Q3 2021 Adamis Pharmaceuticals Corp Earnings and Corporate Update Call

Greetings and welcome to the Atmos Pharmaceuticals Corp, Q3, 2021 financial results and corporate 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. During the conference. Please press star zero on your telephone keypad. Please note.

This conference is being recorded I will now turn the conference over to your host Mr. Robert <unk> you may begin.

Thank you operator, good afternoon, everyone and welcome to the Atmos Pharmaceuticals third quarter 2021 financial results and corporate update conference call. Thank you for joining us today for the update.

And welcome to our shareholders analysts and anyone interested in Adama joining me today is Adam us as President and CEO, Dr. Dennis J Carlo Chief Medical Officer, Dr. Ron Moss.

<unk> business Officer, David Marr, Goodly O and Adam Metz, who was recently named Chief Financial Officer, David Benedict.

The format for this call will consist of prepared remarks from management followed by Q&A. This call is being webcast and will be available for replay in the investors section of our website Adamos pharmaceuticals Dot com.

In today's call, we will make certain forward looking statements regarding our business based on current expectations and current information those statements speak only as of today and except as required by law, we do not assume any duty to update in the future any forward looking statement made today.

Of course any forward looking statements involve risks and uncertainties and our actual results could differ materially from those anticipated by any forward looking statements that we make today.

Additional information concerning factors that could affect our business and financial results is included in our most recent annual report on Form 10-K, with the Securities and Exchange Commission and in other subsequent filings that we make with the SEC. These.

These are available at the SEC's website.

In addition, I would also like to say that if anyone would like to email questions and.

During the Q&A portion of the call or at any time during the call Pete Please feel free to do so using the email address.

At Atmos pharma dotcom.

With that I will now hand, the call over to Dr. Dennis Carlo President and CEO.

Thank you Robert.

Well, obviously a lot has happened since our last business update in June and at that time, we were looking ahead to the following well number one the FDA acceptance of the resubmitted new drug application for Zim line naloxone injection product.

Number two enrolling the first patient into our phase II phase III clinical trial using temple as a treatment for COVID-19 number theory looking forward to increasing sales of our some jeopardy epinephrine injection product.

Looking at looking to get approval on <unk> treatment for opioid overdose and the subsequent commercial launch.

And finally following the RMB.

To enable the development of temple for another indication at which time we will.

Targeting radiation dermatitis.

Well I'm pleased to say, we've made steady progress on each of these objectives and with the exception of a commercial launch of <unk>, which will occur early in 2022.

We have either already net or expect to meet by year end each of these targeted milestones well.

Well, let me move forward now with an update on Zen why our naloxone product.

We submitted our NDA in May and in June the FDA indicated they had accepted it for review.

October we received notice of approval approximately one month ahead of the Fda's target action date.

I'm always speculated that the alarming increase in overdose deaths and worsening opioid crisis may have contributed to the agency's expedited review.

Recent New York Times article entitled Overdose deaths, reaching record high as the pandemic spreads reported overdose deaths in the U S. Top 100000, according to the CDC data for the 12 months ending April 2021.

Arab Wallach Zim why is the highest dose naloxone product that is currently accrued.

It is differentiated from the currently available products and then the lockdown enters the bloodstream faster and reaches higher concentration than either of the competing nasal products.

Every second matters during an overdose and the higher levels are especially important when dealing with the highly toxic substances.

We have no commercial partner, yes, we'll miss I'm very excited about introducing this product to the market, especially since they already are selling that come from that.

Entry product in the area. They are already very familiar with this space.

Now, let me shift to some jaffe, our epinephrine product.

So the thinking on the commercial responsibility for sure Jackie in late 2020 U S. <unk> has nearly doubled units sold during the same prior year period understand dose also market penetration remains on an upward track.

While we require continued growth before we approach.

One sales expectations for some Jackie we view the increase in quantity and availability of the epinephrine product in the market as positive for those patients susceptible to severe allergic reactions.

Additionally, we are very encouraged by the sales trajectory and U S. World, then strategy and commitment to make some jeopardy, a commercially successful products. They haven't been Julia will expand on this a little bit later in the call.

Let me now we want to temper.

In early September we enrolled the first patient into our ongoing phase two three clinical trial sample for the treatment of COVID-19.

Dr. Mark will delve into more specifics on the scope and timing of the trial, but I would say up until now the combination I'm increasing numbers of vaccinated individuals and decreasing the risk of Covid infection has presented challenges to patient enrollment to address this challenge, though we've begun a significant expansion in the number of clinical study sites.

