Q4 2021 Nabriva Therapeutics PLC Earnings Call
Okay.
Good day and welcome to the debris with Therapeutics fourth quarter 2021 financial results and business update call. At this time all participants are in a listen only mode.
After the Speakers' presentation there'll be a question answer session.
To ask a question during the session you will need to press Star then one on just had some telephone if anyone should require assistance during the call. Please press Star then zero suites and operator.
As a reminder, this call maybe recorded.
I would like to turn the call over to Dan Dolan, the previous Chief Financial Officer, you may begin.
Thank you and good afternoon, everyone welcome to <unk> conference call and webcast, where we will be discussing the fourth quarter 2021 earnings and providing a business update.
The slides for today's presentation are posted on the company's website www dot and Abreva dot com and can be found under the investors tab in the events and presentations section. We recommend that you refer to the presentation as we will be using those slides for today's discussion.
Before we begin on slide two I would like to remind everyone that this conference call and webcast will contain forward looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ.
Please note that these forward looking statements reflect our opinions only as of the date of this call. We will undertake no obligation to revise or publicly release the results of any revisions to these forward looking statements in light of new information or future events factor.
Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward looking statements are discussed in greater detail in our most recent filings on Form 10-K , and our other periodic reports on forms 10-Q, and 8-K filed with the SEC.
Turning to slide three let's briefly run through this afternoons agenda, Ted Schroeder and Abreva CEO will start with a business update and present, an overview of the commercial highlights from the quarter Dr.
Dr. Steve Jones, our President and Chief operating Officer will provide an overview of our regulatory strategy related to <unk> and then I will provide a financial review before Ted comes back with some final commentary and leads our Q&A session.
I will now turn the call over to breathe as Chief Executive Officer, Ted Schroeder.
Thank you Dan and thanks to everyone joining our call this afternoon.
Let's start on slide five we are pleased with the progress we made in the fourth quarter and how we exited the year.
Last year the team continued to lay the groundwork on key operational drivers focused on creating sustainable long term value.
Let me start with the launch of our own N D. C for some extra <unk> in April 2021.
As you recall this allowed us to recognize 100% net product sales force of extra.
Which has provided a positive impact to our P&L, we continue to see ongoing momentum for some external and are happy to report another quarter of subscription of sequential prescription growth.
Next we transition to development and commercialization rights of a fabulous in greater China, just Sumitomo Pharmaceuticals, Sumitomo opted to pursue a fabulous to complement their existing anti infective product portfolio in China.
Sumitomo is already a dominant player in the anti infective space in the greater China region, putting them in a solid position to launch a fabulous once approved.
We announced in November that the NDA for La Fabulous in greater China has been accepted by the regulatory authorities and we look forward to providing updates when available.
As a reminder, we are entitled to low double digit royalties on net sales as well as payments of up to $86 million upon the achievement of certain sales and regulatory milestones.
First milestone of which is due upon approval in the region.
As previously mentioned, we would expect this approval to be within 18 to 24 months from when the regulatory authorities accepted the new drug application in November 2021 .
Moving to our second commercial product set and letter we continued to make progress in making the product more accessible and convenient for patients in the U S. In November of last year, we launched the 10 count oral pack or ex Tac, which allows for improved patient access and the opportunity.
And just further broaden availability and retail channels.
Next we partnered with Disney and <unk> Pharmacy network to expand visibility of the IV formulation of the Atlanta in hospitals.
This agreement affords in letter the support of the Museum network through their hospital systems by increasing awareness and sent a letter as an alternative antibiotic treatment option for community acquired pneumonia.
We believe this could be a good opportunity present letter as it transition of care alternative given its IV and oral formulations.
We continue to explore additional uses something later and have advanced the cystic fibrosis program, we are making good progress with the CF trial and anticipate the first patient dosed within the next month.
Phase one safety and PK data are expected in 2023.
Our optimism for this program is based on the potent anti staphylococcal activity and send letter against strains of staph aureus isolate it from CF patients.
In October we published data in a peer reviewed journal plus one demonstrating left ambulant has anti inflammatory properties in in vivo and in vitro models. The anti inflammatory aspects of a fabulous has potential wide ranging applications to very soon.
Sections, including cap and C F.
The combination of the potent anti microbial and potent anti inflammatory properties of our Fabulous, it's very encouraging for the cystic fibrosis patient population in particular.
Lastly, we continued to strengthen our financial position with negotiations on our contracts with Oh beyond our third party manufacturer for Zen letter and our debt agreement with Hercules. These amended agreements along with the strong performance from some extra <unk> extended our cash runway.
