Q3 2022 Adamis Pharmaceuticals Corp Earnings Call

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Okay.

[music].

Good afternoon, ladies and gentlemen, and welcome to D.

Pharmaceuticals third quarter 2020 financial results conference call.

At this time all lines are in a listen only mode.

If at any time during this call do you require immediate assistance. Please press star zero for the operator.

This call is being recorded on Monday November 14th 2022, I would now like to turn the conference over to Robert Robert Who'll with ICR Westwick. Please go ahead.

Thank you operator, welcome to the Atmos Pharmaceuticals third quarter 2022 financial results and corporate update conference call. Thank you for joining us today for the update joining me on the call will be members of the Adams executive team, including Chief Executive Officer, David Margulies and.

Chief Financial Officer, David Benedicto they.

They will share with us their various atmos updates our format for this call will consist of prepared remarks from management and following that we will have a Q&A session.

This call is being webcast and will be available for replay in the investors section of our website Adam is pharmaceuticals dotcom.

In today's call, we will make certain forward looking statements regarding our business based on current expectations and current information.

These statements speak only as of today and except as required by law, we do not assume any duty to update in the future any forward looking statements made today.

Of course any forward looking statements involve risks and uncertainties and our actual results could differ materially from those anticipated by any forward looking statements that we make today.

Additional information concerning factors that could affect our business and financial results is included in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission and in other subsequent filings that we make with the SEC. These are available on the SEC's website.

Now please let me hand, the call over to David Martin <unk> <unk> CEO of Animas.

Thank you Robert.

I appreciate all of you for tuning in today for our third quarter update.

After our clinical trial examining the effects of temple and COVID-19 treatment failed to achieve its primary endpoint.

<unk> Hot.

Paused and now have halted further development of temple.

Beginning at the end of September and early October we announced we had initiated a process to explore strategic and financing alternatives for the company.

Those alternatives include partnering or outright sale of one or both of our commercial products <unk> and Zim hi.

Or the sale merger or reverse merger of the company.

All of these options would have the objective of maximizing shareholder value.

The company hired our longtime investment bank Raymond James as strategic adviser.

To assist and evaluate potential alternatives. We are presently actively involved in communications with third parties regarding which.

Regarding this process, which could result in one or more possible transactions.

While engaged in the process, we have implemented significant and successful expense reduction measures, including stopping all development programs and reducing employee head count to just those individuals' directly involved in either the manufacturing of our commercial products, maintaining regulatory compliance or supporting the strategic.

Process.

These measures were necessary to preserve the company's limited cash while determining our path forward.

Over the last few months, we've weathered a near perfect storm of both micro and macro events, which have severely limited the company's ability to operate.

However, I am confident that this process. We began in October will conclude with one or more good options.

Will enable us to reset our strategy and place the company on a path to increasing shareholder value.

While there can be no assurance that this process will result in a transaction.

And we have not established a schedule for completion of the review process.

I expect that in the coming weeks, we will have a better sense of where this process is likely to head.

But until the company enters into a definitive agreement or otherwise determines that our disclosure is necessary or appropriate we will not expect to disclose or provide updates concerning developments related to the process, where the companies engaged in the process.

I'd now like to turn it over to our CFO , David Benedicto to provide a brief update on our recently filed third quarter financial results.

Thank you.

This afternoon, we filed our Form 10-Q for the quarter ending September 32022.

I will discuss a few items relating to our financials and I encourage you to review the 10-Q for additional details and disclosures.

Despite still being negatively impacted by the same jetblue recall total net revenue for the quarter ending September 32022 was one 5 million compared to 760000 for the same quarter in 2021.

This 98% increase was primarily due to sales of semi the absence of sales for <unk>, resulting from the 2022 product recall and the recognition of deferred revenue under the U S. <unk> agreement offset by the cost of the subject the recall.

Selling general and administrative expenses.

Proximately $2 5 million for the quarter, ending September 32022 versus $4 8 million in the quarter ending September 32021.

The 48% decrease was primarily a result of reductions in legal and advisory fees and the reversal of accrued bonus expenses.

Research and development expenses were lower for the third quarter of 2022 at approximately $2 million compared to $4 6 million in 2021.

Seven decrease was primarily related to lower development spending for example in Zimbabwe.

Net loss for the combined discontinued and continued operations for the quarter ended September 32022 was approximately $4 4 million compared to $12 4 million for September 32021 of 64% decrease.

Cash and cash equivalents at September 32022 totaled $2 4 million, we expect to receive additional proceeds between now and the end of the first quarter of 2023, which could range from approximately 3 million to $4 million from the disposition of the remaining.

