Q2 2022 AcelRx Pharmaceuticals Inc Earnings Call

Welcome to the accelerate second quarter 'twenty to 'twenty two earnings call. This call is being webcast live on the events page of the investors section of excel or access website at www Dot accelerates dot com.

Operator: Welcome to the XLRX Second Quarter 2022 Earnings Call.

Operator: This call is being webcast live on the events page of the Investors section of XLRX's website at www.xlrx.com.

Vincent Angotti: Thank you very much.

Operator: This call is the property of XLRX.

This call is the property of accelerates any recording reproduction or transmission of this call without the express written consent of XL Rx is 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 Inver.

Operator: Any recording, reproduction, or transmission of this call without the express written consent of XLRX is strictly prohibited. As a reminder, today's call is being recorded.

Vincent Angotti: You're welcome.

Operator: You may listen to a webcast replay of this call by going to the Investors section of XLRX's website.

Busters section of XL Rx's website.

Operator: I would now like to turn the call over to Raffi Asadorian, XLRX Chief Financial Officer.

Operator: The next question comes from Ed Arce of H.C. Wainwright and Company.

I would now like to turn the call over to Rafi Asa Dorian XLR Axa Chief Financial Officer. Please go ahead.

Operator: Please go ahead.

Ed Arce: Please go ahead.

Thank you for joining us on the call today. This afternoon, we announced our second quarter 2022 financial results and some business updates and a press release.

Raffi Asadorian: Thank you for joining us on the call today.

Raffi Asadorian: This afternoon, we announced our second quarter 2022 financial results and some business updates in a press release.

Raffi Asadorian: This press release and the slide presentation accompanying this call are available within the Investors section of our website.

This press release and the slide presentation accompanying this call are available within the Investor section of our website.

With me today are Vince and Gaudy, our Chief Executive Officer, and Dr. Pam Palmer, our Chief Medical Officer.

Raffi Asadorian: With me today are Vincent Angotti, our Chief Executive Officer, and Dr. Pam Palmer, our Chief Medical Officer.

Before we begin I'll remind listeners that during the call we will make forward looking statements within the meaning of the federal Securities laws.

Raffi Asadorian: Before we begin, I'll remind listeners that during the 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 XLRX.

These forward looking statements involve risks and uncertainties regarding the operations and future results of accelerates.

Raffi Asadorian: 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.

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.

Raffi Asadorian: I'll now hand the call over to Vince.

Ed Arce: Hi, guys.

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

Thank you Rafi and good afternoon, everyone.

Vincent Angotti: Thank you, Raffi, and good afternoon, everyone.

Ed Arce: Thanks for taking my questions.

Vincent Angotti: Since the first quarter, we've been focused on advancing our newly acquired assets through the regulatory approval process, specifically our product candidate NIAID that was obtained through our acquisition of Lull Therapeutics earlier this year, as well as our pre-filled syringe product candidates that were in license from Agatant last year.

Vincent Angotti: Can you hear me okay?

Since the first quarter, we've been focused on advancing our newly acquired assets to the regulatory approval process, specifically our product candidate not yet that was obtained through our acquisition of <unk> Therapeutics earlier this year as well as our Prefilled syringe product candidates that were in licensed from <unk> last year.

Vincent Angotti: We can.

These programs are a top priority for us as we believe they have a near term as well as long term value.

Vincent Angotti: These programs are a top priority for us as we believe they have a near-term as well as long-term value.

We're pleased to report another quarter of commercial unit sales volume growth for the fifth consecutive quarter since focusing our commercial efforts on procedural suites.

Vincent Angotti: We're pleased to report another quarter of commercial unit sales volume growth for Dissuvia, the fifth consecutive quarter, since focusing our commercial efforts on procedural suites and specifically on specialty settings such as plastic and cosmetic surgery, ENT, and oral maxillofacial surgery. We're also in discussions with potential national accounts that operate in these specialties for broader use across their networks, which could provide us with a consistent recurring revenue stream.

Pacifically on specialty settings, such as plastic and cosmetic surgery, Emt and oral maxillofacial surgery.

We're also in discussions with potential national accounts that operate in these specialties for broader use across their networks, which could provide us with a consistent recurring revenue stream.

In addition, as mentioned on our first quarter earnings call for 2022.

Vincent Angotti: In addition, as mentioned on our first quarter earnings call for 2022, we remain in discussions with potential partners having more commercial resources to amplify the expected growth for Dissuvia.

We remain in discussions with potential partners, having more commercial resources to amplify the expected growth for distribution.

Finally, our European partner and it gets hot is on track to launch the Zubair Yo, which is the European branded name for our Sufentanil Sublingual tablets later this quarter in Europe .

Vincent Angotti: Finally, our European partner, Agatant, is on track to launch Dizuvio, which is the European branded name for our cefentanyl-sumlingual tablets, later this quarter in Europe.

Vincent Angotti: Now, following our strategic acquisition of Lowell Therapeutics in January, we've prioritized, our focus on NIAID, our first nephamistat product, which is being developed for use in the U.S. as an anticoagulant for extracorporeal circuits, such as for use during dialysis. The Lowell acquisition also added a family of additional nephamistat product candidates, to our portfolio that target a diverse group of potential applications. NIAID is a lyophilized form of nephamistat that is being regulated as a device by the, FDA, given that its mechanism of action takes place within the extracorporeal circuit to anticoagulate the filter. Nephamistat is approved and widely used as an anticoagulant for dialysis in Japan and, South Korea, but it's never been developed for such use in the United States.

