Q4 2022 Aytu Biopharma Inc Earnings Call
Okay.
Good afternoon, everyone and welcome to <unk>, two Biopharma fourth quarter and fiscal year 2022 financial results Conference call. At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation.
It's now my pleasure to turn the floor over to your host Robert Blum with Lytham partners, Sir the floor is yours.
Alright. Thank you very much good afternoon, everyone and as the operator said, thank you for joining us for todays eight two biopharma fourth quarter and fiscal year 2022 financial results conference call joining us on today's call is <unk> CEO , Josh Disbrow, and the company's Chief Financial Officer Mark.
Okay.
At the conclusion of today's prepared remarks, we will open the call for a question and answer session.
I'd like to remind everyone that today's call is being recorded a replay of today's call will be available by using the telephone numbers and conference I'd.
Provided in the earnings press release issued earlier today.
Finally, I'd also like to call to your attention the customary safe Harbor disclosure regarding forward looking information.
The conference call today will contain certain forward looking statements, including statements regarding the goals strategies beliefs expectations and future potential operating results of <unk> Biopharma.
Although management believes these statements are reasonable based on estimates assumptions and projections as of today. These statements are not guarantees of future performance.
Time sensitive information may no longer be accurate at the time of any telephonic or webcast replay.
Actual results may differ materially as a result of risks uncertainties and other factors, including but not limited to the factors set forth in the company's filings with the SEC.
<unk> undertakes no obligation to update or revise any of these forward looking statements with that said like to turn the event over to Josh Disbro, Chief Executive Officer of <unk> Biopharma Josh. Please proceed.
Thank you Robert and welcome everyone I'm pleased to be sharing this fiscal 'twenty two full year and Q4 review on the call and look forward to holding these quarterly calls going forward.
I am extremely pleased with the traction we are achieving in our commercial operations, we attained record fourth quarter and fiscal year net revenues, which are being driven by strong growth in our prescription business and high single digit annual growth in our consumer health segment.
As you saw in today's press release, the $18 7 million in prescription revenues was a new quarterly record for the company and up 28% compared to last year's fourth quarter.
The growth is largely being driven by the continuing execution of our sales force and the leverage we are gaining through <unk> Rx connect our novel and proprietary patient access program.
<unk> connect enables affordable predictable hassle free patient access to <unk> prescription products and along with our sales force is a cornerstone of our Rx business.
Our sales force is making incremental strides with our physician and patient centric messaging and we're experiencing tailwind from the growth of our key prescription markets, particularly within ADHD I will expand more on all of this in a moment.
Another milestone to highlight during the quarter with the achievement of positive adjusted EBITDA within our prescription segment. This milestone was achieved through a combination of operational improvements commercial execution strong prescription trends and positive market drivers. We believe these trends bode well for us as we enter fiscal 'twenty three particularly as we continue both our topline growth.
And margin improvement through the outsourcing of production of <unk>, XR, ODT and <unk> XR ODT to a contract manufacturer to further improve our bottom line now.
Now there will always be some seasonal variations that impact our commercial operations in any given quarter and in particular, our first fiscal quarter with kids out of school in the ADHD markets going softer. However, we are feeling great about the traction we are generating and are seeing solid prescription growth, we're seeing continuing growth as we've nearly we're nearly through our first fiscal quarter of 2003.
And we expect this to continue.
On the development front as announced in July 22, we initiated our global phase III prevent clinical trial events, a storm, which we which we call <unk> hundred one for the treatment of patients with <unk> positive vascular dealers danlos syndrome or beds.
Prevent stands for prevention of ruptures with Enzo stored for vascular <unk> Danlos syndrome.
<unk> is a rare genetic disorder typically diagnosed in childhood and characterized by arterial aneurysm dissection rupture bow rupture and rupture of the gravity uterus.
We've begun patient identification and study site contracting and have received regulatory clearance to initiate this registrational study in the United States and in numerous countries in Europe .
Spend more on this momentarily, but needless to say we are excited to have advanced air 101 to this critical point following several regulatory milestones this past year.