U S compounding assets, while there are no guarantees we are endeavoring to implement further reduction measures to cut operating expenses to manage the company's limited cash to.

Both continue critical operations and provide the time required to conclude one or more potential strategic transactions. Once again I encourage you to review our recently filed Form 10-Q for additional details and disclosures I will now turn it back to David Magee.

Thanks, David.

I would now like to provide you with a brief update on our commercial products.

For boats, some Japan Zim, Hi, as you know in March we announced a voluntary recall of certain batches of some jaffe due to quality issues at one of our manufacturers.

I am pleased to announce today that following corrective actions Cadillac has now resumed operations at their Belgium facility and they have scheduled a new batch of some jetbead. We've manufactured in November without any further delays, we would expect some JP can be back in the market before the end of Q1 'twenty three.

Prior to that recall it seems likely that 2022 would be the year that some jetblue reach breakeven and.

Begin producing positive cash flow for Atmos.

We expect that U S World Meds can regain their prior momentum and we are hopeful that 2023 will be that banner year that we expected for 2022.

Shifting to Zim high on.

On our last call I provided a substantial summary of how U.

U S World Meds is approaching the commercial launch of Zim Hi.

Including their areas of focus within the retail and non retail markets. I also attempted to establish the expectation that the heavy lift in the first few quarters of any drug launch is laying the necessary foundation through a tedious process of adding the drug to the formularies of both insurers.

And prescription benefit managers contracting with directly with customers et cetera.

You may have noticed an uptick in media coverage of Zim higher over the last couple of months. In fact, there have been 470 distinct media mentions of Jim highest since August .

August 31.

With at least eight of those stories highlighting individual lives that have been saved by Zim hi.

It's exciting to track this increased media exposure as the market becomes more and more aware of Zim hi.

Additionally.

U S World Meds continues to grow the size of its commercial team focused on Zim high last month. They added a new director of medical affairs to focus on better positioning Zim high in the market.

Their team is also actively engaged.

With opioid task forces and more than a dozen states and multiple federal agencies.

All of this foundational work.

Is just now starting to convert into increase in sales our third party sales prescription sales in prescription data shows that unit sales of Zim high increased 90%.

In the third quarter of 2022, nearly doubling the second quarter.

Now there's still a long way to go to reach total unit sales at a level, that's meaningful and establishing cash flow for atmos, but it's certainly directionally positive.

So to summarize the commercial update we expect some jetbead to reenter the market in the first quarter of 'twenty three there.

The commercial launch of Zim highest proceeding as plan and we look forward to stronger sales in Q4, and look ahead to more meaningful revenue for both products in 2023.

That concludes our initial remarks before I open it up to questions ill share that following our second quarter call. We received positive feedback regarding the format that we had used for Q&A.

So we're going to continue that format today, having Robert consolidate the most frequently asked questions from investors.

Robert.

Thank you David.

Let's kick it off with this one and this one has to do with your cash balance of $2 4 million at the end of September .

So this investor is asking will you be out of cash by the end of the year. If no additional proceeds come from the U S. Compounding liquidation and what is your confidence level in receiving the $3 million to $4 million of additional proceeds that you discussed in your remarks.

No. This is David Benedicto no we.

We have a plan to manage expenditures to coincide with the receipt of the additional proceeds we are confident on the receipt, but we remain uncertain, where actual proceeds will fall within the estimated range.

Okay great.

Now shifting over to the <unk> and getting that back on the market.

When does the newly manufactured Sim Jaffe from Cadillac get shipped to your fill and finish contract manufacturer.

And when should we expect product to be available to patients.

And on the shelves of the pharmacy, just just help us understand the steps and where there might be some additional delays or unanticipated.

Bumps in the road if any.

Yes, certainly so.

The process starts for some jetbead at Cadillac and Belgium.

And at that site, they formulate epinephrine and fill it into syringes and insert rubber stoppers before.

That has been evaluated for release it goes through all its release testing and eventually ship to Philips meadows size for what they're part of the of the supply chain and sales.

Which is they manufacture all of the plastic components for the device and assemble the device around the syringes.

Add all of the labeling and packaging search and secondary packaging and then that product is shipped.

From Philips to U S roadmaps for distribution.

So as far as the timing as it relates to the restart as I mentioned we.

We are currently on schedule with Cadillac to manufacturer.

A batch of some jetbead in November .

And assuming that there are no further delays.

Product should be released sometime towards the end of January shipped to Philips and then as Philips begins their assembly process, they will send that product out.

As it's completed two U S World men. So we're we're saying.

By the end of the first quarter, but we are certainly working towards accelerating that timeline.

Okay great.

