Q2 2021 AcelRx Pharmaceuticals Inc Earnings Call

So Alex says website and accelerate dot com. This call is the property of accelerate and any recording reproduction or transmission of this call without the expressed written consent of accelerate is strictly prohibited.

Operator: ExcelOx's website at accelerex.com. This call is the property of AccelerX, and any recording, reproduction, or transmission of this call without the express written consent of AccelerX is strictly prohibited. As a reminder, today's call is being recorded. You may listen to a webcast replay of this call by going to the Investor section of AccelerX's website. I would now like to turn the call over to Raffi-Azzedorian, Accelerix's Chief Financial Officer. Please go ahead.

As a reminder, today's call is being recorded.

Listening to a webcast replay of this call by going to be investing section of acceleration, but.

I would now like to turn Nicola to Raffi Ecuadorian accelerate Chief Financial Officer. Please go ahead.

Raffi Mark Asadorian: Thank you for joining us this afternoon. For its most directly comparable gap financial measure, please see the reconciliation table located in Alamara's earnings press release, business updates, and a press release This press release and the slide presentation accompanying this call are available in the Investors section of our website. With me today is Vince Angadi, our chief executive officer, and Dr. Pam Palmer, our chief medical officer. Before we begin, I'll remind listeners that during this call, we will make forward-looking statements within the meaning of the federal securities laws.

Thank you for joining us this afternoon earlier today, we announced our second quarter financial results and some business updates in our press release. This press release and the slide presentation accompanying this call.

<unk> in the investors section of our website.

With me today is Vince Angotti, our Chief Executive Officer, and Dr. Pam Palmer, our Chief Medical Officer.

Raffi Mark Asadorian: These forward-looking statements involve risks and uncertainties regarding the operations and future results of Accelerance. Please refer to our press release in addition to the company's periodic, current, and annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward-looking statements. We'll now hand the call over to Vince. Thank you, Rafi, and good afternoon, everyone.

Before we begin I'll remind listeners that during this call we will make forward looking statements within the meaning of the federal Securities laws. These forward looking statements involve risks and uncertainties regarding the operations and future results of accelerates.

Please refer to our press release in addition to the company's periodic current and annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward looking statements I will now hand, the call over to Vince.

Thank you Rafi and good afternoon, everyone. We appreciate you taking the time to join the call. We've accomplished a lot during the second quarter. Despite the uncertainties that remain about the COVID-19 pandemic.

Vincent J. Angotti: We appreciate you taking the time to join the call. We've accomplished a lot during the second quarter, despite the uncertainties that remain about the COVID pandemic. The highlights for today's call include one, the solid distribution sales momentum and where we're seeing success. Two, the addition of two new complementary late-stage product candidates to our portfolio, and three, the addition of a commercial partner for DeZuvio in Europe. And four, the agreement reached with the FDA regarding the Promotion of Materials Warning Letter.

The highlights for today's call include one the solid distribution sales momentum and where we're seeing success.

To the addition of two new complementary late stage product candidates to our portfolio.

Three the addition of a commercial partner for <unk> in Europe.

And for the agreement reached with the FDA regarding the promotional materials warning letter.

Vincent J. Angotti: These accomplishments are aligned with our four-pillar strategy, supporting both organic and inorganic revenue growth to drive the value of Acceler Act. After I review these accomplishments, Rafi will take you through the Q2 Financer results, so let's get started. The Sudia revenues in the quarter were $.4 million, a 117% increase over the first quarter of the year.

These accomplishments are aligned with our four pillar strategy supporting both organic and inorganic revenue growth to drive the value of accelerates.

After our review these accomplishments Rafi will take you through the Q2 financial results. So let's get started.

<unk> revenues in the quarter were <unk> $4 million or 117% increase over the first quarter of the year.

Vincent J. Angotti: We're expecting continued growth this year, assuming we do not encounter returning restrictions from COVID. During the second quarter, we saw many of the restrictions on visitors to hospitals, surgery centers, and surgical suites lifting. Now, with the recent resurgence of COVID, we're beginning to see certain areas of the country again institute restrictions. Fortunately, we have some insulation given that plastic surgery is one of our fastest growing specialties and tends to have fewer COVID limitations since these procedures are often completed in surgical suites, separate from the hospitals or surgery center. As you can see on the slide, Plastic Surgery.

We're expecting continued growth this year, assuming we do not encounter returning restrictions from Covid.

During the second quarter, we saw many of the restrictions on visitors to hospitals surgery centers and surgical suites lifted.

Now with the recent resurgence of Covid, we're beginning to see certain areas of the country again Institute restrictions.

Fortunately, we have some installation given that plastic surgery is one of our fastest growing specialties and tends to have fewer COVID-19 limitations. Since these procedures are often completed and surgical suites separate from the hospitals or surgery centers.

As you can see on the slide plastic surgery, followed by orthopedics is our fastest growing specialty.

Vincent J. Angotti: Followed by Orthopedics is our fastest growing speciality. We're getting solid momentum with plastic surgeons, given the unique characteristics of the Sudia and its use during awake surgery. In fact, several nationally recognized plastic surgery thought leaders are supporting the education of physicians in this speciality, which has resulted in an increasing number of plastic surgeons coming to Sudia. We don't have a large commercial team, and the word of mouth about Subi has been encouraging as plastics is a concentrated community of physicians. For these positions, patient comfort and satisfaction, coupled with safety, are key measures of success. Orthopedic Surgery is the next fastest growing specialty. Again, some nationally recognized thought leaders have supported the education process.

We're gaining solid momentum with plastic surgeons, given the unique characteristics of <unk> and its use during awake surgeries.

Fact, several nationally recognized plastic surgery thought leaders are supporting the education of physicians in this specialty which has resulted in an increasing number of plastic surgeons Trialing d'souza.

