Q4 2021 DURECT Corp Earnings Call
[music].
Greetings and welcome to the direct Corporation fourth quarter 2021 earnings 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 <unk>.
<unk> zero on your telephone keypad.
Please note that this conference is being recorded.
I will now turn the conference over to our host Mike Aaron Berg Chief Financial Officer. Thank you Sir you may begin.
Good afternoon, and welcome to our fourth quarter 2021 earnings Conference call. This.
This is Mike Aaron Berg, Chief Financial Officer of direct Corporation.
Before beginning I would like to remind you of our safe Harbor statement. During the course of this call. We may make forward looking statements regarding direct products and development expected product benefits, our development plans future clinical trials or projected financial results.
These forward looking statements involve risks and uncertainties.
Cause actual results to differ materially from those in such forward looking statements.
Further information regarding these and other risks can be found in our SEC filings, including our 10-K and 10-Q s under the heading risk factors.
You will no doubt have seen the 8-K filed last week, describing that I will be leading direct hands on March 13th.
Pursue another opportunity.
I just wanted to say a few words on that.
Without getting into too many details I will be taking an opportunity as chief operating and business officer at an oncology company.
This will be an expanded role.
It will be it will take my career down a different path.
This was not an easy decision because I sincerely believe that direct has a stellar team and an incredible asset in the last two calls sterile.
The utmost confidence in the potential of our superstar all to save lives and transform the company and I am more than grateful for the many opportunities I've had working at direct.
I also want to note that Matt Hogan, the company's former Chief financial Officer from 2006 to 2018.
That served as corporate finance advisor to the company since 2018 well.
We will continue to support the company during the search for a new Chief Financial Officer.
Further Jan Lee, who has been our VP of finance and corporate controller for the last 19 years.
It will be our interim principal accounting officer.
With that said, let me now turn the call over to Matt who will provide a brief review of our financial results and then Jim Brown, our president and CEO will provide an update on our programs. We will then open up the call for a question and answer session.
Thanks, Mike Let me now turn to our financials.
The noteworthy accounting events in Q4 was the licensing of U S pause them your rights to in our call.
The deal was signed on December 21, 2021.
In all the materials deliverables to allow in a call to benefit from the agreement were completed before year end.
So revenue was recognized in 2021.
Upon signing can I call agreed to pay us a $4 million nonrefundable upfront fee.
And $1.3 million, primarily to cover manufacturing supplies, an excipient used in the manufacturing of pausing here.
And certain equipment at the manufacturing sites that they acquired from us.
Our balance sheet at December 31st 2021 reflects that $5 3 million as accounts receivables.
And a call then paid us that full amount in January 2022.
In terms of revenues in Q4.
$4 1 million was recorded in collaborative R&D and other revenue.
$1 1 million from the sale of manufacturing supplies, an excipient was recorded in product revenue.
And the remaining roughly 100000 for the equipment was not recorded as revenue, but was reflected as a reduction in equipment on our balance sheet.
As a result of this.
Total revenues in Q4, 2021, or $7 3 million compared to $2 2 million in Q4 'twenty 'twenty.
Collaborative R&D revenue increased by approximately $4 $3 million year over year, essentially due to the unit call revenue.
Product revenue from the <unk> transaction and the sale of balance that pumps.
Increased from $1 9 million in Q4 of 2020 to $2 7 million in Q4 2021.
R&D expense was $8 4 million in Q4, 2020 , one as compared to $6 7 million in Q4 2020.
The increase was primarily due to higher clinical trial expenses and higher contract manufacturing costs for do you are 92 eight.
SG&A expenses were four and a half million dollars in Q4, 2021 as compared to $3 4 million in Q4 2020.
$750000 of this increase was a transaction fee related to the unocal deal.
Our underlying burn rate during the quarter was $10 9 million.
And at December 31, 2021, we had cash and investments of $70 million.
As compared to $56 9 million at December 31, 2020.
Again, if you consider that this cash figure does not include the payments for me to call net of transaction fees.
Cash figure would have been more like $74 6 million.
With that let me turn the call over to Jim for an update on our programs.
Thank you, Matt Hello, everyone. Thank you for joining us today for our 2021 fourth quarter update.
Direct is conducting but we believe it could be an NDA, enabling trial a box tucows steroid for the treatment of alcohol associated hepatitis or a H.
Hey, H is the definition of unmet medical need.
In the United States. There are approximately 137000 hospitalizations per year for a H.
With a 90 day mortality rate of 30%.
And with no approved therapy.
In all our CECO sterile phase Iia trial, we saw 100% survival at 28 days compared to a 20% to 26% historical 28 day mortality rate.
No drug related serious adverse events and the mechanism of action aligns with a H epigenetic dysregulation.
We are making great progress in our firm.