Vincent Angotti: Great.

Our following our strategic acquisition of mall Therapeutics in January we've prioritized our focus on NIAD are first the famous that product, which is being developed for use in the U S. As an anti coagulant for extra proposal circuits such as for use during dialysis.

Ed Arce: First question on NIAID.

The lower acquisition also added a family of addition on the famous that product candidates to our portfolio the target a diverse group of potential applications.

<unk> is the only authorized for them from the famous stat. It is being regulated as a device by the FDA.

Given that its mechanism of action takes place with an extracorporeal circuit.

Anti coagulate filter.

The famous that is approved and widely used as an anti coagulant for dialysis in Japan, and South Korea, but it's never been developed for such use in the United States.

In the near term, we're focused on obtaining an emergency use authorization or EUA for not yet for use as an anti coagulant for extra proposal circuits expected next year.

Vincent Angotti: In the near term, we're focused on obtaining an Emergency Use Authorization, or EUA, for, NIAID for use as an anticoagulant for extracorporeal circuits expected next year. Subsequently, we'll seek full FDA approval after conducting a single registration study, of 160 patients with endpoints already agreed upon with the agency. While there are many potential opportunities in other extracorporeal circuits, the near, term opportunity that we're targeting is patients undergoing dialysis where we believe NIAID could address a significant unmet need.

Ed Arce: Understand that you're pretty confident around the acceptance of this EUA, given the quotes and other supporting evidence that you just presented.

Ed Arce: And then as we think about the timeline, you know, filing first half of next year with a priority review, and, as you mentioned, ICD-10 code already in place.

Ed Arce: My question really is, once and if it does get the EUA, how do we know that it's going to get the EUA?

Subsequently, we will seek full FDA approval after conducting a single registration study of 160 patients with endpoints already agreed upon with the agency.

While there are many potential opportunities and other extra portal circuits.

The near term opportunity that we're targeting is patients are undergoing dialysis, where we believe <unk> could address a significant unmet need.

Ed Arce: How should we think about the receptiveness of this to, you know, the payers and physicians who would be using this product in sort of dialysis centers and other places where this would be used?

Based upon our market research, we believe that the potential peak sales for night I could exceed $200 million annually.

Vincent Angotti: Based upon our market research, we believe that the potential peak sales for NIAID could, exceed $200 million annually, and this amount is attributed to just the inpatient and outpatient dialysis markets, excluding any use in other extracorporeal circuits.

Ed Arce: What gives you the confidence in terms of, you know, commercial uptake?

Ed Arce: And then just more generally, what level of sales do you think is reasonable, say, you know, the first couple years?

Vincent Angotti: Sure.

And this amount is attributed to just the inpatient and outpatient dialysis markets.

Vincent Angotti: Let me take the first part of that.

Vincent Angotti: And I'm going to actually direct that question to Dr. Palmer, who's online, who's been spending a fair amount of time with the key experts within this area, attending some of the meetings where these groups congregate.

Vincent Angotti: And she can supply you their impression of the Famistat, their knowledge of it historically, even though it hasn't been used or approved in the United States.

Excluding any use and other extra proposal circuits.

Pamela Palmer: Pam?

Pamela Palmer: Sure, yeah.

Pamela Palmer: Hi, Ed.

Pamela Palmer: It's a very small group.

Vincent Angotti: Furthermore, the potential target market indications for our intravenous nephamistat product candidates, collectively referred to as LTX608, are also significant, and we have filed U.S. and international patent applications directed to those target indications, including antiviral indications, disseminated intravascular coagulation, or DIC, acute respiratory distress syndrome, or ARDS, and acute pancreatitis.

Furthermore, the potential target market indications for our intravenous the standards that product candidates collectively referred to as L. T. X 608 are also significant we have followed the U S and international patent applications directed to those target indications, including anti viral indications the semi.

Pamela Palmer: Yeah, it's a small group of, nephrologists who really focus on sort of the dialysis in hospitals for sure.

Intervascular coagulation or dicey acute respiratory distress distressed syndrome, or arts and acute pancreatitis.

Our plan is to submit our EUA for not yet to the F. D. A once our first cgmp law has been produced which is currently underway with our contract manufacturer.

Vincent Angotti: Our plan is to submit our EUA for NIAID to the FDA once our first CGMP lot has been produced, which is currently underway with our contract manufacturer. Based on our interactions with the FDA to date, we're optimistic about the prospects of receiving this, authorization given the recognized significant unmet medical need.

Pamela Palmer: And, you know, they're well aware of NIAID from all the publications over the, past 20 to 30 years out of Japan and South Korea.

Based on our interactions with the FDA to date, we're optimistic about the prospects of receiving this authorization given the recognized significant unmet medical need.

Pamela Palmer: So they're very eager to have a third option beyond heparin and citrate. You know, 60% of patients undergoing dialysis don't qualify for either heparin or citrate because of the various risks, whether it's liver issues, bleeding issues, what have you.

Pamela Palmer: And they would qualify for use with NIAID since NIAID does not have, the same risks.

In this regard I'd like to read a few selected quotes from our FDA correspondence last year regarding our proposed EUA to provide context as to why we're so optimistic about not yet.