We don't have a large commercial team and the word of mouth about the <unk> has been encouraging as plastics has a concentrated community of physicians.

For these physicians patient comfort and satisfaction, coupled with safety our key measures of success.

<unk> surgery as the next fastest growing specialty again, some nasty recognized thought leaders have supported the education process.

Vincent J. Angotti: Published studies of real-world data in August and December of last year have been key contributors to the initial adoption by orthopedic surgeons. We expect the number of ongoing investigator-initiated studies and future publications will further support education regarding the key advantages of the Suvia in this speciality, as well as more broadly across the perioperative environment. Adoption in the oral surgery specialty has been slower than that of plastics and orthopedics. Overall, surgery centers and procedural suites continue to adopt the Sudia more quickly than hospitals.

<unk> studies of real World data in August and December of last year have been key contributors to the initial adoption by orthopedic surgeons.

We expect the number of ongoing investigator initiated studies and future publications will further support education regarding the key advantages of the <unk> and the specialty as well as more broadly across the Peri operative environment.

Adoption in the oral surgery specialty has been slower than that of plastics and orthopedics.

Overall surgery centers and procedural suites continue to adopt the suite of your more quickly than hospitals.

Vincent J. Angotti: We believe this has mainly been driven by the pandemic leading to a slowdown and often cancellation of the P&T committee meetings held at hospitals. Regardless, our pipeline of potential hospital network approvals remains robust, and overall, we're on track to exceed our goal of 615 approvals by year end. Now moving to our first pillar.

This has mainly been driven by the pandemic leading to a slowdown in Austin cancellation of the PMT Committee meetings held at hospitals, regardless, our pipeline of potential hospital network approvals remains robust and overall, we're on track to exceed our goal of 615 approvals by year end.

Now moving to our first pillar.

Vincent J. Angotti: The Department of Defense remains the largest short-term sales growth driver for Acceler Act. The US Army continues to work through their administrative and logistics process to distribute the SOF in all their sets, kits, and outfits for deploying troops. The resolution of the process has taken longer than we had hoped.

The department of Defense remains the largest short term sales growth driver for accelerates.

The U S Army continues to work through the administrative and logistics process to distribute distribute and all their sets kits and outfits for deploying troops.

The resolution of the process has taken longer than we had hoped however, just a couple of months ago. The U S Army publicly communicated their support of the CVR for battlefield pain management.

Vincent J. Angotti: However, just a couple of months ago, the U.S. Army publicly communicated its support of the Suvia for battlefield pain managers. The U.S. Army medical material development activity, known as Usamda, stated concerns with the standard intramuscular morphine auto-injection. They also emphasize that another commonly used battlefield anegesis, Oral-Tensucosal Phentanil Citrate, is licensed only for use in chronic pain syndromes found in cancer patients, and it is specifically labeled not to be used for acute pain management.

The U S Army medical material development activity known as you Sander stated concerns with the standard intramuscular morphine auto injectors.

I also emphasize that another commonly used battlefield analgesic.

Oral chance mucosal fentanyl citrate is licensed only for use in chronic pain syndromes found in cancer patients and specifically labeled not to be used for acute pain management.

Vincent J. Angotti: We believe this recent public commentary on the currently available alternatives to Dissuvia is signaling the Army is moving closer to finalizing all logistics and, therefore, purchases and packing out of the SKOs. Another objective we achieved recently was the successful outlicensing of Dissuvia, or D'Zuvio, as it is named in Europe, to Agatine. We believe Agaton is an ideal partner to commercialize DeZuvio across Europe, given its broad commercial coverage of the territory, as well as its focus on the acute care setting with its existing product portfolio.

We believe this recent public commentary on the currently available alternatives to Sylvia is signaling. The army is moving closer to Finalization of all logistics, and therefore purchases and packing out of the SK OS.

Okay.

Another objective we achieved recently was the successful out licensing of the Silvia or <unk> as it is named in Europe to Agi time.

We believe <unk> is an ideal partner to commercialize the zalviso across Europe, given its broad commercial coverage of the territory as well as its focus on the acute care setting with its existing product portfolio.

Vincent J. Angotti: They are well known for their strong hospital market access capabilities and have a presence in more than 70 countries. We're working on the operational aspects of the partnership to ensure a smooth transition of commercial knowledge as they focus on the regulatory and other aspects until they are prepared for their commercial launch, which we expect will be in the first half of 2022. AccelerX is responsible for manufacturing the product, and Agatot will perform secondary packaging, regulatory, and commercial activities.

They are well known for their strong hospital market access capabilities and have a presence across more than 70 countries.

We're working on the operational aspects of the partnership to ensure a smooth transition of commercial knowledge as they focus on the regulatory and other aspects until they are prepared for their commercial launch, which we expect will be in the first half of 2022.

<unk> is responsible for manufacturing the product and <unk> will perform secondary packaging regulatory and commercial activities.

Vincent J. Angotti: So we're thrilled to be partnering with an established organization, which we believe is a strong fit with Acceler Act. Additionally, separately, we agreed with Agatont to commercialize in the US their ready-to-use patented, pre-filled syringe product candidates, one with ephedrine and another with phenolephrine, subject to FDA approval. Phyderin and Phynelephrine are common medications for use in the perioperative setting in both ASEs and hospitals, as well as in intensive care units in the emergency room, resulting in a strong commercial law overlap with our current sales team. Now, I'll hand the call over to Pam to briefly explain these two additions to the portfolio. Pam. Thanks, Vince.

So we're thrilled to be partnering with an established organization, which we believe is a strong fit with accelerates.

Separately, we agreed with <unk> to commercialize in the U S towards their ready to use patented prefilled syringe product candidates, one with ephedrine and another with phenylephrine subject to FDA approval.

Ephedrine and phenylephrine are common medications for use in the perioperative setting in both <unk> and hospitals as well as intensive care units in the emergency room, resulting in a strong commercial overlap with our current sales team.

