.
Compared to net income net income of approximately $11 6 million or $2.88 per basic and $2 17 per diluted share for the comparable period of 2019.
In December of the company announced that it had entered into a $50 million convertible note purchase and security agreement with a syndicate of PON effects.
Nance and Cree of capital.
Under the the agreement opiate will be able to draw up to 50 million in three tranches.
The first tranche of 20 million was funded at closing on December 10, 2020, and the remaining 30 million is available.
Upon achieving certain milestones.
10 million of $20 million, respectively. Upon the filing of the NDA.
The FDA approval of O P N T 003.
[noise] subject subject of certain limitations pontifex inquiry of can elect to convert up to half of their outstanding loan into shares of opiates common stock at the conversion price of $19 64 per share.
As of December 31, 2020, opiate had cash and cash equivalents of $48 3 million Inc.
<unk> of the first tranche of $20 million received from the vertical debt financing.
Per the $31 million at December 31, 2019.
The current cash balance does not include the full impact of the night of grant of approximately $7 4 million or the BARDA contract, which is now approximately $8 1 million. Following BARDA additional commitment of up to $3 5 million announced in December.
He's done the mid range of the full year 2021 guidance for sale of Narcan nasal spray provided by a b S of $315 million.
We expect full year 2021 royalty revenue from the sale of Narcan nasal spray of approximately $27 8 million.
We also expect to end 2021, with cash and cash equivalents of approximately $40 million, which will not include any receipt of additional tranches of the convertible debt deal.
With that I'll now ask the operator to open the call up for questions operator.
At this time, we'll be conducting a question and answer session. If you'd like to ask the question. Please press star one on your telephone keypad the.
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One moment, please pool for questions.
And our first question is from Brandon Folkes with Cantor Fitzgerald. Please proceed with your other question.
Yeah.
Hi, Thanks for taking my questions and congratulations on all of the progress.
Two questions from me and by the.
And for like Christmas areas of its very odd maybe just sort of thinking ahead as we get to commercialization of there there of three.
Using the device you're using now gone to there'll be a potentially of generic I guess on the market.
The thing we should think about in terms of the supply of devices in a P. I once approved or was that all sorted out now and then secondly, you know I get this question of bad So I'm, just kind of asking for granted.
So.
Is it anything of the Narcan agreement that would preclude you from sort of counter detailing narcan and granted where you're sitting I'm not asking for your commercial strategy of more just asking if there's anything per the agreements right now or do you have free range to market share there given that it's a.
Yeah, no the intranasal naloxone. Thank you.
Thanks, Brandon and thank you for joining the call from the questions. So for.
On the.
The commercialization supply.
At all of the the unit dose devices.
Widely available.
And we absolutely have a sufficient supply for the launch and they have a way of us.
<unk>, Inc.
The inventory should demand increase.
The increase as well on the API, yet we have no issues as far as the worldwide was adequate supply of API the.
On the situation of our rights and our ability to commercialize the okay. Gee, there's a story there is nothing in the agreement.
The stops us from doing this it's not part of the.
Well the original companies adapt pharma is not part of that license.
Great. Thank you very much.
Our next question is from Carl Byrnes with Northland Securities. Please proceed with your question.
Great. Thank you congratulations on the quarter and the progress so and in anticipation of the commercial launch of all of the three how do you how do you foresee staffing.
With respect of personnel and territories and regional directors and such and over what timeframe and then I have a follow up as well. Thanks.
The bank's called yet so.
The main drivers for.
Any stuffing expansion.
The driven by gender.
Generating positive data at all clinical studies, we're not going to be spending significant amounts of capital ahead of that.
Recognizing and between generating positive data and filing an NDA and ultimately launching that and that would be of pair it substantially ramp up and the exact details of stuffing will really depend on the extent that we do self commercialized.
And in the past and this remains so is the west we do see an opportunity to self commercialize this ourselves now that might be in its entirety, but there might be options to license. This is a attractive offers.
Our out of that but also even if it's not the whole loss at the <unk>.
Waves of potentially splitting it where we retain one segment of the market of licensee would take the other segments.
All of that is all the.
The contemplation that for that drives the exact.
Staffing requirements for the business.
So that's the answer for that one you had another question.
Great. Thank you.
Just sort of looking at potential generic entry in the let's call. It the latter part of the year.
But considering the challenges with respect to Covid and the other aspects of the of the generic launch.
How do you see the potential or do you see thinking through the potential the the generic could be pushed out or lagged into 2022 and this is of course, assuming that EPS and an OPM prevail in litigation.
I mean, it's hard to exactly anticipate how of generic Mike.
