Q3 2022 Trevena Inc Earnings Call

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Greetings and welcome to the <unk> incorporated third quarter 2022 earnings call.

During the presentation, all participants will be in a listen only mode.

Afterwards, we will conduct a question and answer session.

If you have a question. Please press the one followed by the four on your telephone.

If at any time during the conference you need to reach an operator, Please press star zero.

As a reminder, this conference is being recorded Wednesday November 9th 2022.

I would now like to turn the conference over to Barry Shin Chief Financial Officer. Please.

Please go ahead.

Great. Thanks, Good morning, and welcome everyone with me today are Kerry Bordeaux, our president and CEO .

Drake, our chief commercial officer, and our Chief Medical Officer, Mark <unk>.

As a reminder, Olympic was approved by the FDA and indicating in adults for the management of acute pain severe enough to require an IV opioid analgesic and for whom alternative treatments are inadequate.

The important safety information, including the box warning and full prescribing information are all available on Olympic Dot com.

We will also be making forward looking statements within the meaning of federal Securities law.

These statements are subject to risks and uncertainties related to our business, including those covered in our filings with the SEC.

We undertake no obligation to update these statements beyond today.

I'll now turn the call over to Kerry for an overview of our third quarter and recent business accomplishments carry.

Thank you Barry good morning, everyone and thanks, Thanks for joining let.

Let me start the call. This morning talking about a Linda what we're seeing in the overall environment.

We're executing and what our plans are moving forward.

While the pace of formulary wins and customer engagement levels are noticeably increasing the hospital market environment remains challenging and I know you're hearing this from all hospital focused companies. It's the staffing shortages the tight margins formulary delays, they're all a factor importantly, inpatient admissions are still not up to <unk>.

Pre pandemic levels.

So what are we doing well first in August we downsized our field and medical teams brought the remainder of the field team in house and signed a contract with visit yet so that their pharm DS can help us educate hospital customers on our Linda and together, we're covering approximately 50% of the IV opioid volume Baidu.

This we're managing our resources and our cash to be as effective and efficient as possible to help weather the aftermath of the pandemic.

Second we focused on new business areas like burn centers and ambulatory surgical centers and.

And we recently secured CMS pass through status, which will help reinforce our value message with customers in the hospital outpatient setting of care.

Our field activity levels have improved face to face customer meetings and speaker programs are back to pre pandemic levels and physicians are also starting to attend medical meetings live again.

Olympic is getting significant attention at these meetings and were frequently highlighted for special podium presentations we.

We saw this at the recent anesthesiology meeting and in December the Olinda cognitive data versus IV morphine will be presented at another large meeting.

So what's our plan going forward well, we will continue to be focused on efficient management of our resources were being conservative in how we think about resource allocation until we see a more stable trajectory with the inpatient hospital market.

We do believe that it is important to continue to highlight Olympics unique profile with new data in areas that our customers care about like respiratory depression and cognitive function.

And now that we've completed the cognitive study versus IV morphine. Our plan is to approach FDA early next year about potential next steps for label expansion.

With regard to our pipeline, we're very excited about <unk> five our novel <unk> receptor modulator and we're interested in two areas.

Non opioid treatment of chronic pain and epilepsy large markets, where there is tremendous unmet medical need and an interest in new product mechanisms.

This morning, we were pleased to report top line phase one data for T. R V O four five and based on this data together with our extensive non clinical work and studies with the NIH. We believe that <unk> four five maybe a first in class molecule with anti seizure anti inflammatory and analgesic effects.

And T. R V O four five may have a potential disease modifying effect on epilepsy.

Planning is underway to initiate a focused proof of concept study early next year. We believe this study will be helpful to us and strategic partners in highlighting the promising potential of <unk> 45.

Let me now turn the call over to Patti and Mark to provide more details on Olympic and T. RVO for <unk> Batty.

Yeah.

Thanks, Carrie and good morning, everybody.

Today I'll provide an update on Olympic watch performance related to market access and field execution.

