Q4 2021 AcelRx Pharmaceuticals Inc Earnings Call

Good day and welcome to the seller at fourth quarter and full year 2021 earnings call.

Operator: and welcome to the Seller X fourth quarter and full year 2021 earnings call. This call is being webcast live on the events page of the investor section of Acceler-X's website at www.acceler-x.com. This call is the property of Acceler-X, and any recording, reproduction, or transmission of this call without the express written consent of AccelRx is strictly prohibited.

This call is being webcast live on the events page of the investors section of accelerates accelerates its website at www dot sell Rx Dot Com. This call is the property of Excel, Our act and any recording reproduction or transmission of this call without the.

Without the express written consent of accelerate.

Is it strictly prohibited as a reminder, today's call is being recorded you may listen to a webcast replay of this call by going to the investors section of Excel Orexis website, I would now like to turn the call over to Rafi off the Dorian accelerates its chief Financial Officer. Please go ahead Sir.

Operator: As a reminder, today's call is being recorded. You may listen to a webcast replay of this call by going to the investor section of AccelRx's website. I would now like to turn the call over to Raffi Asadorian, AccelRx's Chief Financial Officer. Please go ahead, sir.

Raffi Asadorian: Thank you, Chuck, and thank you for joining us this afternoon. Earlier today, we announced our fourth quarter and full year 2021 financial results and some business updates in a press release. This press release and the slide presentation accompanying this call are available in the investor section of our website. With me today is Vincent Angotti, our Chief Executive Officer, and Dr. Pam Palmer, our Chief Medical Officer. Before we begin, I'll remind listeners that during this call, we will make forward-looking statements within the meaning of the federal securities laws.

Thank you Chuck and thank you for joining us this afternoon.

Earlier today, we announced our fourth quarter and full year 2021 financial results and some business updates in our press release. This press release and the slide presentation accompanying this call are available in the investors section of our website.

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

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

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

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

Now I'll hand, the call over to Vince.

Thank you Rafi and good afternoon, everyone.

Vincent Angotti: This past year has been transformational for Acceler X despite the commercial challenges encountered with the pandemic. In line with our stated strategy, we've successfully added new late-stage development assets that we believe create multiple short-term catalysts, bring significant value to Acceler-X, as well as extend and diversify our product portfolio focused on medically supervised settings. In addition, the adoption of the SUVIA for use in procedural suites is encouraging amidst the continued challenges faced in introducing new and innovative pharmaceutical products to hospitals.

This past year has been transformational for accelerated despite the commercial challenges encountered with the pandemic and.

In line with our stated strategy, we successfully added new late stage development assets that we believe create multiple short term catalysts brings significant value to its solar X as well as extend and diversify our product portfolio focused on medically supervised settings.

Further the adoption of the SUV for use of procedural suites is encouraging amidst the continued challenges faced introducing new and innovative pharmaceutical products to hospitals.

Vincent Angotti: Accordingly, our near-term strategy is focused on commercializing de-suvia and procedural suites, where many painful procedures are now being performed instead of at hospitals and ASCs, and advancing the development of our pre-filled syringe products in the family so that they can realize their potential value. So today, we'll update you on the studios' growth and success that we're seeing in the procedural suite, as well as the expected timelines and regulatory paths for our pre-filled syringes and the Famistat product candidates. We'll also have an internationally renowned expert in acute kidney injury, Dr. Mink Chawla, join us on the call today.

Accordingly, our near term strategy is focused on commercializing <unk> and procedural suites, where many painful procedures are now being performed instead about hospitals and a S. CS and advancing the development of our pre filled syringe products in the family start to realize their potential value.

So today, we'll update you on distribution growth and success that we're seeing in the procedural suites as well as the expected timelines and regulatory paths for our Prefilled syringes and the famous staff product candidates.

Also have an internationally renowned expert in acute kidney injury, Dr. Chawla join us on the call today.

He will provide his perspective on the unmet need for these patients and how much damage that can potentially address this need.

Vincent Angotti: He'll provide his perspective on the unmet need for these patients and how Nifamistat can potentially address this need. So let's start by providing an update on the progress with Dissuvia and the recent commercial shift we've made, which is producing promising results. Many painful procedures are no longer being performed in just the hospital or ASC settings but instead take place in procedural suites, which are more cost-effective. As an example, for ear, nose, and throat, or ENT, 55% of outpatient procedures have recently shifted from the hospital setting to the office-based procedural suite.

So let's start by providing an update on the progress with the suite and the recent commercial shift we've made which has produced some promising results.

Many painful procedures are no longer being performed and just the hospital or ASC settings, but instead take place and procedural suites, which are more cost effective.

As an example for ear nose, and throat or E&C, 55% of outpatient procedures have recently shifted from the hospital setting and into the office based procedural suites.

Vincent Angotti: Similar to the historical shift from hospitals to ASCs, these procedural suites support higher patient satisfaction, lower patient costs, and Better Economics for Physicians. Importantly, in contrast with hospitals in ASEs, there is typically a single person that approves which pharmaceutical products to use, creating significantly shorter times to approval and ordering for dysubia compared to hospitals in ASEs. Procedural suite specialties with which we are currently engaged are plastics and cosmetics. E&T, and Oral Maxilla Facial Surgeons with a primary focus over the last few quarters on plastic and cosmetic surgery. Deschuvia's key characteristics of rapid and effective analgesia, with minimal to no cognitive impairment.

Similar to the historical shift from hospital to S sees these procedural suites support higher patient satisfaction.

Lower patient cost and better economics for physicians.

Importantly in contrast, with hospitals and S. Sees there is typically a single person that approves, which pharmaceutical products to use creating significantly shorter times to approval and ordering for distributor compared to hospitals N. A S. Six.

Procedural suites specialties with which we are currently engaged our plastics and cosmetics E.

E N T and oral maxillofacial surgeons with a primary focus over the last few quarters on plastic and cosmetic surgeons.

The Sirius key characteristics of rapid and effective analgesia with minimal to no cognitive impairment.

Vincent Angotti: Low Peak Plasma Levels and its non-invasive route of administration are supporting solid adoption across these specialties, and Ivy Access is typically not utilized in this setting. Many of these specialists rely on high patient satisfaction scores and reviews to support their practices. And the anecdotal feedback we've been receiving is that effective pain relief from Dysuvia has been a key driver of patient satisfaction. The shift in our customer priority is reflected in how we've reorganized the structure and focus of our commercial team, and in fact, most of our recent success has been driven by the efficiency and reach of our virtual sales. In the fourth quarter, we reorganized our commercial team to increase the number of virtual representatives in place of field-based sales representatives.

Low peak plasma levels and it's noninvasive route of administration of supporting solid adoption across the specialties as anesthesiologists and IV access are typically not utilized in this setting.

Many of these specialists rely on high patient satisfaction scores and reviews the support the practices and the anecdotal feedback we've been receiving.

That effective pain relief from the Subia, that's been a key driver of patient satisfaction.

The shift in our customer priority is reflected in how we've reorganized the structure and focus of our commercial team and in fact, most of our recent success has been driven by the efficiency and reach of our virtual sales team.

In the fourth quarter, we reorganized our commercial team to increase the number of virtual representatives in place of field based sales representatives.

Vincent Angotti: This reorganized sales force exhibits improved productivity and cost efficiency. Beginning in the third quarter, we increased our focus on the procedural suites, resulting in 82% of all sales calls directed to these settings in the fourth quarter of 2021. And as a result of this shifted focus, the total increase of ordering customers in the fourth quarter compared to the third quarter was 52%, and the number of our customers and procedural suites increased 91% in the same period. The increase in customers was the main driver of the total increase in distributed units sold to commercial customers in Q4 from Q3 of 30%.

This reorganized sales force exhibits improved productivity and cost efficiencies.

Beginning in the third quarter, we increased our focus on the procedural suites, resulting in 82% of all sales calls directed to these settings in the fourth quarter of 2021 .

And as a result of this shifted focus the total increase of ordering customers in the fourth quarter compared to the third quarter was 52%.

The number of our customers and procedural suites increased 91% in the same period.

The increase in customers was the main driver of the total increase in distributor units sold to commercial customers in Q4 from Q3 of 30%.

Vincent Angotti: We're expecting continued solid growth in orders for procedural suites during 2022 as a result of this shift in focus. As of December 31st, 2021, we achieved 725 approvals compared to our initial target of 615. And as of February 28th of this year, 2022, we've achieved 813 previously approved devices for dispute.

We're expecting continued solid growth in orders for procedural suites. During 2022 as a result of this shift in focus.

