Q1 2022 Nabriva Therapeutics PLC Earnings Call

With business development.

Today, we announced a three year extension with Merck securing some extra revenues at least through 2026. We are very excited by this development as it provides the opportunity for continued growth to our top line revenues as.

<unk> current performance the team continues to make great progress as we are seeing strong results. We were very pleased to see double digit year over year prescription growth.

To further accelerate <unk> growth, we align the sales strategy to increase our focus on the top AD see prescribers as we head into the peak skin infection season.

Turning to Zen letter, we are making good progress enrolling patients in our phase one trial evaluating the pharmacokinetics and safety of <unk> in patients with cystic fibrosis.

Based on the potent activity of then letter against strains of Staph aureus, including MRSA isolated from CF patients we were optimistic for the prospects of this program.

We are still on track for data readout in 2023, if successful this could become another important revenue stream for the company.

With regards to then let or for patients with community acquired bacterial pneumonia or cap. The team is focusing its efforts on pulmonologists to drive prescribing.

Moving to compete though let me reiterate what we said last quarter.

We remain committed to getting <unk> approved for complicated utis and it remains a priority for the company.

There is a large unmet need in the United States for treating patients with infections caused by multi drug resistant or MTR organisms with an estimated 3 million people in the United States that are treated for suspected or confirmed MTR each year.

We continue to engage with the FDA regarding their plans to complete inspections at our manufacturing partners in Italy, and Spain and.

And lastly, we continue to explore other business development opportunities that we believe will bring additional value to the company.

So the extra agreement and subsequent contract extension with Merck is a great example of this as it secures a consistent future revenue stream for the company.

Based on the success with <unk>. We are also exploring potential in licensing opportunities that would fit into our commercial infrastructure.

We also continued to advance discussions for partnership opportunities for us and let it in Europe and the rest of the world.

Moving to our commercial update which can be found on slide seven.

Announcing the extension of the extra agreement with Merck at least through 2026 is a meaningful milestone for the Braves. This.

This extension provides the opportunity to benefit from continued revenue generation, while allowing us to maximize our investments to date in <unk>.

As a reminder.

<unk> has been marketing and distributing some extra in the United States and certain of its territories as part of an exclusive agreement.

<unk> signed in July 2020 with Merck.

Under the initial term of the agreement the breather was solely responsible for marketing sales and distribution of <unk> in the United States through December 2023.

The amended agreement provides for a three year extension to at least December of 2026, and importantly, the term can be further extended for additional three year periods.

We think this demonstrates our collaborative relationship with Merck and our ability to successfully commercialize them. Some extra brands, we expect to have extra to be a significant contributor to the continued long term growth of <unk>.

To capitalize on some extras momentum heading into the peak <unk> months, we have expanded the call universe to drive additional awareness and prescriptions as a result as seen on slide eight we have decided to maximize our sales opportunity to focus on the 7800 <unk>.

<unk> prescribing nasty targets.

This optimization went into effect April one and we believe that this decision strengthens the <unk> opportunity.

Expanding our scope of coverage to nearly 8000 targets.

Both our field based sales team and our inside sales representatives will be focusing on the top prescribers of ABSSI across various specialties, including podiatrist and dermatologists as well as primary care physicians. We believe this strategy positions <unk> to Max.

<unk>, the near term opportunity and more efficiently leverage our investment in the brand.

The alignment of territories can be seen on the left hand side of the slide.

You can see on slide nine so of extra have demonstrated a strong 10% year over year growth in prescriptions during the first quarter.

Driven by our commercial execution it.

It is also worth noting that the extra does not have an extra hasnt aspect of seasonality, especially during the first quarter.

To further highlight the impact of our commercial efforts you'll note that we were able to mute some of the seasonality entering 2022, and now have a higher <unk> prescription base heading into the historical higher volume quarters. We believe that these results coupled with the more targeted sales force effort.

It gives us increased confidence in <unk> ongoing performance.

The incremental 3000, hcp's appropriately aligns us to deliver on continued growth for <unk> as we head into what has historically been the peak season for ABSSI.

We are therefore, reaffirming our guidance of <unk> sales returning to historical peak run rate sales levels by the third quarter of this year.

Now, let me talk about <unk> for cystic fibrosis.

Slide 10 lays out our rationale for exploring <unk> as a treatment option for CF patients with chronic staph aureus MRSA infections.

The initiation of our phase one trial in CF last month marked another significant achievement for the company and we were encouraged with how the trial is enrolling.

<unk> remains an unmet medical need in patients with cystic fibrosis.

