AcelRx Pharmaceuticals Inc. Q1 2023 Earnings Call
Speaker 1: Hello, welcome to a SolarX first quarter 2023 Financial Result conference call.
Speaker 1: This call is being webcast live via the events page on the investor section of Xelarx's website www.xelarx.com
Speaker 1: This call is property of XellerX and any recording, reproduction, or transmission of this call without the express written consent of XellerX is strictly prohibited.
Speaker 1: As a reminder, today's webcast presentation is being recorded.
Speaker 1: You may listen to the replay of this webcast by going to the investor section of Accelerax website. Welcome.
Speaker 1: I would now like to turn the call over to Raffi Azadourian, XRX Chief Financial Officer.
Speaker 2: Thank you for joining us on the call today. This afternoon, we announced our first quarter, 2023 financial results and associated business updates in a press release.
Speaker 2: This press release can be found within the investors section of our website.
Speaker 2: With me today are Vince Angotti, our Chief Executive Officer, and Dr. Pam Palmer, Accelerex's co-founder and Chief Medical Officer.
Speaker 2: Before we begin, I want to remind listeners that during this call, we will likely make forward-looking statements within the meeting of the federal security laws.
Speaker 2: These forward-looking statements involve risks and uncertainties regarding the operations and future results of AccelerX.
Speaker 2: 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 will now hand the call over to Vince.
Speaker 3: Thank you, Rafi, and good afternoon, everyone. We're excited to provide an update to you today during this transformative time for AccelerX marked not only by the divestment of the Suvia, but also by submitting a request for an emergency use authorization to the FDA in April for NIAID, or LEAD to Famistat Program.
Speaker 3: This emends a prior EUA submission to the FDA by law therapeutics, which received an encouraging response from the agency, but requested certain CMC information that was being reported.
Speaker 3: These requests were addressed by the primary amendments to our recent EUA submission.
Speaker 3: NIA has been developed for use in the U.S. as a novel NI Quadulent for dialysis circuits.
Speaker 3: We cannot stress enough how important the availability of an alternative anticoagulant is for dialysis patients including those undergoing continuous renal replacement therapy or CRRT.
Speaker 3: This is because clotting of the circuit filter during CRRT can occur resulting in major complications to the patient.
Speaker 3: Our interactions with leaders in the field of nephrology during our recent advisory board meeting reinforce the urgent medical need for an alternative anti-quagulant for use during CRRT. And this, combined with our recently conducted US quantitative research, reaffirms the market potential for an iodide.
Speaker 3: At this point I'd like to turn it over to Dr. Palmer to help explain the risks of not using an anti-coagulant with inpatient dialysis.
Speaker 4: Thank you, Vince. As a result of not using anticoagulants in the dialysis circuit, patients can experience a low-quality dialysis due to a clotted filter. Thank you.
Speaker 4: In addition, when the clotted filter is changed, loss of red blood cells and platelets removed with the filter can often result in the patient requiring a transfusion.
Speaker 4: For these reasons, the International CRRT guidelines recommend the use of an anti-coagulant infused into the dialysis circuit.
Speaker 4: But despite this, US physicians do not always use anticoagulants in patients undergoing CRRT.
Speaker 4: Our recent quantitative market research indicates 29% of patients undergoing CRRT get no anticoagulation in the dial circuit.
Speaker 4: So why would physicians not use an anticoagulant in some patients, even though it's an internationally recommended standard of care?
Speaker 4: As we were told by many physicians at the recent annual Acute Kidney Injury and CRRT meeting held at the end of March in San Diego,
Speaker 4: They are stuck with, in their words, two bad options for CRRT and equagulation, Hepburn and Citrate, the latter of which was made available under an EUA at the start of COVID.
Speaker 4: Hepprin has a relatively long half-life and recirculates back into the patient and can cause systemic bleeding as well as other issues.
Speaker 4: Regarding citrate, it is difficult to use, requires calcium levels to be drawn every four hours, requires intensive nursing time, and our recent market research indicates physicians are concerned about its use due to its side effects, which include hypocalcemia, citrate safety, alkylosis.
Speaker 4: and other complications, including ventricular arrhythmias.
Speaker 4: Not surprisingly, when talking to one ICU physician from a major academic center who was at the recent AKI and CRRT meeting, he told us his hospital does not use any anacquagulant during CRRT at all due to the risks of both heparincy trait.
Speaker 4: even though it is against the International Standard of Care.