Well into the fourth quarter of 2022 .
Moving to slide seven we are excited with the accomplishments to date, but more importantly, with what we see as the key value drivers that lie ahead for the company.
We believe we have multiple significant catalysts over the near term that can benefit patients and enhance shareholder value as we maximize each of our core franchises.
With roughly $48 million of cash on hand as of December 31, 2021, we have now extended our cash runway well into the fourth quarter up 2022.
Strategy is based on the strong set of extra foundation, which continues to show solid growth in the U S.
This progress gives us confidence to reaffirm our guidance that sort of extra sales will reach historical peak sales levels by mid 2022 .
Fully funding our commercial efforts and a portion of our G&A costs, while helping to further reduce our overall cash burn.
As far as then later, we are continually seeking ways to optimize the access for patients and health care practitioners as.
As we have said before the cat market is large with approximately 2 million potential adult patients in the outpatient setting.
We recently held a positive interaction with an advisory board of Pulmonologists, who understand and see the value in a product like than letter.
The advisory Board provided significant insights as we continue to evaluate and assess the value proposition present letter in the antibiotic market.
It's important to remember that we have an extensive patent runway out until 'twenty 33, giving us time to raise awareness and create value within letter for patients and for health care practitioners.
Additional opportunities present letter include potential use in cystic fibrosis, which we estimate it could potentially generate $100 million of incremental sales.
The phase one trial is a small investment to determine if the non clinical data translate clinically and if so we believe this could be a major catalyst for the company.
Lastly, within letter we continue to explore partnership opportunities outside the United States. This is another resorts, which has the potential to provide the company with additional non dilutive funding.
We have existing partnerships in Canada, and China and are actively negotiating in other regions, including Europe .
Moving on we remain committed to bring can keep up to the market.
We believe there is still a large unmet need in the United States for treating patients with infections caused by multi drug resistant or N D. R organisms.
An estimated 3 million people in the United States are treated for suspected or confirmed M. D. R.
Turning to slide eight so extra posted another quarter of sequential growth in the second straight quarter, where we saw more than one thousands of backstroke T. Our axes.
In addition to executing commercially with our experienced sales team.
We are demonstrating the ability to grow CIT backstroke back towards historical peak sales.
With our commercial infrastructure now well established the organization has shown the capability to drive patient access and utilization of course stablish brands likes of extra.
Shifting to them later on slide nine we continued to see a lot of potential for the product with its novel mechanism and broad coverage.
We held an advisory board with Pulmonologists earlier, this year, which reinforce then let us positive characteristics and differentiated positioning.
One of the main takeaways was the ongoing need for cap treatment options.
The availability of IV and oral formulations allows for the efficient transition of care from hospital to community.
More importantly, the availability of an oral option may allow for treatment in the community to help avoid hospitalizations.
A short five day course of therapy is another positive attribute feeds.
See back from the Advisory Board also supports interest in the potent anti inflammatory properties since Atlanta.
We continue to learn more about the letter from ongoing interactions with community base H C. P. J.
Gaining insights from providers about how they view the drug and its utility as a first line empiric agent.
This is especially important as we plan a framework to explore expanding usage for some letter in areas such as cystic fibrosis.
Switching to can people on slide 10.
Optimism for the prospects of can Tipo continues to be bolstered by the reality that the science silent pandemic of antimicrobial resistance is becoming more prevalent and negative patient outcomes continue to be more common base.
Based on a recent publication and Lance it it was estimated that a staggering 1.27 million deaths were attributed to <unk> in 2019 globally.
Put that into perspective.
That's attributed to attributable to a M. R. Now outnumber the annual deaths from.
HIV breast cancer, where malaria globally.
Importantly.
The six leading pathogens for deaths associated with resistance or E. Coli, followed by Staph aureus, Klebsiella pneumoniae Streptococcus pneumoniae as.
They need a backup armani and Pseudomonas aeruginosa.
And these pathogens accounted for just under 1 million deaths attributable to a M. R.
As you are most likely aware.
People has a novel mechanism of action that has been shown to be highly active in vitro against several of these commonly resistant pathogens.
Can people has been demonstrated to be well tolerated and effective against E coli and klebsiella pneumoniae in our pivotal trial for complicated UTI and pyelonephritis.
In addition, IV fossil mice. It is approved for multiple indications and used extensively outside the United States for many years now.
As a result, many U S physicians are already aware of the drug's potential benefits and we believe there is a unique opportunity for <unk> as a potential treatment option for patients with suspected or confirmed multi drug resistant infections in the United States.