Our firm is a phase two b 300 patient double blind placebo controlled trial on three continents.
Our robust survival benefit may support NDA filing.
With the potential to be the first approved treatment for a H and the FDA has granted the program fast track designation.
Yeah.
Now to update on recent events, we are pleased with the enrollment rate and affirm our phase <unk> study of a superstar all the patients with severe alcohol associated hepatitis.
We've made excellent progress in opening clinical sites with the addition of 15, new clinical sites since our last earnings call.
We now have 51 sites enrolling for our firm and we are nearing completion of our goal of 60 or more sites for the trial.
We have 41 sites in the United States five sites in Australia, and five sites up and running in Europe , and the U K.
Last week, we announced the first patient was dosed in Europe , and we announced today that we have dosed more than 100 patients Jennifer.
We estimate the completion of enrollment remains on track for the middle of 2023.
We presented a poster at the liver meeting near the end of 2021, showing increased hospitalizations for a H in the United States.
Those eight patients who died during their hospital stay had significant comorbidities and cost of over $150000.
During the fourth quarter of 2021, we signed an exclusive U S licensing agreement with <unk> Pharmaceuticals under the agreement direct will receive up to a $136 million in upfront and milestone in addition to low to mid double digit royalties.
Hey, Nicole remains on track to launch in closet bear during the second quarter of this year.
On a personal front, we wish Mike Ehrenburg, all the best in his future endeavors.
Matt Hogan for its continued support and we've engaged a search firm to recruit for a new CFO .
We strengthened our board of directors with the appointment of Pete Garcia.
Seasoned financial executive with extensive biopharmaceutical industry experience we.
We also welcomed Dorothy Ingo King as our VP of regulatory affairs. She is a regulatory executive with more than 25 years of experience.
Let's now move to Las Vegas sterile our development program for alcohol associated hepatitis Andy affirmed trial.
[noise] affirms our ongoing phase <unk> efficacy and safety trial.
It is a placebo controlled double blind multinational study targeting 300 patients.
Yeah.
It is our belief that if a firm demonstrates a statistically significant improvement in 90 day survival. This trial should support the NDA filing a bunch of newco sterile for the treatment of a H.
The FDA has granted fast track designation for the development of my Super sterile and the treatment of age.
Yeah.
Our firm has three treatment arms.
30, milligram, and 90 milligram, CECO sterile and a placebo arm.
As with the Phase Iia trial patients in the affirmed trial receive an infusion of like Super sterile or placebo on day, one and if they are still in the hospital on day four they received a second infusion.
The primary endpoint for the trial is 90 day survival.
Yeah.
We have 51 clinical sites open which represents 15 more site since our last quarter update.
We plan to have between 60 and 65 clinical sites total for this international study.
Last week, we enrolled our first patient in Europe , and now have sites open in the United States, Australia, The U K and the EU.
We are pleased with the enrollment rate, we have now dosed more than 100 patients in the trial and expect this study will complete enrollment in the middle of 2023.
Yeah.
With COVID-19, we do think its burden on the hospital system, we anticipate the meat basi acceleration of patient enrollment.
Main focus of the company is to execute on this trial to the highest level of quality and in a timely fashion.
<unk> is the highest priority in the company.
In 2019. It was reported there were approximately 137000 hospitalizations per year in the United States for a H.
What physicians have available to them today, primarily involves accidents and supportive care, which includes nutrition and hydration.
Corticosteroids are used in some cases, but have shown no survival benefit at 90 days or one year.
There is no approved treatment for a H.
A retrospective analysis of 77 studies published between 1971 in 2016, which included data from a total of 8184 patients.
So the overall mortality from a H was 26% at 28 days, 29% at 90 days and 44% at 180 days.
A subsequent global study published in December of 2021, which included 85 tertiary centers in 11 countries across three continents.
Prospectively enrolled 2000, and 581, a H patients with a median meld score of $23 five.
This study reported mortality of 20% at 28 days and 31% at 90 days.
Yeah.
Prior to the COVID-19 pandemic the incidents of a H was increasing in younger patients and during the pandemic alcohol consumption in the United States has increased by about 30%.
This is led to a dramatic increase in hospitalizations for IH as well as many more a H patients being listed for liver transplant.
This has been described in the literature, including an article in Jama Network open.
This particular paper notes approximately 6% as severe a H patients are listed for liver transplant.
This percentage has nearly tripled since the beginning of the pandemic.
A H has a significant economic cost to the health care system.
The average hospital stay for in a H patient in the United States is approximately one week with many staying significantly longer.
The average hospitalization costs were at a H patient is approximately $56000.
For patients who survived the first 90 days and approximately $151000 for those who do not.
Alcohol associated liver disease is becoming a leading cause of liver transplant in the United States with the average cost of liver transplant exceeding $875000.