Vincent Angotti: In this regard, I'd like to read a few selected quotes from our FDA correspondence last year regarding our, proposed EUA to provide context as to why we're so optimistic about NIAID. Quote, we believe that your device has the potential to address an unmet need in patients who cannot tolerate, heparin or who are treated in facilities that are ill-equipped for use of a citrate anticoagulant, end quote.

Pamela Palmer: So it's an exciting area.

Pamela Palmer: It's a small, small group of KOLs who we have to have outreach to.

Pamela Palmer: And, you know, I think there's nothing better than listening to our KOL Day presentation from a few months ago that really sort of consolidates the messaging around NIAID that we will be using towards these experts.

Well, we believe that your device has the potential to address an unmet need of patients who cannot tolerate heparin or who are treated in facilities that are ill equipped for use of a citrate anti coagulants and quote.

This comment highlights the complexity of the use of <unk> in these procedures, which is likely the main reason why only 5% of continuous renal replacement therapy or see our R. A T procedures utilized citrix as an anti coagulate. Despite the fact that the trade has been granted in the U S.

Vincent Angotti: This comment highlights the complexity of the use of citrate in these procedures, which is likely the main, reason why only 5% of continuous renal replacement therapy, or CRRT, procedures utilize citrate as an anticoagulant despite the fact that citrate has been granted in EUA.

Vincent Angotti: The FDA noted further drawbacks to the use of citrate were certain compromised patients, commenting, quote, additionally, we recognize that there may be an unmet need for patients who also cannot tolerate citrate due to another condition such as liver disease, end quote.

The FDA noted further drawbacks to you to use citrate, where certain compromised patients commenting well.

Additionally, we recognized that there may be an unmet need for patients who also cannot tolerate citrate due to another condition, such as liver disease and cool.

Vincent Angotti: Furthermore, the FDA stated, quote, we believe that you have provided significant evidence, demonstrating that the potential benefits of the NIAID device could be greater than the reasonably foreseen risks, end quote.

Furthermore, the FDA stated quote we believe that you have provided significant evidence demonstrating that the potential benefits of the NIAID device could be greater than the reasonably foreseen risks and quote.

Vincent Angotti: Accordingly, you can certainly see why we're so excited about the prospects of bringing, NIAID to the market through an EUA as we believe it can provide benefits during any type of dialysis procedure and for use in other extracorporeal circuits. Now, we finalized agreements to develop and produce the initial batches of NIAID with, contract manufacturing partners, which allows us to remain on track for our EUA filing in the first half of next year.

Accordingly, you can certainly see why we're so excited about the prospects of bringing <unk> to the market through an EUA as we believe it can provide benefits during any type of dialysis procedure and for use in other extra boreal circuits.

And we finalized agreements to develop and produce the initial batches of NIAD with contract manufacturing partners, which allows us to remain on track for our U S filing in the first half of next year.

Vincent Angotti: We also have a path that could help accelerate our internal timelines.

We also have a path that could help accelerate our internal timelines.

Okay.

Vincent Angotti: Importantly, the FDA has assigned NIAID with a breakthrough device designation, which provides, us with several advantages as we work toward gaining regulatory approval. The most salient being additional FDA input during development and during the submission, process, as well as a priority review once the regulatory submission for the device is filed.

Importantly, the FDA has assigned not yet with a breakthrough device designation, which provides us with several advantages as we work toward gaining regulatory approval the.

The most the only thing additional FDA input during development and during the submission process as well as a priority review once the regulatory submission for the devices filed.

Vincent Angotti: Further, CMS has already assigned an ICD-10 procedural code for NIAID's use in the extracorporeal, circuit.

Further CMS has already assigned ICD 10 procedural code for <unk> juice and the extra proposal circuit and this will.

Vincent Angotti: And this will facilitate reimbursement for the product if and when it's approved in the, U.S.

<unk> reimbursement for the product if and when it's approved in the U S.

Vincent Angotti: If approved, NIAID would be the only regional anticoagulant labeled for use in this indication, in the United States.

If approved <unk> would be the only regional anti coagulant labeled for use in this indication in the United States.

Vincent Angotti: I'll remind you that in May we held a KOL webinar on NIAID, a replay of which is currently, available on the investor section of our website.

Pamela Palmer: Yeah, I just can add, Ed, if you didn't get a chance, we did a KOL event, that's on our website back in May with two of the preeminent nephrologists that really can provide some insight into the nephamyslate market.

I'll remind you that in May we held a K O L. Webinar on I am a replay which is currently available on the investors section of our website.

Vincent Angotti: We think it was very well done.

Vincent Angotti: And we'd encourage you to listen to it to learn about NIAID and, more generally, the, utility of Nifamistat in South Korea and Japan throughout its decades of use to date.

Vincent Angotti: I think it provides a lot of information.

And we would encourage you to listen to it to learn about <unk> and more generally the utility of the famous stat in South Korea, and Japan throughout his decades of use to date.

Consistent with our priority to advance our pipeline of late stage assets, we continue to progress towards filing NDA for our veteran and phenylephrine Prefilled syringe product candidates licensed from Magneton.

Vincent Angotti: Consistent with our priority to advance our pipeline of late-stage assets, we continue, to progress toward filing NDAs for our fedrin and phenylephrine prefilled syringe product candidates licensed from Agaton.

Vincent Angotti: I can just add to the second part of the question, you know, we believe peak sales opportunity here is about $200 million.