There are three milestones related to market access.

First as you'll recall on last quarter's call, we announced a significant contract win with busy yet the largest member driven healthcare performance improvement company in the country.

One of our goals with this contract was to see if new busy and customers would order Olympic and importantly that is what we're seeing as well as reorders continuing from those customers.

We've equipped is yet with our health economic data that demonstrates an almost tenfold cost offset with Olympic versus conventional IV opioids.

While we're optimistic about the long term potential opportunity with Disney in these.

These types of large GPO contracts do take time to ramp up.

Second in addition to Vivien, we have a new capability to contract directly with national ambulatory surgical centers or ASC chains.

This is important because more and more significant surgeries are happening in the afcs.

In fact, Theres, a 7% compound annual growth rate predicted through 2028 for outpatient surgeries.

Finally, as it relates to reimbursement Olympic received CMS pass through designation that just went into effect in October .

This reimbursement milestone will help us continue to address the high unmet medical need when treating acute pain within our indication.

So what does it mean, the CMS pass through status allows ambulatory surgical centers and outpatient hospital facilities to Bill Medicare and other insurance providers for Olympics for the next three years.

Another reason why our direct contracting with ASC is so important.

While the majority of IV opioid usage currently takes place in the inpatient hospital setting the CMS decision represents a good opportunity for initial use for surgeons and anesthesiologists, who can use the limbic in the AFC and then bring that experience to the inpatient setting and P&G discussion.

Moving on to our field execution.

All of the things that I've just shared with you are a direct result of moving to a 100% internal trevino salesforce team.

In addition to our contracting and reimbursement wins, we've also made progress across a number of metrics as of today. We have 172 formulary win which is a reflection of the direct contracting with the afg's that I referenced previously.

While we're pleased with this the work to now pull through those formulary wins into orders and Reorders is just beginning.

Our key account managers are reaching about 125% more accounts on a monthly basis than we saw earlier in the launch and we're seeing an increase in the number of customer engagements and speaker programs.

We're also seeing an increase in orders new customers and repeat customers, although the base remains small.

And as Karen mentioned, we had an important presentation at the American Society of Anesthesiology meeting where Dr. Albert the Hans double Blind study comparing all of Feraheme and morphine on ventilation in the elderly was selected as one of the best and clinical science abstract.

We're also attempting the southern burn conference, which is taking place this week.

As a result of our focused and burn we have several clinicians interested in trying or Linda in their own institutions to demonstrate the potential benefits of it and that's important patient population.

To close we continue to make progress. So we understand it is not as fast as we'd hoped to deliver.

We have begun contracting directly with the ASC to further augment our strategy.

We've received CMS pass through status and we're gaining efficiencies with our field team.

With that let me turn the call over to Mark to discuss our clinical programs in more depth.

Thanks Patty.

Throughout the last quarter.

We've made significant progress with <unk> <unk> five our novel <unk> receptor modulator.

I'll start by touching on what makes <unk> mechanism of action unique.

What sets it apart within this important class of drugs.

With that in mind I will then comment on what we've seen in our phase one and non clinical data that are consistent with this mechanism.

Based on this overview.

To convey why we're excited about the potential opportunities just compound presents.

One of its key features is that when <unk> five volumes to the <unk> receptor on the surface of cells.

The receptor drug complexes internalized, but then to associated and the receptor is rapidly able to return to the cell surface.

This is different from other drugs in this class and.

And we believe this rapid receptor recycling process or lack of receptor desensitization sets <unk> apart.

Causing no reduction in peripheral lymphocyte levels, which we would expect to lead to no long term immuno suppression.

This is important because it opens up the possibility of exploring the use of <unk> five and CNS conditions.

Were reduced lymphocytes in immuno suppression or not desirable features.

This will point to targets like epilepsy, and chronic pain indications that have not been clinically practical to explore with other <unk> modulators.

Further augmenting the differentiation of <unk> five.

