Q3 2021 Nabriva Therapeutics PLC Earnings Call
Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on hold thank you for your patience.
Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily.
Until that time your lines will again be placed on hold thank you for your patience.
[music].
Good day and thank you for standing by welcome to then the Beaver Therapeutics third quarter 2021 business update and financial results call.
At this time all participants are in a listen only mode.
After the Speakers' presentation, there will be a question and answer session.
Ask the question during the session you will need to press star one on your telephone if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Mr. Dan Donlan, Beavis Chief Financial Officer.
Thank you and good afternoon, everyone.
Welcome to the previous conference call and webcast.
Discuss the third quarter 2021 earnings and also provide a business update.
The slides for today's presentation are posted on the company's website www dot and the breathe of Dot com and can be found under the investors tab in the events and presentations section.
We recommend that you refer to the presentation is we'll be using those slides for today's discussion.
Before we begin on slide two I would like to remind everyone that this conference call and webcast will contain forward looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ.
Please note that these forward looking statements reflect our opinions only as of the date of this call. We will undertake no obligation to revise or publicly release the results of any revisions to these forward looking statements in light of new information or future events factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such.
Forward looking statements are discussed in greater detail in our most recent filings on Form 10-K, and our other periodic reports on forms 10-Q, and 8-K filed with the SEC.
Turning to slide three I would like to briefly run through with this afternoons agenda.
Ted Schroeder Abreva CEO will start with a business update and will present, an overview of the commercial highlights from the quarter steeped alone and a brief as president and COO will then give an update on the families and the prospects for the Fabulous lifecycle management Lastly, I will provide a financial review before Ted comes back with some summary comments and lead the Q&A.
Sure.
I would like to now turn the call over to breathe as Chief Executive Officer, Ted Schroeder. Thank you, Dan and thanks to everyone. Joining our call. This afternoon before I get started I would like first to welcome Dr. Christine Waco, Pobby, who joined the breathe of as our Chief Medical Officer in October Dr. Waco Poppy it bring.
Over 30 years of global biopharmaceutical experience and extensive expertise in every stage of drug development, including Pharmacopeia economics, and outcomes research and medical Affairs.
She has previously held leadership positions at small startups and large multinational companies, including Mckesson, Merck Wyeth, Pfizer and <unk> welcome again Christine.
Let's start on slide five we are very pleased with our results this quarter and the progress we're making on multiple fronts.
<unk> performance was strong recording double digit quarter over quarter growth in both net sales and in T. Rx as these figures are promising and give us increased confidence that our commercial efforts are having an impact.
As mentioned in previous updates, we expect to get to the Baxter sales back to historical peak sales trends by mid 2022.
To help our efforts in increasing awareness of both send letter ends of extra <unk>. We recently launched an inside sales Representatives program, which has supplemented our field base team to expand the promotional reach of <unk> and then letter.
We believe this additional program will expand our reach by targeting an estimated 2000 top prescribers in white space geographies through additional personal promotion.
Moving to the letter, we recently announced an agreement with Disney in the largest healthcare performance improvement company in the U S to expand access to them later in the hospital setting for.
For those that are not aware Disney and provides expertise analytics and advisory services as well as our contract portfolio that represents more than $110 billion in annual purchasing volume to improve patient outcomes and lower costs.
With approximately 3 million people treat it for community acquired bacterial pneumonia or cap in the hospital setting each year. We believe this partnership is a great step toward establishing Zen letter as a treatment option for cat in the hospital setting.
In September we also announced the approval of a sudden letter in Taiwan as many of you as of you know Zen letter has received regulatory approval in every country in which we have filed a regulatory application.
We continue to see additional opportunity for growth with send letter through geographic expansion. We recently renegotiated our agreement with Whovian by extending our strategic partnership with Toby on through 'twenty 30, we gained near term flexibility and cash allocation we can now.
L deploy additional investments towards growth driving initiatives, such as the increased advertising non promotional promotion and direct to patient initiatives as we are entering the cap season.
Earlier this month, we published the first data demonstrating the potent anti inflammatory properties of the family. We are encouraged by these data and the potential that an agent combining antibacterial and anti inflammatory properties may offer clinicians and patients.
Steve will provide additional color on these important data later in the presentation.
As a result of the celebrating revenue growth and continuing to be prudent with our resource deployment. We have now extended our cash runway to substantially through the second quarter of 2022.
Moving to slide seven this graph shows the T R axis for the oral antibiotic market in the United States. As you can see the current trajectory is trending positively towards a return to pre pandemic antibiotic prescribing the trend is encouraging and while not back.