So before I dive into more specifics I believe <unk> is well positioned going forward. We expect continued growth in our portfolio of prescription and consumer health products and this organic growth when coupled with operational and manufacturing efficiencies as well as <unk>.
As well as portfolio prioritization that should drive us towards positive adjusted EBITDA for a complete commercial business.
This solid base, coupled with the clinical advancement of <unk> hundred one provides us with a unique ability to have a solid fundamentally driven commercial business, coupled with our high value pipeline opportunities to us this puts <unk> in a very exciting position.
Let's dive into the commercial business a bit more beginning with their prescription segment as a reminder, within prescription we operate primarily in two areas ADHD in pediatrics, we acquired our ADHD product portfolio in March 'twenty, one with the acquisition of Neo Therapeutics. The portfolio includes extended release stimulant medications formulated in patient.
Friendly orally disintegrating tablets that utilize the nios developed micro particle modified release drug delivery technology platform.
<unk> XR ODT and <unk> XR ODT, the first and only FDA approved amphetamine and methylphenidate extended release orally disintegrating tablets, respectively for the treatment of ADHD and Theyre, finding a well earned position in this large and growing ADHD stimulant category.
Mark will hit a bit more on the numbers, but across the board. We are seeing strong growth in the ADHD products, which contributed to $12 2 million in fourth quarter revenues and $42 9 million for the fiscal year.
The fourth quarter numbers, which showed 21% growth was on an apples to apples basis, given a full quarter of operations in last year's fourth quarter, highlighting the traction we are achieving.
<unk> on this at the beginning but to iterate the key drivers to growth can largely be attributable to three things.
Overall growth in the ADHD market as we continue to come out of the pandemic and see a normalization of diagnoses second by young energized and highly motivated sales force that is getting better and making more consistent strides with overall targeting an improvement of sales execution. We have a great team in the field. One is one that is populated with mostly new to industry sales professionals who are.
Barry Hungary.
They're getting their legs under them following turning on turning over much of the sales force in favor of this lower cost higher upside profile and we're excited about the traction they're all getting and finally.
The leverage we are gaining through <unk> connect as we continue to cultivate our roughly 1000 pharmacies in the key markets across the country are improved distribution channel drives growth for all of our prescription products to connect <unk> connect is a hidden gem of sorts for us and one we believe can be leveraged further in the future with our current products and new products, we may bring into the portfolio.
Yes.
One of the keys to continued improvement on the bottom line is the expected tech transfers of both incentives and <unk>. The process is well underway with the prospective contract manufacturer, including the conduct of the bioequivalence studies and other FDA mandated work. It is our goal of having everything finalized and the CMO manufacturing our products in calendar 'twenty three.
A site change stands to improve the gross profit margin of the ADHD products by 15% or more of a meaningful step change that if achieved will further improve our improving P&L.
On the pediatric side, our portfolio includes poly VI, Flor and Tri VI Flor two complementary prescription fluoride based multi vitamin products that contain combinations of fluoride and vitamins and various formulations.
We also market carbon <unk> ER, an extended release carbon oxiclean based F. Antihistamine suspension indicated to treat numerous allergic conditions for patients two years of age and older. These products serve established pediatric markets and offer distinct clinical features and patient benefits over the branded and generic competitive products during.
During the quarter, we achieved 64% growth in revenues from a prescription pediatric segment with revenues growing to $6 1 million in the quarter.
The key driver here is the same improvement in sales force execution and the Rx connect leverage we discussed combined with a solid payer environment, particularly for the multi vitamins, which has provided some tailwind for the products.
Overall, we feel confident about the traction we are achieving in our prescription segment as mentioned, we experienced 28% revenue growth in the fourth quarter, which produced a positive $1 1 million in adjusted EBITDA with continued growth in the cost reduction measures in place. We believe we can only continue to improve upon this in the quarters to come.
Let's transition to our consumer health segment now for fiscal 'twenty. Two net sales were $35 5 million within the consumer health segment, an increase of eight 8% compared to fiscal 'twenty. One we achieved this high single digit year over year growth. Despite some short term supply chain disruptions, which is something most of us have experienced as of late but we believe these.
<unk> had been addressed.