Is that it is specific for subtype one among the five different <unk> receptors.

We believe this receptor specificity is meaningful.

<unk> one receptor is highly expressed on and regulates to the function of certain cell targets in the brain for example, astrocytes and microbial cells.

These cells are believed to play key roles in the pathophysiology of house seizures develop.

And how they persist to cause epilepsy.

As well as playing a central role in the regulation of brain signaling events key to the development of chronic pain.

Finally, our non clinical safety data suggests that <unk> <unk> five shows no evidence of cardiac pulmonary or OSM logic effects, which have been reported with other drugs that target the <unk> receptor.

This potential differentiation is now further supported by the evidence seen in our phase one study results.

In short.

We began to assemble data that suggests this unique mechanism may produce anti seizure.

Anti epileptic <unk>.

Anti inflammatory and pro analgesic effects and introduces the exciting possibility that <unk> may have the potential to be disease modifying in the case of epilepsy related disorders.

With that as background I am excited to announce that we have now completed our first in human phase one study.

Important observations were the <unk> <unk> was well tolerated and there were no serious adverse events.

The PK profile about 45 also showed a half life consistent with anticipated once daily dosing.

The study also examined our range of targeted laboratory measures to evaluate the safety of our 45 <unk>.

Including total lymphocyte counts Ecg's and ophthalmology examination since changes in these measures have been reported with existing <unk> targeted compounds.

We were pleased that no safety observations were seeing on any of these endpoints.

Data from ongoing work in our non clinical studies is also emerging and I'd like to mention two final notes from network that further highlight the potential significance of TRP O four fives novel mechanism of action.

First at an upcoming neuroscience meeting in December .

We will be presenting the results of our positive animal model epilepsy data obtained from our long standing collaboration with the NIH is epilepsy therapy screening program.

I previously reviewed these data, which highlight significant positive outcomes of four five and several acute and chronic animal models of epilepsy.

These data provide encouraging support for our interest in the potential role for <unk> five in refractory epilepsy in humans.

Second along with our phase one topline results. We also reported the completion of a recent study examining the ability of <unk> to directly modulate the inflammatory signaling or astrocytes in vitro.

This was a study of primary astrocytes derived from mouse brain isolated and studied in cell culture.

And that work, we examine 17 different cytokines and Chemokines produced by astrocytes and demonstrated that <unk> five modulator. The concentrations of these substances released from Astra sites with a net actions to dampen the inflammatory response of these cells.

We believe these data are significant since it is known that inflammatory signals from astrocytes and other brain cells.

Appear to play an important role in the development of seizures and the emergence of epilepsy.

While more work lies ahead we're.

We're excited by the prospect of <unk> <unk> five may have the potential to have a disease modifying effect on the treatment of epilepsy in humans.

With the results of these studies in hand.

We're now preparing a focused proof of concept study in approximately 25 healthy subjects.

The benefit of a targeted study like this is that it offers the possibility of a quick data readout and we will provide confirmation of CNS target engagement relevant to clinical indications such as epilepsy and paint.

We look forward to providing further details of this study soon.

I'll now turn the call over to Barry to review, our third quarter financials Barry.

Thanks Mark.

In the third quarter, our net loss was $15 3 million or <unk> <unk> per share compared to $13 $8 million or eight cents per share for the same period last year.

The results include $2 6 million of nonrecurring noncash adjustments that I'll discuss in more detail.

They also included previously announced reductions in costs and gains in efficiency in our commercial infrastructure.

As Pat discussed, though our wholesalers are seeing growing order and reorder rates. They continue to fill these orders from existing stocks.

Given the uncertainty of predicting future Olympic sales in this environment in Q3, we recorded a $2 2 million noncash valuation adjustment for slow moving or obsolete obsolete inventory, which are recognized as cost of goods expense.

We also made a $4 million noncash adjustment to our returns reserve for Olympic held at our wholesalers, which appeared as negative product revenue.