Vincent Angotti: The first candidate for which we plan to file an NDA is PFS01, our ephedrine prefilled syringe. After meeting with the FDA last quarter to clarify our regulatory strategy, we remain on, track with our efforts and are keen to advance this program towards commercialization.

The first candidate for which we plan to file an NDA is PFS of one our ephedrine pre filled syringe.

Vincent Angotti: Obviously, it'll take some time to get to that.

After meeting with the FDA last quarter to clarify our regulatory strategy. We remain on track with our efforts and are keen to advance this program towards commercialization.

Vincent Angotti: This is being sold into two places, into the hospital, mainly the ICU setting, and then also into the outpatient dialysis market. That's what makes up that $200 million.

Vincent Angotti: So that will take some time, but given that they're, if you listen to the KOL call, that at least these two preeminent nephrologists really believe that this is something that's needed in the market given that there's no other great alternatives.

Vincent Angotti: We think it's going to be at least very well accepted out of the gate without the need for a significant sales force.

With two planned NDA filings in 2022, we expect our pre filled syringes will be our next FDA approved products that a commercial launch could occur as soon as next year.

Vincent Angotti: With two planned NDA filings in 2022, we expect our prefilled syringes will be our next, FDA-approved products that a commercial launch could occur as soon as next year. The market opportunity for these assets exceeds $100 million, and we believe we'll be able, to obtain a large share of this market with minimal investment since much of the commercialization efforts are expected to be through contracting with group purchasing organizations and hospital networks.

The market opportunity for these assets exceeds $100 million and we believe we'll be able to obtain a large share of this market with minimal investment.

Since much of the commercialization efforts are expected to be through contracting with group purchasing organizations and hospital networks.

Vincent Angotti: As mentioned previously, Vesuvia has continued to demonstrate solid growth in the procedural, suite market, even with our very limited commercial team. As communicated last quarter, we initiated a realignment of our cost structure to generate, expected annual savings of approximately $9 million, and we continue to assess how we can further reduce our annual expenses.

Vincent Angotti: Right, okay.

As mentioned previously the Servier has continued to demonstrate solid growth in the procedural suite market, even with our very limited commercial team.

Vincent Angotti: And there are, I should say, there are some additional programs for, since there's been so little innovation in the field of dialysis, there are sort of the NTAP programs, the TIP and NEEDS programs, etc., for various governmental reimbursement for the use of new products.

Vincent Angotti: So we'll absolutely be making sure that NIAID is filed for those various reimbursements as well.

Vincent Angotti: Okay.

As communicated last quarter, we initiated a realignment of our cost structure to generate expected annual savings of approximately $9 million and we continue to assess how we can further reduce our annual expenses.

We strongly believe and to see these benefits to patients as well as to the overall health care system, which is underscored by the feedback we're receiving from the expanding group of health care providers, who are administered to patients undergoing painful procedures.

Vincent Angotti: We strongly believe in disuvious benefits to patients, as well as to the overall health, care system, which is underscored by the feedback we're receiving from the expanding group of health care providers who have administered disuvia to patients undergoing painful procedures. This value is also endorsed by the numerous recent real-world studies that have been and, continue to be published, hailing the advantages of using disuvia in various medically supervised settings.

This value is also endorsed by the numerous recent real World studies that have been and continue to be published killing the advantages of using to Sue you.

And various medically supervised settings.

We remain steadfast that the serious full potential as a unique MLG can be maximized by a partner with more resources.

Vincent Angotti: We remain steadfast that disuvia's full potential as a unique analgesic can be maximized by, a partner with more resources, and as such, we remain in discussions with potential entities that have a more robust commercial presence to help maximize disuvia's value.

And as such we remain in discussions with potential and entities that have a more robust commercial presence to help maximize the studios' value.

As you can see on the slide.

Vincent Angotti: As you can see on the slide, the adoption of disuvia for use in procedural suites for, specialties such as plastic surgery, oral maxillofacial, and ENT remains the largest driver of use. This is an important market in terms of volume, since an increasing number of painful procedures, are now being performed to procedural suites, as this setting is more cost-effective, convenient, and safer than hospitals. The procedural suite market represented 75% of all commercial sales for disuvia in the, second quarter of 2022, increasing from 71% in 1Q of 2022, and from 38% in 2Q of 2021.

Ed Arce: And then thinking about ongoing launch and growth, I'm just thinking about mentioning earlier the national accounts and some of the certain, specialties that you've seen in the procedural suites, for example, for Dysuvia and the discussions there.

The adoption to serve you for use of procedural suites for specialties, such as plastic surgery oral maxillofacial and E&P remains the largest driver of use.

This is an important market in terms of volume since an increasing number of painful procedures are now being performed a procedural suites is this setting is more cost effective convenient and safer than hospitals.

But the procedural suite market represented 75% of all commercial sales for <unk> in the second quarter of 2020 to incur.

Increasing from 71% and <unk> of 2022, and from 38% and <unk> of 2021.

As we've previously stated we believe that working with a commercial partner on the studio will be imperative to gain rapid uptake in the high growth procedural suite areas.

Vincent Angotti: As we have previously stated, we believe that working with a commercial partner on disuvia, will be imperative to gain rapid uptake in the high-growth procedural suite areas.

Ed Arce: Maybe just a little more detail around what discussions revolve around and what kind, of a commercial impact, ultimately, these agreements, if reached, could have.