As of December 31, 2021, we achieved 725 approvals compared to our initial target of 615 and as of February 28 of this year 2022, we've achieved 813 formally approvals for distribution.

Vincent Angotti: Overall, including Dissuvia or including the DoD, Dissuvia units sold in the first two months of 2022 compared to the first two months of the fourth quarter of 21 increased by 63 percent. Dr. to Dr. Education and our Procedure Suite Markets are important to support Dysuvia's continued adoption. Given this is a relatively small community of specialists, we believe there's positive momentum with doctors sharing their experiences with Dysuvia, as we've been receiving inbound requests from physicians to speak with current Dysuvia physician customers in each of these key specialties. Also, importantly, the number of recent publications about D'Souville is providing further real-world evidence of the many benefits experienced when administering D'Souville in these as well as other settings.

Overall, including the Serbia or including the D O D. The studio units sold in the first two months of 2022 compared to the first two months of the fourth quarter of 'twenty, one has increased by 63%.

Yeah.

Doctor to Doctor Education, and our procedures Sweet markets is important to support the shoes continued adoption. Given this is a relatively small community of specialists. We believe there is a positive momentum with doctor sharing their experiences with tissue via.

As we have been receiving inbound requests from physicians to speak with current distribute physician customers in each of these key specialties.

Also importantly, the number of recent publications about the <unk>, providing further real world evidence of the many benefits experienced when administering distributing these as well as other settings.

Vincent Angotti: Recent and upcoming publications focused on plastic and cosmetic procedures continue to report on the eskocine safety profile of Dysuvia in the outpatient setting. So suffice it to say, we're very encouraged by the recent progress being made with Dysuvia in commercial settings, albeit there's certainly a long way to go. Regarding the Department of Defense, we continue to wait for the administrative and logistics prerequisites to enable the U.S. Army to begin purchases of the Suvia for their SETS kits and outfits, or SKOs.

Recent and upcoming publications focused on plastic and cosmetic procedures continue to report on the efficacy and safety profile of <unk>.

Julia in the outpatient setting so suffice it to say, we're very encouraged by the recent progress being made with the <unk> and the commercial settings, albeit there is certainly a long way to go.

Regarding the department of Defense, we continue to wait for the administrative and logistics prerequisite to enable the U S. Army begin purchases all of this Julia for their sets kits and outfits or S. Chaos.

Vincent Angotti: The Army continues to make purchases for their pre-positioned stockpiling program, but we expect an increase once the Army begins supplying deployed troops for their SKOs. We're unable to estimate the timing of these SK-related purchases as we expected these to begin back in 2020 after the milestones to see approval.

The army continues to make purchases for their preposition stock Poly program, but we expect an increase once the army begin supplying deployed troops for their S. Chaos.

We're unable to estimate the timing of these S. T. A related purchases as we expected. These to begin back in 2020 after the milestone C approval.

Vincent Angotti: However, we are encouraged that the DoD has finally initiated two studies that were initially planned 18 to 24 months ago. The first is being performed at the University of Pittsburgh Medical Center, and it's focused on the use of dystopia in emergency room patients, and the second is being performed at the University of Texas Southwestern Medical Center, and it's focused on testing the hemodynamic stability of opioids, including dystopia. In addition to these studies, a recently published commentary in military Medicine noted the favorable pharmacological properties of DeSuvia that address the battlefield's unmet needs and identified DeSuvia as the next evolution in battlefield pain management.

However, we are encouraged that the Doj has finally initiated two studies that were initially planned 18 to 24 months ago.

The first is being performed at the University of Pittsburgh Medical Center and is focused on the use of the studio and emergency room patients and the second is being performed at the University of Texas Southwestern Medical Center and is focused on testing the hemodynamic stability of opioids, including distributor.

In addition to the studies a recently published commentary in military Medicine noted the favorable pharmacological properties of <unk> that address the battlefields unmet needs and identify the Suvs as the next evolution in battlefield pain management.

Yeah.

We believe that successful conclusion of the two new studies in this publication could further the demand for distributed across more branches of the U S military.

Vincent Angotti: We believe that the successful conclusion of the two new studies and this publication could further the demand for distributed across more branches of the U.S. military. And before I hand the call over to Dr. Palmer, let me now provide you with some details on our recently acquired development pipeline. In July last year, we in-licensed two pre-filled, ready-to-use syringe product candidates, ephedrine and phenylephrine, from our European partner, Agaton. And in January of this year, we closed our acquisition of Lull Therapeutics, acquiring their Nafamistat product candidates, including NIAID, for the anticoagulation of the extracorporeal circuit, which is currently advancing through the regulatory pathway after having received a breakthrough device designation for this initial indication.

Before I hand, the call over to Dr. Palmer, Let me now provide you with some details on our recently acquired development pipeline.

In July last year, we in licensed two pre filled ready to use syringe product candidates ephedrine and phenylephrine.

From our European partner AG autonomy.

And in January of this year, we closed our acquisition of lull therapeutics acquiring theyre in a famous stat product candidates, including NIAD for the anti coagulation of the extra <unk> circuit, which is currently advancing through the regulatory pathway. After having received a breakthrough device designation for this initial indication.

Vincent Angotti: The prefilled syringes, we believe, will undergo a relatively straightforward regulatory submission process since ephedrine and phenylephrine are commonly used FDA-approved drugs. The novel component in these products is the ready-to-use pre-filled syringe product delivery. In early November, we submitted a meeting request with the FDA and planned for our first meeting in January.

The pre filled syringes, we believe will undergo a relatively straightforward regulatory submission process since ephedrine and funnel efron, our commonly used FDA approved drugs.

The novel component in these products is the ready to use pre filled syringe product delivery system.

In early November we submitted a meeting request with the FDA and plan for our first meeting in January despite.

Vincent Angotti: Despite two missed deadlines by the FDA, we continue with our efforts to prepare both NDAs for submission. Efedrin is expected late in the second quarter of this year, and phenylephrine is expected late in the fourth quarter, assuming the FDA agrees with our proposed pathway.

Despite two missed deadlines by the FDA, we continue with our efforts to prepare both NDA for submission.

Vedran expected late in the second quarter this year.

Phenylephrine expected late in the fourth quarter, assuming the FDA, great FDA agrees with our proposed pathways.

Vincent Angotti: Both of these are commonly used products and are found on nearly every operating room part. The markets are evolving through ready-to-use products from concentrated vials. Many hospitals are purchasing pre-filled effedron and final-eference syringes from compounding pharmacies today, which have a limited shelf life.

Both of these are commonly use products and are found on nearly every operating room cart.

The markets are evolving to ready to use products from concentrated vials. Many hospitals are purchasing pre filled ephedrine and phenylephrine syringes from compounding pharmacies today.

Which had limited shelf life.

Pamela Palmer: So we believe there's a potential market opportunity in excess of $100 million for these products, and we look forward to receiving feedback from the FDA and submitting our NDAs to have these products available for sale next year. We're excited about a recently acquired product pipeline, including a Famous Stat, and for a number of reasons, continue to look forward to the investment in this... Pipeline Portfolio. Dr. Palmer and Dr. Chala will now discuss these recently acquired products. Dr. Palmer? Thanks, Vincent.

So we believe there is a potential market opportunity in excess of $100 million for these products and we look forward to receiving feedback from the FDA and submitting our NDA is to have these products available for sale next year.

We're excited about our recently acquired product pipeline, including a thermostat and for a number of reasons continue to look forward to the investment in these.

Pipeline portfolio Dr.

Dr Palmer and Dr. <unk> Shah will now discuss these recently acquired products Dr. Palmer. Thanks, Vince.

Pamela Palmer: The recent progress we have seen with the Suvi is impressive. Especially the rapid adoption by physicians for use in their procedures, including plastic, ENT, and oral surgery. While we remain focused on Dysubia, it has also become a really exciting time for the clinical development side of Accelerex these days as we are moving forward with our FDA filings for the two pre-filled syringes and advancing the Nephamistat Program. Regarding the pre-filled syringes of a Fedron in Phenola, these are commonly used medications to allow anesthesiologists to rapidly regulate blood pressure and heart rate during general and regional anesthesia.

Recent progress we have seen with the Suzie is impressive, especially the rapid adoption by physicians for use in their procedural suites, including plastic E&P and oral surgeons. While we've remained focused onto subia. It also has become a really exciting time for the clinical development clinical development side of accelerates these days.

As we are moving forward with our FDA filings for the two prefilled syringes and advancing the thermostat program.

Regarding the pre filled syringe is a steadier and phenylephrine.

