Q4 2022 AcelRx Pharmaceuticals Inc Earnings Call

Welcome to the accelerate 2022 full year and fourth quarter financial results Conference call.

This call is being webcast live via the events page on the Investor section of <unk> website at Www dot accelerate dot com.

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As a reminder, today's webcast presentation is being recorded.

You may listen to a replay of this webcast by going to the investors section of accelerations website. If you require operator assistance. Please press Star then zero.

I'd now like to turn the call over to Rafi asset Orient accelerates Chief Financial Officer.

Yeah.

Thank you Andrew.

Thank you for joining us on the call today. This afternoon, we announced our full year and fourth quarter 2022 financial results and associated business updates in our press release.

This press release can be found with the investors within the investors section of our website.

With me today are Vincent Gaudy, our Chief Executive Officer, and Dr. Pam Palmer accelerates as founder and Chief Medical Officer.

Before we begin I want to remind listeners that during this call we will likely make forward looking statements within the meaning of the federal Securities laws. These forward looking statements involve risks and uncertainties regarding the operations and future results of accelerates.

Please refer to our press release in addition to the company's periodic current and annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward looking statements I'll now hand, the call over to Vince.

Thank you Rafi and good afternoon, everyone.

This past year has been a transformative one for accelerates.

We're pleased to update you today after executing on our previous previously stated goal of divesting to Sue the our first commercial product to a lora pharmaceuticals.

Florida is a well resource to operation with extensive experience commercializing products in hospitals expertise in the manufacturing and sales of controlled substances in a team of over 200 sales persons.

In addition to the 15% royalty on that commercial sales and the $116 $5 billion in sales based milestones and our agreement with the Lora.

Able to leverage our invested time and resources working with the department of defense the single largest customer for <unk> three.

75% royalty on D O D net sales.

In today's press release, we announced numerous publications and presentations on the studio, including a presentation at the Anesthesiology annual meeting 2022, but the uniformed services University Health Sciences on the street for battlefield pain management and.

In the presentation. The authors once again recommended the adoption of the chute 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 for acute pain management.

Now the duty as many different purchasing points across various areas of the armed services. We remain focused on the U S Army since the largest opportunity for dispute is within their sets kits and outfits or S kilos for deploying troops.

The duty is a very important relationship and we believe that this will provide long term value for our shareholders.

After the expected closing of the <unk> transaction in the coming days look transformed the company and are confident that we can leverage our successful development expertise and obtaining approval for our late stage high value assets.

In particular, we're focusing on our lead the famous that program NIAD, which is S. T. A breakthrough designation.

And it's being developed for use in the U S. As an anti coagulate for extracorporeal circuits particular, such as dialysis.

As such we wanted to provide visibility into not yet its potential which we believe is a key component of the company's value.

The famous status approved and widely used as an anti coagulant for dialysis in Japan, and South Korea.

We accelerate so the first to develop it for such use in the United States and if approved <unk> would be the only regional anti coagulate labeled for use in this indication in the U S.

Clouding in the dialysis filter drink continuous renal replacement therapy or see our Artie is a major limitation to the patient receiving effective dialysis.

In addition filter clotting results in loss of Red blood cells.

Waitlist and clotting factors, often requiring transfusions for the patient for.

For these reasons the international G. R. R. T guidelines recommend the use of an anti coagulate infused into the dialysis circuit.

So today too and I quite didn't options exist for C. R. A T.

First heparin and then their citrate, which is only available under EUA.

Our recent U S quantitative market research confirms the urgent medical need for an alternative anti coagulate for use in CRT.

The study results show that the inherent risks of the currently used products heparin, which is used 43% of the time in patients and six rate, which is used and 28% of patients lead physicians to not use anti coagulants, which again is below the international standard of care and the remaining 29% of <unk>.

Patients are undergoing C. A R T.

Okay.

Consistent with the published literature and a recent quantitative market research, 84% of physicians reported that frequent filter changes occurred when not using an anti coagulant there's.

This is not only leads to increased blood loss and an increase in the number of transfusions, but also resulted in delayed a prolonged treatment time and imposes a burden on the health care resources.

Now in addition to our market research. He tells me specific adverse events positions were concerned about regarding sits right.

It included hypercalcemia.

The trade safety alkalosis and others.

So in conclusion, we believe that the market opportunity for <unk>.

Is 29% of the patients that are receiving no man I coagulate.