At this time, we are not ready to discuss pricing for electrical sterile. However, it's marsico sterile is successful in saving the lives of a H patients and if one assumed the price of only half of the low end of these costs.
It could be a multibillion dollar opportunity and could save the health care system substantial costs.
Let's review why we are so optimistic.
About the use of plus newco sterile and the treatment of patients with severe a H <unk>.
Hey, H patients face a 90 day mortality of approximately 30% and there is no approved treatment.
In the first trial of a shoe called sterile and a H patients all 19 of the patients including the 12.
Severe a H patients survived. Additionally, 14 of the 19 patients were discharged in less than four days after receiving only one IV infusion of life. So it goes Darryl.
The prognostic scores for the eight patients in this trial, including Lille and meld scores bilirubin and other biomarkers were improved as compared to baseline.
The circle sterile was also well tolerated by all the patients and at all the doses evaluated in the phase Iia trial, there were no serious drug related adverse events reported in this trial.
Dr. Mcclain from the University of Louisville conducted a comparative analysis of.
The eight severe a H patients treated with our CECO sterile and the 30 and 90 milligram cohorts.
From our phase Iia trial with 13th severe H patients from our Louisville study and it's important to note that the 30 and 90 milligram cohorts are the doses that we are testing in our firm.
The Louisville patients receive supportive care, including steroids.
Both groups had similarly high meld scores and high Madry discriminate function scores.
The Laura Chico steer all treated patients had substantially lower Lille scores as compared to the Louisville group.
And all of the luxury called sterile patients survived the 28 day follow up period, while three of the Louisville patients did not survive past 28 days and a fourth patient died at day 30.
This analysis was presented by Dr. Craig Mcclain at the 2019, a a S L b liver meeting.
Why did this comparison can be seen in our corporate deck on the direct website.
In addition to the clinical trial results. We also have supporting data from numerous in vivo animal models that demonstrate plus newco sterols potential again, multi organ failure, which can occur in a H patients.
But our sucrose Gerald mechanism of action helps us better understand the remarkable results that we saw in the treatment of a H patients.
Our CECO sterile is an endogenous epigenetic regulator it binds to and inhibits the activity of D. N M. T 138, and three B D. N M. Ts are epigenetic regulator enzymes that add methyl groups to DNA and a process called DNA methylation.
Treatment with a shoe called sterile, it's dressed liver cells led to decreased DNA hyperventilation and modulator expression to more than 1000 genes that were associated with multiple crucial cellular signaling pathway.
In July of 2019, our Jimmy at all published a study in nature communications in.
In this study the gene transcription patterns of patients with severe a H were distinctly different from control subjects and patients with other liver diseases.
In the age patients there was DNA hyperventilation, altra, transcriptome and liver cell dysfunction.
The expression of D N empty one N D N M. P. Three a were found to be profoundly increased in the a H patients, but not in the control subjects or patients with other liver diseases.
The authors of the study suggested that inhibition of D. N M T could be a novel therapeutic approach for a H.
Our CECO sterile binds to and inhibits the DMT, which adds to the strong rationale for evaluating by shoe called sterile as a therapeutic agent for patients with a H.
In conclusion.
There is a huge unmet need in a H.
There is no approved therapy today for H patients and the 90 day mortality is approximately 30%.
H costs the U S health care system billions of dollars per year and is rapidly becoming a leading cause of liver transplant.
We are optimistic regarding the potential for success of the affirmed trial because of the results from our phase Iia study there.
The comparative analysis with the Louisville severe a H patient data.
In vivo animal model results against multi organ damage.
And the association of a superstar all its mechanism of action with the epigenetic Dysregulation senior patients with severe a H.
Given the high unmet need for hospitalized a H patients.
Lack of current treatment options and the high mortality rate.
We believe our robust survival benefit India from trial would support an NDA filing.
In addition, the FDA has granted fast track designation for lunch Newco sterile and the treatment of a H.
Lastly, 42% of new drugs launched in the United States in 2018 were approved based on a single trial.
The FDA issued a draft guidance in December 2019 that supports an NDA filing should the trial like a firm be successful.
This document is titled demonstrating substantial evidence of effectiveness for human drug and biological products guidance for industry.
Page 11 states that a single trial quote can establish effectiveness unquote by showing quote marked improvement in survival compared to a control group unquote.
If it is also supported by natural history data demonstrating quote.
Very limited median survival time unquote.
We believe 30% mortality at 90 days represents a limited median survival time.
We will have to wait for the affirmed data regarding the improvement in survival.
Next an update on potential indications for <unk> Zucker sterile beyond a H.
One of the indications we are considering is Nash, we have completed phase one eight and one day trials and more than 70 patients that demonstrated reduced liver enzymes.