Pamela Palmer: They're used every day in every hospital and surgical center around the world. Typically, the commercially available forms of these drugs are in vials, in which case, drawing the medication up with a needle and syringe, diluting it to the appropriate concentration if required, and then labeling the syringe are all required steps prior to administering the drug to the patient. This delay is unacceptable in what is often an emergent situation of unstable blood pressure or heart rate. Because this process takes away from the rapid treatment of the patient, anesthesiologists draw these medications up and label them ahead of time. If they're not used, they must be thrown away.

These are commonly use medications to allow anesthesiologists to rapidly regulate blood pressure and heart rate during general in regional anesthesia.

They are used every day in every hospital and surgical center around the U S tip.

Typically the commercially available forms of these drugs are in a vial.

In which case, drawing the medication up with a needle and syringe diluting to the appropriate concentration if required and then labeling. This range are all required step prior to administering the drug to the patient.

This delay is unacceptable and what often is an emergent situation of unstable blood pressure or heart rate.

Because this process takes away from the rapid treatment of the patient.

Anesthesiologist draw these medications up and label them ahead of time.

If theyre not used they must be thrown away.

Pamela Palmer: To avoid this waste, compounding pharmacies sell ready-made syringes. But these pharmacy-made syringes have a shelf-life measured in months, not years. Therefore, the inventory of these drugs that are not used must also be discarded on a relatively frequent basis. In addition, compounding pharmacies have been known to have periodic sterility issues with their products, which is also a liability. Providing hospitals and ambulatory surgery centers with a three-year shelf life ready-to-use pre-filled syringe of these two commonly used medications will be a tremendous advantage both clinically as well as financially for these studies. Often, in the process of drawing up medications, especially those that require dilution, errors are made.

To avoid this waste compounding pharmacies sell ready made syringes, but these pharmacy made syringes have a shelf life measured in months not years.

Therefore, the inventory. These drugs. It is not used must also be discarded on a relatively frequent basis in.

In addition, compounding pharmacies have been known to have periodic sterility issues with their products, which also is a liability.

Providing hospitals and ambulatory surgery centers with a three year shelf life ready to use pre filled syringe of these two commonly use medications will be a tremendous advantage both clinically as well as financially for these settings.

Often in the process of drawing up medications, especially those that require dilution errors army.

Pamela Palmer: Our goal with these product candidates is to both safeguard against these medication errors as well as reduce medication wastage in these medically supervised settings. We are not expecting to perform additional clinical studies for these NDAs and are moving forward with preparing them for submission to the FDA. Moving on to our acquisition of nifamostat, our first focus for this unique broad-spectrum serine protease inhibitor is product candidate 9, which is a lyophilized form of nifamostat as an anticoagulant for injection into the extracorporeal circuit. The term extracorporeal circuit means circulating the patient's blood outside their body through a machine that temporarily assumes the function of an organ.

Our goal with these product candidates is to both safeguard against these medication errors as well as reduce medication wastage in these medically supervised settings, we are not expecting to perform additional clinical studies for the NDA and are moving forward as preparing them for submission to the FDA.

Moving onto our acquisition of the families that are first focus to this unique broad spectrum serine protease inhibitor is a product candidate <unk>.

Which is a lyophilize form of new salmon stack as an anticoagulant for injection into the extra Copano circuit.

The term extra <unk> circuit means circulating the patient's blood outside their body doing machine that temporarily assumed the function of in Oregon.

Pamela Palmer: Our upcoming clinical study of NIAD is for its use as an anticoagulant in the extracorporeal dialysis circuit used in hospitals for acute kidney failure. Outpatient dialysis for chronic kidney failure also requires anticoagulant. Another example of an extracorporeal circuit is ECMO, or extracorporeal membrane oxygenation, for all these extracorporeal circuits to work most efficiently.

Our upcoming clinical studies NIAD esports use as an anti coagulant in extra Cooper real dialysis circuit eased in hospitals for acute kidney failure.

Outpatient dialysis for chronic kidney failure also requires anticoagulation.

Another example of an extracorporeal circuit is ecmo or extra compiled membrane oxygenation for all these extra compiles circuits to work most efficiently.

Mink Chawla: Anticoagulant treatment of the filters is usually recommended. Importantly, NIAID has been awarded a breakthrough device designation by the FDA and also has been given a unique ICD-10 procedure code by CMS for, quote, extracorporeal introduction of nifamostat anticoagulant, end quote. Regarding our progress with NIAID, once the clinical drug lots are manufactured, we plan to move into our single pivotal clinical study with design and endpoints that have already been informed by the FDA. To explain the potential advantages of NIAID over the commonly used anticoagulant HEPA,

Anticoagulation of the filters is usually recommended.

Importantly, NIAD has been awarded a breakthrough device designation by the FDA and also has been given a unique ICD 10 procedure code by CMS.

For quote extracorporeal introduction of nystagmus that anticoagulants and quote.

Regarding our progress with NIAD once a clinical drug lots of manufactured we plan to move into a single pivotal clinical study with design endpoints that have already been informed by the FDA.

To explain the potential advantages of NIAD over the commonly used anticoagulants heparin and the less frequently used anti coagulants citrate is doctor Meek charla and active investigators in the field of critical care nephrology since 2002 and previous recipient of the.

Mink Chawla: And the less frequently used anticoagulant citrate is Dr. Mink Chawla, an active investigator in the field of critical care nephrology since 2002 and previous recipient of the International Vicenza Award for Critical Care Nephrology in 2015, which recognizes individuals who have made seminal clinical research advancements in acute kidney injury.

Potenza Award for critical care Nephrology in 2015, which recognizes individuals who've made seminal clinical research advancements in acute kidney injury. Thank you Dr. <unk> for joining us on the call today.

Mink Chawla: Thank you, Dr. Chowler, for joining us on the call. Thank you, Dr. Palmer, for that kind introduction. Hepburn has long been used as an anti-clagum.

Thank you Dr Palmer for that kind introduction.

Britain has long been used as an antique white one of choice for dialysis circuits. That's frankly, there wasn't much else available to us.

Mink Chawla: Dialysis circuits. Frankly, there wasn't much else available. Heparin is injected into the dialysis. However, due to its long half-life of up to three hours in patients with normal liver function, enough for five to six hours in patients with liver impairment, it is classified as a systemic anti-gligalant since it's actively anti-gligal limitation as well as dialysis. This is a major downside because patients who are sick in the hospital often have bleeding lesions, and this is exacerbated. If the patient develops a bleeding disorder, it is not easy to reverse, and therefore Hepburn is contraindicated in patients with a risk of bleeding.

When he is injected into the dialysis machine. However, due to its long half life of up to three hours and patients with normal liver function and up to five to six hours and patients liver impairment is classified as a systemic anti coagulant since its actively antique white limitation as well as the dialysis machine.

This is a major downside you should happen because patients who are sick and the hospital often had bleeding risks.

And this is exacerbated that happened.

It's a patient develops a bleeding disorder.

It is not easy to reverse and therefore, Kathryn it's contra indicated in patients with the risk of bleeding.

Mink Chawla: To avoid this issue, instead of heparin, citrate can be used as a regional anticoagulant, and the dialysis filters this. But the citrate effect must be reversed with concomitant calcium infusion after passage through the dial. This balancing act of giving one infusion of citrate to the anticoagulant filter and giving another infusion of calcium to avoid citrate toxicity is a delicate balance, and it can go awry. Low calcium, also known as hypocalcemia, is very dangerous for patients and can lead to ventricular tachycardia and cardiac arrest.

Oh boy this issue instead of heparin citrate can be used as a regional anticoagulants or the dialysis filter system, but the Detroit the fat must be reversed with concomitant calcium infusion after passage through the dialysis sculpture.

This balancing act of giving one infusion of situates anti selected the filter and giving another infusion of calcium to avoid to treat toxicity.

A delicate balance and it can go awry.

Low calcium also known as hypocalcemia, it's very dangerous for patients. It can lead to a particular tachycardia and cardiac arrest.

Mink Chawla: For this reason, the use of fissure requires extensive training for both doctors and nurses, and necessitates frequent blood draws to make sure that the ionized calcium is in the correct range. Fisquate regile anticoagulation is kinlimically available for an emergence of youth authorization or the U.S. Because using citrate as a dialysis anticoagulant is complicated, risky, and expensive, only 5% of in The only other option we have, if you can't use heparin or citrate, is to use nothing and to continually replace the dialysis filter when it is clogged. For these patients, filter clotting results in blood loss and platelet loss.

For this reason you subsidiary it requires extensive training for both doctors and nurses.

And necessitate frequent blood draws to make sure that the all unites calcium is the correct range.