Speaker 4: Our recent study of 150 physicians specializing in CRRT showed that across the board, herprin was used in 43% of patients and citrate was used in 28% of patients.
Speaker 4: leaving 29% of patients with no anticoagulant due to the risks of the other two agents.
Speaker 4: Given issues and fears the position have available, the two available anticoagulant options, this is not surprising and demonstrates a large unmet need for an easy to use short half-life anticoagulant such as Nihat.
Speaker 4: We plan to submit this quantitative market research for peer-reviewed publication this quarter.
Speaker 3: Thanks for that, Pam. As a result, we believe the majority of the target population for NIAD consists of patients that are receiving no an Icoagulant.
Speaker 3: as well as the 28% that are receiving situate totaling 57% of CRRT patients.
Speaker 3: to a monitor degree patients at risk going happen.
Speaker 3: In terms of market opportunity, we estimate NIA to have a peak annual sales potential of $200 million in the U.S. attributed to just the inpatient and outpatient dialysis markets, excluding use in any other extra-corporeal circuits. Or estimate the peak sales potential comes from modest.
Speaker 3: penetration into these markets.
Speaker 3: the dialysis market outside of the hospital.
Speaker 3: Recently, we've agreed to terms with the manufacturer for the supply of the active pharmaceutical ingredient in NIAD, being the famist at Mesoli, that will allow us to scale up the production of this product candidate.
Speaker 3: We look forward to initiating a single registrational trial in the second half of this year, of which the primary endpoints have already been agreed upon by FDA for a 160 patient study.
Speaker 3: In addition, after all-rating receiving an IECD-10 CMS procedural code to facilitate reimbursement,
Speaker 3: We're proceeding with early commercial planning.
Speaker 3: We anticipate that we'll need only a small sales force for NIA. That's such evaluating the use of an in-house sales team versus external commercialization partners with nephrology and or ICU experience.
Speaker 3: We remind you that if approved, NIAID would be the only regional anti-quagum approved for this indication in the United States.
Speaker 3: Now let's turn to our pre-filled syringe portfolio.
Speaker 3: We plan to follow new drug applications or NDAs for our fedron and final left from pre-filled syringes.
Speaker 3: The first filing will be Fed CERA, our pre-filled syringe with Fedron anticipated by the end of the second quarter.
Speaker 3: The need for pre-filled syringes is clear since their availability offers a significant improvement and advantage for the overall health care system.
Speaker 3: including less waste, improved safety, and the convenience of not having to dilute and prepare the syringe in advance of procedures.
Speaker 3: There are currently two FDA approved the fedroom pre-filts or inches.
Speaker 3: Although then these recent approvals nearly all the current used to fedric pre-filter injuries are made by compounding pharmacies which have an inherent short shelf life and well-known risks for contamination.
Speaker 3: Whoever the ability of physicians to have it available, a convenient, pre-filled, termally sterilized effedron syringe that has an extended shelf life would certainly offer an additional advantage.
Speaker 3: For all these reasons, we believe that there is a significant amount of room for FedSear and what we estimate is a hundred plus million dollar market.
Speaker 3: This is especially true based on our partner, Agaton's European product, which has a three-year shelf length.
Speaker 3: We believe that the market opportunities also are attractive for pre-filter engines since we're expecting to allocate minimal resources towards this program.
Speaker 3: This is because much of the commercialization efforts are expected to be through contracting with group purchasing organizations and hospital networks.
Speaker 3: With potential approval of the FED of the NDA for FED Sierra, commercialization could occur as soon as the first half of next year.
Speaker 3: Now, with regard to our transition of dystuvia to alloral pharmaceuticals, we close the divestment transaction on April 3rd. And as restated in our press release today, we anticipate the transition to beyond going for about six months from the closing date.
Speaker 3: During this time, Excelter X will be reimbursed for transition services. We'll lead the relationship with the Department of Defense or DOD to ensure continued engagement and expected sale to that important customer.
Speaker 3: In fact, we completed training to an infantry division just last week with additional training scheduled for this year.
Speaker 3: Remind you that in addition to the 15% rule to your commercial sales by Alora, we'll retain 75% rule fees on all net sales to the DOD to see the single largest customer, which is a significant upside of our agreement. In addition, we're entitled up to 116.5 million.
Speaker 3: dollars in sales based milestones from Alora.
Speaker 3: In summary, in 2023, we have already accomplished the following previously communicated goals.
Speaker 3: Number one, the divestment of the Sylvia to a strong commercial partner while retaining upside-from-rollities on both the commercial and DOD sales.