Vincent Angotti: In the meantime, we continue to maximize the value of our small virtual sales team focused, on procedural suites, which we believe is the most efficient approach.

In the meantime, we continue to maximize the value of our small virtual sales team focused on procedural suites, which we believe is the most efficient approach.

So far there have been numerous publications about the issue of your ranging from its application in the battlefield towards civilian use multiple surgical settings, when administering to shoot for painful procedures.

Vincent Angotti: So far, there have been numerous publications about disuvia, ranging from its application, in the battlefield to its civilian use in multiple surgical settings, when administering disuvia for painful procedures.

Ed Arce: Yeah.

Vincent Angotti: Hi.

Vincent Angotti: Yeah.

As we mentioned in our press release today in the abstract has also been accepted for podium presentation at plastic surgery. The meeting 2022 to be held from October 27 through 30 in Boston, Massachusetts.

Vincent Angotti: As we mentioned in our press release today, an abstract has also been accepted for a podium, presentation at Plastic Surgery, the meeting 2022, to be held from October 27 through 30 in Boston, Massachusetts. This is the premier educational and networking event of the year for both domestic and international, plastic surgeons.

Vincent Angotti: This is Vince.

Vincent Angotti: I can help with that.

Vincent Angotti: First, let me clarify with our U.S. promotional team, just to be sure everyone is grounded, in reality.

Vincent Angotti: We have less than 10 customer-facing headcount in our company generating the sales. The bulk of them are virtual in nature, as opposed to feet on the street.

Vincent Angotti: The national accounts I mentioned are those that are in, I can't comment on the names, of them, but oral maxillofacial in nature and plastics in nature that under a single umbrella have multiple units nationally and some even outside of the U.S. And we've been approached by them as they want to continue to improve the patient experience, and, in their words, the safety in the pain care of their patients.

Vincent Angotti: In particular, talking about the concerns about the IV opioids in their uses and would, prefer something that is not invasive in nature.

Vincent Angotti: I think it's important that we've been approached by them based off the noise that continues, throughout these meetings at the oral maxillofacial conventions, as well as the plastics conventions and the platform presentations.

Vincent Angotti: Right.

This is the premier educational and networking event of the year for both domestic and international plastic surgeons.

Vincent Angotti: With less than 10 sales representatives or customer-facing personnel, you could imagine, they would have significant impact on our sales moving forward, I'm quoting you a number.

Vincent Angotti: They would be our largest accounts.

Ed Arce: Great, that's helpful.

Okay.

Vincent Angotti: Beyond the procedural suite setting, disuvia's single largest customer is the Department, of Defense. This large customer has many different purchasing points from many different areas. We continue to believe the largest opportunity within the DoD for disuvia is the U.S. Army's, use within sets, kits, and outfits, or SKOs. Two years after achieving milestone C approval, a key gateway to having disuvia approved for, use across all the U.S. Army SKOs, we believe we're finally making good progress in disuvia's broader adoption within the U.S. Army. This momentum started with commentary published in the Journal of Military Medicine, highlighting the favorable aspects of disuvior for use in the military setting, and recent communications with critical decision makers within the U.S. Army.

Ed Arce: Thanks again.

Beyond the procedural suites setting distrigas single largest customer is the department of defense.

Ed Arce: Thank you.

This large customers many different purchasing points from many different areas.

Operator: Thanks, Ed.

We continue to believe the largest opportunity within the D. O D. For <unk> is the U S. Army's use within sets kits and outfits or S. Chaos.

Two years after achieving milestone C approval, a key gateway to having just you've you're approved for use across all the U S Army S. K OS.

We believe we're finally, making good progress and deceive as broader adoption within the U S Army.

This momentum has started with commentary published in the journal of military medicine, highlighting the favorable aspects of <unk> for use in the military setting and recent communications with critical decision makers within the U S Army.

Furthermore.

Vincent Angotti: Furthermore, a recent Armed Services Committee report directs the Chairman of the Joint Chiefs of Staff to brief the House on the timeline and process being used to integrate recently FDA-approved, government-funded combat medications for inclusions and SKOs.

Our recent armed Services Committee report directs the chairman of the joint Chiefs of staff to brief the house on the timeline and process being used to integrate recently FDA approved government funded combat medications for inclusions and S. Chaos.

Vincent Angotti: It also cites the potential use of these medications by allied and partner militaries.

I'd also say the potential use of these medications by allied and partner militaries.

Also as mentioned last quarter, the department of defense or D. O. D has initiated two studies that were originally planned to commence over 24 months ago.

Vincent Angotti: Also, as mentioned last quarter, the Department of Defense or DoD has initiated two studies, that were originally planned to commence over 24 months ago.

We believe that initiation of these two studies.

Vincent Angotti: We believe that initiation of these two studies, the recent military publications, and language in the Armed, Services Committee report further confirm the growing momentum for disuvious military use.

The recent military publications and language and the Armed Services Committee report further confirm the growing momentum for distributors military use.

Vincent Angotti: In the meantime, the Army continues to make purchases for their stockpiling program.

In the meantime, the army continues to make purchases for the stockpiling program.

And finally I get time is readying for <unk> to launch in Europe in the coming months, we look forward to monitoring the uptake of this important drug in a new market.

Vincent Angotti: And finally, Agaton is readying for Dizubeo to launch in Europe in the coming months.