Fibrosis markers and by imaging liver fat stiffness and elasticity.
Reducing circulating fact, including triglycerides.
We do sell death marker.
Proved insulin resistance and a good safety profile.
Other potential additional indications for life superstore that are supported by preclinical data are acute kidney injury.
Titus metabolic syndromes stroke sepsis and others we.
We are currently planning our next indication for life secret sterile.
Next to pause about popular as a novel non opioid sustained release local anesthetic that is approved to produce post surgical pain analgesia for up to 72 hours following arthroscopic Subacromial decompression.
Late last year, we license the development and commercialization rights for a partner in the United States to ethical pharmaceutical.
We selected in a call as our commercial partner because of their strong commercial team, including a 60 plus hospital sales force, our medical affairs team and our marketing access to and because they are already focused on the post surgical pain market.
Lew Pasquerilla their CEO served as nobody August U S head of commercial operations and Anthony Golly, They're chief commercial officer led the U S surgical business for Ethicon, Inc. A part of Johnson <unk> Johnson medical device companies.
With positive or is there a call and a call surgical implant and a call is the first company to have to sustained released bupivacaine products to offer the post surgical pain market.
We believe there is a strong commercial synergy between the products that will help both grow and succeed in the marketplace.
And a call remains on track to launch partner in the United States during the second quarter of this year.
Jack will receive a 2 million dollar payment upon first commercial sale.
With the potential for up to $130 million in additional commercial regulatory and intellectual property milestone payments as well as tiered low to mid double digit royalties on net product sales in the United States.
During the fourth quarter, we added Pete Garcia to our board of directors.
He has worked as a chief financial officer, and the life Sciences industry for more than 25 years and raised more than $2 billion in capital during that period.
He is currently the Chief financial Officer, Alex oncology since joining them in January of 2020, and let their IPO in July of that year and our follow on offering in December .
Prior to Alex oncology, who served as CFO from 2013 to 2019 at PDL Biopharma and an acquirer of.
Royalties and pharmaceutical assets.
Before his time of PD L. Mr. Garcia served as CFO for a number of biotechnology companies.
He began his life science career at Amgen, where he served in a number of financial roles of increasing responsibility. Mr. Garcia holds an MBA from the University of California, Los Angeles, and a b, a and economics and sociology from Stanford University Peters.
<unk> is a wonderful addition to our board and has experienced guidance in perspective is greatly appreciated.
Last week, we welcomed Dorothy NGO King as our VP of regulatory Affairs. Dorothy Most recently served as the VP of regulatory affairs quality, and Pharmacovigilance, where Atomist pharmaceuticals until the acquisition by Super Nice Pharmaceuticals, her career spans more than 25 years and multiple product approvals.
We are bringing your onboard now and planning for success with the affirmed trial and in preparation for potential FDA and European submissions.
Yeah.
In summary.
We are making great strides with the firm we have 51 clinical sites up and running out of the 60, plus we have plan. We've added 15 clinical sites since our last quarter's call.
We dosed our first patient in Europe , and now have clinical sites opened in the United States, Australia, the UK and the EU.
We are pleased with the patient enrollment rate and now have dosed more than 100 patients at a time.
We expect our firm will complete enrollment in the middle of 2023.
Yeah.
Elevated D N N T expression and DNA hyperventilation reported in the liver samples of H patients fits with our eco steroid mechanism of action and helps to explain the efficacy signals, including survival of patients observed in our phase two a a H trial.
Since the pandemic alcohol consumption has increased by about 30% in the United States and the percentage of the H patients waiting for and receiving lipid trial might have increased substantially.
We have fast track designation by the FDA for our <unk> program.
We expect that will be achieved through robust survival benefit. This study would support an NDA filing.
Our partner in a call place to watch, possibly in the United States during the second quarter of this year.
Direct will receive a $2 million payment upon first commercial sale with the potential of up to $130 million in additional commercial regulatory and intellectual property.
Milestone payments as well as tiered low to mid double digit royalties on net product sales in the United States.
We will use the proceeds from this partnership to help fund our epigenetic program and our flagship product life sucrose gel for the treatment of a H.
Beyond H the mechanism of action for electrical steel provides further scientific rationale for developing treatments for other acute organ injury and chronic diseases.
We would now like to take any questions that you might have.
Yeah.
Thank you Anna.
And ladies and gentlemen at this time, we will conduct 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 that your line is in the question queue.
You May press the Star key followed by the number two if you would like to remove your question from the queue.
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Our first question comes from Christian Cuzco with Cantor Fitzgerald. Please state your question.
Hi, good afternoon, everybody. Thanks for taking the questions and Mike Best wishes to you that your new opportunity.
Yeah.
Oh, great. Thanks.
So I thought I'm very very much hot off the press last week, there was a study by Mayo clinic.