So shrink regional anticoagulation is clinically available through an emergency use authorization or the way you are in the U S.

Because using situated biologists and things like that.

Complicated risky and expensive only 5% of inpatients I also think regulation utilized especially.

The only other option we have if you can't use hampered our search rate used to use nothing and continually replace the dialysis filter one lots for them.

For these patients filter clogging results and blood loss and platelet losses for the patients. In addition, frequent filter clogging undermines the efficacy of the dialysis treatment.

Mink Chawla: In addition, frequent filter clotting undermines the efficacy of the dialysis treatment and most of all, increases nursing time and costs for the hospital. And being able to have another anti-quagal option will be transformative for future kidney injury care. The Famous stat has the same efficacy of citrate with a favorable safety profile. However, Famistat has a very short half-life of just eight minutes.

And most of all increases nursing time and cost for the hospital.

Being able to have another anti platelet option will be transformative to the queue.

The injury care.

The famous that has the same efficacy as the trade with a favorable safety profile.

The famous that has a very short half life of just eight minutes. So the clinical team once the effects go away they simply turn off the infusion.

Mink Chawla: So if the clinical team wants the effect to go away, they simply turn it off. As a practicing ICU physician, I can tell you that having that kind of optionality is really important, and having a good safety profile to go alongside it is also very important. And these factors are very important in my decision making about which drugs I use and which I do not use in the intensive care unit.

As a practicing IC position I can tell you that having that kind of optionality is really important and having a good safety profile with the goal of alongside with it is also very important and these factors are very important in my decision, making about which drugs are used and not to use in the intensive care unit.

Mink Chawla: The Famous That Requires Much Plus Work for the Nurses, which is also very... As we are all aware, our nurses and doctors have been through a very tough two years, and therapeutic options which work well and make life easier for the staff are in. I can tell you that I just recently attended the Kidney Injuries Key Meeting in San Diego. Most of the nephrology experts in this country, the Small and Focus Group, have confirmed and are very much looking forward to the opportunity to have NIAID here and available. Thank you, Dr. Chawla.

The damage that requires much less work for the nurses, which is also very important.

As we're all aware our nurses and doctors have been through a very tough two years and therapeutic options with work well and make life easier for the staff are in demand.

I can tell you I just recently attended an acute kidney injury in certain key meeting in San Diego.

Most of the nephrology experts in this country, which is a small and focused group.

I have confirmed and are very much looking forward for the opportunity to have not yet you're in available to U S.

Yeah.

Thank you Dr. Charlie I would like to add that we plan on submitting for an EUA for NIAD once a clinical drug blocks of manufactured due to potential advantages over citrate, which as Dr. Charlie mentioned is now being utilized under EUA here in the U S.

Pamela Palmer: I would like to add that we plan on submitting for an EUA for NIAID once the clinical drug locks are manufactured due to potential advantages of overcitrate, which, as Dr. Chawla mentioned, is now being utilized under an EUA here in the U.S. I would also like to briefly discuss the intravenous uses of nifamostat, which we're developing in our pipeline as LTX608. IV nephamestat has been administered in South Korea and Japan for many years as an approved treatment for disseminated intravascular coagulation, or DIC, as well as for acute pancreatitis. Another interesting quality of nifamostat is that it exhibits antiviral properties, including against both COVID-19 and influenza. There are currently ongoing studies in multiple XUS countries on the use of Ivy Nefamistad for the treatment of COVID-19.

I would also like to briefly discuss the intravenous uses of the panelist at which we are developing in our pipeline as L. T X six Oh wait.

I've been a fan of Stat has been administered in South Korea, and Japan for many years as an approved treatment for disseminated intervascular coagulation or D C as well as for acute pancreatitis.

Another interesting quality of new pharma stat is that it exhibits anti viral properties, including against both COVID-19 and influenza.

There are currently ongoing studies in multiple ex U S countries on the use of IV <unk> for the treatment of COVID-19, a very recent positive study outcome on survival benefit in the famous that group over standard of care with reported an E Biomedicine, which is the journal in the Lancet group.

Pamela Palmer: A very recent positive study outcome on survival benefit in the Nefamous Tech Group over-standard care was reported in E. Biomedicine, which is a journal in the land. All of these disease states are exciting and impactful uses of nifamistat in areas where there are currently very few treatment options. We plan to move forward on both the DIC and COVID-19 indications for LTX-608 following our progression of NIAD into the Pivotal Study. I'll now hand the call back over.

All of these disease states are exciting and impactful uses of new families that in areas, where there are currently very few treatment options.

We plan to move forward on both the D. I C and COVID-19 indications for <unk> six O eight following our progression of NIAD into the pivotal study.

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

Vincent Angotti: Thank you, Dr. Palmer and Dr. Challah. Like the studio, NIAID has a place in the hospital setting but also provides benefits for use in other medically supervised settings outside the hospital. We believe there's a favorable pathway to gaining regulatory approval given its breakthrough designation status, its years of safety and efficacy data arising from use outside the U.S., and the large unmet medical need, as you just heard. We've also already been provided with a NIAID-specific ICD-10 procedural code for reimbursement, which should support the commercial launch of clinical adoption after approval. Importantly, we believe we have a strong opportunity for an emergency use authorization.

Thank you Dr Palmer and Dr. Charlie.

Like to Sue the United has a place in the hospital setting, but also provides benefits for use in other medically supervised settings outside the hospital.

We believe there is a favorable pathway to gaining regulatory approval given its breakthrough designation status its years of safety and efficacy data arising from use outside the U S and the large unmet medical need.

As you just heard.

We've also already been provided with the NAIAD specific ICD 10, procedural code reimbursement, which should support the commercial launch clinical adoption after approval.

Importantly, we believe we have a strong opportunity for an emergency use authorization. So once we have the product manufactured we plan to submit an application to the FDA for an EUA for NII targeting early next year.

Vincent Angotti: So once we have the product manufactured, we plan to submit an application to the FDA for an EUA for an IAD early next year. We expect to have a KOL call for investors and analysts in the second quarter of this year, at which time we'll provide additional insight into the clinical and market potential of this new asset, which we believe can have peak sales potential in excess of $200 million for the first indication alone.

We expect to have a KOL call for investors and analysts in the second quarter. This year at which time, we'll provide additional insight into the clinical and market potential of this new asset for which we believe can have peak sales potential in excess of $200 million for the first indication alone.

Vincent Angotti: Now moving back to a few additional Distributor Related Updates. We're excited about the upcoming launch of DeZuvia, or DeZoo-Vay-Oh, in Europe. We expect Agatant to launch DeZoo-Vay-Oh in the third quarter of this year, and they are currently busy with all their pre-launch activities.

Now moving back to a few additional distributor related updates we're excited about the upcoming launch of <unk> with <unk> in Europe , We expect <unk> will launch <unk> in the third quarter. This year and there are currently busy with all the prelaunch activities.

Vincent Angotti: The regulatory transfer has been completed, and the partnership is proceeding very nicely. We're also happy to announce that we're able to make our collaboration with Zimmer Biomet Dental, now known as Zimvee, non-exclusive. This change now allows us to also commercialize Dysuvia in the oral max with facial settings, which aligns very well with our increased focus on procedural suites. As a quick update on our automated packaging line, our contract manufacturer has requested that additional validation and testing of the equipment be performed, which has delayed our expected date for submission to the FDA for final line approval. We're now targeting initial packaging batches to be produced at the end of this year, with commercial batches beginning after regulatory approvals are received, currently expected in 2023.

The regulatory transfers have been completed and the partnership is proceeding very nicely.

We're also happy to announce that we were able to make our collaboration with Zimmer Biomet dental now known as <unk> nonexclusive.

This change now allows us to also commercialize to Sue you and the oral maxillofacial settings, which aligns very well with our increased focus on procedural suites.

As a quick update on our automated packaging line or contract manufacturer has requested additional validation of testing the equipment be performed which has delayed our expected date for submission to the FDA for final line approval. We're now targeting initial packaging batches to be produced at the end of this year with commercial batches beginning after regulatory approvals are received currently expected in.

2023.

Vincent Angotti: And as it relates to the FDA warning letter received in February of 2021 regarding certain promotion materials, we're very happy to announce that the FDA has informed us that we have satisfied all requested activities. We're expecting a closeout letter in the first quarter of 2022. Finally, before handing the call over to Raffi, I'd like to briefly address the security lawsuits that have been filed. To be clear, we believe that these lawsuits are without merit and intend to vigorously defend against them.