Now I'll hand, the call over to Pam to briefly explain these two additions to the portfolio.

Pamela Pierce Palmer: I'm excited we added both these product candidates to our portfolio. Treating clinically significant hypotension or low blood pressure is an emergent issue. Both pherin and phenlephrine are used to treat hypotension in different settings. Ephedrin is used when both heart rate and blood pressure need to be increased, such as after anisetic induction.

And then Im excited we added both of these product candidates to our portfolio.

<unk> clinically significant hypotension or low blood pressure is an emerging issue.

Both federal and phenylephrine are used to treat hypertension in different settings.

February is used in both heart rate and blood pressure and need to be increased such as after anesthetic induction phenylephrine infused when the peripheral vascular resistance has dropped often due to spinal anesthesia and only the blood pressures needed to be increased by visa constricting the peripheral vascular churn.

Pamela Pierce Palmer: Phanephren is used when peripheral vascular resistance has dropped, often due to spinal anesthesia, and only blood pressures need to be increased by vasoconstricting the peripheral vasculature. It is important to realize that during clinically significant hypotension, clinicians cannot take the time to pull out a vial of concentrated drug, draw up the medication in a syringe, dilute it to the standard concentration, and then label Yet all of that, in fact, needs to be done with concentrated vials, which were the only form of these drugs available for so many decades.

It is important to realize that during clinically significant hypotension clinicians cannot take the time to pull out a vial of concentrated drug dropped the medication in the syringe diluted to the standard concentration and then labeled a syringe before dosing yet all of that in fact needs to be done with the concentrated.

<unk>, which was the only form of these drugs available for so many decades.

Pamela Pierce Palmer: So anesthesiologists such as myself would always prepare the syringes ahead of time, just in case they were needed. But as they had no shelf life beyond the day they were drawn up, we would throw them away whether we used them or not.

So anesthesiologists such as myself.

We prepare the syringes ahead of time just in case they were needed.

As they had no shelf life beyond the data were drawn up we would threaten away, whether we use them or not.

Pamela Pierce Palmer: Due to the excessive cost over time, it became popular for hospital pharmacists to pay a premium price to obtain these pre-filled and labeled syringes from a compounding pharmacy. Another reason for paying a premium for compounded pre-filled syringes is that dosing errors can often occur with the previous syringe preparation methods I just described. And joint commission inspections would show time and again that in the rush to draw up these syringes, dosing errors were made, and syringes were not properly labeled, leading to drug mixing.

Due to the successive cost over time, it became popular for hospital pharmacists to pay a premium price to obtain these presale then labeled syringes from the compounding pharmacy.

Another reason for paying a premium for compounded prefilled syringes is that dosing errors can often occur with the previous arrange preparation methods I just described and joint Commission inspections with Showtime and again that in the rush to draw. These syringes dosing areas remain in syringes were not properly labeled.

Bleeding control mixed up.

Pamela Pierce Palmer: However, compounding pharmacy syringes still have a limited shelf life, and since pharmacists must always have these life-saving medications on hand, they tend to over-order and then destroy the unused syringes after expiration. So the dosing errors are reduced, but the cost of wasted drugs is still a significant issue. Sterility issues at compounding pharmacies are also a concern and have been widely publicized.

However, the compounding pharmacy <unk> still have a limited shelf life.

Since pharmacists must always have these life saving medications on hand.

Tend to over order and then destroy the unused syringes after exploration.

So the dosing errors or reduced but the cost of wasted drug is still a significant issue.

To really be issues that compounding pharmacies are also a concern and had been widely publicized.

Pamela Pierce Palmer: Only very recently, in April of 2020, did the first pre-diluted vial of a fetterant get FDA approval. Note, this is a pre-diluted vial, not a pre-filled syringe. So this saves only one step in the process, possibly avoiding having to draw up the syringes ahead of time in certain cases when the use of the drug might be a low probability. But in many cases, such as operations on elderly patients or patients with known cardiac risk factors or stroke risk, any time spent preparing a syringe to treat life-threatening hypotension is undesirable.

Only very recently in April of 2021st pre diluted vial of et cetera, and get FDA approval. No. This is a pre diluted diluted vial not a pre filled syringe. So.

This saves only one step in the process, possibly avoiding having to drop the syringe is ahead of time in certain cases, when they use the drug might be a low probability but in many cases, such as operations on elderly patients or patients with known cardiac risk factors or stroke risk any time spent preparing a syringe to treat <unk>.

Life threatening hypertension is undesirable.

Pamela Pierce Palmer: In general, FDA-approved medication syringes are ready to use and also benefit from extended shelf lives compared to compounding pharmacy syringes. Therefore, you would expect less waste of drugs, and the pre-labeled, pre-filled, ready-to-use nature of these syringes should also mitigate against dosing errors and drug mix-ups. The two product candidates from Agaton are approved in Europe but have not been approved in the U.S. If approved by the FDA, these products would be an exciting step forward in anesthesia care, as there currently are no FDA-approved pre-filled, ready-to-use syringes for either ephedrine or phenolephrine.

In general FDA approved pre filled medications syringes are ready to use and also benefit from extended shelf lives compared to compounding pharmacy syringes. Therefore, you would expect less waste of drug.

And the pre labeled pre filled ready to use nature of these syringes should also mitigate against dosing errors and drug mix out there.

Two product candidates from AG time are approved in Europe, but have not been approved in the U S.

If approved by the FDA. These products would be an exciting step forward in anesthesia care as there currently are no FDA approved pre filled ready to use syringes for either ephedrine or phenylephrine.