The thing about that different variables that have typically correlated with the greatest risk of mortality.
From historical data over a number of years and they pointed out age blood urea nitrogen albumin and <unk>.
Reuben So wanted to ask you I don't know if you've read the paper of course, but from your diligence and in some of the work you've looked at and some of these historical factors. What do you believe are the greatest correlate to factors to mortality and how these findings may also further support larger sterile for the phase Iia finding.
Yeah.
That's a great question and.
I'll just start and then hand it over to I think both weight she enormous should speak to this but.
You look at the at the reasons for people dying typically you. It it's because of multi organ failure multiple organs to shut down and certainly kidney function and liver function are two key.
Components in both ones that we've shown with our superstar all that we can do we can help it but maybe I'll start with way Chi.
Oh sure I.
I had two on mute sorry so.
Yeah, I think I have many factors.
Studying importantly backup battery.
Very interesting.
The nation.
Uh huh.
One.
Prognostic marker of course is the mouse score has been pointed out.
It's particularly a baseline meld score, which was I think it all I'd point out that to Oh.
Hum highly productive after mortality of these patients.
I think I lost you I lost you hear it might be my reception, but you said something about initial meld and then I lost you could you repeat that.
Oh.
So I.
The.
Mouth school.
Which it has been pointed out among all the other prognostic squad.
To put that peso scar.
Scoring system.
I can't break that 90 day Mark.
Okay and then after that that's 70 Lille score has seemed kind of tenure.
It actually has a relatively high specificity and the sensitivity and unlocking.
Responses.
So for now Scott, it's off costs at a baseline level.
Uh huh.
Got it.
Our scores, but then the Lille score is that fine.
In Mexico, we are now.
Looking at the change offset that Ruben.
So both mouse score and the Lille score they incorporate multiple hum.
Lockers upbeat organ function markers, such as bilirubin scale.
Both Scott.
That really stand out.
But still run down a little bit.
Also quite often.
And then so that so.
That's actually pointing towards that the paper.
Exactly you just mentioned are these markers are important.
Put them together, you'll have to look that and look at them as a whole like a gym has pointed out when a patient.
Patient die, but frequently by from out of all those things with the Nellix IDE that kidney failure.
In addition to the liver failure.
And you all are important and that's why bulks costs incorporate.
Oh crap.
Oh Wow.
So I hope that.
Uh huh.
Is that the right.
Question I think that that's.
Yeah, I think so rates, yes. Thank you for that and then norm and what would you would you add anything to that.
I think we'd she is has said everything the.
The dynamic model Little school, even though on there.
Area on there or a crude it looked as if print lower has really stood the test of time.
And so it's depending on the cohort different.
Papers have suggested one might be slightly better than the other but they generally gives you very similar information. The addition of age and underlying cirrhosis.
Hum probably has a major effect, but when we're talking about recoverable disease.
I feel very confident of the Lille data.
Thank you okay. So yeah, I think it's important just to remind our listeners.
That we had that luxury cholesterol had such a profound effect on reducing.
The Lille scores as compared to Dr. Mcclain patients were which were equivalent in there.
And they're starting characteristics to ours, and we had four times four fold reduction in Lille comparative Lille scores. So.
Okay. Thank you for that color and I know you are very much laser focused on this opportunity, but you Didnt know in your prepared remarks that you're currently planning the next indication to evaluate so obviously the list that you gave for us for some examples is quite extensive.
Wanted to ask maybe if you could talk about what are some of the specific criteria you might consider and then on that no I believe where we're heading the one year mark of the publication of the mechanism of action. So I was just curious like in terms of the conversations and now that you've been able to share more.
Or with the scientific community, how that might determine next steps as well.
Yeah, they're both really good questions I think with regard to the first question on the next indication.
Indication for unless you can scale, we are taking a hard look at them.
At the potential indications and we did give quite a long list and quite frankly that isn't the entirety of it we have others that we didnt mentioned.
The way, we're going to select the.
Next indication is going to be based on certainly the animal data the preclinical data that we have but also on the unmet need.
And and and so were looking in areas, where there really just isn't a good therapy. For example, you'll be sick, we selected a H because there's nothing really out there that can help these patients and it's a huge problem and so we're looking to try and fit my circle sterile and where it can fill a void that's there for the health care.
And I and we'll start with these very high need indications and eventually will rollout to the to the to some of the others as well as far as the mechanism of action.
It certainly is exciting and it yeah. It is amazing how fast time goes by you're right. It has been.
About a year since that paper was published.
Unfortunately in the area of epigenetics as it applies to this type of epigenetics, not an anti cancer kind of circumstance.
In a circumstance, where you're looking to improve the epigenetic function of itself there really hasn't been much new in the area of certainly people that we've talked to are very excited about what we're doing.
We're really at the forefront.