And as it relates to the FDA warning letter received in February of 2021 regarding certain promotional materials, we're very happy to announce that the FDA has informed us that we have satisfied all requested activities, we're expecting a closeout letter in the first quarter of 2022.

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

Vincent Angotti: And I have the call over to Raffi to take you through the fourth quarter financial results, Raff. Thanks, man. Our financial position remains strong. $51.6 million in cash at December 31st and $13.3 million in senior debt.

And I'll hand, the call over to Rafi to take you through the fourth quarter financial results Ralph.

Thanks Vince.

Our financial position remains strong.

With $51 $6 million in cash at December 31, and $13 $3 million in senior debt our.

Raffi Asadorian: Our debt level continues to reduce each quarter as we reach maturity in Q2 2023. Our strong unit sales growth in the fourth quarter of 142% was not reflected in our financial results due to the need to record a reserve for potential returns on sales made in 2020 to the Department of Defense's primary wholesaler. Although the Department of Defense continues to place orders for Dissuvia, they are purchasing it from a secondary wholesaler customer to which we also sell.

Our debt level continues to reduce each quarter as we reach maturity in Q2 2023.

Our strong unit sales growth in the fourth quarter of 142% was not reflected in our financial results due to the need to record a reserve for potential returns on sales made in 2020.

To the department of Defense's primary wholesaler.

Although the department of Defense continues to place orders for <unk>. They are purchasing from a secondary wholesaler customer to which we also sell.

Raffi Asadorian: It is unclear why the DoD continues to make only purchases from the secondary wholesaler, but regardless, we have recorded a reserve for the majority of the inventory held by the primary wholesaler. Strong unit sales growth continued in the first two months of the first quarter, principally driven by sales to procedural suite customers.

It is unclear why the Dod continues to make only purchases from the secondary wholesaler, but regardless we have recorded a reserve for the majority of the inventory held by the primary wholesaler.

Strong unit sales growth continued in the first two months of the first quarter, principally driven by sales to procedural suite customers.

Raffi Asadorian: Solid growth throughout 2022 is expected as we continue to make commercial progress in procedural suites, as Vince mentioned earlier. Operating expenses, or combined SG&A and R&D expenses, were $6.9 million in the fourth quarter of 2021 compared to $8.7 million in 2020. Excluding non-cash depreciation and stock-based compensation, fourth-quarter 2021 cash operating expenses were $5.6 million.

Solid growth throughout 2022 is expected as we continue to make commercial progress and procedural suites as Vince mentioned earlier.

Operating expenses or combined SG&A, and R&D and R&D expenses were $6 $9 million in the fourth quarter of 2021 compared to $8 $7 million in 2020.

Excluding noncash depreciation and stock based compensation fourth quarter 2021, cash operating expenses were $5 $6 million.

Raffi Asadorian: The decrease in operating expenses in the fourth quarter of 2021 was mainly driven by reductions in personnel-related costs. Our 2022 year-end goals include the submission of two NDAs for our pre-filled syringe product candidates, pending the outcome of FDA feedback expected in the second quarter. We also expect to advance our nephamistat development with the first priority being the manufacturing of the initial batches of the famistats, which could support an emergency use authorization from the FDA for NIAID early next year. Quarterly combined R&D and SG&A expense is expected to be approximately $9 to $10 million and $8 to $9 million, excluding stock-based compensation and depreciation.

The decrease in operating expenses in the fourth quarter of 2021 was mainly driven by reductions in personnel related costs.

Our 2022 year end goals include the submission of two N D. A's for a pre filled syringe product candidates pending outcome of FDA feedback expected in the second quarter.

We also expect to advance our <unk> development with the first priority being the manufacturing of the initial batches of the famous staff.

Which could support an emergency use authorization from the FDA for NIAD early next year.

Quarterly combined R&D and SG&A expense is expected to be approximately $9 million to $10 million and $8 million to $9 million, excluding stock based compensation and depreciation.

Vincent Angotti: Annual debt service is expected to approximate $10 million as the company continues to pay down amounts outstanding under its senior debt facility that matures in the second quarter of 2023, and your Cow Pack is expected to approximate $2 million, attributed mainly to the final validation of the automated packaging line at Accelerex's contract manufacturer. Now turn the call back to them. Thanks, Raffi. We're excited about the many upcoming potential catalysts and value drivers, including the continued penetration of the SUV into the procedural suites.

Annual debt service is expected to approximate $10 million as the company continues to pay down amounts outstanding under its senior debt facility that matures in the second quarter of 2023.

Annual Capex are expected to approximate $2 million attributed mainly to the final validation of the automated packaging line at accelerates as a contract manufacturer.

Now I'll turn the call back to them, Thanks, Ross where it is.

Vincent Angotti: NDA submissions and potential FDA approvals for the two pre-filled syringe products, the launch of DiZuvio in Europe by our partner Agaton, and the manufacturing of the initial batches of an FAMostat application for an EUA and initiation of the single registration study and the related readout from IAD, a device with FDA breakthrough designation. We're very excited about our future and the transformation we've made over the past year with our new late-stage development assets.

Cited about the many upcoming potential catalysts and value drivers those including the continued penetration of the students the procedural suites NDA submission and potential FDA approvals for the two pre filled syringe products. The launch of <unk> in Europe by our partner <unk> and the manufacturing of the initial batches of <unk> pharma.

That application for an EUA and initiation of a single registration study and the related readout for NIAD device with FDA breakthrough designation.

We're very excited about our future and the transformation we've made over the past year with our new late stage development assets.

Vincent Angotti: And now I'd like to open the line for any questions you may have. Operator? We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keypad.

I'd now like to open the line for any questions you may have operator.

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad if.

If youre using a speakerphone please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.

Operator: And to withdraw your question, please press star then two. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Brandon Folkes, with Cancer Fitzgerald. Please go ahead. Hi, thanks for taking my questions and thank you for the information today. Maybe just the first one on NIAID.

And the first question will come from Brandon Folkes with Cantor Fitzgerald. Please go ahead.

Hi, Thanks for taking my questions and thank you for the information today.

Maybe just a first one on NIAD.

So.

Brandon Folkes: I just want a good clarification on the regulatory approval possible here. I'm not correct in understanding that you're looking to get an EUA, and then... Would it be a 15K approval pathway, you know, and if you don't get the EUA, how do we think about potential additional studies there? Secondly, maybe just- Are you willing to give us some color and the specialties you've seen volume growth in on video at the beginning of this year?

I just wanted to get clarity on the regulatory approval pathway.

Am I correct in understanding that you're looking to get an EUA path.

And then.

Would it be a five 10-K approval pathway.

And if you don't get the EUA, how do we think about potential additional studies there.

Secondly, maybe just.

Are you willing to give us some color on the specialties, you'll see volume growth this year and the beginning of this year.

Brandon Folkes: and then maybe just wrapping those two questions together. With this focus on the Soviet and the procedural suite, I heard about virtual marketing, but does that change your focus on building a hospital-based company and maybe look a bit wider for products in the future? Thank you very much.

And then maybe just wrapping those two questions together.

With this focus of CVA in the procedural suites.

I heard about the sort of virtual marketing, but does that change maybe broaden you'll focus on putting our hospital based company.

Sort of maybe look a.

A bit wider for products in the future. Thank you very much.

Vincent Angotti: Great. Thanks, Brandon. I appreciate it. We'll start on, I think, your first question with NIAID relative to the EUA pathway, and then, in the absence of that, additional studies. And Pam can give you some clarity on that, which has already been informed by the FDA. Yeah, so the plan after making the GMP lots is to move forward with applying for an EUA. At the same time, we'll be moving forward to initiating the phase 3 clinical trial. As you know, EUAs are not in place of actual approval.

Great. Thanks, Brian I appreciate it will start on I think your first question with NIAD relative to kind of the EUA pathway and then in the absence of that the additional studies in Pam can give you some clarity on that which has been already informed by the FDA.

Yeah, So the plan after making the.

But the GMP lots is to move forward applying for any way at the same time, we'll be moving forward to initiating the phase III clinical trial.

E ways are not in place of actual approvals.

Pamela Palmer: It's just that this is a situation where many people have been using extracorporeal circuits for dialysis for obviously a long time in hospitals. Just their need has suddenly increased with the COVID-19 issues. So we will actually be pursuing a PMA even though it's a drug. It's being regulated as a device because it's being injected into a machine, and its primary mechanism of action is in the machine, not the patient's body.

Just said this is situation that many people have been using extracorporeal circuits for dialysis, obviously for a long time and hospitals just their need has suddenly increased with the COVID-19 issues. So we will actually be pursuing a PMA, even though it's a drug is being regulated as a device because it's being injected into a machine.