For those not familiar within consumer health, our core product focus in categories, such as hair loss digestive health Urological health diabetes management and allergy all products are intended to be used by consumers on a regular basis and as such we offer a monthly subscription program to allow for ongoing use and to simplify product ordering and used by customers we sell.
We to consumers through e-commerce platforms, including branded websites and the Amazon platform. Additionally, the segment sells products through our proprietary sales and marketing platform, which focuses primarily on direct mail, allowing customers to purchase directly through business reply or through call centers with shipment directly to their homes.
The high single digit growth for the year within consumer health was primarily due to solid growth in the Amazon channel coupled with new product launches importantly, we made a strategic decision prior to fiscal 'twenty, two and through the year to pivot our efforts more to the online channel with a primary focus on improving our visibility on and sales through Amazon.
While we could have driven revenue by continuing to focus on the direct mail centric business very clearly to us the opportunity to scale. This consumer business and to generate profit lies with driving growth of the online business. This shift to more E. Commerce has borne fruit in this channel will be our primary focus going forward on the consumer side, while we supplement with the direct to consumer sales of dietary.
Supplements and personal care items I do want to point out again that we were a bit constrained during the fourth quarter. This year due to some supply chain issues with some purchase orders being delayed this was not unique to us and we believe the issues have been resolved.
During the year, we had a consumer segment adjusted EBITDA loss.
The $4 $9 million in this business and a $2 $1 million loss in Q4, again, noting that Q4 supply chain disruptions lowered our revenue line, which in part contributed to this uptick in EBITDA loss.
As we look to the future our goal continues to be to significantly shrink these losses each quarter with the goal to run the business with positive adjusted EBITDA in the relative near term given the revenue growth and operating improvements. We believe are ahead. We're excited about the brands performance through our online channels and the pipeline of OTC medicines that we're rolling out over the coming quarters, we continue to add new brands to the platform.
<unk> inclusive of the Amman pharma sterile I ear and nose products, along with other products in the allergy category for which we just signed to supply agreement.
So when you look at this from a 30000 foot view I believe we have a solid fundamentally driven commercial business fourth quarter revenues were up 17% to $27 4 million, placing us on an annual run rate in excess of $100 million.
Our prescription segment was adjusted EBITDA positive in Q4 with expectations for further growth and cost reductions going forward, both of which should benefit the bottom line.
With continued growth in our commercial health segment excuse me consumer Health segment. We believe we can drive the total commercial businesses, both Rx and consumer to positive adjusted EBITDA as well in the coming quarters. This is exciting to see this component of our business have the potential to be self sustaining in the relative near term, which dramatically changes the way we think about funding on a go forward basis.
We recognize there are lot of moving parts within the business and we hope. This detailed breakdown provides you the added detail to see the operational achievements, we are making within our commercial ops.
So with that let's transition to our development pipeline led by our development of <unk> hundred one and the storm for the treatment of patients with KOL III, a one positive beds as I mentioned in July we announced the initiation of the global Phase III prevent trial of <unk> hundred one the prevent trial is a prospective phase III global randomized double blind placebo controlled efficacy study.
<unk> designed to evaluate <unk> in patients with genetically confirmed <unk> hundred <unk> positive beds. The primary aim of the trial is to determine whether <unk> reduces the occurrence of beds related arterial events, requiring medical intervention compared to placebo or standard of care, we expect to enroll approximately 260 <unk> one confirm beds.
As in the prevent trial.
As added background <unk> hundred one is an oral investigational first in class small molecule series theory.
<unk> kinase inhibitor of the PKC, Matt Kay Art pathway are one on one has been studied in more than 3300 patients across a range of tumor types in trials previously conducted by Eli Lilly.
Dr. Hal <unk> of Johns Hopkins develop the first preclinical model that mimics the human condition and recapitulates beds and this model serves as the basis for the plausible clinical benefit and rationale for conducting a clinical trial with <unk> hundred one in beds. This novel Knockin model has the same genetic mutation most prevalent and vets patients and is represented.
<unk> of the human condition and both the timing and the location of vascular events. The model has generated identical structure histology and mechanical characteristics and unbiased findings have now demonstrated that vascular structure alone does not lead to vascular events is increasingly understood that through objective comparative transcriptional profiling by high throughput.