Speaker 3: Two, significantly reduced our operating expenses. Three, advanced the manufacturing and supply chain for NIAD, and four, submitted the EUA for NIAD. Moving forward, we're preparing to initiate the NIAD Registration Control Trail later this year. We're also on track to follow our NDA for Fed Zero, our first pre-filled syringe product candidate.
Speaker 3: setting up the potential of two commercial products by mid-2024.
Speaker 2: And with that, I'll now hand the call over to Rafi to take you through the details of our first quarter financial results. Thanks, Vince. Sales of Dusuvia in the first quarter were $0.5 million, which was a 7% increase over the first quarter of last year and a 111% increase over the fourth quarter of 2022.
Speaker 2: despite only having three sales representatives promoting the Suvia during the quarter. With the experience and resources that Alora Pharmaceuticals has in sales and marketing, we expect continued momentum in sales with their ownership of the Suvia.
Speaker 2: The revenues in the first quarter are not reflected in our statement of operations due to the specific accounting treatment and presentation of the now-divested DeSuvia business.
Speaker 2: All sales and expenses related to Dissuvia are reflected in a single line item entitled NetLost from Discontinued Operations in our Statement of Operations, and the individual line items will be disclosed only in the notes to the financial statements.
Speaker 2: Cash and cash equivalent totaled $13.4 million at the end of the quarter.
Speaker 2: Our combined R&D and SG&A expenses in the first quarter, excluding the SUVIA related expenses, since these are now reported within the net loss from discontinued operations line item, totaled $5.3 million compared to $4.9 million in the first quarter of 2022.
Speaker 2: Including the DeSuvia-related expenses within the loss from discontinued operations, these expenses have declined $2.3 million in Q1 2023 compared to Q1 2022.
Speaker 2: QQ-1, 2023, combined R&D and SGNA expenses included $0.6 million non-cash stock-based compensation expense.
Speaker 2: Our estimated combined R&D and SG&A expense in 2023, excluding non-cash related expenses, is in the $16 to $20 million range, depending upon the timing of the receipt of a potential emergency use authorization for NIAID and other discretionary costs.
Speaker 2: We expect to continue to closely monitor our discretionary expenses during the year to extend the cash runway as we await potential upcoming significant milestones.
Speaker 2: We expect to continue to closely monitor our discretionary expenses during the year to extend the cash runway as we await potential upcoming significant milestones. I'll now turn the call back over to Vince.
Speaker 3: Thank you, Rafi. I'd like to open the line for any questions you might have.
Speaker 3: I'd like to open the line for any questions you might have. Operator.
Speaker 1: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up the handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Brandon Foulkes with Canvas.
Speaker 3: Do we think about this as a normal hospital product launch trajectory? Or do you think there's possibility of maybe bending that curve a little bit, just given the need for this product? Thank you. Yeah, so I think the key to your question, Brandon, and thank you for this. What is a normal hospital trajectory? And they've been all over the map, but historically what I...
Speaker 3: within that target population, that target set of institutions, a faster uptake because of their knowledge in the FAMISAT, their historical...
Speaker 3: Not experience, but education on the product and anticipation for it coming to the US. I think the other key to this, and I'll ask Dr. Palmer to comment on it, is this isn't, as we have learned, a typical P&T routine calendaring...
Speaker 3: Mechanism for approval within the hospitals. Dr. Palmer, can you please comment on those that are critically involved with this and how that would typically operate? Yeah, what we found out from talking to these large institutions and the smaller ones as well is that there's only one or two docs who are really calling all the shots.
Speaker 4: CRRT anticoagulation in any of these institutions. So this isn't something that goes in front of you know a 25 panel P&T committee and has to get on the calendar and has to be debated. The decision really is made by the folks who are running the CRRT program as to what exactly they want and if they ask for it they get it. So it's it's going to be quite different I think than something like Dastuzia for example.
Speaker 3: As we've been designing the study and working with those are going to be investigators on the trial. We were expecting maybe nine to twelve months in life for enrollment.
Speaker 3: The communication back to us is they feel like they can accelerate that. Dr. Palmer, maybe you can comment on how they're talking about the velocity of enrollment.
Speaker 4: Yeah, I think that, you know, even with our quantitative market research and sort of hearing from 150 US physicians, when you really talk to them one-on-one, they really don't like Apprent and they really don't like Citrity, they're all though it's sort of a necessary evil when a patient can't tolerate Apprent. They...