Pamela Palmer: So we will be applying for that PMA route of regulation, and Pam again, the study designed by the FDA that's been informed, or really by law, that we're adopting moving forward. Maybe you could just quickly comment on the size and the primary endpoints and the fact that it's a single study. Yes, so the study is a single study. It's a 160-patient study, 80 in the placebo group and 80 in the nifamistat group, so very straightforward. The primary endpoints, activated clotting time, secondary endpoints, number of filters used, and different things like that.

<unk> and its primary mechanism of action is in the machine not the patient's body. So we will be applying for that PMA route of.

Regulatory.

And then Pam again, the study design from the FDA. That's been informed originally by law that we're adopting moving forward maybe you could just quickly comment on the size and the.

Primary endpoints and the fact, it's a single study.

Yes. So the this study as a single study. It's 160 patient study 80 in the placebo group and 80 in a famous tech groups are very straightforward.

Primary endpoints activated clotting time.

Secondary endpoints number of filters used different things like that so it's very straightforward should be fairly easy to enroll.

Pamela Palmer: So it's very straightforward, should be fairly easy to enroll, and we're really looking forward to doing that as well as pursuing the CUAI. Brandon, that addresses the first part of your question. Did you have any additional clarification required on that portion?

And we're really looking forward to doing that as well as pursuing this EUA option.

Brandon that that addresses the first part of your question did you have any additional clarifications required on that portion.

Vincent Angotti: Maybe if I could just bring in the K-Wheel here and ask him, what he thinks about that study design going against Cevo? Do you think that he thinks that for adoption, you would have to run a head to head at some stage versus those options he talked about? Great question. Mink?

So yeah. It was great Vince maybe if I can just bringing a K well, yeah and asked him what he thinks about that study design going against placebo do you think does he think for adoption you would have to run a head to head at some stage adversity, there's options he talked about great.

Great question Yeah.

Mink Chawla: Yeah, thank you. So I think that's a very good question. I think that in a normal scenario, I think that you would definitely want to have a large head-to-head study to have endpoints that drive a dog.

Yeah. Thank you. So I think that's a very good question I think that in.

In a normal scenario I think that you would definitely want to have a large head to head study to have endpoints that drive adoption.

Mink Chawla: But I think in this circumstance, we get to leverage the 30 plus years in Japan and the 15 plus years in South Korea where numerous randomized control trials have been conducted and nifamistat works very, very well. In my view, in speaking to my colleagues in South Korea, that represents to me a very interesting natural experiment. So when nifamistat was introduced in South Korea, they had both citrate and nifamistat available. And what you find in South Korea is that no one uses citrate anymore because of the very significant serious toxicities that can occur.

But I think in this circumstance, we get to leverage the 30 plus years in Japan, and the 15 plus years in South Korea, where numerous randomized controlled trials have been conducted and the famous that works very very well I think in my view and speaking to my colleagues.

In South Korea that represents to me a very interesting natural experiment. So when the famous that was introduced in South Korea, They had boats citrate and the famous that available.

And what you find in South Korea is no one uses Detroit anymore because of the very significant serious toxicities that can occur.

Mink Chawla: So as a consequence of that large body of work, I do believe, and I'm speaking with my colleagues, the need for something like this is quite high. I think the other thing is that, in my career, you know, it's an intensivist nursing time. The previous COVID did not have a lot of value, to be honest.

So as a consequence of that large body of work.

Do you believe in and speaking with my colleague the need for something like this is quite high.

The other thing is that in my career.

<unk> is an intensivist nursing time previous to Covid did not have a lot of value to be honest.

Mink Chawla: If someone came into our ICU and said, I have this device or I have this drug, and it's going to save your nurse 10 minutes every hour, which is going to equal a full hour-ish. You know, the charge nurses and the administrators say, well, I'm paying her for the entire shift or I'm paying him for the entire shift. They can do whatever they need to do, and they'll get the job done. But as it's been covered on the cover of the Wall Street Journal, it's been covered all over, you know, many, many media outlets; we have a mass, and anything that we can do to give them a break and decrease their workload is having value, and many other people are putting together options, devices, and drugs that improve that efficiency.

Someone came in to our ICU and said I have this device or I have this drug.

And.

It's going to save your nurse 10 minutes every hour, which is going to equal a full hour a ship.

You know the charge nurses and administrators say well I'm paying her for the entire shift or I'm paying him for the entire ship. They can do whatever they need to do and they'll get the job done.

But it's been covered in the cover of the Wall Street Journal, it's been covered all over many many media outlets, we have a massive nursing shortage.

And anything that we can do to give them a break and decrease their workload is having value and many other people are putting together options devices and drugs that improve that efficiency and so when you walk into an intensive care unit and you get to say to the staff.

Mink Chawla: And so when you walk into an intensive Care Unit and you say to the staff, the doctors, the nurses, we have an option that is just as effective as what you have. It is arguably safer, and it's a lot less work, and you don't have to go into the room five times a shift, doping and dawning, your mask, your gear, you know, and gown and gloves.

The doctors and the nurses, we have an option.

That is just as effective as what you have.

Is arguably safer and it's a lot less work and you don't have to go into the room, five claims and ship Dolphin and dawning your mask gear and.

And down in gloves.

Mink Chawla: This becomes very attractive very quickly, and I think that's why I saw the enthusiasm that I did at the meeting I just attended. And so I do think that some people will want to see head-to-head data, but the nice thing is that since Citrate is available in the ecosystem, they can do it very quickly in their own system. You know, we'll look at our historical data with 5, 10, 15, 20 patients with this rate, and we can look at how we did with NIAD. And so they'll be able to do these things referred to as drug use.

This becomes very attractive very quickly and I think thats why I saw enthusiasm that I did.

At the meeting I, just attended and so I do think that some people will want to see head to head data, but the nice thing is as <unk>.

Detroit is available in the ecosystem being in their own system can do a very quick.

We'll look at our historical data with 510, 15, 20 patients with Detroit and we can look at how we did with not yet and so they'll be able to do these things we referred to as drug use.

Mink Chawla: Okay, I said. DUA, this is very common, and they'll be able to generate their own data, which is always more believable than something you read in the journal, what you do in your own hospital with your own patient segment and with your own technique. So I think that there's a lot of reason to believe that the large body of work that previously exists, the good safety record, the efficiencies for nurses and physicians, and the better safety profile make this something which I would expect to see quite a rapid market for. Does that satisfy your question relative to NIAID? Yeah, that was great.

Assessments.

This is very common and there'll be able to generate their own data, which is always more believable. That's something you can read in the journal what you do with your own hospital with your own patient segment with your own techniques.

So I think that there's a lot of reason to believe that the large body of work that previously exist the large safety record.

Fishing seats for nurses physicians and the better safety profile makes this something which I would expect to see quite rapid market adoption.

Alright, Thanks, Brian does that satisfy your question relative to <unk>.

Yeah, that's great. Thanks.

Vincent Angotti: Thanks, Vincent. Okay, great. We'll branch into your other questions. So, the second aspect of your inquiry was around Vesuvia, and I believe you mentioned, what are the specialties that are driving procedural suite adoption and growth? And I can tell you from our sales team and virtual team, we're concentrating our efforts the majority of time on plastic and cosmetic surgeons, and to a lesser extent, but when we have the time, on ENT and oral maxillofacial. Pam, maybe you can comment on what you're seeing used most often and why in these plastic and cosmetic surgeries.

Okay, Greg we'll branch into your other question. So the second aspect of your inquiries was around the <unk> and I believe you mentioned what are the specialties that are driving the procedural suite adoption and growth and I can tell you from our sales team and virtual team, we're concentrating our efforts the majority of time.

On plastic and cosmetic surgeons.

And to a lesser extent, but when we have the time to E&P and oral maxillofacial Pat maybe you can comment on where you're seeing it used most often and why.

And these plastic and cosmetic surgeries.

Pamela Palmer: Sure, well, it's really amazing the growth of the awake surgery that's being done in these procedural suites. Facelifts, liposuction, pretty extensive surgeries that take hours are actually being done with these awake patients, and having the ability to give them Dysuvia and have them very comfortable along with the local anesthetic that they use is really incredible. And there are also very painful, not as invasive procedures that are occurring. Radiofrequency microneedling, you know, some of these surface procedures for cosmetic reasons that are quite painful, even though they're not that invasive.

Sure well there, it's really amazing the growth of the awake surgery, that's being done in these procedural suites Facelifts liposuction.

Pretty extensive surgeries that take hours are actually being done with these awake patient.

And having the ability to give them to Sylvia and have been very comfortable along with a local anesthetic that they use.

