Q2 2022 Opiant Pharmaceuticals Inc Earnings Call
Greetings and welcome to Opiates Pharmaceuticals second quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
It should require operator assistance during the conference. Please press star zero on your telephone keypad.
Remainder this conference is being recorded.
I'd now like to turn the conference over to your host Atkins, Vice President Communications and Investor Relations. Please go ahead Sir.
Thank you operator, and thank you all for joining us this afternoon.
With me on today's call are Chief Executive Officer, Dr. Roger Crystal and Chief Financial Officer, David <unk>.
This afternoon, <unk> issued a press release announcing financial results and providing a business update for the three months and six months ended June 30 of 2020 to today's press release is available on our website at Www Dot <unk> dot.
Cool.
Before we start please note that certain information discussed on the call today is covered under the safe Harbor provision of the private Securities Litigation Reform Act.
We caution listeners that during this call <unk>.
Management will be making forward looking statements actual results could differ materially from those stated or implied by these forward looking statements due to risks and uncertainties associated with the company's business.
These forward looking statements are qualified by the cautionary statements contained in <unk> news releases and SEC filings, including in our annual report on Form 10-K for the year ended December 31st 2021 and subsequent filings.
This conference call also contains time sensitive information that is accurate only as of the date of this live broadcast August 11 2022.
<unk> undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this conference call.
Now I'd like to turn the call over to Roger.
Thanks, Ben and a very warm welcome to you all.
Thank you for joining our conference call to discuss <unk> financial.
Financial results and business highlights for the second quarter.
First six months of 2022.
We appreciate everyone's time and attention.
The first half of 2022 was important as we continue to advance our pipeline of new medicines for addiction and drug overdose.
We have a tremendous sense of mission to create meaningful therapeutics that we believe can help kind of substance use and relieve that burden. It places on our communities and health care.
<unk> made its first impacted by developing narcan nasal spray for the emergency treatment of known or suspected opioid overdose.
It was a new formulation easier to use and containing a higher dose of naloxone Apache earlier unapproved kits.
We remain very proud of Narcan and the role it plays in our communities. Yes. We also open the new reversal agents are needed.
Potency of illicit synthetic opioids growth.
So let me start with a review of our progress with OPM is there is there are three for the treatment of opioid overdose.
And to offer some context as to how we are thinking about its place in the market.
<unk> III is a nasal formulation containing.
Containing the highest entity opioid antagonist nalmefene.
In May we announced positive results from a Pharmacodynamic study evaluating <unk>. There is there are three head to head with four milligram nasal naloxone.
As we reported a P&C is there is there are three met the primary endpoint of non inferiority to nasal naloxone, producing a reversal and Lenny fentanyl induced respiratory depression.
It was nearly twice that produced a nasal naloxone, it's five minutes.
Further analysis of the data showed it took nasal naloxone 20 minutes to achieve the same level of effects. It took nasal nalmefene at only five minutes.
Our completion of the PD study concluded the clinical program supporting OPM sees every day rates right.
As we shed our NDA incorporates extensive data from our PD study and two prior pharmacokinetic studies.
Our PK data demonstrated rapid absorption and higher plasma concentrations.
The intra muscular injection of Nalmefene.
On our last earnings call, our Chief Scientific Officer, Dr. Phil Skolnick explained the full set of P. D and PK results and the OPM T. There is there are three that parents fast action strength and long duration as well Matt to address overdoses from illicit synthetic opioids.
In particular fentanyl.
The value of our P&C. There is there are three has been further strengthened by the allowance of surgeon formulation and method of use patent claims covering Oh, kenzie Theres area, three and intervale nasal formulation.
They've already received a notice of allowance and we expect the patents to be granted in the coming weeks and we will also include this in our NDA submission.
Without data reported we are focused on completing the NDA filing for <unk>, which we announced the startup in may as a rolling submission.
We're making good progress.
The non clinical section has been submitted the CMC section is under final review and publishing and the clinical section is in progress.
This puts us on track to complete our submission by year end.
Our planned filing timeline, if you receive priority review provides us with a possible paducah date in the second quarter of 2023.
Work is well underway preparing for commercial launch of OPM T. There is there is great.
A record number of people in the United States over 80000 died of an opioid overdose. During the 12 months ending February 2022, according to provisional data from the CDC.
Each opioid induced fatality according to our own research of existing data.