To pre pandemic levels, we are seeing consistent upward prescription growth overall this was promising especially for Zen letter as we head into the fall and winter season, when we typically expect to see a greater incidence of respiratory infections.
Looking specifically at <unk> on slide eight I'm excited to announce that <unk> hit the 1000 prescription Mark this quarter. The first quarter. This has been achieved since the second quarter of 2020.
Additionally, we were excited to report the quarter over quarter growth demonstrated by <unk> with a 14% sequential increase.
We remain confident that sort of extra sales can reach historical peak sales levels by mid 2022.
Some of the factors responsible for the strengths include the increased product awareness the rate of MRSA infections in the community and the productivity of our sales force.
The outstanding coverage for some extra was another factor driving adoption.
We have currently have approximately 275 million lives in the U S covered for Savak stroke, our field based sales representatives continued to see a high level of in office interactions as we've progressed throughout the year.
Not only are these increased office visits good for the current growth of <unk>, but we also believe this is laying the groundwork ahead of the cap season by keeping then let it.
Top of mind.
Moving to slide nine let me spend the next few minutes discussing our agreement with vision, which we signed in early September to make them available to visiting <unk> Pharmacy network program.
<unk> is the largest healthcare performance improvement company in the U S. Visiting customer base includes 18 networks and approximately 340 health systems, which represents an opportunity to focus on improving patient outcomes, our partnership will afford us.
Access to visiting expertise analytics and advisory services.
With approximately 3 million adults treated with cap in the hospital setting annually. This represents a significant opportunity to efficiently expand the use of Zen letter overtime.
Slide 10 lays out some of the key benefits that this relationship will bring to them later.
Given the recent challenges of getting access to hospitals due to COVID-19 restrictions. We believe that we have created a channel through Vivian to expand the awareness and presence of Zen letter in the hospital setting.
As we have previously mentioned we are optimistic that's been letter will be recognized as a promising therapeutic for cap with its novel mechanism of action short course of therapy, low propensity to develop bacterial resistance and favorable safety profile.
What is also important about the visit agreement is the opportunity to expand then let it usage in the transition of care scenario when a cat patient goes from the hospital to the outpatient setting last winter, we experienced the season of drastically reduced respiratory infections.
But we anticipate that as people continue to resume normal activities. It is reasonable to expect a rise in the number of patients seeking treatment this fall and winter.
We are envisioning the patient will start therapy, while they are in the hospital and then get an additional prescriptions take home upon discharge.
Slide 11 highlights some additional efforts we are employing to promotes and letter and drive increased demand in Q4 to capitalize on the respiratory season. These efforts focused on expanding prescriber reach through brand messaging at the point of cap diagnosis.
Generating highly qualified leads to sales representatives from non personal efforts identifying local and regional medical Congresses for the sales representatives to engage with prescribers beyond the office and the introduction of the 10 count oral pack or ex pack for improved patient.
Access and convenience. We are also focused on activating targeted patients by developing a Zen letter patient tester as destination and content repository Doctor discussion guide leave behinds with key messages and leveraging website drivers to reach the most likely.
Cap patients.
As we turn to slide 12, we are excited to announce the launch of our 10 count oral pack or the ex pack for us in Atlanta, the availability of the 10 count oral pack allows for an efficient option for pharmacies, the carries and let it across their distribution networks.
As a result, we believe this one hence the overall patient experience by improving access and availability of sand letter across the retail market. Our salesforce will actively communicate the availability of the 10 count oral pack, which we believe provides another positive step for Syn <unk>.
Letter as we enter the upcoming cap season.
With that as the commercial update I will now pass the call over to Steve to loan who can discuss the progress with fabulous in cystic fibrosis and the recent promising data showing the fabulous anti inflammatory activity Steve.
Thank you Ted and it's my pleasure to provide a brief update on some of the ongoing and let a lifecycle management activities.
As we have previously disclosed the breathe is evaluating the potential of <unk> and the management of bacterial exacerbations caused by staph aureus in patients with cystic fibrosis.
As a reminder, and to help frame the unmet medical need slide 14 depicts the most recent data from the cystic fibrosis Foundation patient Registry report from 2019, showing the staph aureus remains the most common respiratory pathogen identified in patients with CF, even after the introduction of <unk>.
Later therapy.
Importantly, as shown on the right side of the slide the presence of methicillin resistant staph aureus, or MSA and our respiratory tract culture now.
Negatively impacts the median survival time in CF patients with an observed reduction of $6 two years as compared to CF patients with the respiratory culture that is negative for MRSA.
While clinicians have a number of anti staphylococcal antibiotics in their treatment armamentarium.
They've had to rely upon agents that have either not been demonstrated to be reliably effective for the treatment of MRSA.