Potential sites outside the U S.

Well last week. Some of you may have seen a webinar hosted by the NIH and temple and its potential use in treating COVID-19.

To date.

Which had been previously published by the NIH demonstrated the antiviral properties of tempo that could be beneficial on a number of medical conditions, including COVID-19.

We are aware of the NIH.

Recent activities related to the temple and its potential use in treating COVID-19, and we'll monitor it.

We'll continue to monitor those activities.

To remind investors animas licensed exclusive worldwide rights under patents that have issued patent applications and related knowhow related to gamble, if certain licensed fields, including the treatment of respiratory diseases, including asthma.

Ensuring some social virus influenza and COVID-19 patents have already issued and this is in addition to our work with Covid.

We continue to look for additional indications for the use of temple and to explore options regarding funding and design of a clinical study to examine the effects of temple for other clinical indications with the goal of being in a position to follow in R&D.

We initially explored radiation dermatitis.

But because of the recent changes in treatment regimens.

Shorter treatment the incidence of dermatitis has decreased and oncologists are seeing success, creating a less severe cases of German guidance with steward creams.

We'll continue to monitor the area, but for now we decided to prioritize other potential uses.

Now with the recent approval of in line.

It made sense to look for other opportunities in the addiction space.

Since multiple preclinical studies.

Adjusted tempo could play a significant role in the treatment setting mean in coking use disorder, we decided to further explore in this area.

Now lastly, I must address where things stand with the previously announced opinions that the company on our used car bank subsidiary received from the U S. Attorney's office for the Southern District of New York in connection with an investigation by the U S Attorney's office.

There's opinions requested a broad range of documents and materials relating to among other things certain veterinary products sold by USC certain practices agreements and arrangements relating to products or by UMC, including veterinary products and certain other matters relating to the company and USC also experienced leaders.

Our audit committee initiated.

An independent internal investigation and now I am pleased that we have reached the stage, where we're able to fire file our quarterly report.

As has been disclosed in our form 10 Qs.

At the end of July 2021, the company sold assets relating to U S. Compounding Julian compounding pharmacy business. It sounds like Sis the manufacturing, both human and veterinary pharmaceutical products and is engaged in the process of selling or otherwise disposing of the remaining assets other business and the employment of all USC employees.

And.

I would now like to introduce our longtime controller and recently named CFO, David Benedicto to provide some highlights from our recently filed financial statements.

Thank you Dennis.

As mentioned.

We are pleased to have closed today, our Form 10-Q for the first quarter was supposed to be here.

Sale of assets of Ust and the winding down of its business with Covid, we have changed the presentation of they're not totally resolved.

They think that the company at USC.

Cost of discontinued operations accounting principle, and as a result, I will focus on the Peanuts told me. So for the nine months ended September 30 could be plus one.

One I encourage everyone to thoroughly review its Form 10-Q individually for additional details and disclosures.

The business is conducted through our USC subsidiary is treated as a discontinued operation as of September 13, 2021. Accordingly for this period of major assets. Other assets currently abilities and non current liabilities have been reported as components of total assets and liabilities.

Rates on those balances of continuing company operations at the same time the results of all discontinued operations have been reported as components of that loss separate from the net loss of continuing operations.

Additionally, the financial statements of the comparable prior periods were reflected in conformity with the current presentation as a discontinued operation.

Conflicting discontinued.

Discontinued operations accounting principles the revenues for the nine months ended September 32021, and 2020, we're approximately three 4 million and $2 1 million respectively. The increase in revenue was primarily attributable to the U S Lopez marketing initiative.

JP.

The selling general and administrative expenses for the nine months ended September 32021, and 2020 were approximately $13 2 million a $9 6 million respectively. The increase in expenses was attributable to an increase in legal fees.

The research and development expenses for the nine months ended September 32021, and 2020 were approximately $9 1 million and $6 6 million respectively.

Increase in expense was primarily due to development related to the same high and simple product.

Loss from discontinued operations for the nine months ended September 32021, and 2021 approximately $10 3 million and $7 6 million respectively. The increase in loss was primarily due to the decrease in USD revenue and gross profit and the incremental volume.

Tangible and intangible assets, resulting from the disposal of U S.

This loss was offset with the reduction in operating expenses and the gain from the sale of assets to bugger off.

Cash and cash equivalents at the end of September 30th bucket onto one were approximately $8 7 million.

Based on the operating capital required by USC over the last four quarters, we estimate the shutdown of the division may increase the company's overall cash burn by approximately one 2 million per quarter, starting in the fourth quarter of 2010 to one excluding expenses associated.

