Q3 2022 AcelRx Pharmaceuticals Inc Earnings Call
From large national accounts in these specialty areas.
As previously disclosed we're in active discussions with a larger more resource commercial organizations to potentially partner to serve you to build upon our success and maximize the Cvs value.
We expect to finalize the transaction this quarter.
Our European partner <unk> initiated its launch of <unk> in Europe last month I get that.
We'll be implementing insights learned from our launch and commercialization of <unk> in the us to facilitate a broad and smooth rollout of <unk> to physicians in the European markets.
So let's move now to our first pharma stock product that is being developed for use in the U S. As an anti coagulant for extra coil circuits such as for use during dialysis.
Now it is being regulated as a device by the FDA given on its mechanism of action takes place outside of the body within the extra proposal circuit to anti coagulate circuits filter.
The <unk> is approved and widely used as an anti coagulant for dialysis in Japan, and South Korea, and we are the first to develop it for such use in the United States.
We plan to submit our EUA for an AD to the FDA upon successful completion of our first cgmp production run and once stability data is available.
Based on written feedback from the FDA, we are optimistic about the prospects of receiving this authorization given the recognize significant unmet medical need for patients undergoing continuous renal replacement therapy.
In particular, the FDA has noted that certain health care facilities are ill equipped for the use of such rate the alternative EUA product for this indication.
We believe <unk> could address the signet significant unmet need for the 60% of patients for whom existing anti coagulants like heparin or situate or not used.
We believe that Citron has many practical limitations due to safety risks and complexity of administration, yet due to the high unmet need it has been granted in the U S.
As previously disclosed the FDA assigned to <unk>, a breakthrough device designation, which provides us with several advantages as we work towards gaining regulatory approval. The most salient being additional FDA input during the development and submission processes as well as a priority review.
Once an approval submission for the device has been filed.
Furthermore, CMS has already assigned an ICD 10 procedural code from the famous that's used in the extra <unk> circuit and this will facilitate reimbursement for the product when it's commercially available.
In addition, we plan to seek final FDA approval after conducting a single Registrational study of 160 patients with endpoints that have already been agreed upon with the agency.
And as we've stated in previous communications, we believe that the potential peak sales per night, Ed could exceed $200 million annually as the only regional anti coagulant labeled for use in this indication in the U S.
And this is attributed to just the inpatient and outpatient dialysis markets.
Excluding use than any other extra proposal circuits.
Consistent with our priority to advance our pipeline of late stage assets, we continue to progress towards filing NDA for our veteran and funnel reference prefilled syringe product candidates or PSS products that we in licensed from <unk>.
Our lead candidate is PFS or one where our bedroom pre filled syringe.
The benefits of pre filled syringes include less waste improved safety convenience of not having to dilute and prepare the syringe and advanced procedures and an improved shelf life.
And based on Agatize label, the expected shelf life of the ephedrine pre filled syringe is three years.
Again, we plan to submit the NDA for our first pre filled syringe of <unk> by the end of this year with a second following next year.
With potential approval of an NDA for our effective pre filled syringe.
Commercialization could occur as soon as next year as stated previously we believe that the market opportunity for these assets exceeds $100 million.
And we believe we will be able to obtain a significant share of this market with minimal investment since most of the commercialization efforts are expected to be through contracting with group purchasing organizations and hospital networks.
Now before handing the call over to Rafi I want to reiterate our belief in the high market potential medical promise for <unk> and note. The continued enthusiasm of researchers and key thought leaders.
For example in October we announced the podium presentation made by Dr. Jeffrey <unk> at plastic surgery. The meeting 2022 held October 27 through the 30 <unk>.
This was a presentation of an important study of the <unk> invest.
Investigated in a large cohort of plastic surgery procedures with significant results.
This study entitled experience in complex outpatient plastic surgery procedures using sabbatical sublingual tablets was conducted in 324 plastic surgery cases and reported many positive benefits of <unk> <unk>.
<unk> for example, the ability to perform complex extensive cosmetic procedures without general anesthesia, allowing for a rapid discharge time.
Also last month, we announced two abstracts that were presented at the Anesthesiology annual meeting 2022.
The first abstract presentation was from a 190 patients investigator initiated trial conducted at Brigham and women's hospital, comparing the use of <unk> versus intravenous opioids for the management post operative pain following spinal surgery.