Pamela Pierce Palmer: In evaluating the FDA approval of EMERFED, which is the first prediluted vial of Fedron that was approved in 2020, and the subsequent approval of another prediluted bile of ephedrine, Rezipres, which occurred earlier this year, there's a precedent for a straightforward filing of a 505B2 NDA, with no additional clinical trials being required. We expect to submit NDAs for our pre-filled syringes within the next 12 months, and we believe approval will follow within 10 months of these submissions. I'll now hand the call back over to Venn.

In evaluating the FDA approval of <unk>, which is the first pre diluted vial of ephedrine that was approved in 2020.

And the subsequent approval of another pre diluted vial of ephedrine, <unk>, which occurred earlier this year there.

There is a precedent for a straightforward filing of a 505 <unk> NDA.

With no additional clinic clinical trials being required.

We expect to submit NDA for our pre filled syringes within the next 12 months and we believe an approval will follow within 10 months of the submission.

I'll now hand, the call back over to Vince.

Thank you Pam these products or indeed, a great addition to the portfolio from both a clinical and commercial perspective, and importantly, we don't believe there is significant cost to getting these products. These product candidates to an FDA approval and again, we're excited to partner with <unk> on both the out license.

Vincent J. Angotti: These products are indeed a great addition to the portfolio from both a clinical and commercial perspective. And importantly, we don't believe there's a significant cost to getting these products, these product candidates, to FDA approval.

Vincent J. Angotti: And again, we're excited to partner with Agaton on both the outlicensing of the Zuvio and commercializing the pre-filled syringes in the United States. On the operations front, our fully automated manufacturing line has been installed at our contract manufacturer, and we're currently completing the final site acceptance tests. We remain on our previously communicated timeline and expect to have initial commercial batches produced in the third quarter of 2022. We also expect the regulatory batches that will be produced before this time will be able to be sold.

Singh of Zalviso and commercialized in the pre filled syringes in the United States.

On the operations front, our fully automated manufacturing line has been installed at our contract manufacturer and we're currently completing final site acceptance testing.

We remain on our previously communicated timeline and expect to have initial commercial batch is being produced in the third quarter of 2022.

We also expect our regulatory batches that we be produced before this time, we'll be able to be sold.

Vincent J. Angotti: We're excited to finally get this phase of operations moving, as we believe this will significantly reduce our cost of sales as we prepare for increased orders from the Department of Defense as well as our commercial customers. As previously communicated, the FDA has agreed with Acceler-X's proposed plan to update certain promotional materials, including providing a letter to healthcare professionals, D-HCP letter explaining the corrections to the discontinued promotional materials. AccelerX has included this D8CP letter on the DeSuvia.com website, which will be available for a period of eight months.

We're excited to finally get this phase of operations moving as we believe this will significantly reduce our cost of sales as we prepare for increased orders from the department of defense as well as our commercial customers.

As previously communicated the FDA has agreed with <unk> proposed plan to update certain promotional materials, including providing a letter to health care professionals.

Dhcp letter, explaining the corrections to the discontinued promotional materials.

<unk> has included this dhcp letter on the <unk> Dot Com website, which will be available for a period of eight months.

Vincent J. Angotti: All promotion materials currently used by AccelerX's commercial team have been updated to address the FDA's concern. AccelerX expects to receive a close-out letter from the FDA after the DHCP letters have been sent to the identified healthcare professionals, and the letter has been posted on the website for a duration of eight months. Finally, before handing the call over to Rafi, I'd like to address the securities lawsuits that have been filed. To be clear, we believe that these lawsuits are without merit and intend to vigorously defend them. We believe they will be dismissed in due course.

All promotion materials currently in use by <unk> commercial team have been updated to address the fda's concerns.

<unk> expects to receive a closeout letter from the FDA. After the Dhcp letters have been sent to the identified health care professionals and a letter has been posted on the website for duration of eight months.

Finally, before handing the call over to Ralph you would like to address the securities law suits that have been filed to be clear. We believe that these lawsuits are without merit and intend to vigorously defend them against them.

We believe they will be dismissed in due course.

Raffi Mark Asadorian: I now hand over the Clover to Raffy to take you through the second quarter financial results. Thank you, Vince. Our financial position remains strong with $55.3 million in cash at June 30 and $17.2 million in senior debt. In addition, we expect the upfront payment from Agatant to be received shortly in the third quarter. We're thrilled to have finalized a partnership with Agatom that will support further DeSuvia growth outside the U.S. and also adds value to our U.S. commercial efforts, two unique pre-filled syringe product candidates for the U.S. market.

I'll now hand, the call over to Rafi to take you through the second quarter financial results.

Thank you Vince our financial position remains strong with $55.3 million in cash at June 30, and.

And $17.2 million in senior debt and.

In addition, we expect the upfront payment from <unk> to be received shortly here in the third quarter.

We're thrilled to have finalized the partnership with <unk> that will support further to CVA growth outside the U S. And also adds value to our U S. Commercial efforts with two unique prefilled syringe product candidates for the U S market.

Yes.

Raffi Mark Asadorian: Gross profit remained negative as revenues did not exceed the fixed overhead cost. However, this gap was reduced in the quarter as higher product sales led to an improvement in the gross margin compared to Q2 2020. We're excited that the automated packaging line has been installed and look forward to the efficiencies expected to be realized as volumes ramp up. Operating expenses, or combined SG&A and R&D expenses, were $9.4 million in the second quarter of 2021, compared to $8.4 million in 2020; excluding stock-based compensation, second quarter 2021 cash operating expenses were $8.3 million.

Gross profit remain negative as the revenues have not exceeded the fixed overhead cost. However, this GAAP was reduced in the quarter as the higher product sales led to an improvement in the gross margin compared to Q2.2020.

We're excited that the automated packaging line has been installed and look forward to the efficiency is expected to be realized as volumes ramp.

Operating expenses or combined SG&A and R&D expenses were $9.4 million in the second quarter of 2021 compared to $8.4 million in 2020.

Excluding stock based compensation second quarter 2021, cash operating expenses were $8.3 million the.