Is is really incredible and there is also very painful not as invasive procedures that are occurring radiofrequency micro needling.

You know some of these.

Surface procedures for.

Cosmetic reasons that are just quite painful, even though theyre not that invasive physically.

Pamela Palmer: So really being able to take all the moderate to severe pain that they're dealing with in the procedural suite and to be able to use Dysuvia, it's really changing their practice, and we're getting such great feedback. And that, in fact, doctor-to-doctor communication, which Vince referred to earlier, is really almost our best sales. They really encourage each other to try to sue me once they've had a

So really being able to take all of the moderate to severe pain that they're dealing with in the procedural suite and to be able to use to Sylvia it's really changing their practice and we're getting such great feedback and that in fact doctor to Doctor communication, which Vince referred to earlier is really almost our best sales tool they really encourage each other.

Tried to Sylvia once they've had good success and for Pam Emt, where reimbursement has really advanced for the office based procedures. Maybe an example of a few of those procedures, where you talk with physicians that have already used to sue you. Yeah. It's interesting while the plastics field has slowly gone away from the ambulatory surgery.

Pamela Palmer: And for Pam, E&T where reimbursement has really advanced for office-based procedures. Here's an example of a few of those procedures where you've talked with physicians that have already used the SUVIA. Yeah, it's interesting. While the plastic... Field has slowly gone away from the Military Surgery Center into procedural suites. It seems like, with a blink of an eye, the E&T specialty has almost jumped there overnight. The reimbursement to the physician is dramatically improved when they do the procedure in their office procedural suite instead of at an ASA. It's cost savings for the third-party payer.

Center into inter procedural suites, it seems like with a blink of an eye that Ian key specialty has almost jumped there overnight.

The reimbursement to the physician is dramatically improved when they do the procedure in their office procedural suite instead of in an ASC is cost savings. The third party payer it's cost savings if the patient is a self pay.

Pamela Palmer: It's cost savings if the patient is self-pay. There are just so many more efficiencies in doing the procedural suite. They use a lot of local anesthetic. They're very good with those techniques, but there's just some areas they can't fully numb up for their ENT procedures.

There's just so many more efficiencies for doing a procedural suite. They use a lot of local anesthetic are very good with it those techniques, but theres just some areas. They can't fully numb up for their E&P procedures. We're talking Septoplasty is very invasive balloon sinus.

Pamela Palmer: We're talking septoplasties, some very invasive balloon sinus dilations. It's amazing what they're doing in the office now. And again, these procedures can last about an hour and a half, and they're quite painful.

Dilation.

It's amazing what they're doing in the office now and again these procedures can last about an hour and a half and theyre quite painful so their use of the soon to be again, what we are hearing is really changing their practice and what theyre able to comfortably do in their office.

Vincent Angotti: So their use of the SUVI, again, what we are hearing is really changing their practice and what they're able to comfortably do in their office. I think we need a little more data around that, Brandon. When we look at just the opportunity and where we're spending our time between plastics, oral maxillofacial, and ENT to a lesser extent, we're looking at around 11 and 12 million procedures on an annual basis, so a very large market. That does not include areas that we are not currently going into, for instance, gastroenterology or OB-GYN that also have severe pain issues with the procedures they're conducting in their office-based procedural suite.

A little more data around that brand and when we look at just the opportunity and where we're spending our time between plastics oral maxillofacial and <unk> to a lesser extent, we're looking at around 11, and a half million procedures on an annual basis. So a very large market that does not include.

Payers that we are not currently going into for instance, gastroenterology. Our obgyn that also have moderate to severe pain issues with the procedures for conducting in their office space procedural suites. So.

It's an extraordinarily large market. We're just building our beachhead early with plastics, and then trending little by little into the E&P and oral maxillofacial on our own.

Vincent Angotti: So it's an extraordinarily large market. We're just building our beachhead early with plastics and then trending little by little into the ENT and oral maxillofacial markets on our own. I think the third component of your question was around virtual markets and whether this now allows us to broaden our reach beyond just the hospital for other potential assets, etc., and my answer would be yes. Look, hospitals will, in the long term, be an important market for us, but we all know that the sales cycle in hospitals and the adoption, because of the multi-decision makers involved in the protocols, are difficult to move swiftly.

I think the third component of your question was around this virtual markets.

And does this now allow us to broaden our reach beyond just the hospital for other potential assets et cetera, and my answer would be yes.

The hospitals long term will be an important market for us, but we all know that the sales cycle in hospitals and the adoption because of the multi decision makers involved in the protocols are difficult to move swiftly.

Vincent Angotti: That's where DeSuvia has really given us an opportunity to pivot with ASCs, but more particularly these procedural suites with the single decision makers. But if you look at our portfolio today, DeSuvia allows you to be out of the hospital, but you could still long-term be in the hospital. Pre-filled syringes allow you to be out of the hospital for the ambulatory surgical centers but will still have an opportunity in hospitals, more from contracting than really being a sales team.

That's where <unk> has really given us an opportunity to pivot with ASC, but more particularly as procedural suites with a single decision makers, but if you look at our portfolio today.

<unk> allows you to be out of the hospital, but could still long term being in the hospital Prefilled syringes allow you to be out of the hospital for the ambulatory surgical centers, but we will still have an opportunity in hospitals more from contracting there really sales team and then not yet as well. So you can kind of see the criteria we've been developing as boundaries as we're looking to continue to attain.

Vincent Angotti: And then NIAID as well, so you can kind of see the criteria we've been developing as boundaries as we're looking to continue to attain assets. NIAID, certainly, in critical care for hospitals but outside the hospitals for the dialysis centers.

Assets NIAD certainly in critical care for hospitals, but outside the hospitals for the dialysis centers. So it has now given us flexibility.

Vincent Angotti: So it's now given us flexibility. We want to remain in medically supervised settings versus retail, but it certainly has broadened our application and opportunities moving forward. Brandon, did that answer all the components of your question? More than well.

We want to remain in medically supervised settings versus retail, but it certainly has brought in our applications and opportunities moving forward.

Brandon did that answer all of the components of your question.

Yes.

More than well.

Brandon Folkes: Thank you to all three of you. I really appreciate that detail. Thank you. Thanks, Brian. The next question will come from Ed Arce with H.C. Wainwright & Company. Please go ahead.

You have here and I appreciate that detail. Thank you.

Thanks, Brian .

The next question will come from Ed Arce with H C Wain Wainwright and company. Please go ahead.

Ed Arce: Great. Thanks for taking my questions. So, firstly, I just wanted to ask a question about the fourth quarter financials and just to better understand the moving parts here. So you reported 8,960 units. Raffi Asadorian, Chen Casey, Johness Gallagher, Melanie Lu fazem, Prof. Atkinson Priebu, Steven Manson, Samantha Hiley Ashley King, Kindly, Um, and so if I, um, look at. You know, the The sales from the third quarter of 160, and apply that multiple, you get to... 386 for the fourth quarter. So, you know, even if I take out.

Great. Thanks for taking my questions.

So firstly I just wanted to.

Ask a question about the fourth quarter financials, and just to better understand.

Moving parts here.

So you reported.

89, <unk> 88.

<unk> 8960 units in.

In the fourth quarter up substantially from the 3700 10.

Third quarter for the two point Forex multiple.

And so.

If I.

Look at.

You know the.

The sales from.

Third quarter of 160 and apply that multiple.

You know you get to a 300.

<unk> 86 for the fourth quarter, so even if I take out.

Raffi Asadorian: The 300,000 reserve, which I understand was a meaningful decrease, is still significantly short just based on the unit. So, just trying to understand if there was some sort of, what would appear to be some loss of efficiency here in that regard. And then I have a follow-up. Yeah, sure, Ed. But I don't think you can say loss of efficiency.

The 300000 reserve, which I understand.

<unk> was a meaningful decrease.

It's still significantly short just based off of the unit growth. So just trying to understand.

If there was some sort of what would appear to be some loss of efficiency here.

In that regard and then I have a follow up.

Yes sure Ed.

I don't I don't think you can say loss of efficiencies keep the keep in mind, there's a couple of things and I'm not even sure what that means but keep.

Raffi Asadorian: Just keep in mind there are a couple of things. And I'm not even sure what that means. But keep in mind the fluctuating purchases or the more volatile or infrequent purchases of DoD. It's not like a procedural suite or ASC where they're purchasing on a regular basis.

Keep in mind, the fluctuating purchases or the <unk>.

Or volatile or infrequent purchases of D. O D is that like a procedural suite or.