We're kind of at the very cutting edge up.
Of the science, there, but it's a it's a great place to be a lot of a lot of exciting information.
Okay. Thanks, and my last question is just on the patient enrollment in guidance here.
Wondering if you could give a little bit more color about this mid 2023 trial completion, specifically as you add more sites and look at the cadence that's been occurring, albeit during the pandemic.
Help us understand a little bit more how you're coming up with this timeline and then for future earnings releases should we expect that the company will either reiterate this guidance or updated if necessary based on what you see throughout the month.
Yeah. My my guess is we probably.
It's so important because we will end up giving some kind of update on the guidance.
Have selected the mid 23 date.
Just on where we are now everything we understand about the interim rates of sites, we have up and and like we're not gonna be take into account future sites. Although we're excited about getting them up and running as well.
But just looking at how things go forward.
That's R R.
Most reasonable guess at this point in time and so that's that's where we are certainly the team strives everyday to to improve and I.
On any timelines and I'd have to say that that they're doing a bang up job on in a moment that you want to add anything.
Oh, no I can't.
We can't.
Obviously.
Covid really slowed a lot of sites down so they they were looked at a lot of interruptions.
We will have to see if that changes once its completely.
Diminish its role is diminished and and I think as Jim says, we could off the guidance, if we feel that where they can make more progress, but I think for right now we're comfortable sticking with our original.
Our original estimation.
Perfect. Thank you thanks Krishna.
Okay. Thanks.
Our next question comes from Francois Brisbois with Oppenheimer. Please state your question.
Hi, Thanks for taking my questions and my congrats and best of luck.
Great to hear from you.
Sure.
Alright, thanks, and so yeah I'll just move forward with a couple of questions. So just on enrollment I think that's very important here is.
But the goal of the total number that you know for a number of sites has that changed at all and you know based on the clinical trial design if enrollment completes in mid 'twenty. Three can you just help us understand maybe how.
How to think about when top line data would come out afterwards.
Sure.
We did early on.
Over a year ago, when we saw that the pandemic was having the effect that it was we added more sites and that's where we got to the 60, plus where we are now and that diversity in geography across the United States in that.
Now World Hasnt really helped a lot because you know we have a circumstance where the pandemic would you'd be burning hottest and when you have the pandemic on the Rage, then you've got you know sometimes coordinators not allowed into the hospital beds aren't available nursing staff is reduced all these kind of things and so that that's been.
Our really our foundation and has really allowed us to maintain.
The timeline that we have and so if if one considers than the timing that you've suggested and Ah and looking at a mid 'twenty.
23 completions with the last patient in.
Is enrolled in the mid of 'twenty three than that last patient last visit would occur then three months later and then.
Some months later after that the data we've cleaned up the database will be locked and a and then we would have top line data as to how long that would be hard to say I think at this point.
I'd like to let that become defined but it's going to be certainly a good amount of time and we're doing a great time, keeping up real time with the data coming in but still.
With my experience. It always takes months to do that so I would just you know we'll have to see but it'll probably be Mike I don't know for sure yet.
Hesitate to give it time, because I just want to let the team determined that normally would you.
Concur with that you can run it at that.
I don't think I could add.
Add much to that.
Obviously this is something that occupies my thinking every day.
That's the timeline, we're keeping up with them.
As we're keeping up with data as we go and so we're trying to make sure that when the truck comes to an end, where it's close to having a complete handle on the data as possible, but there is a there was a period of some years.
Finalizing getting the last patient in.
And then making sure that we have.
Yeah, I've covered all of the basis in all of the venture L. T. Before we looked at before he doing unlocks because indeed.
Any decisions any lessons decisions, we make up get them made why that's still blinded.
Okay. Now that's helpful. And then obviously the pandemic has been difficult, but especially with maybe a trial sites ex U S. Here any impact that we're seeing based on geopolitical issues.
No.
Our Hearts go out to what's happening in Ukraine and to Europe , I mean, it's it's it's a horrible horrible circumstance.
Hoping that somehow that can be solved.
And.
Save from the death and destruction, that's occurring there, but we made a decision early on even though there certainly is.
A lot of Oh, there is a big problem with alcohol sushi and hepatitis in Eastern Europe , We made a decision just because it can be challenging to get the quality of data that you would like out of sites there not to use in the eastern European side. So I think as far east as we go as Germany and so.
That's.
So it won't impact the firm, but it certainly impacts all of US just heart right I mean, it's horrible.
Okay, No yeah, obviously in and Okay. That's helpful and then.
In terms of the the launch of pause them there.
Can you just maybe help frame for us for the listeners are the market opportunity and and you know come second quarter. It seems like that's still the timeline for launch in terms of the mid to double digits royalties do what we can maybe expect here or just maybe the size of the market and if you can give any color on.