That require intravenous administration in order to be effective or has significant safety and tolerability issues limiting their clinical utility.
Given this and let it is both is available as both an oral and intravenous formulation has been shown to be a potent anti mris agent and is well tolerated. We believe it may provide an attractive treatment option for this difficult to treat patient population.
Slide 15 provides an overview of the multifaceted approach, we're taking to demonstrate the potential clinical utility of <unk> in patients with CF.
In collaboration with experts in the field, we have identified the most important challenges present in treating exacerbations in patients with CF, including that this patient population is often heavily pre treated with antibiotics, placing them at increased risk for the presence of resistance to many existing anti bacterial classes.
That these patients have a unique inflammatory environment present in their long.
And if they take concomitant medications that may pose potential drug drug interactions as we constructed our approach to optimize the key attributes of didn't let it.
For example, we have demonstrated the potent anti staphylococcal activity of <unk> against strains of staph aureus isolated from CF patients and have completed modeling the potential for drug drug interactions with the most commonly prescribed see FTR modulators.
Additional ongoing work will describe the efficacy of the family in CF mouse infection models, and we are on track to dose the first patient in our phase one study evaluating the safety and pharmacokinetics subs and letter in patients with CF in the first quarter of 2022.
We are very excited to be working with many of the world's experts on this program and are anxious to continue to share our progress with the scientific community over the coming months.
In addition to our ongoing work to further describes in lettuce direct acting anti bacterial effects.
We have recently published results that demonstrates and let also possesses potent anti inflammatory and immuno modular Tory properties in the journal plus one.
In two different animal models of Logan lung inflammation, one stimulating acute respiratory distress similar to that caused by the Sars Covid two virus.
And another caused by the H one N. One strain of influenza virus also known as the swine flu that caused a pandemic in 2009.
The latter was shown to reduce the number of neutrophils, which are specific kind of white blood cells get recruited into the lungs of these animals.
It inhibits the production of pro inflammatory cytokines, including TNF Alpha and interleukin six it had been associated with poor outcomes in patients with pneumonia.
It reduced alveolar inflammation and lung consolidation.
And importantly, we showed the increase the survival rate in animals infected with the H one N one influenza virus.
And let us activity was notably shown to be similar to that observed with dexamethasone, a known potent anti inflammatory corticosteroids and superior to a zither Meissen a macrolide anti bacterial agent that is commonly used for its anti inflammatory activity.
With grant support from the Austrian Research promotion agency. Our team is advancing work designed to elucidate the potential mechanism of action of the latest anti inflammatory and immuno modulator <unk> effects as well as to validate these effects in in vivo disease specific models that.
We will help guide potential future clinical applications, such as the treatment of acute respiratory tract infections bacterial exacerbations of cystic fibrosis autoimmune conditions and fibrotic diseases.
We look forward to the next steps in this important project and to providing updates on our progress.
It's now my pleasure to turn the presentation over to my colleague, Dan Dolan, who will provide an abbreviate corporate financial update.
Dan.
Thanks, Steve as we turn to slide 18, I'd like to touch on some key highlights for the third quarter of 2021 total revenues of $8 $9 million grew 8% sequentially versus the second quarter of 2021.
This was primarily driven by some extra net product sales sequential growth of over 14% versus the second quarter of 2021.
Revenue also includes $1 million in collaboration revenue and grant funding from the Austrian government.
Within the third quarter results, we recorded a special returns reserve adjustment for the shelf life exploration of the initial launch bottles of Zim letter, which had three year dating with the newly available 10, count oral pack, which will have four year dating we anticipate wholesalers will replenish some of the soon to be expiring product with this new 10 count.
OPEC.
During the third quarter, we continued to focus on disciplined balance sheet management as we renegotiated our supply agreement with Colby on the API manufacturer for <unk>.
The amended agreement provides for near term cash flexibility easing the amount of cash we need to allocate towards inventory and allowing us to put more cash to work behind growth initiatives for both her and let her answer of extra.
We also entered into an equity line of credit agreement with Lincoln Park capital, which provides an efficient option to access capital at our discretion over the course of the next two years, we will continue to maintain a laser focus on our cash allocation strategy driving efficiencies in our operating expense mix to ensure we are maximizing our investment.
While driving commercial execution and revenue growth, we exited the quarter with cash and cash equivalents of approximately $52 million, providing us cash runway substantially through the second quarter of 2022.
Moving on to Slide 19, we look at our P&L for the three months ended September 32021 versus the same period for 2020.
We experienced significant year on year growth on our top line revenues driven by net product sales of <unk> as well as the recognition of collaboration revenue upon the achievement of milestones from our Chinese partner.