Foot RNA sequencing of the aorta excessive PKC Burke cell signaling is that reported driver of disease.
To establish that further the PK ins PKC inhibitor ends a storm or <unk> hundred one was studied in the deep slab improved efficacy efficacious in multiple preclinical models and indeed prevented deaths due to vascular rupture. So based on this research nature has seemingly found a way to treat this devastating disease by turning down this aberrant cell signal.
Leading to a reduction in arterial events.
We have secured exclusive global rights to <unk> hundred one in the fields of rare genetic pediatric diseases outside of oncology and also have global rights to the intellectual property developed by Dr. <unk> surrounding these beds related treatment methods in December 'twenty, one the FDA granted orphan drug designation to <unk> hundred one for the treatment of eds inclusive of beds, allowing for seven years.
A marketing exclusivity in the United States in March of 'twenty. Two we also received orphan designation in the EU, allowing for 10 years of marketing exclusivity in the EU.
The FDA has cleared the IND application for <unk> hundred one which enables us to proceed with initiating a pivotal clinical trial for <unk> hundred one.
In terms of upcoming key milestones for <unk> hundred one we are waiting one more country approval in Europe to reach our standard stated objective of five country study sites.
We have been approved in the U S plus for the five European countries and once we received the final European country approval will be in a position to dose. The first patient at this point, we expect to start screening patients in late 'twenty two with first patient enrollment in the early part of 2023.
We look forward to reporting on the progress in the months to come.
Now a quick update on <unk>.
On April 22, we announced positive preclinical data in ventilator associated pneumonia or bap for <unk>, our proprietary UV a light into tracheal catheter based on these positive data. We have now initiated a second larger pig study at the hospital clinic de Barcelona under the supervision of Dr. Tony tourists and we expect this study outcome to guide the further development of <unk>.
Lights for patients with FAP.
Following the completion of this <unk> study and we now expect to explore monetization opportunities for <unk> potentially in the form of regional or global out licensing arrangements. We do not anticipate further so giving development without a partner to finance further development.
Partnering could be in the shape of out licensing a portion or all commercial rights to <unk> in exchange for meaningful consideration.
Before I turn it over to Mark I'd like to remind all stockholders about the special meeting of stockholders that is scheduled for next Wednesday October the fifth we have received a significant number of boats already and we appreciate the support of our stockholders have shown as the meeting approaches. We're pleased with where we are in the vote tally I'll remind you that we are asking for a vote in favor of enabling our board of directors to author.
<unk> reverse split if it should become required in order to maintain our NASDAQ listing.
I want to note that while they vote in favor of the reverse split gives the board the authority to implement a reverse it would not require that the board effective at this time, we expect to implement a reverse split only if it truly becomes necessary. After further discussions with NASDAQ around potential extensions, which they may very well allow.
If an extension to the 120 to 180 day Grace period is granted by NASDAQ, We expect to take all the time needed to increase the share price without having to effect a reverse split if we are granted an additional 180 day grace period by NASDAQ that extension would take us into may of 2023.
So we would have that long to evaluate the share price and general market conditions to see whether a reverse split does indeed have to be implemented at that time.
So next week's vote in favor will give us the ability to effect a reverse stock split, but does not obligate us to do so in the near term. We do believe having this vote in hand is important in the event that we do need to effect a reverse split at the appropriate time in order to maintain our NASDAQ listing.
Thanks for your support in this important matter as we approach next week's meeting with that overview and my initial comments now complete let me turn it over to our CFO Mark Oki to add some additional color to the numbers.
Thank you, Josh and welcome to everyone joining us on this call let.
Let me build upon comments that Josh has already provided starting with revenue.
Net revenues for the fourth quarter of fiscal 2022 was $27 4 million compared to $23 5 million for the fourth quarter of fiscal 2021.
A 17% increase for the year net revenue was $96 7 million compared to $65 6 million for fiscal 2021, a 47% increase.
Breaking down the quarter net revenues from prescription sales in the fourth quarter of fiscal 2022 was $18 7 million compared.