Raffi Mark Asadorian: The increase in operating expenses in Q2, 2021 was attributed to the benefit in Q2 2020 from the transaction break fee received from Tetrafate. We expect quarterly cash operating expenses to remain around the same level as they were in the second quarter of 2021 for the rest of the year. We continue to remain prudent with our cash and control our spending as the DUSUvia launch progresses into new specialty areas and further penetrates hospitals and ASCs.

The increase in operating expenses in Q2.2021 was attributed to the benefit in Q2.2020 from the transaction break fee received from Tetra phase.

We expect quarterly cash operating expenses to remain around the same level as they were in the second quarter of 2021 for the rest of the year.

We continue to remain prudent with our cash and control our spending as the <unk> launch progresses into new specialty areas and further penetrate hospitals and <unk>.

Raffi Mark Asadorian: Turn the call back now. Thank you, Rafi. Again, we're pleased with very strong progress over the past several quarters, including publications of real-world data supporting the significant clinical advantages of D'Suvia in the perioperative setting, solid growth in DeSuvia sales, the recent addition of two late-stage assets through business development, and the commercial expansion of DeSuvia into Europe. All of this was done while prudently managing our cash, and I'd like to open the lineup for any questions Operator? Thank you.

I will turn the call now back to Vince.

Thank you Rafi.

Again, we're pleased with the very strong progress over the past several quarters, including publications of real World data supporting the significant clinical advantages of the <unk> in the perioperative setting.

The solid growth in distribution sales and the recent addition of two late stage assets through business development and the commercial expansion of <unk> into Europe. All of this done what prudently managing our cash now.

Now I'd like to open the lineup for any questions you may have operator.

Operator: Thank you. We'll now begin the question and answer session. To ask the question, you may press Stargan 1 on your telephone keypad. If you were using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press start again. Your first question comes from Brendan Folks from Cantor Fitzgerald. Please go ahead. Pardon me, Brendan, your line is now live. Please go ahead.

Thank you we will now begin.

In the question and answer.

To ask a question you May press.

And then one on your telephone keypad.

Thank you Brian.

Nicole.

We'll go.

Joe Your question Chris.

Thank you.

Your first question comes from Brendan.

Yellow. Please go ahead.

Pardon me Brendan Your line is now live. Please go ahead.

Brandon Richard Folkes: All right, thanks, thanks for my question. Can you hear me now?

Hi, Thanks for taking my question.

Let me now.

Yes, Okay fantastic. Thank you.

Operator: Yes. Okay, fantastic. Thank you. I guess, you know, very positive on a number of friends. I'm just going to focus on two of them. Firstly, on the Army. Any idea when we may see significant orders coming through there? And secondly, you know, you've done very, very well on the formulary approvals. You remain on track for that 650. As you look after this sort of 20, 22, and beyond, is the strategy continued for primary adoption, I guess, or going deeper into these accounts? I'd imagine it's the combination of both, but just any color in terms of what you see of value drivers, just given the success you've had with the formulary approvals in 2021. Thank you.

And I guess, Greg positive on a number of fronts.

To focus on two of them.

On the army any color on when we made significant orders coming through there.

And then secondly, you've done very very well on the formulary approvals.

We remain on track for that 615.

<unk> 2022 and beyond is the strategy.

Coronary.

Coronary adoption, I guess or going deeper into these accounts.

Imagine it.

A combination of both just any color in terms of what your value drive it just given the success you've had on the pulmonary approvals in 2021. Thank you.

Sure Brandon So there's two segments to that question and thank you for them. The first on the Dod We can't give you an insight, but we were heavily encouraged by that public commentary. They made on the <unk> website regarding battlefield pain management and the fact that that's the first time, we've actually seen them.

Vincent J. Angotti: Sure, Brandon, so there are two segments to that question, and thank you for them. The first on the DoD, we can't give you insight, but we were heavily encouraged by the public commentary they made on the Usomda website regarding battlefield pain management. And the fact that that's the first time we've actually seen them puts the Shuvia at a significant, what I'll call, premium in their minds compared to what they have currently been using over the last number of decades.

Put the <unk> at a significant.

What I'll call premium in their mind to what they were currently been using over the last number of decades.

Vincent J. Angotti: And so for them to put that out public with confirmation of, other material in there being their milestone C meeting last year, the fact that's on the joint deployment formulary, the fact that the wholesaler has been affirmed, we thought it was very, very positive momentum for us. So we're excited to help them achieve the fulfillment of these SKOs in the coming future quarters. I cannot give you the exact time frame of that.

And so for them to put that out public with confirmation of although materially and they are being their milestone C meeting last year. The fact, it's on the joint deployment formulary. The fact that the wholesaler has been.

Affirmed we thought was very very positive momentum for us. So we're excited to help them achieve the fulfillment of these <unk> in the coming future quarters I cannot give you the exact timeframe of that but.

Vincent J. Angotti: But again, when I reiterate that we were excited to see that public commentary relative to Suvia versus the other products in their battlefield acute pain management basket. On the second question, with formal approvals deeper into accounts, or just to continue to expand maybe initial use with formal approvals, it'll be both. But we'll end up in the future putting a priority on deeper utilization of the account so that it's more protocolized within their different procedures and outpatient operations moving forward.

But again want to reiterate that we were excited to see that public commentary relative to <unk> versus the other products and theyre battlefield acute pain management basket.

On the second question.

With the formulary approvals and deeper into accounts for just to continue to expand maybe initial uses formally approvals it'll be both but we'll end up in future, putting a priority on deeper utilization with the accounts. So that it's more protocol lies within their different procedures and <unk>.

Patient operations moving forward I can tell you in the second quarter, we had our highest quarterly number of new Rems certifications since the fourth quarter of 2019, when we had almost three times as many reps.