So the next part of the presentation I'd like to turn it over to Doctor steeped alone, our President and Chief operating officer for a brief update on the status of the can people N D a steep.
Yeah.
Thanks Ted.
You may recall, the FDA communicated the need to conduct on site inspections at our foreign manufacturing facilities that are located in Italy, and Spain before the agency could potentially grant approval for Tipo.
Based on external disclosures by the FDA approximately 50, new drug applications were pending review as of the end of 2021 due to the agencies inability to travel abroad secondary to the Covid pandemic.
Most recently the agency has communicated that it does plan to resume foreign inspections, but thus far has not signaled how pending applications will be prioritized.
As a result, and given the uncertainties of the timing of on site inspections at our manufacturing partners.
Areva requested an extension of the deadline to resubmit the Tipo NDA.
Which the FDA has granted.
This extension of the deadline for Resubmission of the NDA provides the breathe of flexibility could submit any time up to and through June of 2023.
We believe the Resubmission extension enables us to avoid the scenario, where the breathe of resubmitted to compete bow NDA, but FDA is unable to complete the required inspections within the six month due for review timeframe.
Which would most likely prompt a complete response letter.
We continue to keep the lines of direct communication with the FDA opening.
And we are closely monitoring multiple products manufactured by our CMO partners that have near term action dates, which may provide further insight into the fda's approach to inspecting these facilities.
As the observations that the agency made where general GMP observations that apply to all products manufactured at these sites.
It's also noteworthy that the NDA Resubmission extension has no impact on People's market exclusivity as the eight year market exclusivity does not begin until marketing approval is granted.
Okay.
This continues to be a dynamic and fluid situation.
And I can't stress enough that we're in.
Working diligently with our manufacturing partners and the agency to obtain agreement on timing of the required on site inspections at our partners' facilities in Italy and Spain.
And we are poised and ready.
To resubmit the <unk> NDA once we have assuredness that the onsite inspections can be completed during the NDA review site.
We remain committed to commercializing <unk> in the U S and look forward to providing you an update on a future call.
I'll now turn the presentation over to Dan <unk>, Our Chief Financial Officer, who will provide the financial review.
Dan.
Thanks, Steve as we turn to slide 14, I'd like to touch on some key highlights for the fourth quarter and full year 2021.
Total revenues of $9 $3 million in the fourth quarter consisted of net product sales of eight and a half million dollars, representing 8% sequential growth compared to third quarter of 2021.
We ended the full year 2021, with approximately $29 million in total revenue up $24 million compared to the prior year driven by sort of extra net product sales.
During the fourth quarter, we saw continued improvements in our operating leverage and slower cash burn driven by sort of extra performance.
We also realized the benefit of renegotiating, our third party manufacturing contract with whole beyond present letter, which provided near term cash flow flexibility.
This allowed for investment in value, creating opportunities with a focus on driving top line growth.
In 2021, we also strengthened the balance sheet by renegotiating, our debt agreement with Hercules further extending our interest only payment period.
Additionally, we entered into an equity line of credit agreement with Lincoln Park Capital. This partnership provides additional optionality for the company.
We exited the quarter with cash and cash equivalents of approximately $48 million, providing us a cash runway well into the fourth quarter of 2022.
Moving on to Slide 15, we look at our quarterly operating burn and as you can see our operating cash burn has steadily declined each quarter in 2021, driven by strong some extra performance and the near term benefit of our renegotiated agreements with Oviatt and Hercules.
While the trend in 2020 , one is reflective of the <unk> in D. C launch and improved operational execution within the business. We do anticipate the typical one time payments in the first quarter of 2022, consistent with prior years, including annual insurance prepayments and other annual subscription renewals.
Additionally, we will continue to purchase of extra supply from Merck as needed, which will fluctuate from quarter to quarter.
Moving to slide 16. This reflects a quarterly view of our revenue and expenses for 2021.
The main focus as we exit 2021 is the fact that net product sales of $8 $5 million in the fourth quarter continued a trend of growth since the launch of our <unk> in D. C. In the second quarter of 2021 as Ted mentioned, some extra remains on track to achieve our guidance of historical annual run rate gross sales highs by the middle of.
This year <unk>.
So of extra continues to provide a solid foundation for the company to drive operating leverage in the near term the performance of some extra more than fully funds, our commercial investments slowing our overall cash burn and further enables investments to raise awareness isn't letter in their near term for cap and invest in medium to long term lifecycle management opportunities.
Such as the investment in our phase one trial for cystic fibrosis.