About eight non fatal overdoses, which can lead to long term physical and mental disability.
Health experts warned however, about very troubling trends particular, defensible and other illicit synthetic opioids that illustrates the growing need for easy to use and affected opioid overdose reversal agents.
In April a report published in Jamba noted that for the first time in a decade overdose deaths among teens in the United States Rose dramatically in 2020 and kept rising through 2021 as well.
The study found that fentanyl related deaths increased from 253 in 2019 to 680 to following yet.
And in 2021, 77% of all teen overdose deaths involved fentanyl.
A major cause is a surgeon nation wide in socal and took pills.
These counterfeit pills are laced with Huntsville and produce to closely resemble legitimate prescription medicines, such as adderall and xanax.
Turning now to the pipeline.
Made progress during the quarter in our phase II study evaluating O P. N. C. There is there is two nasal naltrexone alcohol use disorder.
We have enrolled over 200 patients keeping us on track to complete enrollment of a target 300 patients by year end.
As you know a P N T zero there two is being developed as a nasal spray that someone can take as needed to quell the pleasurable effects of alcohol.
We believe this can help someone reduce regular heavy drinking.
Au D is a significant cause of disease. Although you can see there is there to could have a dramatic impact on one's ability to control unhealthy drinking.
We're excited to complete this study.
Our understanding of its therapeutic potential in a novel approach.
We expect to report data in the first half of 2023.
In conclusion I'm excited by the progress we have made.
We continue to advance our mission to develop new medicines to treat addiction and drug overdose.
The coming months will be pivotal for us as we continue to execute on our Opn T 003 program and we're excited for the journey ahead.
I want to thank the entire team and our collaborators at the hard work and dedication.
With that I'll turn the call over to David discussion of financials.
Thanks, Roger our financial results for the three and six months ended June 32022 are detailed in our press release issued this afternoon.
I'd like to take a moment to provide some context and highlight a few key points from the quarter.
We reported second quarter revenues of $3 9 million.
This includes $2 3 million of revenue attributable to the sales of Narcan nasal spray from our license agreement with UBS.
Revenue from Narcan was lower than expected.
Cause E B S under the royalty owed to US based on this quarter's U S sales of Narcan.
Under the generic reduction clause of our license agreement E.
E B S should pay a tiered royalty on U S. Narcan sales when the net sales in a given quarter are greater than 70% of the net narcan sales in Q3 2021.
Second quarter U S sales as reported to us by UBS, we're above 70% of U S. Net sales in Q3 2021.
However, instead of applying correctly the terms of the license agreement E. B S chose to apply an arbitrary 2% rate on U S. Net narcan sales.
S E T S had applied the tiered royalty rates correctly as provided in the license agreement.
We believe the correct amount E. B I should have paid us is approximately $9 1 million for the second quarter.
A difference of approximately $6 8 million.
On August 10th we provide a D. B S. A default notice of a material breach of its license agreement for underpayment of royalties.
This gives E. B S 60 days to meet its obligation under the license agreement and paid the correct amount owed.
If E B S fails to do so we will pursue the remedies available to us under the agreement.
Which includes termination of the agreement.
And potential return of Narcan nasal spray to opiates.
Turning now to our second quarter operating expenses.
Research and development expenses increased to $7 9 million in the second quarter 2022.
Compared to $3 1 million for the same period in 2021.
The $4 8 million increase was primarily due to increased activity on our lead product.
P M T 003, nasal nalmefene for opioid overdose.
As well as personnel and noncash stock based compensation expense.
Sales and marketing expenses for the three months ended June 32022 were approximately $2 8 million as compared to approximately $1 million in the comparable period in 2021.
The 1.8 million increase was due to personnel and noncash stock based compensation expense, which increased by $1 1 million and external third party spend related to pre commercial activities, which increased by.
Point $7 million.
General and administrative expenses for the second quarter were approximately four 4 million as compared to approximately $2 7 million in the comparable period in 2021.
The $1 3 million increase was primarily due to increases in personnel and related expenses as well as noncash stock based compensation.
We reported a net loss this quarter of 11.8 million or a loss of $2.31 per basic and diluted share compared to net income of 1.7 million or income of 39 cents per basic and 31 cents per diluted share in the second quarter of 2021.
We ended the second quarter with cash cash equivalents of $40 2 million.