As stated with the winding down of USC business.

Additionally over the four quarters the company estimates to receive additional cash from amounts payable relating to the previously announced certain USC asset superdrug.

The company will be selling.

Or what's the exporting of the remaining assets of U S. Compounding, which include flood the building the machinery and the equipment.

Once again, please see our December 31, 2020 Form 10-K, and our quarterly reports on Form 10-Q for additional details and disclosures I will now turn it over to our Chief Medical Officer, Ron Moss for an update on our regulatory pipeline.

Yeah.

Thank you David as Dennis mentioned in September we began enrolling patients into a phase III flashed three clinical trial testing temple and early COVID-19 infection to determine the effects on clinical improvement inflammation in the rate of hospitalization.

Temple as he now has a unique triple mechanism of action, including antioxidant anti inflammatory and anti viral activity, which differentiates itself from other approved or unapproved antiviral to monoclonal.

Of note our trial requires individuals with moderate COVID-19 symptoms to be unvaccinated and have comorbidities, such as heart disease as those patients typically have worse outcomes requiring hospitalization.

We continue to enroll the trial remain blinded to the data as required by the study design. However, we have experienced enrollment challenges as Dennis mentioned precipitated by the dramatic decrease in Covid infections and increase the immunizations in this country.

To mitigate this challenge we are engaged in the process of opening new sites across the U S and are ready for the next Covid surge should there be one this winter if many are predicting as if we're reading in the newspapers.

It should be noted on average working with an experienced clinical research organizations use sites take 10 weeks to open and involve multiple steps.

In addition, we are also planning to consider clinical sites outside the U S. In geographic locations, where vaccination rates are lower and lower and Covid rates are higher the company plans on announcing the interim analysis decision by the data safety monitoring board when it becomes available.

To emphasize again the company is blinded to the data on a daily basis as mentioned, we will report on the trial after the DSM being interim analysis for the first 50 to 60 patients until then we do not plan on announcing any new went from information publicly.

At this time I'd like to turn it over to David Martin Julio.

Thank you Ron.

As we previewed the previously disclosed and as Matt mentioned, a few times on this call.

Sold certain assets at the end of July relating to the USC is human compounding business to figure on.

That agreement provided that we will receive monthly payments over the next 12 months or over a 12 month period and Mount equal to one to two times the total sales of products.

Identified customers in the book of business. It was included as part of that agreement.

In addition, we've sold additional USC assets and are engaged in a process of winding down the remainder of the business and selling or otherwise disposing of any remaining assets of USC, including the land building and manufacturing equipment.

Please refer to our most recent filings for additional details regarding the sale of U S C.

Now turning to product commercialization.

According to market data from Symphony health sales of epinephrine injection products in the U S.

Exceeded one 7 billion for the 12 month period ending September 32021.

So it remains a very large market opportunity.

And despite marketing challenges posed by the pandemic and related Lockdowns Symphony market data indicates that for the nine months ending September 32021, some jetblue unit sales have increased approximately 98%.

Versus the first nine months of 2020.

While these numbers continue to lag our own expectations. The trend suggests that U S world matches is gaining traction.

And based on the overall size and growth of the market. We remain bullish on the long term commercial potential for some jeopardy.

Now turning to Zim high certainly last months early approval was exciting.

As quickly as as the excitement came we immediately shifted gears to preparing for a commercial launch since the approval Animas along with our manufacturing partners have been working closely with U S well matched to prepare for the launch of some of them high in 2022.

We will provide additional information on the status of that launch and future updates, but in the interim I would encourage you to explore the new Zim high dotcom website for additional information on the product itself and its availability in the market.

With that I'll give it back to Dennis for closing remarks.

Well. Thank you David I'll conclude by leveraging some of our major corporate accomplishments for 2021.

Number one we followed an IMD and we initiated our phase II phase III clinical Covid trial.

Number two we resubmitted, our NDA for naloxone and received early approval.

Three we've increased sales of our some jeopardy epinephrine products.

Number four we sold both the human and veterinary businesses in the U S compounding.

Number five we began GMP production of temple.

Number six we continued working with our commercial and manufacturing partners to enable the launch of <unk>, our high dose naloxone product.

Seven we intend to file an IND for another application for temporal by year end.

With that I'd like to close I'd like to open it up to questions. Thank you very much.

At this time, we will be conducting a question and answer session. If you'd like 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.

As a reminder, if you'd like 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.

Okay.

Yes.

And it looks like there are no questions at this time.