Vincent J. Angotti: I can tell you in the second quarter, we had our highest quarterly number of new REM certifications since the fourth quarter of 2019, when we had almost three times as many raps. In the second quarter of this year, we also achieved historical highs in unique orders, repeat ordering customers, and new ordering customers. So there was a nice balance of getting some depth of use, as well as having new accounts come onto play.

And the second quarter of this year, we also achieved historical highs and unique orders.

Repeat ordering customers and new ordering customers. So there was a nice balance of getting some depth abuse as well as having new accounts come on to play.

Vincent J. Angotti: And about 78% of our doses shipped to the end user in the second quarter were repeat doses, 22% being first-time orders. So we're excited about the blend, and we're seeing a lot of momentum in plastics right now. And they're really utilizing it for awake surgeries because they want to move away from the IV opioids or other opioids they've traditionally been using. Pam, maybe you can comment on that quickly.

And about 70% of our doses shipped to the end user in the second quarter, a seven 8% of them were repeat doses, 22% being first time orders.

So we're excited about the blend and we're seeing a lot of momentum in plastics right now.

And they are really utilizing it for the awake surgeries, because they want to move away from the IV opioids or other opioids, they've traditionally been using Pam maybe you can comment on that quickly.

Pamela Pierce Palmer: Sure, I mean, you know, it's popular to have plastic surgery. It didn't diminish much during the pandemic. In fact, we kind of joke that everyone is staring at themselves on Zoom videos, realizing maybe they could look a little bit better.

Sure I mean the.

It's popular Deb plastic surgery, it didnt diminish much during the pandemic in fact, but we kind of joke everyone's staring at themselves on zoom video to realizing maybe they could look a little bit better but.

Pamela Pierce Palmer: So that's the exciting thing. It's a market that's not diminishing during COVID. They love the product because it doesn't, you know, avoids all the problems with the IV peaks and troughs, gives them a nice, smooth period of analgesia, and again, very wake and alert for them to be able to quickly be discharged home.

So that's the exciting thing that it's a market that's not diminishing during COVID-19.

They love the product because it doesn't point to other problems with the IV peaks and troughs gives them a nice smooth period of analgesia, and again very awake and alert them to be able to quickly be discharged town.

Vincent J. Angotti: I think another comment that I'll make to you, relative to your question about this mix of formularies versus depth of use, is that while the hospital approval process has certainly slowed down, as we discussed in the script, the body of the script, hospitals are one of the main sources on a per-account basis of utilization of the suburb. For instance, while they represent a minority of accounts, they represent close to 50% of all doses utilized by the end user.

Yes, I think another comment that I'll make to you relative to your question about this mix of formularies versus depth of use as well. The hospital approval process has certainly slowed down as we discussed in the script. The body of the script hospitals are one of the main sources on a per account basis.

Utilization of the <unk> for instance, while they're the minority of accounts.

They represent close to 50% of all doses utilized with the end user. So they will certainly remain a key priority for us moving forward and the depth of use as they start to use it across different disciplines within the hospital being same day surgery being emergency room and being other disciplines within that installed.

Vincent J. Angotti: So they will certainly remain a key priority for us moving forward, and the depth of use as they start to use them across different disciplines within the hospital, being same-day surgery, being emergency room, and other disciplines within that institution. I hope that helped answer the question, Brandon.

Situtions.

I hope that helps to answer the question Brandon.

Brandon Richard Folkes: Yes, very helpful. I appreciate all the color. Thank you very much.

Yes very helpful. I appreciate all the color. Thank you very much.

Thank you.

Yeah.

Operator: Thank you. Your next question is from Ed Ark from H.C., BrainWite, and Co. Please go ahead.

Thank you our next call.

Hum.

Wholesale bandwagon.

Please go ahead.

Ed Ark: Hi, everyone. Thanks for taking my question. Uh.

Hi, everyone. Thanks for taking my questions.

A few for me.

Ed Ark: A few for me, first starting with You know partner, Agbatant, congratulations, by the way. Just wanted to ask about the milestone to be received in the third quarter. I don't think you break that out, along with the sales-based milestones. So wondering if you can give us the upfront number that you expect this quarter. And then secondly, turning to the two new late-stage assets.

First starting with.

New partner at that time.

Congratulations by the way.

Just wanted to ask about the milestone to be received in the third quarter I don't thank you.

You break that out.

Along with the sales based milestones I'm wondering if you can give us the upfront number.

You expect this quarter and then secondly.

Turning to the new <unk>.

Two new late stage assets.

Ed Ark: You cite a size of the commercial opportunity of over $100 million. I'm wondering if you could help us understand, you know, how you arrive at that figure between the two assets. And just overall, what do you think are the key value proposition points as you prepare to file your NDA? And then lastly, regarding the automated packaging line, could you remind us again, you know, quantitatively how you think this could impact the Cods line going forward? Thanks so much.

Site.

Size of commercial opportunity of over $100 million I'm wondering if you could help us understand.

How you arrive at that figure between the two assets and just overall what.

Or do you think are the key value proposition.

Points.

Are you prepared to file your NDA.

And then lastly.

Regarding the automated packaging line, if you could remind us again.

Yeah.

Quantitatively, how you think this could impact the Cogs line going forward.

Thanks, so much.

Raffi Mark Asadorian: Yeah, okay, so let me start with question one, which is the new partner, Agatant, and the structure of the deal, Rafi. Yeah, as a private company, Agatatat is a private company. We've not yet disclosed that. That will be disclosed in our revenues in the third quarter. But we can tell you it's mid-to-low single-digit millions of dollars that would be received as an upfront.

Yeah. Okay. So let me start with question, one which was the new partner <unk> and the structure of the deal Rafi.

And since it's a private company <unk> is a private company, we've not yet disclosed that that will be disclosed in our revenues in the third quarter.

But we can tell you it's mid to low single digit millions of dollars.

That would be received as an upfront.