As well as the 28, a set of patients that are receiving stitchery. This totals almost 60% of the C. R. R T patients.

This market research is significant we plan as submitted for peer reviewed publication in the second quarter.

We've already completed the production of the initial development Batson NIAD and are now completing stability product testing in preparation for our planned EUA submission.

We remain on target to submit this EUA in the second quarter and in addition, having ordering already received an ICD 10, CMS procedural code for reimbursement, we're proceeding with early commercial planning.

Knight is estimated to have a peak sales potential of $200 million and this is attributed to just the inpatient and outpatient dialysis markets, excluding Houston any other extra portal circuits.

We anticipate that we will need only a very modest sales force for launching that.

Our market research has reinforced that it is clearly an important unmet patient need.

And we look forward to initiating a single Registrational trial in the second half of 2023.

All of which the primary end points have already been agreed upon by FDA for 160 patient study.

Yeah.

Consistent with our priority to advance our pipeline of late stage assets, we continue to make progress towards filing NDA for ephedrine and funnel left from pre filled syringes.

As such our other near term corporate milestone expected by the end of Q2 2023 is the filing of a new drug application for our Prefilled syringe of ephedrine branded that's fed seara again branded as fed Sierra the benefits of pre filled syringe as include less waste.

Prove safety and the convenience of not having to dilute and prepare the syringe and advanced procedures, resulting in a shift towards their use.

Based on our partner <unk> experienced in Europe , the expected shelf life of Fitzgerald is three years.

Nearly all of the currently used the federal pre filled syringes are made by compounding pharmacies, which have an inherent short shelf life and well known risks for contamination.

The ability of physicians.

Available a convenient prefilled terminally sterilized a federal syringe that is a three year shelf life would be a significant improvement and advantage for the overall health care system.

As stated previously we believe that the market opportunities for these assets exceeds $100 million and we believe it will be able to obtain a significant share of this market with minimal investment since much of the commercialization efforts are expected to be through contracting with group purchasing organizations and hospital networks.

And just to put the market potential for a pre filled syringe into better context.

A ready to use by all of the federal not a pre filled syringe, but a ready to use volatile ephedrine launched the 2020 and reported that $30 million in sales in only its second year of launch.

With potential approval of the NDA for fed seara commercialization could occur as soon as the first half of next year.

As we stated in today's press release, both the NAIAD and fed Seara regulatory submissions will bring us closer to delivering important advancements for the health care system and increasing value for our shareholders.

Okay.

In conclusion I'm pleased to report that we believe we're well positioned to execute on a new successful chapter for accelerates.

We've divested our opioid product to focus on our proprietary anti Coagulant program, which we believe is the potential to reach $200 million in peak sales.

Made significant progress in our clinical development program of <unk>.

And we're preparing to move to a registrational trial with endpoints agreed upon by F. D. A later this year.

We're also on track to file our NDA for our first pre filled syringe product candidate that Sierra which also has significant upside potential for the company if approved.

Importantly, we'll continue with our efficient approach to managing cash as we accomplish these key milestones.

I'll now hand, the call over to Rafi to take you through the fourth quarter financial results.

Thank you Vince the planned closing of the Soviet transaction with our Lora pharmaceuticals in the coming days is expected to add value through reduced cash burn and leveraging the of Lora commercial infrastructure to collect royalties and milestones on <unk> sales.

We're excited to work with a Laura on the transition and supporting the potential long term value creation from the transaction.

Our full year 2022 severe sales totaled $1 $8 million, which was a 76% increase over 2021 despite a significant reduction in our commercial investment to conserve cash.

We believe a lora ownership of the Subia will deliver a significant increase in the Sirius sales after the initial transition period.

As Vince mentioned, our focus now turns to our lead program in the famous debt for which significant potential near term milestone success as well as our first pre filled syringe NDA submission said Sarah.

Yes.

We continue to focus on our cash and ended the year with $28 million in cash and investments our debt continues to amortize in the balance at the end of the year was $5 $4 million.

Combined R&D and SG&A expenses for the fourth quarter of 2022 totaled $7.3 million compared to $6 $9 million for the fourth quarter of 2021.

Excluding noncash depreciation and stock based compensation expense. These amounts were $6 $6 million for the fourth quarter of 2022 compared to $5 $6 million for the fourth quarter of 2021.

The increase in combined R&D and SG&A expense in the fourth quarter of 2022 was primarily due to costs associated with the December financing and other legal costs.