Question, just popped up in the queue. Our first question is from Elliot Wilbur with Raymond James. Please proceed with your question.

And first question I guess for Doctor March maybe with respect to tempt ball I guess given your experience to date with the compound maybe you could just outline for us in terms of how you would sort of rank order the potential future opportune.

<unk> in terms of clinical development programs for the asset outside of a COVID-19, what's your what's your thinking about.

And in terms of moving that asset forward.

Sure.

Thank you for that question. So a temple is as I mentioned earlier is a very unique product, particularly the antioxidant anti inflammation components and one of the things that we've been intrigued with its effects on neuro inflammation.

There is multiple animal models in studies of temple for various models that include substance abuse disorders kidney.

England abuse disorders Alzheimer's.

Multiple sclerosis in many different models of neuro inflammation. It appears that temples, who seems to be very effective and safe.

So we will continue to look at these of these opportunities or other areas, but we think because of its good brain penetration that one particular area would be a treatment of neuro inflammation that includes methamphetamine use disorder, Alzheimer's multiple sclerosis et cetera.

Okay. Thanks, and then with respect to the adaptive trials phase two phase III and in COVID-19 patients I think you mentioned the first the F&B interim look is going to occur at 50 patients I believe there was also a second look in that trial I just wanted to confirm that.

And if you could remind us at what patient count that would occur.

Yes, there is a second interim analysis set approximately 120 subjects.

Okay and is there any update on some of the various funding initiatives with respect to utilization of that compound that you had been.

Pursuing earlier in the year.

We are applying are continually in contact with the government, but we are implying for a grant.

For a particular indication of temple.

Okay and then one last question for you Dr March with respect to the.

NIH webinar on temple anything emerging from that presentation that.

Highlights different aspects of the product that you're strongly agree with or was there anything that the NIH presentation focused on that you think maybe necessarily was you know.

It's consistent with what.

You have seen previously or sort of how youre viewing the asset.

No I think the program by NIH.

Solely focused on the antiviral effects of temple and we believe that it's antioxidant anti inflammatory activity are also relevant for the treatment of COVID-19.

Particularly if you can't treat patients very early we know that the sequela of COVID-19.

The virus is very self limited and this is primarily due to an over zealous immune activation that occurs so their presentation was devoid of that very important information.

Okay, maybe just following up on your.

Your response, there so given the current evolution in terms of the advancement of various.

Oral or potential oral therapies for for the virus.

Where do you see 10 fall potentially fitting in.

With respect to some of these newer emerging therapies is it could it be a complementary asset or their various pay.

Patient populations do you think this might be more appropriate for then you know what we're seeing from some of the large pharma companies pursuing oral treatments.

I I personally believe it's complementary to the other therapies that are out there.

Similar to utilizing blue anti virals.

The efficacy of the Antivirals may be limited.

Depending on when they are given in disease, and I think that can pull because of the fancy and Swan and anti inflammatory activity has broader coverage for the true sequela.

I could see this drug being used alone, but I can also see tempo being used in combination with other therapies.

Okay, and then just a couple of quick financial questions here for David I guess just.

Could you walk us through I may have missed this in your prepared commentary, but if there are any.

Upcoming cash exit costs associated with the remaining USC operations.

Okay.

Yes. Thank you for the question.

It's absolutely part of our 10-Q filings.

So currently.

Yeah.

Yes, we have this to make it around one 5 million related to the exit cost.

With regards to the disposal of USC.

It's part of a potential filing.

The restructuring costs.

Okay and then just last question around Jim Hi, could you just remind us if the relationship with U S. World merge includes anything other than simply straight royalties on commercial sales I can't recall, if there were.

Any associated milestones with respect to approval or or or launch, but any any payments outside of oh of royalty based obligations.

David I'll take that yeah sure. Thanks, So the yes there are.

Additional milestone payments that there they are all targeted to performance based.

Based milestones and they are part of a combined.

Our overall revenue targets for both products so the.

The success of both products together leads to cumulative.

Total targets that are that lead to about a half a dozen additional milestones.

Okay.

Alright, those are my questions. Thank you.

Okay.

We have reached the end of the question and answer session and I will now turn the call over to Mr. Robert Gould for closing remarks.

Thank you very much operator that will conclude our call for today. Thank you for participating and for your interest in Atmos Pharmaceuticals have a good evening everyone.

This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Yeah.

Yeah.

[music].

Okay.

Okay.

[music].

Okay.

Yeah.

Yeah.

[music].

Yeah.

Okay.

Yeah.

[music].