2021 was in line with our expectations around how the P&L would evolve following the launch of our own in D. C for some extra <unk> in April of 2021 .
We have demonstrated sequential revenue growth quarter over quarter and continued operating leverage improvements with an infrastructure that will support stable operating spend heading into 2022.
Turning to slide 17 in summary, we saw a positive trend on the P&L and a corresponding positive trend on cash flows as we exited 2021.
The launch of our Suboxone and D. C. In April resulted in an immediate positive impact on our P&L and cash flows.
Looking specifically at the fourth quarter of 2021, we saw an improvement in our operating cash burn of over 50% to just $6 1 million of cash burn versus $13 4 million of cash burn in Q4 of 2020.
Given these positive trends on the P&L and cash flow front combined with our cash and cash equivalents on hand at the end of 2021, and a very manageable amount of debt, we are well positioned as we head into 2022.
This will allow us to continue to invest to gross of extra and unlock value in the letter.
I will now turn the presentation back over to Ted for the next part of the call Ted will make some closing remarks, and then we'll head into a Q&A session Ted.
Thanks, Dan in summary, we are excited by the team's efforts in 2021 and the strong momentum heading into 'twenty two.
We believe the company is well positioned for growth and that our current results coupled with our upcoming catalysts have the ability to create incremental value to shareholders.
We already have two commercial drugs that are being marketed with the revenue fully subsidized in the cost of the commercial sales team.
The CF trial affords us an opportunity to add incremental cash flow with little to no additional investment in the commercial infrastructure. That's already in place. We continue to negotiate partnerships for us in letter, which will provide the company with multiple revenue streams from their respective countries and reach.
<unk>.
And lastly, we are committed to compete though and look forward to bringing the product to the market and adding this as a third product in our portfolio.
On top of Baldness, we are well positioned to add on additional assets that would leverage our existing commercial infrastructure.
I'd now like to turn the call back over to the operator, so that we can open the line for your questions.
As a reminder to ask a question. Please press Star then one.
If your question has been answered and you'd like to remove yourself from the queue press the pound key.
Our first question comes from Carl Byrnes with Northland Capital. Your line is open.
Great. Thanks for the questions and congratulations on your progress.
I have two questions. The next Norton and I'll get back in.
And then I'll get back in the queue.
So looking at gross profit margin or Cogs either way.
It looks like there was a bit of a jump.
The fourth quarter in the third quarter, if I'm calculating this correctly I'm wondering if there was anything.
That was an anomaly in that.
And what you're expecting patients are going forward on gross profit.
Margins.
Dan you want to take that question, yes, sure Karl Thanks for the question. Yeah. So this is specific to then letter it was more of an anomaly. We had some one time true ups in the fourth quarter related to minimum purchase commitments on the IV side of the business. So it did cause.
A little bit of a.
A one time charge in the fourth quarter related to the cost of goods impacting margins.
And then just so similar to what you saw in the third quarter, but maybe a little bit larger in terms of scales up would that be correct.
I'm sorry, so the margins from the third quarter going forward is that your question.
No I think in the third quarter, there was a third adjustment similar type of adjustment.
Because of the amount of zumba.
Yeah.
<unk>.
Sorry, yeah in the third quarter, we took the returns adjustment we had we had a true up for the returns adjustment because some of the tablet product was expiring. So we switched out the bottles for the new blister packs. So that was more of a net sales impact on our cost of goods.
So then on going forward basis, what you would expect normalized G. P M to look like.
Yeah, we've given guidance on some extra in kind of a mid 50% range and then letter.
Hard to get our arms around but we expected that to have a higher margin so depending on the mix.
Somewhere between the mid fifties and call it mid Eighty's.
Yeah.
Got it. Thanks, that's very helpful. And then it looks like your R&D expense was trending down in the fourth quarter do.
Do you expect that to recur going forward gives.
Given that you've got the CSA is one trial.
Potentially other initiatives.
In Q.
Oh.
Yeah, I think some of that reduction was in non clinical activities and some some other external consulting so I think going forward the trial enrolls it might wax and wane, a little bit, but nothing super substantial it'll be relatively stable with some phasing issues, probably phasing timing spend.
Sounds great I'll get back in the queue.
Again to ask a question. Please press Star then one.
Our next question comes from Ed Arce with H C. Wainwright Your line is open.
Hi, Good afternoon, everyone. This is Thomas Yip, asking a couple of questions for us.
Our first.
Can you go over your expectations for the back through 2020 to be to go to reach historical peak sales trend by midyear.
Sure.