The letter is available on both an oral and intravenous formulation has demonstrated anti MRSA activity and is well tolerated. We believe it may provide an attractive treatment option for this difficult to treat population.

If successful the CF opportunity could provide an additional $100 million in peak sales, we look forward to data to a data read out in 2023.

I would now like to turn the presentation back over to our CFO , Dan Boland, who will provide a financial update.

Dan.

Thank you Ted.

As we turn to slide 12, I'd like to touch on some key highlights for the quarter.

We reported total revenues of $8 million in the first quarter of 2022, consisting primarily of net sales as of external with double digit demand growth versus the first quarter of 2021, which had highlighted earlier.

Our operating expenses remained generally flat in the first quarter of 2022.

When coupled with the topline growth driven by sort of extra continues to unlock operating leverage and provided significant improvement in our operating cash burn in the first quarter of 2022 compared to the prior year.

We exited the quarter with approximately $34 million in cash and cash equivalents, providing adequate cash runway well into the fourth quarter of 2022.

Turning to slide 13, we continue to see a positive trend on the P&L on a corresponding positive trend on cash flows in the quarter compared to the prior year.

Total revenues increased by $5 $5 million year over year, driven by the increased prescription demanded of extra and the change in the accounting of this extra agreement from collaboration revenue in the first quarter of 2021 to fully recording net sales in our P&L beginning in the second quarter of 2021.

As you'll recall the first quarter of 2021 was the last one where in a breather recognized percentage of sort of extra performance as a collaboration revenue.

With the launch of our NBC and the second quarter of 2021, Brianna pivoted towards recognizing 100% plus of extra performance as net sales in our P&L.

The corresponding increase in gross profit of $2 $2 million with total operating expenses remaining stable increasing just $300000 continued our trend of improved operating leverage since we launched our some extra NBC.

We remain committed to a disciplined approach focusing on targeted investments with our resources. This is highlighted by the less than 2% increase in operating expenses year on year during a period of high inflation in the macro environment with.

With the extension of our agreement with Merck to promote and distributes of extra or at least an additional three years, we are well positioned to benefit from the investments. We have made some extra and continue to drive operating leverage on top of our existing infrastructure.

Operating cash burn continued a positive trend since the launch of our sort of extra M. D C.

As we turn to slide 14, I'd like to highlight how the continued impact of our disciplined approach on resource allocation.

Coupled with the growth of some extra has had a positive impact on our operating cash burn overtime.

Our first quarter 2022, operating cash burn reflects a 26% decrease versus the same period from the prior year.

We have historically had a higher cash burn in the first quarter of the year driven by one time payments such as annual insurance premiums annual data contract renewals and other annual payments.

It is important to point out that greater than 50% of the operating burn in the first quarter of 2022 was driven by these one time items as.

As mentioned earlier in the second quarter of 2021, we launched our some extra in D C, which pivoted us towards recognizing 100% about sales benefit or some extra.

This has had a positive impact on our operating cash burn since the <unk> launch. Additionally, we renegotiated I'm on purchases of sunlight of inventory with our CMO and the third quarter of 2021 to give us additional flexibility, resulting in less cash tied up in inventory in the near term.

As we exited 2021, we were realizing the benefits of the some extra MDC revised inventory minimum purchases and are more focused operating expense allocation.

Net of the onetime items in the first quarter of 2022, we continue to see the benefit of this discipline in our operating cash burn.

I will now turn the presentation back over to Ted.

The next part of the call Ted will take some make some closing remarks, and then we will head into a Q&A session Ted.

Thanks, Dan.

Slide 16 summarizes <unk> growth drivers currently and looking ahead to the future as we outlined on today's call. The team has worked very diligently to execute on commercializing <unk> by dedicating the necessary brand promotion to engage and re engage with health care providers.

To add incremental revenue and operating leverage.

Standard agreement with Merck as a result of our ability to grow this of extra franchise, which now fully funds our commercial infrastructure.

With the agreement extended out until at least 2026 and further extensions possible. After that we feel strongly that's the extra gives us a solid foundation to leverage the infrastructure we have in place on.

On top of growing <unk>. This year, we also plan to continue with the enrollment other than let us CF trial.

So ex U S partnerships for us and let us evaluate strategic business development opportunities and advanced can tipo towards U S approval, we expect 2022 to be another year of growth for <unk> and we look forward to sharing our progress with you in upcoming quarters.

I would now like to turn the call back over to the operator. So we can open the line for your questions.

Operator.

At this time, if you'd like to ask a question. Please press the star and one on your Touchtone phone you may remove yourself from the queue at any time by pressing star Q. Once again that is star in one to ask a question.