Vincent J. Angotti: However, this was offset by the addition of two new products to our portfolio as well. So it's been a nice upfront package between both the cash and the two new products. So for the two new late-stage assets, you asked how you quantify a $100 million opportunity? Yeah, I mean, we haven't broken that out either, but it's, I would say it leans slightly more towards the ephedron, in terms of the size and the opportunity. What's difficult is not available, actually; the compound pharmacy is the largest provider of pre-filled syringes today, and there's not a lot of information there.

Offset by the addition of two new products in our portfolio as well.

So it's been a nice upfront package between both the cash and into new products.

So for the two new late stage assets you asked how do you quantify the $100 million opportunity yes.

Haven't broken that out either but it's I would say it leans slightly more towards the ephedrine.

In terms of the size and the opportunity.

What's difficult is not available actually is the compound pharmacy as the largest provider of the Prefilled syringes.

<unk>.

And theres not a lot of information there. So if you look at some of the comparable products out in the market.

Raffi Mark Asadorian: So if you look at some of the comparable products out in the market, EmmerFed being one that was launched last year, and that is ephedron. So it's a ready-to-use vial of ephedron, and the first ready-to-use vial of ephedron that was made available and was approved. approved in April 2020. That's running at a gross sales run rate based on the symphony data that we have available of about $30 million already within one year.

<unk> being one that was launched last year and that is ephedrine. So it's a ready to use vial.

Ephedrine and the first ready to use vial of ephedrine that was made available and was approved in April 2020, that's running at a gross sales run rate based on the Symphony data that we have available of about $30 million already.

And.

Within one year.

Raffi Mark Asadorian: So if you think about that and these two products being pre-filled syringe candidates, that opportunity to take even more share of the overall effedrin market, we believe it's very exciting for us. We've spoken to many pharmacists who believe it's also very exciting to have these pre-filled syringe products on the market. And you asked, I think, beyond that, the key value proposition points. Pam, maybe you can reiterate some of the information that we've communicated.

So if you think about that and this being these two products being pre filled syringe candidates.

That opportunity too.

To take even more share of the overall ephedrine market. We believe is.

It's very exciting for us we've spoken to many pharmacists who believe it is also very exciting.

To have these properties pre filled syringe products.

On the market.

And you asked it I think beyond that the key value proposition points. Pierre maybe you can reiterate some of the information that we've communicated sure I mean, so this is as I mentioned, a decrease waste I mentioned, why we have to easily waste ephedrine and Pamela for now decrease errors that huge.

Pamela Pierce Palmer: Sure, I mean, as I mentioned, it's decreased waste, and I mentioned why we usually waste ephedrine and then phenylaphrine now. Decreased errors, that's huge. Products are constantly getting mislabeled when you have to draw them up quickly.

<unk> are constantly getting mislabeled when you have to drop them up quickly.

<unk> decreased time, let's say, the anesthesiologists and intensive as the ER docs time, and it's important also while the federal phenylephrine are used commonly in the perioperative setting. They are also used a lot in intensive care and emergency room as well. So it is quite diverse across the medically supervised settings here and also what's really new.

Pamela Pierce Palmer: Decreased time to save anesthesiologists and intensive care and ER docs time. And it's important also that while phedererine and phenylaphrin are used commonly in the perioperative setting, they're also used a lot in intensive care and emergency risk. room as well. So it is quite diverse across the medically supervised settings there. And also, what's really neat about these syringes is that they're plastic, not glass. And so that's a huge advantage as well. Thank you.

About these syringes as their plastic not glass and so thats a huge advantage as well.

Vincent J. Angotti: So relative to your questions, Edel and Agatant, you know, we're very excited about them as a partner. When you take a combination of both the upfront, as Rafi mentioned, in our and our deal with them on the two new late stage assets, we're very excited. It's transformational for the company moving forward, really expanding the portfolio and moving Zuvayo into Europe. The opportunity is pretty significant, and we're going to really prioritize speed to market on these as best as we can. We mentioned in this script, the pre-prepared remarks that, in total, it will be, we believe, 22 months or under to be able to get these products to market.

So relative to your questions and on AG very excited about them as a partner when you take a combination of both the upfront as Rafi mentioned in our.

And our deal with them on the two new late stage assets. We're very excited it's transformational for the company moving forward really expanding the portfolio of moving <unk> into Europe.

The opportunity is pretty significant and we're going to really prioritize speed to market on these as best as we can we mentioned in the script the pre prepared remarks that in total it will be we believe 22 months.

Or under two <unk> will be able to get these products to market. So.

Raffi Mark Asadorian: So, very neat diversification for our company, and the same call points we're calling today. I think your final question, Ed, was on the automated packaging line and the potential effect that it will have on calls. Thank you.

Very very neat diversification for our company and the same call points, where we're calling today I think your final question was on the automated packaging line and the potential effect that will have on Cogs.

Raffi Mark Asadorian: Yeah, Ed, there are two parts to it. One is, obviously, the efficiencies we gain from the automated line and then the increasing volumes that we're seeing. So both have an effect because it's going to be the fixed cost base being covered by those additional volumes that we've had. And based on some of the numbers we've run for this automated packaging line, we expect it to be a close to 60% reduction in the unit cost of Dissuvia once this is up and running and we're running commercial batches.

Yes, there's two parts to it one is obviously the efficiencies we gain from the automated line.

And then the increasing volumes that we're seeing.

So both have an effect because its going to be a fixed cost base being covered by those additional volumes.

We've had and based on some of the numbers we have.

We've run for this automated packaging line, we expect it to be close to 60% reduction in the unit cost.

Of <unk>.

Once this is up and running and we're running commercial batches, so it's going to be important, especially as.