Thomas.
<unk>.
So some extra it's been a great addition to the to the portfolio and.
As you recall when we brought the product over from Merck.
<unk> sales have been declining they had stopped promoting at some time in advance and of.
Doing the transaction with us and.
So during last year, we successfully reversed the decline and have it back as a growth product. So we've set our sights on kind of the first step of that.
<unk> growth target is to get back to where Merck was and then from there we do expect that there's upside potential for the product.
It's it's nicely positioned.
And it has the advantage of a once a day therapy, that's only gets them for six days, which is both convenient for patients and.
You know it really helps with compliance so we expect that we'll see growth beyond the return too.
So peak sales.
And with.
With continued promotion that the products highly promotional sensitive it does have some seasonality associated with it you might expect that.
There are more skin and skin structure infections in the warmer months than in the in the colder months.
But it's.
It's a we think is going to be a solid performer for the for the right group of patients. So we're we're looking forward to.
Seeing growth from some extra over the next several years.
Got it that makes sense.
Perhaps a more along that line.
Can you discuss it.
The adjustments or updates on your promotional strategy for specs show and also forces a lot of the.
Especially as Covid restrictions.
Continue to be lifted in the United States.
Yeah, Let's say Oh those are good questions I will I will tell you that access to physicians offices.
Continues to be disrupted I think that's a general industry wide trend, but we are seeing some relaxation of access so that certainly helps.
I think the good news about some extra as there is an existing prescriber base.
Some of those are.
Kind of specialists like Podiatrists and dermatologists and so we are increasing our effort on those specialties I think as you see.
See people return to work, especially in jobs, where they are.
On their feet a lot, we'll see increased activity from podiatry. So.
Putting the effort there and as we move into the summer season as the respiratory season starts to wane, we will increase our effort on on sort of extra.
And then present letter.
As we talked about in the in the script.
We think there's a real opportunity among the pulmonology community other patients tend to be somewhat more complicated having.
Having a highly effective therapy like send letter that's not a quinolone.
That can be dose for a short period of time and they have the opportunity to keep those patients out of the hospital.
Monologist flying that extraordinarily attractive they're also quite.
Quite impressed with the anti inflammatory properties. Since then let us so an increased focus on pulmonology specially.
As we move forward, we think we will.
We will continue to drive activity around the same level.
Got it sounds good.
One last question, perhaps switching gear to.
Your partnership with Sumitomo in China.
Can you remind us what are the upcoming milestones in 2022 after after the regulatory submission late in 2021.
So we haven't specifically disclosed the milestone but the.
What we have disclosed is that the royalty associated with sales in China won't be you know will be a low double digit royalty and then our first milestone payment will be on approval.
We expect approval.
Got it.
Standard in China.
Somewhere between 18, and 24 months post acceptance of the NDA that happened in November .
So it's possible that we could see an approval.
22, but likely it'll be a 'twenty it'll be later than that given the usual review cycle in China.
Thank you again for it to kind of questions and are looking.
Looking forward to progress in 2022.
Yeah. Thanks, Thomas I appreciate the interest.
Our next question is a follow up from Carl Byrnes with Northland Capital. Your line is open.
Thanks for the follow up just a real quick question on the <unk>.
Line of equity.
With LPC it looks like you drew that down in the fourth quarter can you quantify out and then also.
<unk>.
The share count at the end of the quarter.
Sure.
So we like this.
Yeah in the quarter, we were active with Lincoln Park I think it was to the tune of three 3 million shares or so.
And we exited the the year right around 60 million shares outstanding.
Got it thanks, and just on that same sort of topic, how much that remains.
Accessible under the Lincoln Park equity agreement and if I recall I think that goes out to September 23, where I'm going here is that.
The additional source to fund.
The cash pathway.
Yeah, Yeah, you're right we have about 18 months left on the agreement to.
To this point, we have we've drawn down a little bit on it but we are we have a pretty good amount left on the capacity. It's it's in the teens I think the mid to high teens millions left.
Great. Thanks very helpful.
There are no further questions I'd like to turn the call back over to Ted Schroeder for any closing remarks.
Thank you and thank you everyone for joining us. This afternoon as you can tell by the tone of the today's call. We're excited.
The 22, we're excited about the progress, we're making with our products, particularly with the growth of Savak stroke and look forward to updating you as the as the year progresses, and we hit some of the other value driving milestones that we discussed today. So thanks, everyone and have a great rest of the ETA.
Thanks.
This concludes the program you may now disconnect.
Okay.
Okay.
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Thank you.
Sure.
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