And we will take our first question from Carl Byrnes from Northland capital markets.

Just looking at the.

The balance sheet it looks like our <unk>.

So it looks like.

You added $2 million from financing is it fair to assume that that's from the Lincoln Park agreement.

You used to have approximately $12 million to $13 million available.

From that.

And then I have a follow up as well thanks.

Hi, Carl Thanks for the question yes.

In the quarter, we had some activity on our line of credit as well as the ATM. So that's probably what you're seeing flowing through that line item.

Got it great and then sorry going back to burn.

Which was a little bit higher because of the anomalies in the first quarter that you referenced what again was the sort of adjusted burn in the first quarter ex ing out those anomalies you guys have done a phenomenal job in bringing burned down and I think the third quarters of $13 million and changed in the fourth quarter. It was $6 million in change.

Again, where would that be on an adjusted basis.

So kind of said in the call about half of the burn in the in the first quarter was was related to those onetime items, so half of the $15 million to $16 million.

Got it perfect. Thank you.

Okay.

Our next question comes from Ed Arce from H C Wainwright.

Hello, everyone. This is Thomas Yip, asking a couple questions for Ed.

First congratulations on the new extended extra agreement with Merck.

Can you highlight.

If there.

Differences.

In terms versus the previous agreement.

If there is any major differences.

Thomas Thanks for the question no. It's exactly the same agreement we are fully responsible for the promotion and under our own in D. C. So we book all of the net sales and we purchased the product from Merck and as it's all cost of goods. So theres no.

Additional royalties or milestones or anything in this agreement. This is this is really an acceleration if you'll recall from the original Merck agreement. It it would have come up for renewal at the end of this year with a one year notification period I think as a result of the outstanding growth of <unk>.

Extra since we entered into this partnership.

And Mark got together to extend the agreement to bring more certainty to the business. So that additional three years gets added on to 'twenty three and takes us at least through the end of 'twenty six under the same terms as we're operating today.

Got it thanks for clarifying.

And then next question regarding.

First quarter revenue. So so so as you pointed us industrial sales.

What about $7 2 million in a corner.

But net product revenue of ore was only $7 million. So is there some kind of contra revenue adjustment.

In the quarter.

Hi, Thomas So, yes, we took an adjustment for some <unk>.

Ivy.

The product dating was coming up so we took a reserve for that in the quarter, which was which was an offset.

Product explorations coming up on us so for conservative to be Conservative we took the reserve now to get it under our belt.

Okay. So.

Theyre working about $200000.

In total.

Thats ballpark, yes, it's about what it was okay.

Okay.

Thanks.

One last question.

This one for the phase one study.

Cystic fibrosis.

And as we approach study data in the first half of next year.

<unk>.

Given that as a safety and PK study.

Sure.

If any other metrics that investors can look forward to.

No sorry about that tax rate I'm not sure and thank you.

Yes Thomas.

Christine our Chief Medical Officer, and Yeah those are its PK.

PK and safety, that's that's really we're looking for.

And Thats.

That's a yes.

What physicians are looking for we have the in vitro data we have several other.

Non clinical studies.

Preclinical studies that will be those data will be released as well.

Such as there would be some DDI modeling and some other non clinical work, but this particular study is just PK is focused on PK and safety in CF patients.

And keep in mind that it's at the same dose that is currently marketed.

So we're not we're not it's not a dose adjustment theres not a different dose contemplated and so the.

But these patients get treated for longer so we wouldn't expect a five day course of treatment, we would expect something much longer than that which really puts the utilization into more of a rare disease type of category.

Right, So fair to say it kind of set the stage for.

Fisher study.

Yeah.

We'll see what the data look like I think we will.

<unk>.

At this point.

Well, we will publish the data.

And we will we will gauge reaction among the treating community.

But.

Whether or not we move into a full development program will depend on a lot of different factors at the moment, there's not a there's.

There's not a clear regulatory path forward, but there certainly is a data path forward.

Understood. Thank.

Thank you again for taking my questions and looking forward to progress.

And so that's true this year.

Thanks I appreciate it.

And once again that is star one to ask a question.

And it appears we have no further questions at this time I will turn the program back over to Ted Schroeder.

Okay, well. Thanks, everyone. Appreciate your attendance I know, it's been kind of a wild day in the markets and I appreciate your attendance and look forward to.

Exciting results continuing throughout the rest of the 22.

Good rest of the evening. Thank you.

This does conclude today's program. Thank you for your participation you may disconnect at this time have a great day.

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