On their thoughts about updating the label.
Yes, I cant give any color on the updating the label yet that's that's.
Entirely in our control and I know their focus right now is on the launch and and they're adding some great new people I don't know I, probably can't talk about it yet.
Their news, but they have already got a great team and they're adding even more.
More and more great people to it so I think it's Oh, we're really excited about what that can what.
What what Lou and his team can do I think if we look at the.
The market in the U S. It's about somewhere a little north of 600000.
Shoulder surgeries per year and for which this could potentially be applicable and then you know there are subcategories and all the like of that so.
It's a we're really looking forward to it.
Nice after all those years of hard work to to think about that being out there, helping the patient right. We all know where the problem narcotic abuse is and getting exposed to narcotics. After surgery is unfortunately, one of the leading causes for getting people.
In.
Horrible cycle so.
We're hoping that pause and there can be out there, helping patients with shoulder surgery and eventually expanded as you suggested to other indications as well.
We're looking forward to cheering from the sidelines as they take that on.
And reading alright, great well congrats on the progress. Thank you.
Thank you sure. Thank you.
Thank you and our next question comes from Ed Arce with H C. Wainwright. Please state your question.
Hi, everyone. Thanks for taking my questions.
That's on the recent progress let me add a best of luck Mike.
Really appreciate it.
I am here and also good to hear from you as well Matt and.
Glad that you're helping out.
First question is I, just wanted to drill down a bit.
On a little bit further on on the continuing acceleration of enrollment that you see.
You mentioned that right now you have a 51 sites out of a total of nine or excuse me of 60 that you.
Hope to have in total so you're looking at adding nine more from what you have now.
First patient was dosed in late January right now in March.
You have just over 100.
Over 13 or 14 months.
So what I'm looking at is as you as your.
Target mid 2023.
As to get another nearly 200 patients in about 15 or 16 months or thereabouts. So clearly a significant acceleration from what you've done over.
The first year and so with that I just wanted to ask you to be.
As specific as you can in terms of the barriers.
Two.
Accelerating that enrollment that you have seen and perhaps expect to see over the next year and a half an hour.
Mitigating them, obviously beyond the additional sites that you've done.
So I think that's it. Thank you for the question that I think that it's important to actually talk about the last part first and that is the number of sites because if you look back over the prior 12 13 months, we started with just three or four or five sites right and then we would get to seven sites and then eight sites in the 911 and 12. So you you start crawling and she started.
Clinical trial by the time, we get to near the finality of the number of sites and will be perhaps a few more than 60, but you know somewhere between 60 and 65 or something.
Once we've got the full complement of sites up and running.
You can enroll imagine it's compared to what if we had 60 sites going as compared to one we had.
10 sites were six X.
Enrollment of patient per site per month is the same so that's why on every clinical trial I've ever been associated with you always see this hockey stick of enrollment right in the end and it often is the case that it takes about as long to enroll the first third as it does to complete the entire rest of the trial and and so that's kind of what what once.
See I don't know that this will be any different I don't expect that it might be any different than that other than oh, we do have on top of that the melting away of the pandemic, which may which may speed it up a little bit more as well so that that would be my assessment not normal, but what are your thoughts.
We might have been maybe a muted.
One moment.
Hello go ahead Sir.
Oh, we lost him okay.
Can you hear me now.
Now we can't yet.
Okay, sorry about that.
So I you know I think you hit the nail on the head. It's really we started out with a very small number of sites and we've been building them.
And so that explains why we have this accelerated where on an accelerated path no, but I think.
The early the early phase was simply a question of having so huge science.
Yes.
Yeah.
Okay Fair enough I I was just.
Perhaps wondering if there was you know beyond the clear acceleration in the number of sites themselves.
Anything in terms of a logistical or operational issues at the site level.
It may have to had worked through to accelerate enrollment that's what I was getting at.
Yeah, So I think the.
And in general.
Most I would say all of the sites we've chosen to have the.
Have the skills to do this we've chosen them carefully for that reason.
Covid had a major impact on how hospitals were run.
Some of them had missed as quick because of vaccine mandate some of them.
Wouldn't allow non essential personnel in so.
Some of them had to close a number of bids. So there were there were a lot of issues a lot of them were full for periods of time, we tried to mitigate that by spreading the.
Sites over a very wide geographic area, so that no one site would be.
Yeah it.
Did stopped for everyone, but it's definitely impacted this and my colleagues in other studies have said the same thing that had a major impact. So hopefully this is finding the clearing the decks.
We'll start to see more normalization of hospital operations.
Okay great.
Thanks for that.
Second question is.
Your plans to give us all an update.
On marsico sterile.
Nash and perhaps other indications.
In particular do you have some sort of a timeline, where we could expect some news and I notice you touched upon this before but there's a number of potential indications.