Compared to $14 6 million in the same quarter last year, an increase of 28%.
ADHD experienced 21% growth in net revenue to $12 2 million in the fourth quarter of fiscal 2022 compared to $10 $1 million during the fourth quarter of 2021.
The prescription pediatric portfolio experienced 64% growth in net revenue to $6 $1 million and our 2022 fourth quarter compared to $3 $7 million in our fourth quarter of 2021.
For the fourth quarter of 2022 net revenues from consumer health France.
Summa health franchise was $8 7 million.
<unk> to $8 9 million in the same quarter last year.
A decrease of 2%.
This decrease was largely driven by the short term supply chain disruptions Joshua mentioned earlier.
Looking at the year net revenues from prescription products for fiscal 2022 was $61 1 million compared to $32 $7 million in fiscal 2021.
An increase of 87%.
ADHD experience, 294% growth in net revenue to $42 9 million in fiscal.
2022 compared to fiscal 2021.
As a reminder, the ADHD products was acquired in March of 2021 and reflect the prior year stub period of ownership.
Prescription pediatrics experienced 29% growth in net revenue to $16 1 million in fiscal 2022 compared to $12 4 million for fiscal 2021.
Net revenues for fiscal 2022 from the consumer health franchise was $35 5 million.
Compared to $33 million.
Last year, an increase of 8%.
You will notice in the press release that we have a salt small amount of other prescription revenue for this year and last year. This other pertains to COVID-19 related test kits and discontinued or de prioritize products. While the amounts were relatively small in the fourth quarters of both years. They were larger in the context of the full year were sales.
Decreased from $9 $4 million in 2000 $21 million to $2 million in 2022.
This is largely due to decrease in COVID-19 related test kits. Despite the loss of revenue.
Some of these older discontinued or deep prioritize credits, we still grew prescription revenue, 87% following the <unk> acquisition.
Gross margins were 54% in both the 2022 fourth quarter and full fiscal year compared to 48%, 44% respectively. In the same periods in fiscal 2021.
This improvement in gross margin percentage was primarily driven by improvements in the ADHD and pediatric product lines.
Result of cost reductions and greater volumes.
On the Opex side for the fourth quarter of 2022, excluding impairment expense and amortization of intangible assets operating expenses were $21 1 million compared to $25 $6 million.
In the same period, a year ago, a decrease of <unk> 5 million.
Search and development expenses were $3 7 million in the fourth quarter of 2022 compared to $4 8 million in the 2021 fourth quarter.
Of this $3 7 million.
One five was a milestone payment earned upon the achievement of an <unk> 101 regulatory milestone.
Looking at the full year, excluding impairment expenses amortization of intangible assets operating operating expenses were $84 3 million in fiscal 2022 compared to $69 2 million in fiscal 2021.
The change was primarily the result of the acquisition of deals, which was which was completed in March 'twenty one.
19th 2021.
Research and development expenses were $14 4 million in fiscal 2022 compared to $5 6 million in fiscal 2021 the.
The increase in R&D was primarily related to investments made to advance <unk> hundred one.
<unk> of $4 million in milestone payments earned which were paid in a combination of cash and stock.
During the fourth quarter of 2022 net loss was impacted by an by an impairment of $10 $8 million due to the $8 6 billion impairment.
Impairment of goodwill associated with our 2022 and there was acquisition driven.
Driven by the decline in <unk> market capitalization.
And $2 $2 million impairment due to the discontinuation of certain consumer products.
For the full fiscal year the company recognized a total impairment expense of $75 5 million.
This consisted of impairments.
$65 $8 million of goodwill again a.
<unk> of the decrease in our market capitalization seven.
$7 1 million.
Tangible assets $2 million of inventory.
$4 million of other assets and $2 million of property and equipment.
The impairment expense related to write down of assets.
Excuse me the impairment expense related to the write down of assets was due to the discontinuation of commercialization commercialization commercializing certain products as both our prescription and consumer segments.
During fiscal 2021, the company recognized impairment expense of $12 $8 million related to the impairment of transistor and the test out licensed intangible assets, which were divested on March 31 2021.