Firstly offset by net decreases in R&D and SG&A expenses compared to the fourth quarter of 2021.

We expect our cash operating expenses in 2023 to range from $16 million to $20 million, which include costs related to a planned to launch of NIAD under an EUA.

Initiating the single Registrational study for NAIAD and the Purdue for fee for fed Sierra for which an NDA submission is expected in the second quarter of this year.

I'll now turn the call back over to Vince.

Thank you Rafi and I'd like to open the line for any questions you might have Andrew.

We will now begin the question and answer session.

Ask me a question you May Press Star then one on your telephone keypad.

If you're using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

The first question comes from Brandon Folkes with cancer Fitzgerald.

Please go ahead.

Alright, Thanks for taking my questions and congratulations on all the progress.

Maybe I'll just starting to see if you.

Can you just talk about who drives the military procurement.

With this deal and are there any current D. O D orders and then just to sort of you know will you have a continued involvement on the D. O D side or just staying ahead of the D O D.

Are most of your question and then I'll hop across Tonight, that's right.

Sure. So the Dod purchasing is decentralized when you consider it from the different branches of the military that being that the Navy. The Air Force the Coast Guard and the army all purchase through different avenues and even within the army in particular, you have different avenues to drive it. So for instance, we have relationships that we work with with the defense.

Agency.

With the Defense Logistics agency you Sama working.

We are working on contingency contracts with the army are outside of those particular channels and of course the T. Triple C. So it's a myriad of different channels within the military.

The largest driver, though will be through these S cargoes, which are often driven essentially.

By a single purchaser for troop deployment and readiness.

These relationships have been fostered over time it takes time.

But we feel like really advancing them here just in the course of the past year to a new level.

And you know part of it honestly is the tension that builds around the world and the challenges with the conflict and the creation for potential more deployments. Unfortunately for our U S armed services.

So we're going to continue to maintain those relationships drive them and hopefully be able to supply them at the right quantity and timing as those things escalate.

Yeah.

Yeah, its our responsibility Brandon we that remains with us.

Okay, Great. That's good to hear and thank you for that and then maybe just shifting gears NAIAD.

Maybe just to talk a public call.

Together I guess any color on the steps outstanding from here on in terms of submitting the EUA Yeah would you.

So I'm quite confident we're going to start to Q says it.

Fancy just think of it as you draw from here on in and then along those lines.

Until the manufacturing of night can you just remind us on this EUA will you need in an inspection and then secondly, staying on manufacturing can you just talk about your ability to supply the market just given them.

You know that 60% figure you put out today. Thank you very much.

Sure I can address the first part of that question and I'll continue to turn it over to Rafi and Pam as it relates to some of the supply. So we've been working on the EUA.

For a year at least in preparation in part of just to give you. An example, although quantitative market research. We just completed that started I think in the fourth quarter last year with results in the first quarter. This year was to continue to show the F D. A the elevated use.

<unk> C. R. R T and the hospitals from a post COVID-19 standpoint, pre and post if you really want to consider it post right now so we've put all of our work together related to the package and the one remaining aspect. Most importantly has remained C. M C.

So we've got the balance of the package basically ready to go if you recall in the early discussions around the EUA.

With the F D E and I apologize for all these three letter acronym acronyms.

The Fda's concentration was on the proper manufacturing of the product. So over the course of the past year that has been our focus.

And as we mentioned, we've got product up on stability.

It's important that we've done accelerated stability some people might not know what that means what that really means is stability testing beyond the normal ranges of temperature and humidity. So the concept is if degradation is going to be happening over time you.

You can stimulate denigration in extreme environments and that'll show you a longer period of time based off of that stimulation of stability of the product.

For us Humidity's a non event, it's obviously a sealed vial we've got three months of good solid data.

At room, and accelerated temperatures that being 25 degrees centigrade 40 degrees centigrade.

Centigrade any accelerated portion in our GMP initial release test data looks very good with only one test still remaining in that sense the reality.

So we feel very good about the progress we've made on C. M C.

We have partnerships related to supply.

Relative to ex U S suppliers for both the API and finished products. So.

We're well on our way as it relates to this.

And I think you had one more question.

The question about inspection the need for inspection for the UA Theres no need for an inspection.

For an EUA, obviously for a full approval, which which would come after our clinical study, which we expect to start the second half of next year.

Is that did that answer all your questions Brandon.

It does thank you very much I appreciate it and best of luck with the filing.

Thank you.