We also received from BARDA and additional award of $2 1 million to support <unk> 003.
This brings total BARDA funding to $10 8 million and we remain grateful to BARDA for it support.
Looking ahead, we are prudently managing expenses, while maintaining our good financial position with multiple value, creating catalysts expected over the next 12 months.
With that said.
We intend to ensure the terms of the Narcan Narcan license agreement are appropriately enforced.
Thank you and with that let me open the call for questions.
At this time, we'll be conducting a question and answer session. We would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue. You May press star two if he doesn't like to remove your question from the queue.
For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.
Hi, Thanks for taking my questions and congratulations on all the progress.
Maybe just three from me if you don't mind I'll just ask them upfront.
Do you think the onset of action data will actually likely to be the bigger driver uptake in the longer half life. I think you know, it's just quite an impressive differentiation there.
And then secondly.
And this sort of goes at the finish line, but how do you feel about the market. The market you cannot launch into now that generic narcan is in the market.
And then if we don't see a meaningful reduction in opioid overdose deaths with the generics in the market.
How should we think about maybe the need to re look at the strategy from the government perspective, you know do they then move to a different agents such as yours or three.
Three you know showing that cost maybe it wasn't the impediments there.
Any market dynamics that I think could be quite interesting.
And then lastly, just on the alcohol use disorder any learnings from the recent trial of compared it to read out and you know this has been a mixed day today. So just any learnings across Kyoto. Thank you.
Okay.
Thank you Brandon.
Yeah.
I might just seemed to be a couple of those questions that I noted them down.
So the first one so in terms of the onset of action and long half life in terms of being differentiated is that.
Discussing that.
Both are very important when we think about saving a life there's two considerations.
How much of an opioid overdose reversal agent you can get into the body.
Ultimately to the brain as quickly as possible.
And that's what.
In principle is going to determine a successful rescue but in fact within that.
Onset of action, what really makes a big difference is.
Binding affinity when we on the molecular level, how hot house tight the opioid antagonist can bind to the Mu opioid receptor, which drives breathing that's a real key consideration, which is why higher affinity agents.
We believe so much more needed today because of fentanyl, having such high affinity in EMEA, good or is that when we compare it to the old.
Older opioids, such as heroin et cetera.
The other consideration around long half life relates to this issue around re overdosing, so even though someone can be successfully rescued from an opioid overdose.
The real issue that we had continuously is how someone could fall back into an overdose.
That's happening a lot more in recent years with fentanyl, which has so much of a longer half life.
So that's another consideration and those are the key attributes and Differentiators. We believe we have with what we're developing with oak PMT Theres area three.
Your question about how do we see the market place with generic Narcan I mean, this is always anticipated.
And it really relates to your first question around we still see this as a hugely differentiated drug that we are developing.
That can potentially save more lives and also when we think about the potential.
Cost per overdose.
We think given its higher potency faster absorption along that duration of action, we think that this could still make economic sense.
Regardless of the fact that increased potential to save who are alive and we believe that will be very well received by people out there in the public interest sector, who are currently.
The majority of people using.
If you'd overdose reversal agents as well as in the in the retail segment as well.
Because bear in mind. This isn't just although we think the attributes are particularly well suited for.
Antonella and synthetic opioid overdoses.
We still believe this will be.
At a drug to be used in all opioid overdoses, such as just opioid painkillers.
Hi.
I think those of you.
You can see there are three questions.
Moreover, otherwise that was a question on a U D, but if I captured everything you wanted them.
Sorry.
Hello.
The mute.
Hi, sorry for that.
Yeah.
Yeah no. Thank.
Thank you very much Craig.
So just moving on to our U D. I mean, yes, I'm aware of are exactly another company developing.
Our product for alcohol use disorder and failed.
In its first phase III study for several reasons.
Well firstly the attraction of AED remains particularly high given the fact that there's not many compelling products out there on the market.
What we're developing is quite different from what that product was though remains in that firstly, it's an entirely different mechanism of action. We are reduced we are using an opioid antagonist to reduce the effects of endogenous opioids.
When you drink alcohol. So the mechanism of action is different.
Second this drug now checks in the way of using has always been.
Jews and is FDA approved in the U S taken orally. So he's already got some demonstrated efficacy and safety for the fact that it's on the market as an oral compound and as a depot injection in the case of pivotal.
So that gives us.
My confidence.