Net loss for the fourth quarter of 2022, lids, $17 7 million or <unk> 49 per share compared to $19 million or <unk> <unk> per share for the same quarter last year.
For the year net loss was $110 2 million or $3 75 per share compared to $58 3 million or $3 48 per share in fiscal 2021.
Again net loss was significantly impacted by the impairment expenses of $75 $5 million in fiscal 2022, and $12 8 million.
In fiscal 2021.
Given the impact from the impairment the bifurcation between our commercial operations and our development operations. We have included tables in the press release that helped provide added color to our operations.
These tables labeled <unk> and <unk>.
To calibrate the impact of certain items, including depreciation and amortization impairment expenses and other noncash items, we encourage everyone to review the tables in detail. So let it just for what add backs were made.
For the quarter adjusted EBITDA from our prescription and consumer segment was only a negative $961000 compared to a negative $8 2 million in last year's fourth quarter.
So the full year. This was a negative $10 4 million compared to a negative $38 million in fiscal 2021.
Taking it down by operating segment prescription adjusted EBITDA was a positive $1 1 million.
Compared to a negative $5 $5 million in the fourth quarter of 2021.
For the year prescription adjusted EBITDA was a negative $5 5 million compared to a negative $25 5 million in 2021.
And in the consumer Health segment, adjusted EBITDA was a negative $2 1 million for the fourth quarter of 2018.
<unk> to a negative $2 7 million in the fourth quarter of 2021.
As I previously discussed consumer health segment was negatively affected by the supply chain shortages during the fourth quarter of 2022 for.
For fiscal year 2022, it was a negative $4 9 million compared to a negative $5 $3 million in 2021.
Again full reconciliations are provided in the tables included in today's press release.
Finally on the balance sheet cash and cash equivalents at the end of the fiscal year ended June 32020 to $19 4 million.
Subsequent to the end of the year, we raised $10 million in gross proceeds and a registered public offering full.
Full details of all these financings are included in our 10-K.
With that let me turn it back over to Jos.
Thank you Marc let me just conclude with where I started I am extremely pleased with the traction we are achieving in our commercial operations as we achieved record fourth quarter and fiscal year net revenues driven by strong growth in our prescription business and high single digit growth on the year in our consumer health segment through operational improvements commercial X.
<unk> and positive market drivers, we have delivered positive adjusted EBITDA in the fourth quarter within our prescription segment.
We believe this bodes well for us as we enter fiscal 'twenty three particularly as we continue both our topline growth and margin improvement through the tech transfer with Zen it's to put template to further improve our bottom line as.
As we look to the future I believe we are well positioned as we expect continued growth in our portfolio of prescription and consumer health products. This organic growth when coupled with operational and manufacturing efficiencies as well as portfolio prioritization should drive us towards positive adjusted EBITDA for our commercial businesses. This solid base, coupled with the clinical advances.
<unk> hundred one and our phase III prevent clinical trial for the treatment of patients with beds. It provides us with a unique ability to have a solid fundamentally driven commercial business, coupled with our high value pipeline opportunity to create value for the future. We look forward to that future with tremendous optimism.
I appreciate everyone's participation on the call today and now we'll be happy to answer questions.
Operator.
Thank you ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please indicate so now by pressing star one on your Touchtone phone.
Pressing star two will remove you from the queue should your question to be answered and lastly, while posing your question. Please pick up your handset if listening on speaker phone to provide optimum sound quality. Please hold while we poll for questions. Once again Thats star one if you have a question or comment.
And the first question is coming from Vernon.
With H C. Wainwright your line is live.
Hi.
Thanks for taking my question Hi, Josh Congrats on the strong results.
And the progress with <unk>.
The star and I was just.
Just wondering if you could talk a little bit about the.
The discontinued products.
If you could.
Either.
Tell us what they are.
Perhaps characterize.
What decision process, you made to de prioritize them.
<unk> perhaps.
Some idea of the cost of sales of those versus the cost of sales of <unk>.
Other.
Consumer health products.
Yeah, Thanks, Vern and appreciate the call and the questions I'll have mark filling if theres anything I Miss on but generally speaking the discontinued products or were a drag on the companys bottom line. These were relatively small revenue players.