We're actively managing our expenses to preserve resources and we finished the quarter with $44 million in cash and marketable securities, which we believe will fund our operations into the third quarter of 2023.

I would note. This cash balance does not include a $3 million milestone and $15 million non dilutive financing tranche that we'd receive upon the Olympic approval and commercial sale and China, respectively.

It also does not include a $10 million non dilutive financing tranche, we would receive upon certain financing or commercial milestones.

Moving on.

I'm also happy to announce we received shareholder approval in September for a reverse split of our common stock, which we expect to implement shortly.

This is an important step to regain compliance with nasdaq's minimum bid price rule and to attract continued investor interest.

We will now open the call for questions after which Carey will provide some closing remarks.

Operator.

Thank you.

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One moment please for the first question.

And our first question is from the line of Douglas Tsao with H C. Wainwright. Please go ahead.

Hi, Good morning, Thanks, and my line broke up Mark when you were talking about the <unk>.

And the planned clinical study that you were that Youre running could could you just run through that again. Please thank you.

Sure.

We're in the process of planning our proof of concept study to begin in the early part of next year at what I mentioned in my remarks is we anticipate this study to be approximately 25 healthy individuals.

And we'll be talking about the design details of that study shortly but you can imagine from the targets that we're interested in without four five including both pain and epilepsy.

The good news for US is there is a range of potential pharmacodynamic measures that we can use that will help us understand the CNS activity and target engagement. So think experimental pain models also models that are accessible to us that could probe measures of cortical excitability.

<unk> think things like Tms or transcranial magnetic stimulation.

Models like that are commonly used at this stage of development in these targets.

Okay.

How long would it.

So given the fact that they have.

Healthy volunteers and pharmacodynamics this would not be terribly extensive study in terms of duration, that's right that's right I should've.

Other thing I mentioned in my remarks is the beauty of doing a study like this is these tend to be very efficient.

Quick data readout types of studies, so we expect there.

As to move along pretty briskly once we initiate it.

Okay, Great and then just turning to Olympic.

Just curious in terms of the ASC opportunity how quickly do you think you might start to see some traction there and I know from an end market opportunity, it's not as big as the inpatient for for the product, but given that you have pass through status. It would seem that this could be.

An easier sell in the short term.

Yes, good morning, Doug.

Sorry go ahead, yeah, you've been out in and out and about in EMEA.

Yeah, sorry, sorry about that Gerry I was just going to say.

I mentioned in the remarks.

Remarks that.

Gary.

More complicated surgeries are happening in the ASD and ASC outpatient.

Surgeries just in general are growing versus what you see in the inpatient hospital where the.

Okay.

Yeah.

It's not.

Return to pre pandemic levels yet.

And so there is momentum there, while it's not ever going to be as large as inpatient.

This gives an opportunity for surgeons and anesthesiologists to get some experience.

As they usually do work in ASC and the inpatient hospitals. So that's really how we view the opportunity with both the growth happening and now with the pass through status happened and you will just get good experience that they can take to our hospitals.

Gary anything to add to that.

Yeah, the only other comment I'd make is that it.

We were thrilled to get CMS pass through it's early it's it was effective as of October one, but you know in early conversations with physicians and and.

Administrators that are running the ASC they really do appreciate that.

The additional reimbursement.

They they absolutely are seeing the kinds of benefits that we've talked about before in their patients right getting patients up moving around more quickly.

Certainly the pain relief I've been pleased because as you mentioned it's the.

The vial usage in the ASC is is less than in the inpatient setting, but I've been pleased because as you described the opportunity and the afcs is growing and it seems to be <unk>.

Difficult to get a hold of and get in touch with physicians that are running. These these ASC. So it's a good way for us to get used for <unk> in the in this outpatient setting.

Okay, great. Thank you so much thank you.

<unk>.

Our next question is from the line of Jason Butler with JMP Securities. Please go ahead.

Hi, Thanks for taking the questions.

Appreciate the S. One P updates a couple of questions there Mark.