Vincent Angotti: We look forward to monitoring the uptake of this important drug in the new market.

I'll now hand, the call over to Rafi to take you through the second quarter financial results.

Raffi Asadorian: I'll now hand the call over to Rafi to take you through the second quarter financial results.

Thank you Vince.

Raffi Asadorian: Thank you, Vince. Our financial position remains solid with $27.9 million in cash at June 30, and less than $10 million in senior debt. Our debt continues to reduce each quarter as we reach maturity in June 2023. Total revenues in the second quarter were $0.6 million, a 29% increase over Q2 2021 and the first quarter of 2022, driven by higher disuvious sales volumes.

Our financial position remains solid with $27 $9 million in cash at June 30, and less than $10 million in senior debt. Our debt continues to reduce each quarter as we reach maturity in June 2023.

Total revenues in the second quarter or zero point $6 million or 29% increase over Q2, 2021 and the first quarter of 2022.

Driven by higher <unk> sales volumes.

Excluding sales to the D O D, which tend to fluctuate.

Raffi Asadorian: Scooting sales to the DoD, which tend to fluctuate, commercial sales volumes increased, 133% from Q2 2021 and 18% from the first quarter of 2022.

Commercial sales volumes increased 133% from Q2, 2021, and 18% from the first quarter of 2022.

During the second quarter. We also completed an initial shipment of <unk> to our European partner AGA thought in preparation for their launch of <unk> later this year.

Raffi Asadorian: During the second quarter, we also completed an initial shipment of Dizubeo to our European partner, Agaton, in preparation for their launch of Dizubeo later this year.

Our cost of sales remained above our sales in the quarter given the level of fixed overhead as sales continue to increase and our cost reduce we expect this loss to not only shrink but to turn positive in the coming quarters.

Raffi Asadorian: Our cost of sales remained above our sales in the quarter, given the level of fixed overhead. As sales continue to increase and our costs reduce, we expect this loss to not only shrink but to turn positive in the coming quarters. Our combined SG&A and R&D expenses were $8.4 million in the second quarter of 2022, compared to $9.4 million in 2021. Excluding non-cash depreciation and stock-based compensation second quarter, 2022 combined SG&A and R&D expenses were $7.5 million, which included a $0.5 million restructuring charge in the second quarter related to the $9 million of estimated annual savings referred to last quarter. The decrease in combined SG&A and R&D expenses in the second quarter of this year was mainly driven by lower facilities-related costs and a reduction in Dizubeo-related selling expenses.

Our combined SG&A and R&D expenses were $8 $4 million in the second quarter of 2022 compared to $9 $4 million in 2021 excluding noncash depreciation and stock based compensation second quarter 2022, combined SG&A and R&D expenses were seven.

$5 million, which included a zero point $5 million restructuring charge in the second quarter related to the $9 million of estimated annual savings referred to last quarter.

The decrease in combined SG&A and R&D expenses in the second quarter of this year was mainly driven by lower facilities related costs and a reduction in <unk> related selling expenses.

Raffi Asadorian: We are evaluating our existing cost structure for further, potential savings to extend our cash runway beyond the middle of next year.

We are evaluating our existing cost structure for further potential savings to extend our cash runway beyond the middle of next year.

Raffi Asadorian: During the second quarter, we also had two non-recurring items recorded on our P&L. First was an $84.1 million gain related, to the extinguishment of the royalty monetization agreement that was held by SWK. This termination eliminates any further contractual obligation associated with the royalty monetization agreement and eliminates the corresponding liability previously recorded on our balance sheet.

During the second quarter. We also had two nonrecurring items recorded on our P&L first with an $84 $1 million gain related to the extinguishment of the royalty monetization agreement that was held by S. W. K.

Raffi Asadorian: Secondly, we recorded a $4.9 million impairment charge related to Zalviso equipment, as we do not believe we will resubmit our Zalviso, NDA in the foreseeable future, given that we have increased our focus on our newly acquired pipeline of prefilled syringes in the Famistat product candidates.

This termination eliminates any further contractual obligation associated with the royalty monetization agreement and eliminates the corresponding liability previously recorded on our balance sheet.

Secondly, we recorded a $4 9 million impairment charge related to Zalviso equipment as we do not believe we will resubmit, our zalviso NDA in the foreseeable future given that we have increased our focus on our newly acquired pipeline of Prefilled syringes in the famous stat product candidates.

Raffi Asadorian: We remain open to partnering Zalviso, which could be included in any potential, Dissuvia licensing or divestment transaction.

We remain open to partnering Zalviso, which could be included in any potential the Soviet licensing or divestment transaction.

And now I'll turn the call back over to Vince.

Raffi Asadorian: I'll now turn the call back over to Vince.

Thank you Rafi, we're excited about the recently diversified portfolio and our execution to advance it.

Vincent Angotti: Thank you, Raffi.

Vincent Angotti: We're excited about the recently diversified portfolio and our execution, to advance it, our direction, and upcoming potential catalysts and value drivers.

Our direction and upcoming potential catalysts and value drivers.

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

Vincent Angotti: And I'd like to open the line for any questions you may have.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you were using a speaker phone. Please pick up your handset before pressing the keys is that any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Operator: Operator?

Operator: This concludes our question and answer session.

Vincent Angotti: I would now like to turn the call back to Vince and Gaudi for closing remarks.

Operator: Thank you.