Let's jump over to one that comes in fairly often just can you remind us where you are in the NASDAQ delisting process is there a scenario where you might have to go to an OTC listing before the strategic process has been completed.

Well.

Just to refresh everybody.

Recall here, we received a notice earlier this year.

From NASDAQ regarding our.

Out of compliance.

Share price.

And they gave us at that time until December 27th to regain price compliance.

And we're quite aware of the delisting process and we are communicating with NASDAQ and we'll intend to communicate further with NASDAQ as this strategic process becomes clear.

At which time, we expect to either file an appeal or.

Some other form of request of additional time to regain that compliance.

It is certainly our expectation that we will maintain our listing on Nasdaq.

Lease for a period of time to get through this process that we're currently in.

But we have no reason to believe otherwise so that's that's currently where our competencies.

Great.

Let's let's talk about.

Switching over to Zim high a little bit.

Generic narcan is available.

I think it's been quite readily accepted by the marketplace is the availability of the generic narcan, having any kind of a negative impact on the zim high launch and its acceptance.

Well the the impact has really been to pricing.

Yes.

Entrance of generics and the response to.

By some of the branded products has been lowering the price overall for Narcan, which we view as a net positive for the market as we have long stated that more naloxone in the market should.

Should lead to fewer and fewer and fewer deaths.

Which is our objective obviously.

Now as far as how that what that translates to as far as our ability to sell.

Zim high I don't think that it impacts.

The ability to sell it given the differentiating characteristics of Zim hi.

Through its different route of administration and its significantly higher dose, we think that those benefits are still.

Stack up well, regardless of whether we're talking about branded products or or generics. So so really the impact is just on possible margins and I think I commented on our prior call that we are we have undertaken a couple of measures and we intend to.

Undertake additional measures to further reduce our cost of goods on the product. So that we can maintain margins even at lower selling prices.

Okay great.

So what can you tell us about the early adopters of the same high and as U S where <unk> had success with this type of.

Customer and why do you think they've been successful or why not.

Well they are.

I think as I described in some detail on the last call targeting a number of different areas of the market, but the what we deem to be low hanging fruit.

Prelaunch and certainly the success.

And break tapping into this market has proven this out is in first responders.

In any group frankly that has to use naloxone naloxone on a <unk>.

Regular if not daily basis for those groups they immediately recognized the.

The benefit of.

The higher dose and the faster uptake of naloxone from the route of administration. So I think that's where they have seen early success and I expect that that will be a.

Going forward a strong.

Supporter and customer for the product.

Okay, great. Thanks for that.

Let's see this one.

This of this investor is now jumping back to some jumping for pretty good question here.

Could you us world Meds decide not to relaunch some jeffy.

Due to the recall in adverse market conditions that have changed what are the terms of the agreement that would allow them to exit the contract.

Yes, so without getting into the specifics of the agreement I can tell you that.

Yes.

I think I mentioned earlier that U S World Mez was in the process of revising our forecast for 2022 before the recall so.

It is our expectation that they will be able to get back that momentum that they had at the beginning of 'twenty, two and I believe that they are eager too.

To get back into the market with the product and we have not been given any indication otherwise.

Okay great.

Let's see here's one about financial modeling and forecasting.

What would be a reasonable estimate for monthly revenue that you were receiving from the sale of U S compounding and when does the stream of cash.

Yeah, I'll, let David take that.

Okay.

With regards for grown we have received all of the expected revenue from the sale of certain assets to them.

What remains are the expected proceeds from the sale of the building land and the remaining manufacturing equipment, which we expect could range from 3 million to $4 million.

Thank you.

Okay great.

And then here's one more up assuming the strategic process currently underway results in a definitive agreement will it require show shareholder approval.

Shareholder vote.

Yes.

I guess the answer depends on the outcome of that process.

And frankly, the nature of the agreement.

And that debt is the result.

If the trend it's transaction that requires shareholder approval then absolutely.

We will be putting together a proxy and soliciting.

Describing the transaction and soliciting shareholder approval.

And we would expect that process to begin right on the heels of signing any sort of definitive agreement.

Okay.

<unk>.

Great.

Is that okay. We've come to the end of the questions that have been submitted to me. So at this time I would like to thank everyone for listening to our call and for your interest in Atmos Pharmaceuticals, and thanks to the management team for <unk>.

Discussion of.

Where they think theyre headed in for the.

Good financial reporting that they have put out now for the third quarter. So thanks, everyone and if you have additional questions. Please.

Contact us alright, thanks, everyone have a good evening.

Ladies and gentlemen, this concludes your conference call for today, we thank you for joining and ask that you. Please disconnect your lines. Thank you.