Q3 2021 Opiant Pharmaceuticals Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the <unk> Pharmaceuticals third quarter 2021 financial results and business update conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad.
I would now like to turn the call over to your host Ben Atkins, Vice President Communications and Investor Relations of Opiate Pharmaceuticals. Please go ahead.
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 Chief Financial Officer, David It tool and Chief Commercial Officer, Matt <unk>.
This afternoon, <unk> issued a press release announcing financial results and providing a business update for the three and nine months ended September 32021.
Please note that certain information discussed on the call today is covered under the safe Harbor provision of the private Securities Litigation Reform Act.
We caution listeners that during this call <unk>.
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 is.
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. This conference call also contains time sensitive information that is.
Accurate only as of the date of this live broadcast November 11th 2021.
Okay sounds it takes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this conference call.
I'd like to turn the call over to Roger.
Thanks, Ben and a very warm welcome to you all.
Given our focus on P&C. There is there are three most of my remarks today will cover our development progress as we look ahead to NDA submission next year.
Joining me today is our chief commercial officer, Mats, Ruth who will elaborate on our commercial readiness activities.
Activities reflect our transformation from a development stage company to a commercial business as we anticipate the launch of <unk> III.
Also on today's call is David O'toole, Chief Financial Officer, who will remark on our financial performance and strong cash position as we approach the end of it yet.
Turning to the quarter our development of Oak empty. There is there are three continues to make good progress.
Last week, we announced the FDA granted us fast track designation.
This underscores the potential for OPM is there is there are three to represent a major advance in opioid overdose treatment, which we believe can help communities faster response to this escalating crisis.
Track as an FDA process designed to facilitate the development and expedite the review of potential therapies that seek to treat serious conditions and fill an unmet medical need.
Programs with fast track designation may benefit from early in frequent communication with the <unk> and.
In addition to the potential for a rolling submission.
Drug application.
This designation comes as regulators and communities across the United States grapple with a worsening opioid epidemic driven by synthetic opioids such as fentanyl.
Opioid overdoses claimed an estimated 63000 lives in the 12 months ended March 2021.
And so I think opioids were linked to over 80% of these deaths.
It makes opioid overdose.
Number one COVID-19 deaths individuals between 25, and 65 years old and the significant contributor to the decline in average lifespan.
Beyond this there are hundreds of thousands of non fatal overdoses each year.
In October the peer reviewed journal Pharmacology and Therapeutics published a review by our Chief Scientific Officer, Dr. Phil Skolnick title treatment of overdose in the synthetic opioid era.
The paper highlights for each opioid induced fatality.
$6 four and eight four non faithful.
Most people don't realize that even if revised from an opioid overdose victims can experience long term physical and mental disabilities, depending on how long the brain is deprived of oxygen during the overdose.
The synthetic opioids are responsible for the great majority of the majority of overdoses are far more potent and have a longer duration of action and opioids such as heroin.
They can quickly depressive persons breathing and continued to deprive the brain of oxygen even after administration of naloxone.
Given the widening prevalence in greater potency of synthetic opioids, such as fentanyl leadership at NIH has called for the development of stronger longer acting opioid antagonist.
Meet this challenge we are developing O P&C. There is there are three using nalmefene.
Nalmefene I'll also an opioid antagonist is different from naloxone in several important ways.
It has a longer half life and the FIFO higher affinity that's naloxone.
That makes it more potent at Mu opioid receptors in the brain.
The recent data from a confirmation.
Kinetic study demonstrated at one P. M. T. There is there are three surpassed intramuscular nalmefene injection across all key metrics exhibiting fast absorption and long duration.
We believe this data supports <unk> 003, being a potentially major advance in opioid overdose reversal.
We are also on track this quarter to complete a study comparing the effect of one dose of nalmefene in each nostril to two sequential doses.
We expect top line data by January.
To further support our new drug application on the Fda's request, we designed a novel Pharmacodynamic study comparing opn sees there is every three with nasal naloxone in reversing the respiratory depression produced by the synthetic opioid Remy fentanyl and healthy volunteers.
The study is powered to demonstrate non inferiority between nalmefene.
<unk> zone, and the primary endpoint measuring the change in minute ventilation at five minutes.
Additional secondary endpoints cover a range of different time points.
This is a novel clinical study that seeks to address important clinical questions not previously answered other studies.