The study found that such patients had significantly lower reported post operative pain scores when treated with the <unk> versus intravenous opioids.
The second abstract presentation was by the uniformed services University of the Health Sciences, which is the nation's federal Health Sciences University.
In this abstract the authors recommended adoption of the <unk> by the department of defense to improve pain management in the battlefield setting.
These and other recent publications provide continued endorsement of the value of the studio both for patients experiencing acute pain in the MLP swear by setting as well as for those serving in our military who would benefit from a more practical and safer alternative for acute pain management.
In addition, Cleveland Clinic recently completed a study on the use of <unk> in orthopedic surgery patients with publication expected in the coming months.
Beyond the procedural suites, signing distributors largest customer is the department of defense. This large customers many different purchasing points across various areas of the armed services. In fact other branches of the military including the U S Air Force and U S. Navy have recently placed are initiated their first orders for distribution.
That said, we're still focused on the U S army knowing that the largest opportunity for <unk> is within their sets kits and outfits or S cargoes for deploying troops.
Throughout this past quarter, we have continued to conduct multiple meetings to support the <unk> acquisition process and we believe that our efforts are finally, gaining momentum to ensure distributors broader adoption within the U S Army.
In the meantime, the army continues to make purchases for their stockpiling program.
I'll now hand, the call over to Rafi to take you through the third quarter financial results.
Thank you Vince our financial position remains solid with $29 million in cash at September 30, and $7 $4 million in senior debt our debt continues to reduce each quarter as we reach maturity in June 2023.
<unk> sales increased 217% from Q3, 2021, and 51% compared to the nine months ended September 2021.
<unk> has continued to demonstrate in the procedure growth in the procedural suite market with a very lean sales team consisting of only four total commercial head count.
We remain steadfast in our belief that the <unk> full potential can be maximized by a partner with more resources.
The adoption of <unk> for use in procedural suites for specialties, such as plastic surgery oral maxillofacial and E&P continues to remain the largest driver of the CVA sales.
The procedural suite market represented 74% of all commercial sales for <unk> in the third quarter of 2022 inch.
Increasing from 51% in the third quarter of 2021.
We believe that the work performed to date with.
With targeting procedural suites has provided our potential new commercial partner our platform for increased growth.
We expect to finalize the transaction with a potential partner by the end of this year.
Total net revenues in the third quarter of 2022 of 0.5 million declined $1 4 million compared to the same period in 2021 due to the recognition of $1 7 million in revenues in the third quarter of 2021 attributed to an upfront payment received related to our <unk>.
<unk> European licensing agreement.
We are excited to have <unk> launching <unk> as <unk> branded in Europe , which we believe will further support brand recognition here in the U S.
Excluding noncash depreciation and stock based compensation, our third quarter 2022, combined SG&A and R&D expenses were $5 7 million compared to $8 $6 million in 2021 the.
The decrease in combined SG&A and R&D expenses in Q3, 2022 was mainly driven by lower personnel related costs and a reduction in <unk> related selling expenses.
We continue to evaluate our existing cost structure further potential savings to extend our cash runway.
I'll now turn the call back over to Vince.
Thank you Rafi and I'd now like to open the lineup for any questions you might have Danielle.
We will now begin the question and answer session to ask a question Kiera Quest Star then one on your telephone keypad.
We are using a.
A speakerphone please pick up your handset before pressing the keys.
Withdraw your question. Please press Star then two.
The first question comes from Brandon Folkes of Cantor Fitzgerald. Please go ahead.
Alright, Thanks for taking my questions and congratulation on the progress.
Well, let me just firstly on for me.
We're not that far from year end. So can you just elaborate and lack of visibility on how close you are to a deal on the CVA and how should we think about the range of possibilities is this a complete divestment of dyskinesia youre pursuing or.
A number of potential specialty subspecialty partnerships.
Hi, guys, Hey, Jonathan when you move on Tomorrow.
Yes, we're going to have Ralph you answer that he has been deeply involved with.
The participants in the discussion on <unk>.
Yes, I think Brandon the structure is.
It's still a bit open but the way we're seeing it is.
We would divest <unk>, but.
But maintain.
The long term upside through some sort of milestone milestones and royalty structure.
And we're also in discussions to keep a piece of that.