Okay.

The next question comes from Ed Arce with H C. Wainwright. Please go ahead.

Hi, everyone. This is a problem.

Just asking a couple questions for Ed.

Thanks, so much for picking up questions.

So while we're not a topic for ni.

Can you discuss what are you.

<unk> expectations.

Are you a this year.

Through what commercial traction, we expect and perhaps initial thoughts about pricing.

Andrew.

Following a use for patient.

So some details on our commercial launch.

Yeah. So so for Knight again under the EUA, we're confident in our ability to submit well I'm sure they'll be dialogue with the FDA as it goes through the process hopefully for that approval. This year beyond that we have to prep either way for potential commercialization with the EUA and as we mentioned in the most recent study we believe our target market is clear.

<unk>, that's the market where people are receiving no anti coagulant and CRT, which is considered below standard of care, which is you'd be a real shame for the United States and our ability to provide health care.

And the second is the citrate market in particular because of the complications and side effects associated with it when you combine those two markets as an opportunity for Knighthoods penetration, it's 60% of the C. R. R T market.

We're working on our commercial planning now as a matter of fact, Dr. Palmer and I are spending time with the CRT meeting in San Diego Tonight, and Tomorrow, We've got an advisory board with some of the key experts for CRT.

In the United States as well as internationally known next week a week from this Saturday, we're beginning to start on pricing evaluations, but it's something I won't comment on this call just from a competitive standpoint, but again, we feel very good about the preparation we have for this moving forward and the size of the target market I think the other important.

Aspect of this is even though the market is.

As large when we talked about a $200 million.

Peak sales opportunity and 60% of the existing.

Practice, that's occurring in the United States based off the citrate no what I coagulation segments. This is not one that we anticipate to require large commercial infrastructure.

We expect it to be very modest it's a top down approach based off the key opinion leaders in the nation that drives CRE T guidelines I think the other important aspect of this is the famous stock is not a new concept to them.

<unk> slashing famished, that's been used as we've mentioned for 30 years and separate countries, including Japan and South Korea.

They thought leaders in the United States Cross mingle and share expertise with those outside of the U S. On the famous stat is a known entity to them and they are often asking us when we think we'll be able to have this available for the U S. So they can provide this anticoagulant to their at risk patients.

I hope that helps give a bit of a color to Thomas.

Payment or do you have anything to add relative to the market research that we've conducted most recently relative to see our R. A T.

No we're writing up the data right now it'll be submitted.

You know in Q2 and likely published in Q3, and we're really excited about.

Possibly being able to in very near term.

Near term address this.

What a deficit in the medical.

As patients drink C. R. R. A T. I mean, it's amazing to me that 29% I do not have any anticoagulation during C. R. A T.

Just because of the you know.

Issues with heparin and citrate.

Thomas I would just add we don't know should we receive in an EUA. We don't know when that would would come there's no specific timeframe on on the FDA review of that so we don't know if that's going to come in one month or its going to come in six months.

So to give any expectations on sales would would not be a would not be a reasonable reasonable a way to estimate this at this point.

I think we can give more detail if we when.

When we receive a any UA later this year.

Got it.

So I guess just to clarify I'm sorry.

Sure.

After the EUA is following this session expected by.

The end of this year.

Well you'd hope that they have no firm guidelines on review timelines like they do for classic Purdue pharma.

So you know as we researched E waste that had been reviewed in the past.

Month, or two months could be longer.

So we just can't give you a defined timeline on that.

I think what's important even beyond that Thomas and maybe some people are asking about is we are intending even beyond the EUA too.

To move forward with the Registrational trial in the second half of this year.

And this is a very clear design trial with endpoints already agreed upon by the FDA. So theres not a lot of what I'll call debate left on how to execute this trial Pam maybe you can comment on the preparation we've made the endpoints et cetera on the trial. So people are clear on how we feel it's very simple to exit.

Yeah, the end of 100 and.

60 patients, which is actually quite a small trial. It's a deactivate placebo has already been agreed by the FDA as is the primary and key secondary endpoints for the trial.

And so yeah I see.

CRO selection.

I'm getting.

Forward with the Finalization of the statistics.

Statistics to the protocol and taking clinical sites is what we're actively doing right now so that's a key part of our advisory board coming up and Pam can you also comment on the active versus the control in that trial. So it'll be obviously in the family stat versus versus a failing saline.