As a result, we anticipate that we wouldn't be eligible to receive three years of market exclusivity.
I N C. There is area three is ultimately approved.
The study consists of two sequential path.
Oswald determines the study condition, including the optimal dose of Remy fentanyl to allow for a safe and a meaningful comparison.
Part two is a head to head comparison against nasal naloxone.
I am pleased to update that we have completed part one and expect to complete recruitment and dosing in part two by year end.
We anticipate having top line data to share in the first quarter of next year.
We had originally anticipated having topline data in the fourth quarter of this year. However.
However, we made the decision joined part one of the study to modify the dose of Remy fentanyl.
This modification was reviewed by the FDA and was subsequently approved by the IRB.
Completion of the PD study represents the last steps to finalizing a robust set of clinical data that will form the basis of our NDA, which we anticipate completing in the first half of 2022.
Turning to the rest of our pipeline.
Working on start up activities for a phase two study evaluating OPM teens. There is there are two nasal naltrexone the treatment of alcohol use disorder.
You will recall that we did not initiate recruitment in 2020 as we had planned due to COVID-19.
I am pleased to say, we expect to recruit our first subjects this quarter with dosing to follow soon thereafter.
This will be a randomized 300 participants double blind placebo controlled study to determine whether or PMT. There is there to reduce it heavy drinking and patients as measured by a change in the world Health organization drinking risk levels.
The study is anticipated to take about a year.
In a phase one PK study <unk> two showed potential to become an as needed nasal spray treatments on a patient's anticipates drinking or is craving alcohol.
With alcohol use disorder, so prevalent in our society. We believe Opn sees there is there are two proven effective in this trial could dramatically improve the treatment landscape.
Turning to <unk> for <unk> for the treatment of acute cannabinoid overdose.
Continue to advance our development of a parenteral formulation of Brinavess in collaboration with and pads and we see the potential opportunity to initiate clinical trials next year.
Overall, we're really pleased with our pipeline progress and particularly Oh pmt's areas there were three.
As I mentioned at the start of my remarks, but joined today by Matt Ruth Our Chief Commercial Officer, Matt.
Matt joined the team in July.
Prior to open he led the launch of Narcan nasal spray adapt pharma.
I asked Matt to join us today to share some insight into the work. He is leading as we look ahead to transitioning to a commercial company Matt.
Thank you Roger I appreciate the opportunity to speak with you all today, because I am extremely excited to be part of the OPM team as our development team continues to advance <unk> T O three towards NDA submission next year, we are working to prepare <unk> for a successful launch if approved and based.
Our strong financial position, which David will go through I am confident we are well positioned to execute on our commercial plan.
As Roger mentioned at adapt I built the commercial organization that launched Narcan nasal spray and pray in 2016.
The launch of Narcan, the public interest market for opioid reversal agents did not exist as it does today.
Establishing this market I'm proud, how we helped change the way communities and first responders confront the opioid crisis.
And building the commercial team at OPM, we have been fortunate to attract former team members who were instrumental in our work and adapt. This includes most recently, our new Vice President of commercial development, Mike Castillo, who previously served as vice president of sales for Narcan nasal spray.
The opioid crisis is much more dangerous than it was when I started at adapt as Roger mentioned in 2020 over 80% of opioid related deaths were attributable to synthetic opioids driven largely by putting all.
This compares to less than 30% in 2015.
Roland State governments have responded by increasing access to opioid reversal agents with greater funding and important co prescribing and good Samaritan legislation.
For this reason the time is ripe for a new stronger opioid overdose reversal agent for those on the frontline of this national public health crisis.
Our launch plan includes four strategic imperatives.
First <unk>.
Ensure current laws and funding for opioid overdose reversal agents include nasal nalmefene.
Secure widespread distribution that ensures broad access.
Third establish comprehensible.
Comprehensive and affordable coverage and fourth.
Partner with key stakeholders in education awareness and funding that ideally will result in more distribution and access to opioid reversal agents.
We're already making great progress on all four imperatives. In addition, we're onboarding skilled agencies to support us with public awareness to the ever changing landscape of the opioid epidemic.
If approved assist with messaging to ensure widespread adoption of Opn T O three as an important new treatment option for opioid overdose reversals.
I look forward to sharing more about our launch plans in the coming months.
And with that I'll turn it over to David O'toole, who will provide an update to our financials.