Vincent Angotti: Thanks, MJ.

Our first question today comes from Brandon Folkes of Cantor Fitzgerald Gerald Please go ahead.

Operator: We will now begin the question and answer session.

Vincent Angotti: And thanks to all of you for joining us today and for your continued support of Acceler-X.

Vincent Angotti: We're clearly excited about the prospects of our development pipeline, continuing to, maximize the potential for dysuvia through partnerships and our tight team, and we'll remain focused on driving shareholder value while absolutely controlling expenses.

Hi, Thanks for taking my questions and congratulations on all the progress.

Operator: To ask a question, you, may press star, then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.

Vincent Angotti: So we look forward to answering any additional questions you might have offline and look, forward to sharing our future developments.

Can you just help I have two questions from me maybe just can you help us just think about how impactful could that range decision D. On opening up additional revenue opportunities for <unk> and then can you just remind us of the gating steps for the U.

Operator: Our first question today comes from Brandon Folks of Cantor Fitzgerald.

Vincent Angotti: Thank you for joining us.

Operator: The conference is now concluded.

Operator: Thank you for attending today's presentation.

Operator: Join me now.

Brandon Folks: Please go ahead.

The way that we should see in sort of the data flow, we should expect from outside between now and submission next year. Thank you.

Randy can you can you repeat that first question for additional revenues it didn't come through quite quickly on the rems.

From the Rems decision.

Gotcha.

Okay.

So you are saying about the revised reduction in audits required for or agreement with the FDA.

Exactly right just how impactful is that from an a.

Practical tangible commercial sense for you in terms of maybe bringing on additional revenue opportunities.

Yeah, well I think our revenue line and our Rems continue to move in the right direction, I think where it really impacts us the bottom line on the expenses associated with the Rems in executing against that program. So I think it's more of a expense line item and as a revenue line item our physicians.

Hospitals procedural suites at a rems certified understand the importance of it.

Comply with it and it's been well executed I think it's evidenced in the lack of any issues. We've been reported to date relative to rems. Consequently, showing the F D. A.

Reduction in some of the.

Requirements.

It just really comforting with yesterday that it shows what we're doing the right things, but from a revenue standpoint, because it hasnt been an intimidating feature from our customers and the fact that we remain only utilized within that medically supervised setting I think we'll remain on the trajectory we've had been for growth.

We'll just continue to limit those expenses related to it.

I hope that helps understand on on that point.

Yeah.

Gating steps for the EUA. The second question the critical aspect for US has really been the contract manufacturing agreements.

So when we have communicated information relative to the EUA.

<unk> in the quotes that we use today on the earnings call.

The key critical next standpoint was basically make manufacture it show us that you can do it in a quality.

Manner, and that's where we've been focusing all our efforts and our goal is to get those agreements and execution of that occurring by the close of this year, we're well on our way to that to remain on target for a first half of next year EUA submission.

We've got some additional paths, we're working with our partners that might even accelerate those time lines.

Does that help Brandon.

Great. Thank you very much.

Brandon Folks: Hi.

Youre welcome.

The next question comes from Ed Arce of H C. Wainwright and company. Please go ahead.

Brandon Folks: Thanks for taking my questions, and congratulations on all the progress.

Brandon Folks: Can you just help two questions from you.

Yeah.

Hi, guys. Thanks for taking my questions can you hear me okay.

We can.

Brandon Folks: Maybe just can you help us to think about how impactful could that REMS decision be on opening up additional revenue opportunities for Dissuvia?

Great.

First question on NIAD.

Stan.

Your.

Pretty confidence.

Around.

The acceptance of this EUA.

Given the quotes and other.

Supporting evidence that you just presented.

Brandon Folks: And then can you just remind us of the gating steps for the EUA that we should see and sort of the data flow we should expect from outside between now and the submission next year.

And then as we think about the timeline.

You know filing first half of next year.

Brandon Folks: Thank you.

With a priority review.

And as you mentioned that ICD 10 code.

Vincent Angotti: Brandon, can you repeat that first question for additional revenues?

Already in place my question really is one.

Once and if it does get you a.

How how should we think about the the receptiveness.

Brandon Folks: It didn't come through quite clear.

All of this too.

You know the payers and physicians, who would be using this product.

In sort of dialysis centers and other places.

Where this would be used.

What gives you the confidence in terms of you know.

Commercial uptake.

And then just more generally what what level.

Sales do you think is a reasonable say the first couple of years.

Sure Let me take the first part of that and I'm going to actually direct that question to Dr. Palmer Who's All line, who has been spending a fair amount of time with the key experts within this area attending some of the meetings, where these groups congregate.

Brandon Folks: Oh, from the REMS?

Brandon Folks: From the REMS decision?

Vincent Angotti: Gotcha.

Vincent Angotti: Okay.

Vincent Angotti: So you're saying about the revised reduction, in audits required for our agreement with the FDA? Exactly, right?

And she can supply you their impression of the famous that their knowledge of it historically, even though it hasn't been used were approved in the United States Pam.

Vincent Angotti: Just how impactful is that in a practical sense or commercial sense for you in terms of maybe bringing on additional revenue opportunities?

Vincent Angotti: Yeah.

Sure Yeah, Hi, Ed.

Vincent Angotti: Well, I think our revenue line and our REMS continue to move in the right direction. I think where it really impacts is the bottom line on the expenses associated with the REMS in executing against that program.