And actually contribute an aggregate negative gross margin over the last year plus and so these were these were not products that we are that we're going to be long term growth drivers as you likely recall before the pandemic, we acquired a product line from Sarah core that we referred to as the pediatric product line and really the centerpiece of that portfolio was what.
We've identified as the core pediatric brands today Poly VI Flor try buy four and carbon all and we brought some additional products that while they were revenue contributors.
We did not expect them to be big growth drivers and again contributed largely negative gross margins. So relatively de minimis revenue that comes from that and a pickup in the context of us being able to to pick up.
Reverse some of that negative contribution margin and then we did discontinue a I'll remind you.
In the tester, we discontinue that along with <unk> back in March of 2021, when we were on the precipice of closing the deal with <unk>, we entered into negotiations with two separate parties to return those assets back to the originators and did that while in the Tesco did contribute some revenue the.
<unk> was de Minimis and so frankly it was addition by subtraction. When you look at all of those products and this is all to say, we're squarely focused on our core ADHD in pediatric brands. Obviously, it's NSX <unk> XR is the lion's share of the revenue, but really the pediatric products poly VI Flor Tri VI Flor in carbon all are really beginning to be meaningful growth drivers for the <unk>.
Company and this enables us to focus squarely in pediatrics in ADHD removed. The distractions of these noncore products that were a drag on the Companys bottom line. So hopefully that gives you some perspective.
Terrific It does.
I have one follow up question, but I'll get back in the queue for now.
Okay.
Once again, if you have a question or a comment please press star one on your Touchtone phone.
Okay, well I have a follow up from Brendan Vernon Your line is live.
Hi, Thanks for taking the follow up here.
He liked.
The device has always been interesting to me.
Our current activities related to that and perhaps you mentioned.
Monetization opportunities, but what perhaps is.
The current Covid.
The environment is.
How one may perhaps advance the product into.
Either.
Clinical development or even just the experimental further use.
Yeah. Thank you Brandon So just to recap. We're obviously hele light started was the concept of potentially treating Sars koby to the COVID-19 virus and while it did show early promise.
We began to make a pivot when it really became clear that now.
Clearly the market has found ways to solve for Covid at least in large part through vaccinations and some of the treatments that have since received authorizations.
But what was clear from the beginning is that this was going to be a device that had far more potential than just Sars COVID-19 two inclusive of severe pneumonia and then specifically with respect to ventilator associated pneumonia and so that's where we find ourselves now with in the throes of a preclinical study at the University clinic to Barcelona under the supervision of Dr. Tony Torres is too low.
And a very refined sophisticated ventilator associated pneumonia pig model, which is really kind of the gold standard in one of the only places on the planet that employs such a model to look and see can we to either delay the time of onset of that potentially prevented altogether and so where we stand is we are we are in the midst of a larger <unk>.
Study after completing a relatively small one to demonstrate proof of concept that in fact, the rates of pseudomonas and the ability to delay onset of Pseudomonas driven that was significant and so we need to do a larger study now and that will in turn inform our decision about where we take development and frankly, we're excited about what this could mean for us.
A couple of perspectives the ability to focus on our core business, which as I mentioned is our commercial business and advancing <unk> hundred one towards the first patients getting dosed in the prevent trial, but it also enables <unk> to potentially get into the hands of a larger larger company that may be more focused in respiratory illnesses anti infectives.
And already has a presence in major Europe European hospitals, and so forth and we think there could be a meaningful opportunity to get to get non dilutive funding in through an out licensing deal through a company that has more resources than we currently do.
You can't be all things to all people what we've what we've said over the last year plus following our transition into a pediatric ADHD company is we'll consider all opportunities to bring in additional sources of funding and we think he'll like could represent a really good source for that so we've kicked off the process and more to follow as to what might come from that but excited about the ability.
To get it into the hands of a company that can really resource it and drive something meaningful.
Through.
Through a potential out licensing deal.
When might we.
See results from.
Those studies and the peg and.
I guess that's it.
Yes so.
I don't want to give you specific guidance because its all depends on the.