And the primary endpoint or the first 24 hours is activated clotting time, so it's basically a powerful anti coagulant versus saline and then looking at you know clotting time as your primary endpoint I think the first 24 hours in the study.

So pretty straightforward.

Got it.

Yes.

Yes.

Really appreciate all the details.

Import.

And the first one.

One more question for miles regarding the Prefilled syringe products.

Can you discuss any ongoing commercial path for a potential launch with the MTA.

And also just to clarify this PFS of one so that's the first NDA to be submitted.

We expect commercial launch Oh, Oh for Peru, Prefilled syringe furloughs or you know.

The open market.

It says.

Yeah. So the pre filled syringe products are being developed in a staggered fashion. The first one is the ephedrine or PFS of one product again trade named our trademarked right now as fed Sierra Ephedrine, syringe, which you can imagine so fed sera something to that effect. So.

That will be on a 10 month review clock.

During that period of time, we will be discussing contracting with the idms.

As well as the group purchasing organizations, we're really encouraged by the uptake we've seen in the market of what I'll call similar but potentially.

Less advantageous products and what do I mean by that we mentioned in the script that and following the most recent launch of an ephedrine ready to use by all not in syringe form but in the vial. So they still have to draw it up having prepare to the table and if they don't use it they're going to have to discard.

<unk>, which has significant waste so requires time energy and potential waste.

Is an AR or completed $30 million in sales in only its second year of launch so there's clearly a need.

To advance the efficiency.

Safety and quality of this product in particular in this market and so we're going to try to submit that here in very short order and get on that 10 month clock.

The balance of the pre filled syringe as you're asking would be the phenylephrine, we're continuing to do work on that with aggregates hot it'll be a staggered submission. So it will be delayed to after ephedrine that'll do two things for us allow us to get a read from the FDA on ephedrine, which we feel very confident in and continue to work on development to fine tune that.

<unk> as well.

Okay sounds good. Thank you so much for the clarification.

Fourth the progress this year.

Thank you.

The next question comes from James Molloy with Alliance Global Partners. Please go ahead.

Hi, This is actually Laura calling in for James Molloy and thank you for taking my questions.

And also congratulations on the recent divestment, but.

Sylvia with a large farmer and what this do you think you could possibly walk through your expectations for the ramp up of sales and then also I have another question. So in regard to your Tonight. When do you expect the rate the Registrational trial to be commenced and then.

But that study design.

Thank you.

Yep.

Sure Laura Thanks for the for the question. So we can't comment on the ramp up of sales I think you were referring to dispute with you on that one based off its divestment to Laura what I can tell you is we are in deep.

Deep trance for mode with them or transition mode between our commercial team their commercial team as a matter of fact, they're absorbing our commercial personnel all except one to maintain the momentum we have in the procedural suites I know that they will be expanding and training even further their hospital sales team based off their communication to us and they've got deep.

Distribution. So we're excited about what they're gonna do can't comment on a forecast from them can only comment on their commitment and resources that they're putting against it which is impressive.

As it relates to nah yet.

Again, we mentioned that the study design has been agreed upon with the FDA. The end points have been agreed upon with the FDA those endpoints as a primary or activated clotting time and as a secondary that we didnt mentioned are there.

We're looking at basically the filter lifespan. So we anticipate obviously when you're using saline into the circuit and you're not inhibiting plotting.

That those filters, but much more frequently.

And they're also looking at platelets a number of transfusions.

You know how efficient B E.

Dialysis is lucky urea concentrations et cetera.

So there's just a whole host of key secondary endpoints that are clinically important but the primary endpoint again being activated clotting time over the first 24 hours at a powerful anti coagulant versus placebo, we feel pretty confident.

And I think you asked about timing Laura again, we're just guiding to the second half of this year.

Dr. Palmer team are working with the euros as we as we sit here now based off of selection of sites etcetera. So again, we're excited to get that one going as quickly as we can.

Got it thank you for taking the questions.

Thank you Laura.

This concludes our question and answer session I would like to turn the conference back over to Vince and gaudy for any closing remarks.

Thanks, Andrew and thank you for all of you for joining us today and for your continued support of accelerator really excited about our execution on the stated plan the.

The significant progress we continue to make with NIAD and our pre filled syringes in.

In particular fed Sera, and we look and remain focused on driving long term shareholder value with advancing this this.

High value late stage pipeline.

Look forward to answering any additional questions you might have offline and sharing our future developments with you.

Again, thank you for your attendance and please be safe.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

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