It's a very high all group.

Yeah, It's a small group of Nephrologists, who really focus on are sort of the dialysis in the hospital for sure.

They're well aware of NIAD from all of the applications over the past 20 to 30 years out of Japan, and South Korea.

So they're they're very eager to have a third option beyond heparin and citrate.

You know 60% of patients undergoing dialysis don't qualify for either happened or citrate because of various risks, whether it's live or <unk>.

<unk>, believing issues what have you and they would they would qualify for use with NIAD from flying it does not have the same risks.

So it's it's an exciting area. It's a small small group of Kols, who we have to.

Outreach to.

And you know I think there's nothing better than listening to our kols. They are presentation from a few months ago that really sort of consolidates the messaging around NIAD that we will be using eye towards these experts.

Yeah, I just can add Ed if you didn't get a chance there we did a K O L event, that's on our website back in May with two of the preeminent nephrologists that really.

Provide some insight into the famous that market. We think it was very well done and I think it provides a lot of information.

Yeah, I can I can just add to the second part of the question yes.

We believe peak sales opportunity here is about $200 million.

Obviously, it'll take some time to get to that this is being sold into two places into the hospital.

Mainly the ice Cu setting and then also into the outpatient I all CIS market, that's what makes up that $200 million.

So that will take some time, but given that there if you listen to the Kols call that they at least these two preeminent while it just really believe that this is something that is needed in the market given that there is no other great alternatives.

We think it's going to be at least very well accepted out of the out of the gate without the need for a significant sales force.

Okay.

Alright, okay.

Okay.

Okay, Alright, that's helpful way there there are some additional programs for since Theres been so little innovation in the field of dialysis. There are sort of the end cap programs that kicked in each programs et cetera for various.

Governmental reimbursement for the use of new products. So we will absolutely be making sure that not yet is filed for military yes, I've reimbursements as well.

Okay.

And then.

Thinking about ongoing.

Launch and growth.

I'm just thinking about.

Mentioning earlier, the national accounts and some of them.

Certain certain specialties.

You have seen in the procedural suites for example, Ford to Sylvia.

And the discussions there.

Maybe just a little a little more detail around what.

You know what.

Discussions revolve around.

And what kind of a <unk>.

Commercial impact ultimately these agreements if reached.

Could have.

Yeah, Hi, guys. This is Ben so I can help with that first let me clarify with our U S. Promotional team just to be sure everyone is grounded reality of we have less than 10.

Customer facing.

Head count in our company generating this sales.

And the bulk of them are virtual in nature as opposed to feet on the street.

Yeah.

The National accounts I mentioned are those that are in I can't comment on the news on both oral maxillofacial nature and plastics in nature that under a single umbrella have multiple units nationally and some even outside of the U S and we've been approached by them as they want to continue to.

Improve the patient experience and in their words the safety in the pain care of their patients in particular talking about the concerns about the IV opioids and their uses and would prefer something that is not invasive nature. I think it's important that we have been approached by them based off of noise.

That continues throughout these meetings at the oral maxillofacial conventions as well as the.

Plastics conventions and the platform presentations.

With less than 10 sales representatives or customer facing personnel you could imagine they would have significant impact on our sales moving forward without quoting you a number.

There would be our largest accounts.

Right.

Great that's helpful.

Thanks again.

Thank you.

Thanks, Ed.

Vincent Angotti: So I think it's more of a expense line item than it is a revenue, line item.

This concludes our question and answer session I would now like to turn the call back to Vince <unk> for closing remarks.

Vincent Angotti: Our physicians, hospitals, procedural suites that are REMS certified understand the importance of it, comply with it, and it's been well executed.

Vincent Angotti: I think it's evidence in the lack of any issues we've been reporting to date relative to REMS consequently showing the FDA's reduction in some of the, It's just really comforting with the FDA that it shows we're doing the right things.

Vincent Angotti: But from a revenue standpoint, because it hasn't been an intimidating feature from our customers, and the fact that we remain only utilized within that medically supervised setting, I think we'll remain on the trajectory we have been for growth, and we'll just continue to limit those expenses related to it.

Vincent Angotti: I hope that helps understand on that point.

Vincent Angotti: Gating steps for the EUA, the second question.

Vincent Angotti: The critical aspect for us has really been the contract manufacturing agreements.

Vincent Angotti: So when we have communicated information relative to the EUA, exemplified in the quotes that we used today on the earnings call, the key critical next endpoint was basically make it. Manufacture it.

Vincent Angotti: Show us that you can do it in a quality manner.

Thanks, Jay and thanks to all of you for joining us today and for your continued support of accelerates. We're clearly excited about the prospects of our development pipeline.

Vincent Angotti: And that's where we've been focusing all our efforts.

Vincent Angotti: And our goal is to get those agreements and execution of that occurring by the close of this year.

Vincent Angotti: We're well on our way to that to remain on target for our first half of next year EUA submission.

Vincent Angotti: We've got some additional paths we're working with with our partners that might even accelerate those timelines.

Doing to maximize the potential for <unk> through partnerships and our Titan team and we'll remain focused on driving shareholder value, while absolutely controlling expenses. So we look forward to answering any additional questions you might have offline and look forward to sharing our future developments. Thank you for joining us.

Vincent Angotti: Does that help, Brandon?

Yeah.

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

Vincent Angotti: Great.