Where we would continue to sell and one of the main sectors, but that's all still being a valued with the participants we're talking with right now.
Okay I appreciate that given the sort of cyclically came on there. So that's helpful and maybe just switching to know Ed Anthony.
Any gating factors to the night locked at this stage is it just stability has there been manufactured and put on stability or anything else.
We should think about there and then from the same line.
Yep.
How would you characterize the interactions with the FDA currently.
Hey, John track. So that's great and then how should we think about timelines for review of this UA.
Yes, I think evolving set of another one on the EIA then COVID-19. So can you just level set our expectations.
In terms of timelines on the EUA.
Because of the review timeline.
Sure Brandon This is Vince so we'll start with the first portion of your question, which was on gating factors or direction from the FDA on gating factors was clearly around CMC, So thats, where we put all of our efforts here in 2022.
As mentioned, we successfully produced our first test run of it all specs being met we are in the process right now putting it up on stability with the final manufacturing runs so the clock will be moving on that so we feel good about the CMC I think one important factor as well.
Also evaluating multiple alternatives to manufacturing on our own we're synthesizing it on our own through other potential partners that could even potentially accelerate that EUA submission. So we're heading down multiple paths to be sure that we achieve our goals in early next year.
Timelines for an EUA on how to think of that you can't I think it's all over the map based on everything we've researched and study that could happen quickly. They could take months that you might take more than months I think significantly depends.
The disease state within which you are operating how it is being affected by the current environment.
I think importantly, we're actually working on some additional research and information here that Pam can comment on in particular relative to physicians and what they're seeing with the current environment, how it's affecting them.
Continuous renal replacement therapy.
We are conducting market research on a 150 kidney specialists intensity similarly examining their issues with the crude.
See our key anti Coagulants.
We're really looking at the impact that Covid has had.
<unk> has just agreed to maintain COVID-19 public health emergency.
Past January it's still an issue we don't know how bad this which is going to be yet so.
They've got issues, they've got CRT patients that meet anticoagulation and we are just thrilled to move this forward and really help these patients out hopefully with that EUA.
So not a perfect answer on timelines of EUA, because there is no standardization, but.
We're working aggressively to accelerated as much as we can.
Alright. Thanks, so much maybe one more if I may and then I'll hop back in the queue can you just update us on your conversations maybe with.
Physicians in practice.
Yes.
The fact that you're getting your line of business.
Need, but given that this product hasnt been a market for so many years in the U S significantly in that market in the U S.
How difficult or how much work do you think there has to change.
How about just treatment standard ahead of <unk>.
Ahead of the ramp, but just once you've launched how quickly I guess do you think.
You can convert.
And just over to ignite.
Yeah, Brandon, it's a small group of specialists.
They really operate off of.
Sort of.
Calling the colleague information the guidelines certainly we've been working with the right. The guidelines, we had a important sort of Kols call I think it was last may.
Where doctors to recall scheme.
<unk> went over the advantages of <unk> hemostat in a recently published study that showed the benefits of Ms Amosite overstitch rate.
By tactical scheme so.
There's a small group they write the guidelines together they all get together at meetings and so word travels very fast we're not looking at this being a huge commercial.
The expense to get famous debt into these hospitals once the EUA is approved I think the other key consideration here is the famous stat isn't a foreign term to them, meaning they understand through the education and watching what's happening internationally that it's a standard of care in other markets. They just haven't had access to it here in the U S.
The molecule on the famous that how its being used will not be.
New concept, but it will certainly be a nice available concept to them moving forward.
Alright. Thank you very much I appreciate you answering all my questions. Thanks, Brad.
The next question comes from Ed Arce.
<unk> <unk> from H C. Wainwright. Please go ahead.
Hi, Good afternoon, everyone. This is Thomas Yip asking a couple questions for thank you for taking my questions.
So first.
I think for Raffi since.
You're at the point person for the severe negotiations.
What would you consider to be key elements.
Optimal partnership.
Can you can you are colder weather.
What are some potential impacts on our growing partnership with the U S military.
Yes.
But yes, I think obviously, we wont get into too much detail since we have not finalized the parties.
That we're discussing with.
But.
I think the most important is having a partner that is.
That we're comfortable that it's going to do a great job and invest into Sylvia we clearly believe in the product.
We know we have not been able to resource it like we have wanted to.