Mark just a clarification more than anything else. He said that there was no cardiac effects I guess could you just confirm that how did you measure heart rate or did you measure heart rate and was there any impact on heart rate. After first dose for subsequent doses and then I guess I didn't I'm, sorry, if I missed it but what was the outcome of the food effects.

Thanks.

Sure so.

Yeah.

Good morning, Jason.

With regard to cardiac we had a pretty comprehensive look at that in the study. So in addition to vital signs which were measured quite closely throughout the dosing period, we had a very good ability to see effect on heart rate of which there was not so.

So we did not see the first dose kartik effect, which is often described with S&P modulators. The other way that we looked at this is.

We used holter monitoring and so we were able to look at the interval data quite closely.

No impact on any <unk>. So obviously the ones we'd be most closely interested in is PR and Qt.

<unk> given the pharmacology of this class of drugs and so no effect on those measures.

And the.

The other question you asked was with regard to food effect, there was a modest food effect.

And we.

We expect that that's something that we will take into consideration as we move into formulation development heading towards our phase II work.

Okay, Great and then just based on the preclinical data you have.

Now and understanding of the mechanism.

Is understand what kind of epilepsies could be most attractive or their genetic epilepsies that tie into the mechanism at all or are you thinking about more broader focal onset patient populations.

Well a little of both.

Given given what we see emerging as our understanding of the mechanism is I've been emphasizing on the call.

Role in.

Inflammation as a mechanism is key here and Thats really what undergirds some of our hope.

And thinking about the disease modifying potential because inflammation inflammatory processes. As you know are critical to the development onset and persistence of this we've had an opportunity.

To discuss this with a range of advisory Board members.

Who've taken a look at the data and are actually quite excited about.

What they are seeing it.

It does when we think about target.

We've got a lot.

More.

Sort of.

<unk>, if you will about that moving forward, but.

<unk> epilepsy refractory focal epilepsy is certainly on the docket as you probably know there are certain rare diseases.

We're inflammatory processes are thought to play a critical role in development.

And I would point to something like west syndrome, or infantile spasms.

Which has a pretty well known.

Pat Physiologic underpinning that involves inflammatory signaling so things like that are certainly on our short list of targets to consider moving forward.

Okay, that's great and then just one on <unk>.

Understanding that just getting PNC committees scheduled right now is still a hurdle can you talk about whether the <unk>.

New cognitive and respiratory function data has moved the needle at all in the meetings that you've had so for example, if you had any knows that were flipped to yes. It has been at least in part because of those those new data. Thanks.

Okay Patty.

Yeah. So I understand that that data is a medical play so I'm going to speak on behalf of our MSL.

In this regard because it's not in our label yet so it's not available to our key account managers for.

For a discussion but more of a cognitive function that has really been a driver in terms of the health economic data because if you have cognitive function, you'll have the opportunity to discharge earlier or get out of the ICU earlier or has better pack you efficiency.

Also being able to ambulate gives you the opportunity not to run the risk of ileus and you'll have more.

Again opportunity for an easier quicker discharge at very efficient. So that has played very very well where the respiratory data comes into play is really very much in regard to the obese patient population.

So it's an important piece of data when they see a patient checking in that has a CPAP. For example, that's the type of patient or an elderly patient that has COPD. That's when you really do worry about the respiratory depression, that's where that data has been very very supportive of the use of.

Lynn back in in those patient population.

And Jason.

On the formulary question.

We actually have had institutions that are re looking at Olympic cities, where institutions early early on before we even had our field team out that had not put <unk> on formulary and so the team. We just had a discussion about this yesterday, where we've got some of the inpatient institutions because the cognizant data is considered.

New.

They are able to go back now with a different advocate right K O L advocate.

Get Olympic on formulary. The other place that it's playing is on the ASC is and there are some large ASC systems that have more of a formulary review process than it used to happen and the cognitive data as Patty said is playing really well there as well.

Great.

Thanks for taking the questions.

Thank you.