Thank you Matt.
Today, I'll summarize our financial results for the third quarter and year to date.
For full details of our financial results for the third quarter and first nine months of 2021.
Please refer to today's press release.
As usual a report on the quarter, we will also be available in our Form 10-Q.
However, because the FCC has closed today, our 10-Q will be available tomorrow morning.
In summary, further increased demand for narcan nasal spray in the current quarter meant we meant we again recognized higher than expected royalties this quarter.
This continued strong revenue for the third quarter and the continued positive outlook for Narcan nasal spray also led to an upward revision of our full year financial guidance in 2021.
We also maintain disciplined cost containment, while executing on our clinical development and regulatory advancement of <unk> 003.
Now for a detailed financial results.
Total revenues were $16 3 million in the third quarter and $34 million per year to date in 2021.
This compares to $9 1 million and $19 7 million respectively. During the corresponding periods of 2020.
Growth over 2020 reflects increased revenue from Narcan nasal spray royalties from Etfs as well as increased funding received from Nader and BARDA for the development of <unk> TMT Zero-zero three.
Third quarter and year to date 2021 sales of Narcan nasal spray, where approximately $133 3 million.
$313 6 million, respectively as reported by Ebs.
Research and development expenses were $4 9 million in the third quarter and $12 1 million for the first nine months of 2021.
R&D expenses have increased significantly over the same periods in 2020, which we anticipated from the increased activity on <unk> 003.
G&A expenses were $3 4 million for the third quarter and $8 7 million for the first nine months of 2021 up slightly compared to $2 7 million and $8 1 million for the same comparable periods in 2020.
Sales and marketing expenses were $1 1 million in the third quarter and $3 million for the first nine months of 2021.
As compared to <unk> 9 million and $3 7 million for the comparable periods in 2020.
We expect to increase spending on our commercial activities in future quarters.
Net income for the three months ended September 32021 was approximately $3 4 million.
Our income of 77 cents per basic share and 56 cents per diluted share.
Impaired to net income of approximately <unk> 7 million or income of 17 per basic and <unk> 15 per diluted share for the comparable period of 2020.
Net income for the nine months ended September 32021 was approximately $2 3 million.
Our income of 52 cents per basic share and income of 41 per diluted share.
Compared to net loss of approximately $1 2 million or a loss of 28 per basic and diluted share for the comparable period of 2020.
As of September 32021, we had $50 3 million in cash cash equivalents and marketable securities.
As indicated previously reflecting higher than expected sales of Narcan nasal spray, we are raising our 2021 financial guidance.
We are aligning our guidance to the upper range of the modified full year 2021 guidance for sales of Narcan nasal spray provided by eds of $420 million.
We now expect full year 2021 royalty revenue from the sale of Narcan nasal spray of approximately $38 million.
We all we are also now expecting to end 2021 with cash cash equivalents and marketable securities in the range of approximately 50% to $52 million, which is 8 million greater than the guidance. We provided during the second quarter conference call.
In conclusion, we expect to start 2022, and a very strong cash position that supports the progression of our pipeline and our commercial strategy as we look forward to a potential launch of <unk> 003 in the latter half of next year.
Thank you and with that let me open the call for questions operator.
Thank you.
This time, we'll be conducting a question and answer session.
To ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue.
You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.
Hi, Thanks for taking my questions and congratulations on the progress.
And.
Maybe just three from me if that's okay, maybe Roger just any color on the thinking behind modifying the dose.
And the thing to know.
And then maybe.
Roger will Max.
I guess, how should how are you thinking about the market dynamics at launch and do you think the differentiation of your product is gonna be depreciated at knowledge base and the PD data, maybe you should be thinking about it more experienced and in Houston and then <unk>.
<unk> talked about this COVID-19.
How long do you think.
Or how long should we think about it taking to establish the commercial reimbursement, but also sort of getting into those curves describing in terms of that blanket legislation that intranasal naloxone enjoys congress. Thank you.
Thanks, Brandon and thanks for the questions.
Relating to the Remy Fentanyl dose Pharmacodynamic study is a novel study that's been done before so it's really just a matter of optimizing the dose and Remy fentanyl. So that we can successfully complete the second positive study comparing <unk> to nasal naloxone. So that's really what it's about.
And until we do part one to get that information, you're essentially learning on the job so to speak and that's really what that entails.