ASC, where they're purchasing on regular on a regular basis, it's much more volatile so theres an impact there between the quarters. So that certainly had an impact but the volume growth and that's why we decided to disclose volume growth is because it is a measure that is free of.

Raffi Asadorian: It's much more volatile, so there's an impact there between the quarters. So that certainly had an impact.

Raffi Asadorian: But the volume growth, and that's why we decided to disclose volume growth is because it is a measure that's free of some of the differences between all the gross to nets. It's a true measure of how we are doing in terms of sales. So I'm not sure if I understood your question on. Visions of the Nessas Fairly.

Some of the differences between these all the gross to nets. It's a true measure of how are we doing in terms of the sales so I'm.

I'm not sure if I understood your question on <unk>.

Efficiency unnecessarily.

Ed Arce: You know, if you just take out the two points. If you just take out the noise, that's what we tried to do by just showing the actual unit, if that's clear. Yeah, I mean, I'm not exactly sure I understand. There's a disconnect there in terms of the growth in units versus the growth in sales. And I'm not sure I understand what the differential is. What's driving that difference?

If you just take out the anyways yeah.

If you just take out the noise and that's what we tried to do by just showing the actual actual units.

If that's clear.

Yeah I mean.

I'm not exactly sure I understand.

The.

There's a disconnect there in terms of the growth in units versus the growth in sales and I'm not sure I understand.

What the differential is what.

What's driving that differential.

Ed Arce: But we can discuss that further. Yeah, there's the one other fact, there are customer mix changes at different prices, right, between, say, a procedural suite customer, which has very limited discounts to our gross sales price compared to the DoD, for example, that has a temporary price reduction and has a much higher discount associated with it. So there are customer mix issues in there that are very difficult to just do a straight comparison.

But we can we can discuss it further.

The one other fact that there's customer mix changes at different prices right between.

Let's say a procedural suite customer, which is which is very limited discounts.

Two our gross sales price compared to the.

The D O D. For example that is has a.

Temporary price reduction that has a much higher discount associated with it so there's customer mix issues in there.

That is very difficult to just do a straight comparison, but the units in terms of and that's why we wanted to disclose that to make try to try to make it clear I guess, we didn't but try to make it clear in terms of how well we're doing with the actual.

Ed Arce: But the units, in terms of, and that's why we wanted to disclose that, to try to make it clear, I guess we didn't, but try to make it clear in terms of how well we're doing with the actual growth in DeSuvia compared to the last quarter. But maybe it's not clear.

Growth in <unk> compared to the last quarter.

But maybe maybe it's not clear.

Alright.

Raffi Asadorian: Right. Okay, the other question was just... sort of related to this, I guess. I appreciate the guidance that's been given here in terms of CAPAX, and the operating expenses as well.

Okay.

The other question was just.

Sort of related to this I guess.

Right.

No I appreciate.

<unk> system given here in terms of Capex.

And the operating expenses as well.

Ed Arce: It would be helpful, you know, clearly you did not provide guidance in terms of net sales for DeSuvia, but it would still be helpful if we could understand your thoughts around growth, how we should think about it, and in particular, the cadence. What we could expect on a quarterly basis, but overall in the year, you know, I, I think it's fair to say it's been difficult. We've modeled the growth rates here, they've been up and down, and especially in light of the fact that we've now entered the fourth year of this commercial launch. Just trying to understand better what your thoughts are on the opportunity here in 2020. We're not going to give you guidance.

It would be helpful. You know clearly you did not provide guidance.

In terms of net sales for Sylvia.

But it would still be helpful. If we could understand your thoughts around.

The growth.

How we should think about it.

And in particular the cadence.

We could expect on a quarterly basis, but overall in the year.

Aye.

I think it's fair to say it's been difficult.

Two two.

Model the growth rates here, it's been up and down and especially in light of the fact that we've now entered the fourth year of this commercial launch.

I'm just trying to understand better what your thoughts are on on the opportunity here in 2022.

Yeah.

Yeah.

We're not going to give guidance I think we've we've experienced so much fluctuation since we launched the product in.

Raffi Asadorian: I think we've experienced so much fluctuation since we launched the product, so we don't want to put a number out there and fail to meet that. Historically, we've given guidance on the number of formulary approvals, which we've always exceeded.

And.

We don't want to put a number out there and failed to meet that historically, we've given guidance on the number of formulary approvals, which we've always exceeded but the sales havent always come in and now we're starting to see the sales growth in terms of unit growth.

Raffi Asadorian: But the sales haven't always come in. Now we're starting to see sales growth in terms of unit growth. And we're not yet comfortable to say, hey, let's just translate that to revenues for the year. And you're effectively asking us to give guidance, and I don't think we're comfortable to give that at this point in time.

And we don't yet we're not yet comfortable to say hey, here's that's just translate that to revenues for the year and youre effectively ask us to give guidance and I don't think we're comfortable to give that at this point in time.

Vincent Angotti: But if we continue to see more frequent and unusual growth in purchasing that we're starting to see, that we believe we're starting to see, we might do that in the future, but we're not prepared yet, Ed, to give that. Yeah, and I'll remind you, Ed, while you say it's going on four years, within the first year of launch, COVID hit, and then that kind of blew everything up from a guidance standpoint. And it just continued to fluctuate from that point on.

But if we continue to see them.

More frequent and unusual growth in saying that we're starting to see that we believe we're starting to see.

We might do that in the future, but we're not prepared yet.

To give that and I'll remind you as well while you say it's gone on for years within the first year of launch Covid hit and then that kind of blew everything up from a guidance standpoint.

And it's just continued flux fluctuate from that point on so that was early 2020, we really launched it in the.

Vincent Angotti: So that was early 2020. We really launched it in the..., what, the second quarter of 19. Hopefully, COVID remains at bay, and the procedural suites give us a steady look at how we can continue to grow the operation, and we'll provide guidance in the future, but today we'd hesitate to do that. And I'd add one thing, Ed, as you know, And as we mentioned in the prepared remarks, the Department of Defense, we've been waiting since 2020, since the Milestone C approval, that we believe the purchases for the sets, kits, and outfits were going to begin pretty close to straight after that milestone season. That has not yet happened. And we don't have transparency in the Department of Defense, as you can imagine.

What the second quarter and 19 so.

Hopefully COVID-19 remains at Bay, the procedural suites give us a steady look at how we can continue to grow the operation and we will provide guidance in the future, but today, we'd hesitate to do that and I'd add one thing as you know.

And as we mentioned in the prepared remarks, the department of defense.

We've been waiting since 2020 since the milestone C approval.

That we believe that the purchases for the sets kits and outfits were going to begin pretty close to straight after that milestone C approval.

That has not yet happened.

And we don't have transparency into the department of defense as you can imagine and that's a big one of our biggest cost single biggest customers.

Raffi Asadorian: And that's a big, one of our biggest customs, single biggest customs. And the biggest near-term opportunity that is very difficult to estimate and forecast. So that's our hesitancy on that. So but we are certainly going to take that out of it.

And the biggest near term.

Opportunity that is very difficult to.

Estimate and forecast so that's that's our hesitancy.

On that so, but we are certainly.

Take that out of it the commercial side of the business, we are seeing some solid growth.

Raffi Asadorian: On the commercial side of the business, we are seeing some solid growth in our unit purchases here, and we certainly expect that growth to continue. Great. Thanks so much for the added detail. I really appreciate it. Thanks, Chad. This concludes our question and answer session. I would like to turn the conference back over to Mr. Vincent Angotti for any closing remarks. Please go ahead. Thank you, Operator. We're certainly excited about our future and, again, this transformation we've made over the past year with our new late-stage development assets, and we look forward to providing additional updates here in the near future related to both Dystuvia as well as our development-slash-regulatory progress with the prefilled syringes and NIAID over the course of this next year.

In in our unit purchases here and we certainly expect that growth to continue.

Great. Thanks, so much for the added detail really appreciate it.

Thanks, Ed.

This concludes our question and answer session I would like to turn the conference back over to Mr. Vince and guarding for any closing remarks. Please go ahead.

Thank you operator, we're certainly excited about our future and again this transformation we made over the past year with a new late stage development assets and we look forward to providing additional updates here in the near future related to both the <unk> as well as our development slash regulatory progress with the pre filled syringes and I add over the course of this next.

Year, Thank you for joining us and please stay safe.

Raffi Asadorian: Thank you for joining us, and please stay safe. The conference has now concluded. Thank you for attending today's presentation. You may now, James Molloy, James Molloy, David Boldt, Laurence Busse, Talphera, MUCH LOVE!! Thanks for watching! [music]

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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Yes.

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