You will see that our cost of sales increased approximately $4 $2 million versus the prior year driven by supply purchases of some extra this was in line with our expectations around how the P&L would evolve following the launch of our own NBC for some extra <unk> in the second quarter of 2021.
The increase of approximately $1 $3 million in SG&A reflects a full quarter run rate of our community based sales representatives compared to a scale back run rate and our commercial efforts during Q3 of 2020, resulting from the initial impact of COVID-19.
Our net operating loss showed improvement year on year, highlighting the impact of extra on the shape of our P&L and highlighting the scalability of our commercial infrastructure to drive operating leverage.
Turning to slide 20, we take a look at our balance sheet as of September 32021.
As mentioned earlier, our cash and cash equivalents at the end of the quarter were approximately $52 million an increase.
Of approximately $11 million from December 31, 2020, driven primarily by activity in our ATM during the second quarter of 2021.
This was offset by operating cash burn, which included some extra supply purchases in the quarter.
The increase in accounts receivable can be attributed to the timing of cash receipts due from our wholesalers on sales of extra.
As we pivot our attention to the liability section you will notice that we continue to carry a minimal amount of debt maintaining focus on our continued commitment towards disciplined balance sheet management.
If we can now turn to slide 21, I'd like to take some time to highlight the impact that the launch of the previous answer of extra MDC has on the shape of our P&L as well as some of the work we've done recently to maximize cash flow has had on our operating cash burn.
Yes.
In April of 2021, we moved from a model of receiving a percentage royalty from sales of Merck's N Dcs of extra pivoting to launching our own end abreva MDC, a sort of extra realizing the full benefit of net sales in our reported revenues.
You will see on the chart the step down in operating cash burn. This provided some degree of it from the first quarter of 2021 to the second quarter of 2021 in the third quarter. We saw the impact of house of extra net product sales showing double digit growth compared to the second quarter further improving our operating cash burn.
As you see on the chart total revenues increased 8% versus Q2 of 'twenty, one and operating expenses remained consistent with Q2 of 'twenty. One this evolution and the revenue composition on the P&L for an Abreva provides increased profit margins and improved operating leverage this operating leverage coupled with our recent revision in our supply agreement.
With Holby entrees and letter helped to drive a steady decrease in our operating cash burn quarter over quarter.
I will now turn the presentation back over to Ted for the next part of the call <unk> will make some closing remarks, and then we will head into a Q&A session Ted.
Thank you Dan before we move to Q&A, let me summarize our achievements in the quarter and touch on where the company stands for the remainder of 2021, which can be found on slide 22 first we were thrilled with the performance of <unk> in the quarter the first quarter since the onset of the Pea.
<unk>, where the drug saw 1000 prescriptions, it's truly a major milestone for the company.
Given the efforts of our field force as respiratory infections continued to increase in the fourth quarter, we expect to gain market share for us in Atlanta.
During this quarter, we highlighted several new programs and partnerships to enhance all the hard work of our commercial team has done in the field.
We launched the inside sales Representatives program, we completed an agreement with visits present letter in the hospital, we renegotiated our agreement with Hogan and we layered on top of that our other achievements like getting another approval for Zen letter in Taiwan and sharing important first time.
Data on the anti inflammatory effects of law Fabulous.
Over the past year, we have adapted to changing market conditions, and we think we are now appropriately position to maximize our commercial performance, while further broadening our pipeline opportunities.
Look forward to updating you on our progress in the coming quarters.
Operator, we are now ready to open up the line for questions.
And as a reminder to ask a question you will need to press star one on your telephone.
A question back to band at Husky.
Okay.
Please stand by while we compile the Q&A roster.
Our first question comes from the line of Carl Byrnes with Northland Capital. Your line is now open.
Great. Thanks for the question and congratulations on the progress can you breakout this does that throw in multifamily in sales for the third quarter and then I have a follow up as well. Thanks.
Yes, so some external sales were roughly I think.
Is it your plan to reestablish the hospital Salesforce for then lit up and also could you comment on how the primary care sales.
Sells for us is ongoing whereas in less than that I'd like extra.
Sure Sushi. Thanks. Thanks for the question, we have no current plans to reestablish a hospital salesforce at least not a traditional salesforce as you may be aware because of COVID-19 in lockdown restrictions.
Broadly across hospitals.
Access in the hospitals for traditional sales reps is very difficult in fact almost nonexistent.
So we are leveraging other opportunities to optimize our contractual I would.
Contract with vision, including.
Leveraging visiting and since lights in and analytics to help us.
Present, the opportunity for the family in the in the hospital. So it's not a it's not an overnight type of his occur.