But we believe there is a lot of value still in this product and it's evidenced by us being able to continue to grow sales with a very limited team.
But that alone that's why any structure that we have.
<unk> been discussing.
And we will likely come out too we will have a royalty and milestone that we have a structure that we can participate in the upside and thats important for us.
What's also important is maybe keeping a part of the business and I don't want to get into any details, but keeping a part of that business that we think has upside for us given the relationships that we've been able to develop.
Developed in that market.
Yes, I think it's important that the partnered elaborating, where I've said just for a moment.
They would already have a commercial organization or that type of structure that allows us to spread the cost of an additional product over that structure.
Whether it's the pharmacovigilance et cetera, where for us it's just isolated to one product. So Ralph has done a nice job.
Sourcing those potential partners.
I think the second part of your question was it about the Dod's.
Yes, that's right.
The.
Potential.
Our ongoing partnerships for <unk>.
Yeah. So so we have.
We've done work with the Dod for years now and we've just more recently actually had direct contact with their specific purchases were often historically, it's gone through the wholesalers or middlemen.
Our accused at seven now we're being contacted directly by the military and Thats a nice change for.
For us moving forward, even though we have been working with other members of the military. These are the actual end user order resolve it. We also got our first indications of order from the Air Force and Navy.
While they're not typically as large as the army or with the potential of the army. It's nice to see the additional branches starting to utilize or inquiry for the studio based off of their addition, or membership of the joint deployment formulary because of the <unk> availability to all military branches.
So we feel good about that moving forward, it's been a lot of hard work behind the scenes, but now with these multiple different pathways of purchasing into to the wholesaler.
Roughly with us and some other avenues, we feel that the momentum is really beginning to pick up with the military.
Got it thanks for the additional details.
Next question for <unk>.
For the EUA.
Should we expect to see any new supportive data ahead of a position or.
Either.
Release or a medical conference.
Remember that we've got an agreement with it.
Yes, there is.
We likely will publish the market research that actually with the 150.
Key folks.
Thank you.
Anticoagulation for CRT.
Our reporting this data, we actually think it's going to be a robust enough.
Search that we would publish that.
But no we're not specifically moving forward for any additional data you will see prior to the EUA, but we will have the Registrational study right on the heels.
That EUA submission, where we're looking at 160 patients a single Registrational study to move towards the full approval of <unk>, maybe you can comment on the fact that.
That study and structure organization points has been discussed already with the FDA, yes.
Endpoints have been agree a very straightforward study, it's an anticoagulation.
<unk> versus placebo.
Primary endpoint is activate.
Activate declining times, so it's very straightforward.
Steady as far as we're concerned thank.
Thank you Pam.
Got it.
Perhaps one final question from.
Regarding that.
Syringe proud of.
Yes.
As we know.
Our commercial prep is already underway.
Any overlap there.
In terms of our commercial infrastructure and preparations for three years to private clients.
Yes, as we did.
<unk> not yet for commercial launch.
Pam mentioned to you, it's pretty much a top down approach from the key experts in the country that are all aware of the guidelines that are utilized.
Going to require.
Much of our sales team relative to that is going to be more about education for those key east top down.
Salesforce for pre filled syringe will really be limited more to contracting.
Thank you and it's been a lesson of very well known molecules. They are used every day in surgical suites across the country. So it's not about convincing them on the molecules themselves their standards of care, it's more about the group purchasing organizations and integrated delivery networks, ibms and educating them.
On the availability of it through contracts moving forward. So this will be less traditional launches that you've typically seen with larger sales teams. This would be very small commercial organization focused on a few K EES and contracting moving forward.
Both of which will be limited in total scope from a number standpoint, when you combine them. So we feel like it's going to be very efficient moving forward.
Okay.
Got it.
Okay, Thats kind of our questions.
Looking forward to it.
Thanks, Tom.
This concludes our question and answer session I would like to turn the conference back over to Vincent <unk> for closing remarks.
Thank you Danielle and thank you for joining us today and for your continued support of accelerates.
We're excited about the progress made with our pipeline of assets the efficiency in our cost structure, the strategic direction for <unk> as well as the multiple catalysts potential catalysts over the next year and we will remain focused on driving long term shareholder value.
We look forward to answering any additional questions you may have offline and again look forward to sharing our future developments.
Thank you again.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.