Play out, but I need to say the when we consider the prospects of zoos are three we factor in the potential of the generic we we always have.
I've done that even prior to the outcome of the type of litigation last year.
We take it very consistent viewpoint in that sense.
And the decision of timing and the success of the generic launch I'll tell you theres various factors that come into play Hudson of exactly how that will impact of this market.
But I think what really.
Overrides everything should be if the data are positive and there is there of three then we think this will set a product the path from.
The generic and the essentially let the data speak for itself and combined with that is not this product we anticipate pricing of responsibly. It will be essentially the price product and therefore access will still be a.
Widely available and we anticipate this being widely affordable for all.
Stakeholders.
Okay.
Thanks, that's awesome and it you know if I could just one more question.
We look at the NIAID and BARDA grants.
$7 4 million on the on the 90 grant.
For the Upsized BARDA grant.
Adjusted for what you spend it looks like you've got about $11 million remaining to fund.
To fund the O O three how would you expect that to be sort of a peanut buttered out between this year and next year given the timing of the anticipated.
<unk> NDA submission.
Thanks, Carl I appreciate you being on the call and the question.
You know given that we're doing the clinical work this year for zero-zero of three and we are anticipating at this point in time filing an NDA by the end of the year the majority of that.
We will come this year, there will be some potentially in the first quarter of of next year.
But the majority of that would be in 2021 with the with the bulk of it being towards the end of the year.
Oh, great. Thank you.
And our next question is from David Bautz Zacks. Please proceed with your question.
Hey, good afternoon, everyone Roger in the.
The Pharmacodynamic trial that youre going to be running is that a required part of the NBA and then also what resolved are you expecting to get from that trial.
Yeah. Thanks, David So will make full disclosure on the study design in the next few weeks or so but essentially what we're looking to do in other studies generate data that really supports the big the differentiated product.
All of what's out there at the moment in terms of opioid overdose reversal.
Anything naloxone based essentially and is it required I mean, certainly from our interactions with the FDA they have.
Implied the generating efficacy data.
It would be beneficial for the NDA submission.
And we saw this is absolutely an opportunity.
The state is really to show that this product is differentiated.
This is what the PD studies Pharmacodynamic study.
Enables a more details on this to come but that's why we ask for that.
Okay, and sorry, if I missed this earlier, but I don't know if you commented on when do you anticipate making a decision about whether the commercial line or three on your own or the partner or license it or whether you have the timeframe.
I mean, the decision of the.
The decision will come well I guess on the one hand, if all of US come in the whole way then obviously, we might be forced to make decisions ahead of an extremely attractive offer to acquire the assets.
One of the what was right for all our shareholders and we would absolutely entertain that there's no.
As the no ego in the room, whereby we must self commercialized for the sake of it but we do recognize that the the <unk>.
General of successful commercial launch.
Generate significant shareholder value. So that's what we would like to pursue and the decision again we are.
Well I think two things to say we are.
Absence of any of us any way building the infrastructure to allow self commercialization. So some of that it has been decided already in many ways.
The second once we generate data from the PD study and the PK study.
I would say towards the end of Q3 overall and that will remain the trigger that.
The additional spending to self commercialize.
And.
But would also be a time, where the asset value will be significantly increased if the data are positive. So that would be the right time is the decision made to the license as well.
Okay.
So David I was wondering if you could talk about some of the reasons why you decided to go with the the convertible debt financing as opposed to other means to raise cash.
Well.
Our stock price.
During that period of time, and it's still we believe is significantly undervalued.
We wouldn't want to raise equity at these levels.
And so doing some sort of debt financing that is tranche based on milestones seem to be to us the the best way to.
Secure financing at a very attractive rate so that we can commercialize zero-zero three if we so choose.
The interest rate on it.
On an average is as you know on line.
Less than 10% and if you look at the conversion price of $19.64.
Have in my mind.
Two funds that are out there in the marketplace that believe that the not the stock is undervalued and that they you know they are comfortable with the conversion price of $19 64.
So it was it was by far one of the most attractive.
Financing transactions that we looked at.
And you know we're glad that we're partnering with pontifex in Korea, as we move move the programs forward.
Okay.
Alright, thanks for taking the question.
Thanks, David.
And we have reached the end of the question and answer session and I will now turn the call over to CEO, Dr. Roger Crystal for closing remarks.
Thank you operator, thank you for joining us today and for your interest in Opiate CAD.
Got an extremely busy start for this year and we look forward to an exciting one ahead.
During which we expect to update investors on a series of important milestones enjoys.
Enjoy the rest of your day and please stay healthy.
The.
This concludes today's conference and you may disconnect your lines at this time.
You for your participation.
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