And then the real differentiator is how we are able to deliver such a high dose of nasal naltrexone and a very short timeframe, which we think is really important too.
Coupled the peak enjoying that people are experiencing in their peak release of endorphins and being able to intercept that key moments in time and with the high doses of now Chuck said that we're delivering in a very short timeframe. We are also.
We also believe we have the potential to block was caused the delta opioid receptors, which are particularly implicated in alcohol use disorder.
And then finally, a phase two study design helps address one of the issues that we see.
More broadly and any CNS trials, which is that as a placebo response.
It's too much detail on this on this call, but I need to say that we have designed the trial to try and eliminated most of the placebo response as possible and we think that puts us in a good place.
Alright, that's very helpful. Thanks Roger.
Our next question comes from Carl Byrnes Northland Capital markets. Please proceed with your question.
Thanks for the questions and congratulations on your progress, particularly they noticed some patent allowance and the additional BARDA funding.
Just with respect to timeline if memory serves me when Narcan was initially approved it was a priority review and approved within four months is there any reason to think that Oh three may have a similar timeline.
Given given the ongoing Sentinel crisis, and the PK PD data that you've demonstrated.
And then I have a follow up as well.
I mean, we had very good interaction with the agency to date.
Do we believe we have a good ratio.
Paste to get priority review, especially on the back of fast track.
As well.
The precedent set by.
Of the opioid antagonist.
For opioid overdose.
And the fact to your point that.
By more naloxone being out of that and as it before.
That continues to skyrocket, so we think there's a.
A broader public health.
Need that we have the agency will be mindful off absolutely.
And you had another question yeah.
Yeah, and then a follow up to that is you know again, given the rapid onset of action the compare the favorable comparison with respect to reverse and respiratory depression and longer half life of 11, I believe it's 11.2 hours it seems pretty straightforward or logical to think that the public interest market.
Would adopt L. Three as a first line therapeutic right out of it.
Right away I mean, it would be almost unethical not to do so is that something you would agree with.
I mean is it vision for these customers absolutely as to how they would say our view is that given the data we have.
Absolutely. We believe that this has the potential to be first line and in this setting absolutely.
And do you think with with respect to that could be something specific in the label that would bootstrap that first line of defense position.
Well, it's I mean, it's unclear yet how exactly the label will will be so it would be premature to comment at this stage.
No worries I'll hop back in the queue. Thanks, so much.
Okay.
Our next question comes from Trevor Alright.
Please proceed with your question.
Hey, guys. Thanks for taking my question. So I guess can you just discuss the recent patent application and some.
Some thoughts as to why you anticipate will provide better protection and then beyond that what that which UBS has on Narcan and then can you also just give any granularity on how ebs supports their position with the 2% royalty rate this quarter. Thanks.
Sure in terms of the patent protection overall, we believe we're in a good position because.
We have.
Like approach to protecting the products. So passes in itself is a use and formulation patents and it builds on the excipient foolish, we have the exclusive license for which is intervale.
And the PK profile in particular.
Is she can be dependent on the use of <unk>. So we believe we are in a good position there.
And that patent goes out to 2037 and on the expectation it would be granted very soon.
And we also believe we have the potential to build on that with additional data we continue to generate on this product.
And that is in addition to the what we would expect it to be three years exclusivity just from a regulatory standpoint, because we've done the clinical study with nasal nalmefene. When we developed the narcan nasal spray that was no. Let's just PK work. There was no clinical study so one didn't get that three years exclusivity.
Either and likewise, the acceptance by using Intervale said, we have an exclusive license to this right.
The existence using their narcan nasal spray.
Well you know more like how can I put it off the shelf easily available excipient.
And then David can be paid in the second part of your question Trevor Thanks for the thanks for the question.
The answer to the question probably is not going to give you much more information but.
We really at this point can't comment or have really any insight on their motivation or the physician on why they decided not to follow the terms of the agreement.
Signed back in 2015 with adapt.
We believe that the terms of the agreement are very clear and I guess over the next 60 days, we will find out what their motivation and reason for doing that.
Okay. Thanks, David Thanks, Roger.
Ladies and gentlemen, we have reached the end of the question and answer session and I would like to turn the call back over to Roger Crystal for closing remarks.
Thank you operator, and thanks for joining us today and for your interest in open. Please enjoy the rest of your day. Thank you.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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