Indications you discussed or mentioned in your.
Our prepared remarks.
I I I granted there is a.
Couple of things that you mentioned in terms of the criteria such as.
Preclinical data and the unmet medical need, but just wondering if you could perhaps.
Give us a little little more details around what would help you.
Need a decision one way or the other.
Thanks again, yeah for sure.
Sure I think that's a really good question and that is part of the business of running any biopharmaceutical company right is where do you where do you take your next step.
And and it really does help if you have some options most companies don't most companies have something that is.
Square Pegging, it's Gotta go into square hole and that's it with our superstar all we have this thing that it.
It has great flexibility and capacity to help across a huge broad.
A list of disease circumstances.
And so then when you've got that kind of freedom, which we do have with her as she goes draw then we have the chance to take a step back and wait she has done an amazing job at the science to look at and where are these things makes it and so we can look and say where.
Some cases, we get even understand the type of methylation and issue. So you can get down to the some of the more basic components of the science there and then certainly looking animal models and in models of the disease in cell lines, and the like and get some sense of whether or not we might be able to have a positive impact and then we look at the overall file Nicole.
Economic circumstances are there already reasonable therapies out there. So we're gonna have to go out there and knock off somebody who's already got.
<unk> got a beachhead in and it's doing well, that's not where we want to go.
What we want to do with the molecule is.
Is cutting edge and as amazing as what our sequel still could be it go where.
Others can witness a H right nobody has been able to make it go we've got you now.
A monoclonal antibodies and its immune system, they've got tested steroids, they've tested kind of everything you can possibly think of against it and unfortunately nothing has shown that it really helps and so but we've shown in that two way that it might save lives and and so that's the kind of place where we'd like to go with our next indication that's someplace, where there isn't.
There's such an unmet need that it's weak.
We can step in and really make a big difference and that's what we want to do.
So.
That's what we're trying to do.
Fantastic Alright final question for me then is on pause them here you mentioned.
You know coal is on track to.
Oh, you know to launch.
<unk> launched the drug next quarter.
And you would expect the $2 million milestone payment on that first commercial sale.
Exactly yeah.
Would you expect that.
Payment.
Not to be a recognized at least.
Uh huh.
<unk> booked.
Or earned I should say in the second quarter.
And then just a broader question just in terms of your expectations.
In terms of the economics that you could derive from this going forward.
As far as the timing goes when that first sale occurs then they will owe us the milestone as far as the timing of when that comes.
I don't know, Matt or Mike one of your guys I don't know how bad does it usually there's a lag there always with every contract that we have.
Right right.
Well if if they have first sale, we will immediately recognized the $2 million in revenue.
And then we'll have to invoice them and then sometime after that we will receive payment I don't remember what the payment terms are but.
It would follow shortly thereafter.
Yeah, I think that's right that's exactly right, Okay, and then as far as the the magnitude which is your question what does it what do we expect the magnitude of their sales and then our associated double digit royalties might be.
We want to let that unfold as it is it should.
Certainly.
When we've looked at this market for for such a very long time, there is a huge unmet need out there. There are you know theres so much.
Uh huh.
Pain that occurs after surgery, especially a survey like shoulder surgery. I mean is that if you have a friend or if you've had it yourself and you know how painful that can be and we did a study with raising your shoulder pain on movement kind of thing.
And so to be able to make a difference there is going to make a huge difference to the patients not taking their cottage is there's a huge.
Potential for helping the patients themselves because you can get away from not having a five or six 7% of the population is a predisposition to abuse. So you don't expose them to it they don't have to worry about that piece and then I then theres another layer to all of this and that it was two more layers one is having less pain.
When it's known locally.
I was going to move at that mobility is really important you know if you've had family members had a knee or hip replaced now they get them up right away right. It's not move them you know.
Very quickly.
And it's because when you can get up and be mobile you can reduce a lot of other morbidities.
Yep, It is pneumonia and and getting up and moving around is it's important to keep reducing that also not taking that arcata, because when you're on narcotics you lose that stimulus to breathe deeply that's just one of the side effects of narcotics.
And.
So by virtue of having that we think there are a lot of positive outcomes for the patients themselves, but as far as giving.
Giving the actual number of what the sales might be I know.
At this point in time I Couldnt do that I think we'll just have to wait and see how things go but we certainly think that it's teed up to do well.
Oh.
Great. Thanks, so much for the commentary I really appreciate it.
Sure.
Thank you and that's all the time, we have for questions I'll now turn it back to Jim Brown for closing remarks.
Okay, well with that I just want to thank all of you for your time and as always if you have any questions. Please reach out and we'd love to talk alrighty. Thanks, a lot and take care bye. Thank you. This.
This concludes today's conference all parties may disconnect have a great day.