Regarding market dynamics.
Launch.
And you all are real.
Excitement is already is around the pulp natrium PK data, while we looked at a very rapid absorption and long.
Half life in that for a long duration.
That in itself we think.
Ill promise incentives demonstrating differentiation from <unk>.
So.
And bear.
Right.
The good thing about the Ped study as we mentioned as well we do need to.
Demonstrating non inferiority.
The basis.
And FDA approval and Nevertheless, we do think that there'll be additional data that come out of that study in which when combined with the PK data plus just the inherent known.
But he is a nalmefene in totality really do I think have the potential to show a very differentiated product.
As to naloxone, which is out there today.
I'll, let Matt add to that in terms of the timing for that.
Vessels et cetera over to Matt yes. Thanks for the question I appreciate it.
Obviously as Roger mentioned, a lot's going to depend on the label.
Ultimately hopefully approved by the FDA.
As to what the market position will be as to the four strategic imperatives, obviously, each one of them will vary in length of time and requirements I think the most important thing that we have to consider now is that we're building the foundation organizationally to address each of those so that we will be ready in EDA.
Good position.
When we're ultimately able to launch.
Oh three at FDA approval.
Can I just ask a follow up there Matt sorry, you just said something quite interesting and you talked about.
It's going to depend on the label is that just did you mean that statement more just to add in.
Yes, depending on what the data or anything like the data in the label or are.
Are you kind of thinking about different differentiated label again some sort.
The labor the delay the ultimate label would be the same as the existing label that was out there. The nalmefene. So this is a 505 to when we can think about the label, though all the data we generate will be a part of that package. So that's why we can look.
Look at the potential differentiators.
And that's already there with the PK data in hand looking.
Looking pretty strong.
Okay. That's what I thought you meant but I just feel like that's it.
Hi, Jen, Matt that's not very helpful and congrats on the progress.
Thanks, Brendan Thank you.
Our next question comes from Carl Byrnes with Northland Northland Capital markets. Please proceed with your question.
Thanks for the question and also congratulations on the progress.
Just briefly how does ebs is intent to launch an authorized generic change your viewpoint with respect to the Narcan franchise.
Going forward and then I have a follow up as well thanks.
The UBS sorry in terms of.
Our intent in terms of this all of you on the knock on franchise opening how would we think if there is various rate.
In terms of the Narcan franchise, just given the royalty stream.
I mean, we can comment I come in broadly in hot.
Add to this.
Under our agreement with adapt which is now emerging bio solutions any form of nasal naloxone.
So by then we receive a royalty on.
That would include.
The authorized generic that they announced narrowed earnings last week. So that's the headline really.
It doesn't change anything as a result of that and it does it have knock on will perform versus an authorized generic I can only really be guided by what they've commented.
Commented on publicly already.
Sure Brad.
But.
Oh, sorry, I understood I guess, where I was going with this is if you have an authorized generic.
It just seems very unlikely in the public sector space.
Public interest space that.
A b rated generic would be used and even in our retail segment there would still be.
Favorability of using.
And authorized generic over an AB rated generic do you disagree or agree with that.
I can't really comment.
I understand where you're coming from with the question again, we're not out there in the marketplace. Today. So again, we just have to take guidance from what <unk> commented on publicly admit brightcove.
Fair enough and then just kind of switching over to cash obviously cash balances strong.
The royalties are up.
Significantly it to go up about 65% year over year at $14 million this quarter as you reported.
You'll receive that in the fourth quarter, which I believe is correct and then also in the fourth quarter. When you recognized in the fourth quarter, it's going to be in the higher 12% royalty recognition.
Which basically kind of secured a strong cash balances through the first quarter and probably even then some is that is that a safe way to look at things.
Yes, Karl Thanks for the question and thanks for attending the call really appreciate it.
You have it exactly correct.
We received the third quarter royalty this quarter and then the revenue recognized this quarter. If you go to the upper end of the range will all be it will be north of $100 million again based on their guidance not ours.
And all of that will be at the 12% range and that will be received in the first quarter of 2022.
Great Thanks, and congratulations again.
Thank you.
Our next question is from David <unk> with Zacks small cap research. Please proceed with your question.
Hey, good afternoon, everyone I'm curious what do you ascribe for the reason or reasons.