The workflows within a large hospital and of course, that's anything but predictable. These days, but I think it's realistic to think that late this year. Early next we will have a read on the porcine model to understand what we do from there and whether we pursue more of a preventative type of approach, which we have which would be a different protocol in a different sort of set of studies versus whether we go after a treatment the bigger opportunity frankly is.
Preventative to go after that is the bigger market, where you can envision that.
Every hospital is employing this as part of their standard operating procedure for any high risk patient that comes in with a respiratory illness and has been and needs to be mechanically ventilated. So excited about what this could mean and I don't want to signal necessarily that we fully expect to get a deal done we are starting the process and given.
What we perceive is a very exciting opportunity.
There could be something a meaningful deal that gets done with your life.
Terrific. Thank you that's very helpful and perhaps defining the opportunity I appreciate you taking my follow ups.
Thanks Brendan.
Okay. The next question is coming from <unk> Kulkarni with Canaccord.
Your line is live.
Good afternoon, Josh Mark Thanks for taking my question could you give us a sense of what the cost of the prevent study might be for them to start and then <unk> and how that might play out.
The cash in hand, right now.
Yes, thanks to Mark good to have you on the call. So what we've what we've discussed in a general sense is that all in up to the up to the interim analysis, which would be kind of a go no go.
It's about a $16 million to $17 million spend its about an $8 million annual spend so that's about a called out 24 months out.
If we get a positive indication from either an efficacy perspective, or it's a primarily being oriented as a safety read just to make sure that we.
The safety profile to enable us to add in some adolescent patients.
So at the very least it would be okay. Now it's safe to add in adolescence go back to the F. D. A.
It is powered and we have afforded ourselves alpha is such that if there is a significant and statistically significant response, there could be an unwinding of potentially able enable.
Filling for benefit at that point. So so generally speaking think of it is about an $8 million annual spend over two but could be three years, assuming that we don't.
We don't necessarily expect to get to an interim read from an efficacy perspective. So there may be another year added onto that so think of about as an 88 or so million dollars annualized spend all in.
Got it thanks, a lot and then now that you have.
Further along on the prevent trial could you give us a sense of what the latest discussions have been with the FDA if any.
The FDA has been relatively quiet because we got to a good agreement on the protocol.
We got really everything that we needed out of them in terms of a real clear endpoint exactly what theyre looking for and so we.
If anything we've had more interactions with some of the European.
Regulatory agencies getting ethics approval getting the country by country Cta is approved and we have that in four of the five countries at this point from an FDA perspective, we've been.
Now I say signed sealed and delivered for multiple months really just wanting to synergize and make sure that we've got all of the runners at the starting line on both sides of the Atlantic.
Such that we can maximize the stats plan too to make sure that we were accruing for the right number of events and the more we can frontload that the better so FDA has been more or less in our camp everything solid obviously got the got the fast track designation, which obviously allows for sort of much more frequent and ready access to the FDA and so we're excited to have gotten agreement from them relative.
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And are now in a position to really just again get the runners to the starting line.
Got it thanks for the detail.
Thank you so much.
Okay. If there are any final questions. Please press star one on your Touchtone phone once again Thats Star one if you have a question or comment.
Okay. It looks like we have no further questions in queue I'd like to turn the floor back to management for any closing remarks.
Thank you John and thanks to everyone for attending today's call and for those that joined via the webcast online I Hope you can hear my enthusiasm hope you share the excitement of what we've accomplished here. This past year significant transition has taken place and we're really excited about the progress thats been made looking forward to the future on continuing to grow the commercial business. We're obviously.
Excited about the fact that we crossed over the EBITDA positive line.
On the Rx side expect to continue to see improvements we expect to continue to advance towards the first patients getting dosed in the prevent trial. So again, thanks for the support thanks for your continuing interest in <unk> for those of you that are shareholders and have not yet voted your shares we would ask you to do that in consideration of certainly the import.
So maintaining our NASDAQ listing and so appreciate everyone that hasn't voted doing so and again. Thank you for your support and for taste or for your time on today's call everyone have a very good evening or afternoon, depending on where you may be thanks, very much have a good day.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Okay.