Vincent J. Angotti: So it's going to be important, especially as the DOD begins ordering for the US Army S.KOs, which, you know, the signal is, as Vincent mentioned, the signal is, things are starting to move there. So that's what we're excited to start. That's all very helpful. Yeah, it'll also be important. Yeah, it's true off, right? That's right, that's right, and these volumes because we expect Agaton to be launching here in the first half of 2022.

The Dod.

Begin their ordering for the U S Army SK OS.

Which the signal as Vince had mentioned the signal is things are starting to move there.

We're excited to start.

To start with.

Yes.

Great. That's all very helpful and also be able.

<unk>, that's right that's right and as volumes, because we expect <unk> to be launching here in the first half of 2022.

Vincent J. Angotti: Did that help Ed? Yeah, that's great, very helpful. Congratulations on the, You know, really have to give Raffy credit on that one to package the two deals together for both. The monetary aspects of the Dezuvio deal and the asset aspects of the pre-filled syringes were very well done.

Did that help Ed.

Yeah. That's that's great very helpful. Congrats on the army deal.

Yeah. It really has to give rafi credit on that 1% to package. The two deals together for both.

The monetary aspects of the <unk> deal and the asset aspects of the Prefilled syringes was very well done.

Operator: Thank you. Your next question comes from Michael Higgins from Leidenberg, Tolman. Please go ahead.

Thank you.

It comes from Michael Hagan from Ladenburg Thalmann. Please go ahead.

Michael Higgins: Thanks, Dr. Hey, guys, thanks for taking some questions here. Just a follow up a bit on the pricing, if I could, on the concentrated drug. Maybe, PM, you can help with this a bit.

Thanks, Operator, hey, guys. Thanks for taking two questions here just to follow up a bit on the pricing if I could on the concentrated drug maybe you can help with the debt.

Michael Higgins: Just trying to understand the differences in the pricing of the concentrated drug versus the pre-deluded files and then versus the potential pricing, that is, for the pre-filled syringe. We're certainly ahead of NES-per type data yet, which you're really, really good at. But just trying to get a sense of the pricing of these different products. Thanks. We'll have Rafi comment on that. Yeah, hi

Just trying to understand the differences in the pricing of the concentrated drug versus the pre diluted files, and then versus the potential pricing.

The pre filled syringe.

We are certainly ahead of any as per type data, yet, which you are really really good at that.

Just trying to get a sense on the pricing of the.

These different products.

We have rafi comment on that.

Raffi Mark Asadorian: There's certainly an opportunity for the pre-filled syringes. We're not going to comment, obviously, on the pre-filled syringe pricing, but we can give more details on that once we file the NDA.

Yeah, Hi, Michael.

There is certainly a an opportunity for the pre filled syringe as we're not going to comment obviously on the pre filled syringe pricing.

We can give more details on that once we file the NDA.

But.

Raffi Mark Asadorian: But, compared to the concentrated version, the generic concentrated vials, there's a significant premium, although I don't have the exact data.

The pre fill the vials compared to the to the concentrated.

Raffi Mark Asadorian: We've got the gross sales, the whack amounts, but there's a significant premium over those generic vials that you're able to charge, particularly when you look at the milligrams per per ML pricing of that. So it's a significant premium they're able to charge because there's a significant value that's provided to the hospital and on that. Yeah, so you'd expect, obviously, versus generics, we'd come out of the premium, but we won't give you that band of pricing until we get much closer to launch.

Version that generic concentrated vials theres a significant premium.

I don't have the exact data we've.

We've got the gross sales the WAC amounts, but there is a significant premium over those generic vials that youre able to charge.

Particularly when you look at the.

The milligrams.

Per ml pricing of that so it's a significant premium they are able to charge because theres a significant value that is provided to the hospital on that.

Sure.

So you would expect obviously versus the generics we would come out of the premium, but we won't give you that band of pricing until we get much closer to launch we'll over sorry now over even the even the branded versions of the ready to use I was just to be clear I was referring to the vials the ready to use vials compared to the generic versions of the concentrated vial.

Raffi Mark Asadorian: Well, over, sorry, no, even the branded versions of the ready to use. I was, just to be clear, I was referring to the vials, the ready to use vials compared to the generic versions of the concentrated vials. Yeah, that makes sense. I appreciate that. And then Am I catching a potential priority review? Is that what you're looking at with these? No, we are not looking at a priority review.

Yes.

Yes makes sense.

Appreciate that and then.

Catching a potential priority review is that what youre looking at with these things.

No. We are not we're not looking at a priority review.

Raffi Mark Asadorian: No, it would be the standard 10-month 505-2. Review time.

The standard 10 months to go.

Pamela Pierce Palmer: review time and again Pam, we're gonna expect any clinical trials involved with this based on historical evidence? Yes, correct. Very good. Appreciate it. Thanks, guys.

Anytime and again Pam Gotcha.

I expect any clinical trials in bulk based off historically.

Yes, correct.

Very good I appreciate it thanks guys.

Michael.

Michael Higgins: Thank you. This does conclude our question and answer session. I would now like to turn the conference back over to Sangotti for any closing remarks.

Thank you. This does conclude our question and answer session I would now like to turn the conference back I think we will.

Got it.

<unk>.

Vincent J. Angotti: Well, thank you. For those of you who joined us today and for your continued support of AccelerX. Again, we believe we're very well positioned for future growth while continuing to control our expense lines. We look forward to sharing more developments in the future, and we do believe that business development is an important part of our future as well. So thank you again, and we look forward to the continued updates.

Well. Thank you for those of you who joined US today and for your continued support of accelerates again, we believe we're very well positioned for future growth, while continuing to control our expense lines and we look forward to sharing more developments in the future and we do believe that business development is an important part of our future as well. So thank you again and we look forward to the continued updates.

Operator: Thank you. This does conclude our conference for today. Thank you for participating. You may now disconnect. I'm going to be

Thank you. This does conclude our conference for today. Thank you for participating you may now disconnect.

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Yes.

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