For such a large increase in Narcan sales. This quarter I mean is that obviously the opioid epidemic is not getting any better it's only getting worse, but it's just a function of that or are we starting to see some effect of these co prescribing laws in the country.
Thank you David.
Can only speculate we don't have any insight in particular that too.
EPS as to what's driving it but I'll give you my thoughts.
Obviously, the latter point about co prescribing exactly so I think that I can.
And trigger what UBS have commented on in general.
The trigger a spike and knock on asset sales.
My view is not just that.
Listening opioid crisis in terms of the number of opioid overdoses, but for opioid overdose more naloxone is required to revive a patient.
We developed the Narcan nasal spray.
That was just one narcan nasal spray would be sufficient, especially because it was a heroin and oxycontin kind of situation, but now with fentanyl and other related synthetic opioids being the main perpetrator.
Tom.
There's no OXXO and are required.
I suspect as reflected in the increased demand.
Okay and then.
Then.
<unk> three is a well hopefully approved.
And you have both narcan or no three out there in the marketplace.
I'm curious if there is some type of independent Oh.
Oregon Station Committee someone that could maybe you could get a.
Kind of a recommendation from is there I don't know if they're a group exists out there for this but is there something like that to try to maybe differentiate your product from narcan.
I think the main.
Source of differentiation is ultimately this data we generate and that will then be up to the prescribe.
Yes.
And Oh intersect.
Sale of the the organization responsible for Sherman to determine whether the data we have is sufficiently important.
And relevant for the opioid crisis, now facing and therefore more suitable product rather than that being an official organization that would.
EV determinant.
Are you able to determine that which would be more suitable in general we see the market growing.
The addressable market.
As I've just mentioned.
Continues to grow.
And the decision will be made at the FDA.
As an individual level or an organization level from state to state.
Which product might be seeing more suitable.
Okay, Alright, well I appreciate you taking the questions.
Thanks for the questions. Thank you.
Our next question is from Mark Walsh, a private Investor. Please proceed with your question.
Good afternoon, Roger and and step up.
Longtime investor I appreciate the opportunity to to participate in the call.
Basically have two questions first pertains to the extension of the PD study in the second to any updates you might provide.
Regarding self commercialization a partnership regarding the extension of the P D.
Obviously it came.
Just a short period of time before the FDA granted fast track approval.
Quick question about whether the wet weather opiates had communications with the FDA, whether the FDA prior to granting the fast track was aware of the modifications I assume that's the case, but if you could provide any color on that.
And secondly on that point.
In addition to the increase in dose of Remy Sentinel.
I noticed that the study participants were increased from 54% to 60. It seems like an awfully small number right not a statistician, but wondering if you could provide any any input as to why the number.
Participants increased thank you.
So thank you for the question Mark and thank you for being here.
Invest.
The two are really connected in terms of fast track designation.
And.
The extension of the PD study really one thing about this PD study as being a novel study that's never been done before so we.
We started initial dose of IV fentanyl and blood.
Need to modify that in order for that second half.
Let's say the study to become relevant so that's really what is being reflected both.
In this extension.
We've always had two parts of the study design the study design.
Likewise, the increased number of subjects because more people are needed to participate in order to.
Modify the massage.
As part of the study.
And then.
Okay.
The second question.
Around sorry, Ryan your second question. So I just want make sure I answer it correctly.
Sure.
So in the past records.
The option to self commercial lines or to engage in partnerships going forward.
You had said in previous calls you know that.
The operation will be done in the best interest of the investors I'm just wondering if there's been any update that you can provide in terms of how that might go.
Well I'll tell you the opportunity to self commercialize too.
Hi.
Maximum shareholder value remains.
And we're sufficiently capitalized to launch there is there are three ourselves.
And that was the basis.
Bringing math onboard is that he's done this before successfully therefore knows what it takes to do this.
However.
We always operate in the interest of our investors.
Alternatives arise that make more sense and of course, we would absolutely entertain that.
As far as we can tell so I had today the best opportunity for shareholder value is through self commercialization.
The strong balance sheet that we have.
Thank you.
We have reached the end of the question and answer session I would now like to turn the call back over to Roger for closing comments.
Thank you operator.
It is an important time for our company.
We're building our teams and capabilities to transform from an R&D company into one that is also a commercial organization.
Thank you for joining us today and for your interest and opioids.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.