Our next question is from the line of Brandon Folkes with Cantor Fitzgerald. Please go ahead.

Alright, Thanks for taking my questions and congratulations on the data this morning.

Two from me on <unk> five.

How should we think about your price in terms of moving this forward obviously, it's a promising asset yet but would you look for a development partner at this stage or at what stage do you believe a development partner makes sense and then on the flip side of that.

Do you think.

Would you ever consider reallocating resources from <unk> to <unk> 045, maybe partner and then Vic I'd just love to get your sort of high level strategy thinking can't just given the promising beautiful.

Yeah. Thanks, Brandon Thanks for the question.

No.

We're interested in partnering all all of our assets as we've said in the past.

It's a this.

This is such a new area, a new mechanism certainly the phase one data and the and even the non clinical data that we've got now on epilepsy I think it will be interesting partners, it's probably though around the proof of concept right, which is why Mark's comments around getting that data as quickly as we can we will be important.

I think that.

That will really highlight the broader potential.

About four five in a couple of different areas that we've mentioned so stay tuned for more around that but I think certainly there's interest but proof of concept is probably where we'll get the bigger the bigger levels of.

As conversations happening.

And as far as reallocating. So we've been as you heard this morning, we've been.

Very efficient in how we're managing our Lindbergh given the hospital climate that we have right now and.

And making choices right. So I think we're making the right choices, we've always talked about the fact that we're not a one product company, we still believe in.

The science around the limbic and certainly the pipeline. So we're pretty excited to get over five moving in this direction, but also being very focused if you will and managing how we how we.

Olympic.

Yeah.

Great. Thank you very much.

Our next question is from the line of Jeff Jones with Oppenheimer. Please go ahead.

Good morning, guys and thanks for taking the question.

I guess two questions on the Cleveland Clinic study.

It looks like Youre now targeting complete enrollment by the end of the year just.

Hmm.

Looking for an update on timing.

The readout, there and plans around publications or conferences, and then in terms of financials.

I believe our bridge financing has a substantial milestone on first mile for sale in China, and so can you update us on the status of Linzess in China. Thank you.

Great Mark do you want to talk about <unk> yet.

Jeff.

On the Volition study Youre correct, we expect were.

From where we stand today, we are on track to close enrollment shortly.

And that project. So this year, we will we will end the enrolment in the <unk> study and we're moving as quickly as we can so we expect early next year to have topline data released we haven't yeah.

Yet.

Ben that specific about meetings that we would present it at but obviously, we'd be working as quickly as possible to reduce that data to publication.

And get it submitted and then get as much visibility at the scientific meetings throughout the year.

As we can.

The other thing I'll say is obviously given that this is Cleveland clinic, and wake forest right to pretty prominent hospitals.

That alone will will help the conversation that we're.

We are having with other formulary committee. So I think that's going to be really helpful.

Barry you want to talk about financing.

Financing round, yeah, Yeah, sure Hey, Jeff It's Barry So we announced in January of this year that Newmont file this NDA in China and things are under their control, there and pushing things forward and things seem to be moving forward on pace and I'd note that we would receive both a $3 million milestone from nuance upon the approval than a 15.

Non dilutive financing tranche from our bridge on first commercial sale and so yes relatively significant financing events.

Non dilutive as well for us.

Alright, thanks, guys.

Thank you.

And there are no further questions on the phone lines at this time I'll turn the presentation back to Kerry Bordeaux for closing remarks.

Great. Thank you and thank you all for your questions. Let me leave you with a few comments.

First as I mentioned earlier, we continue to believe in the science behind Trevino with Alembic, although the challenges with hospitals remain we're really pleased to received CMS pass through.

Which will help reinforce the science and our value message and in the hospital outpatient and ambulatory surgical centers.

With tier four five you've heard a lot of exciting news on this call and we we continue to advance. This novel asset we look forward to updating you on the potential proof of concept study.

And the future opportunities with tier four fives. Thank you again for joining us on the call.

That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.

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