Occurrence for the vision system.
It will will still need to get on formularies and.
But most of the effort will be driven through our community based sales force.
And then the second part of the question regarding.
Our outpatient focus on Zen letter.
So as we mentioned previously we kept the promotional effort high during the summer months. So that then leather would be top of mine as we move into the fourth and first quarters of the year, where traditionally we've seen an increase in respiratory infections and as we mentioned last year.
Sure.
The C D C reported that influenza like infections were down 95% in the U S. We do expect to see a stronger respiratory season. This year as some of the restrictions of come off and children.
Children are back to school and and people are moving around more freely.
And.
With our sales force in the positioning of Zen letter, we think that we're in a great position to gain market share as we move into the colder weather months.
In addition to the Salesforce Act direct sales, we had 60 people promoting the product and then we just started a pilot program with inside sales reps that are making outbound calls into white space geographies and responding to inbound.
Product inquiries and then we have a a full suite of digital and non personal efforts to support the treatment decision at the time of prescribing.
That's helpful. Thank you.
And your best Sushi. Thank you.
Alright next question is from our team is H C. Lane writes your line is now open.
Hello This is Thomas.
I was getting a couple of questions for.
Perhaps for a question.
Related to some leather face one study in the cystic fibrosis.
Sure the Lions.
Sly first patient dosing.
Expected in the first quarter.
So so in addition to safety in Tecate data keeping in mind that his face was study can you.
And the other key endpoints that we can focus on.
Thanks for the question.
The main endpoints, our safety and pique, it's our first time dosing patients with cystic fibrosis within letter and as you may be aware of some.
Sometimes patients with C F have bolted pharmacokinetics and handling of drug products so that.
That really is our primary objective, there's not an efficacy read out it's a single dose study.
We're looking at both the oral and intravenous form and patients and hopefully we'll get a read on the PK and what dosing might makes sense and how well tolerated.
Got it.
Perhaps a after the phase one.
The plan to develop.
Phase two on your own or partner.
And nonprofits such.
Sparkles This foundation.
No. That's a great question I think obviously the data readout from phase one along with some of the non clinical work that I alluded to will help inform the broader development plan and so I think it's a little bit premature to speak about what that looks like until we see the data.
But we're excited to see what that looks like and see what optionality. We have as we move ahead here.
Perhaps.
One final question from Us.
So this is for both Sylvester once in a leather akane discuss.
Some upcoming Carlos.
We can highlight.
2022.
Sure so upcoming Cal us, we'll announce the NDA filing in China, when Sumitomo files.
Files the NDA.
Of course, it will be the the progress with sales at the quarters.
And we are working feverishly on.
Additional outlicensing opportunities for Europe, and other rest of the World territories. So we do anticipate in the coming quarters that will have announcements around those partnerships as well in addition to the commencing dosing of the of the phase one cystic fibrosis.
PK and safety study.
I think those are the.
The main.
The main catalysts as we as we look forward to the coming few court next few quarters.
Got it.
Thank you for taking my questions.
Or two or confused trucking sort of extra traction and your next update.
Alright, thank you.
Our next question comes from the lineup Columbary Northland Capital. Your line is now open.
Great. Thanks for the follow up just going back a cash you reference if you expect cash balances to be sufficient different operations into our through rather off the second quarter of 22 is that inclusive of the Lincoln Park agreement that would assume.
You can pull down 20 thrilled, but that's all for two years. So how do you how do you how do you look at that thanks.
Yeah, Thanks, Carl so.
Substantially if you're Q2 22 is just based on operations doesn't take into account anything we would do otherwise through through the line of credit. We have we have access to it it's an efficient way to get get to capital if we need it but we don't factor or anything like that into our cash runway.
Great. Thanks, and then gone back to my prior question with some extra sales at seven nine with Amazon sales basically being adjusted to a negative 900000.
Secondly, the quarter.
On a normalized basis would've been been more like 10 million plus in terms of revenue was that correct.
I think that's fair just just to make sure we reported seven nine total source of extra was about eight nine and then the latter number was about 900000.
So yes, there was about $1 million. It was for the one time reserve we took on the short dated product. We have entered a returns window. So we took that reserve on and later if you strip that out you could say, we would have been 900000 to a million dollars higher in the quarter on sales, but so have extra was eight nine.
And then let it was negative around 900000 for seven 9 million total and net sales.
Got it thanks.
And there are no further questions I'll know tend to call back.
Sure I go along for closing remarks.
Thank you everyone. Thanks for joining the call the call appreciate your questions and we look forward to updating you as we continue to make progress. Thanks, again and have a good evening.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].
[music].
[music].
[music].