Speaker 4: have told us that their use of CRT has escalated since COVID and has remained escalated and that's certainly what a quantitative market research shows as well.
Speaker 4: So, they're saying an enrollment of this study, which, again, remembers only 80 active and 80 per fibrill patients. So, it's only a total of 160 for the study. They're basically saying this can happen in a few months.
Speaker 4: So we're really sort of having to rethink about how quickly we're going to be able to get this clinical trial done.
Speaker 4: really sort of having to rethink about how quickly we're going to be able to get this clinical trial done. Bren, is that helping answer your question?
Speaker 5: very helpful. Thank you so much.
Speaker 5: Very helpful, thanks very much. Okay, thank you.
Speaker 1: Our next question comes from Ed Arce with HC Wainwright. Please go ahead. Hi everybody, it's Thomas yet asking a couple of questions for Ed.
Speaker 6: So first, good to hear that the 9ELA was filed. Can you give us some details when was the following formally accepted? And just trying to figure out the timing of what the next steps you can go over them?
Speaker 3: Sure, so the filing occurred in the second half of April .
Speaker 3: towards the end of April . And we got confirmation of receipt of that filing within 24 hours. The difference between an EU filing and typically an NDA filing is the NDA filing has to go through an electronic portal that requires some significant work. This is a less formal submission.
Speaker 3: We directed to an email with a pretty significant file that goes directly to the project manager.
Speaker 3: directed to an email with a pretty significant file that goes directly to the project manager. So...
Speaker 6: It occurred in late April , we got confirmation of receipt very shortly thereafter. Okay, so can you remind us so early days? So when should you expect a response from the agency regarding when?
Speaker 3: what questions should be expected. And I'll have Dr. Palmer weigh on this as well, but there is no set timeline with EUAs, as there would be with a classic NDA submission where you have a paduf of involved in regulatory.
Speaker 3: Restrictions on time for review, whether it's a year, whether it's 10 months, etc. I think the important aspect of ours is it does have already FDA breakthrough designation. So while we can't handicap with the timing when the feedback will be, we do know that it gets that priority designation then based off of the breakthrough label that it has received.
Speaker 3: Dr. Palmer, did you have any additional colleagues you might want to add to that?
Speaker 4: No, you're right. I mean, we don't have any specific date. There isn't any specific timelines that they're held to for EUAs. But we're moving very quickly forward with the clinical trial trap. We're working final touches on the investigative brochure. We've selected our CRO. We're going forward with the process.
Speaker 6: point that that is. Thanks, thanks for the additional details. And perhaps beyond the EUA.
Speaker 6: The rest of the instructional study will include KTHL and what else is needed to get the study launched and I believe that the second happened this year. And once you're estimated, total spend on this rest of the instructional study. I'll have Dr. Paul Moran to the first part of that question. The rafi, maybe...
Speaker 4: the clinical research organization, the CR road that we selected, and we're moving forward. So there's really nothing that has stalled us out at all.
Speaker 3: And Pam, would you comment that the enthusiasm for the participation is strong based off of our personal reactions with those potential investigators?
Speaker 4: Yeah, we've met with them both in person at that meeting we mentioned down in San Diego, the AKI CRRT meeting, as well as an ad board that we held a week later. And they are chomping at the bit. They're very excited to get access to this product and to be enrolled in the clinical trial and promise they can get it done very quickly. So it's just a matter of contracting with them.
Speaker 4: versus ADPOSIBO, and the primary endpoint is the activated clotting time over the first 24 hours.
Speaker 4: And so I think we feel very fortunate to have a pretty standard quantitative endpoint. It's an objective endpoint that's easily measured, comparing a very powerful anticoagulant to saline. So we're very excited about the odds of...
Speaker 2: hitting this clinical trial out of the ballpark. And then Rafi, maybe the second portion of the question on the finances. Yeah, so the estimated cost that we have, Thomas, for the clinical study is about $7 million.
Speaker 2: And if it's accelerated, it'll be a bit last, but that's what we're...
Speaker 2: It'll be a bit lost, but that's what we're estimating right now.
Speaker 6: Thank you so much for taking any questions in this manner, thank you.
Speaker 6: Thank you so much for the questions looking forward to the progress in the focus on the video. Thanks Thomas.
Speaker 1: Thank you. Our next question comes from James Malloy with Alliance Global Partners. Please go ahead. Hey guys, good afternoon. Thank you for taking my questions. I'm looking at the 29% NOLA, 28% Citrate markets. Can you walk through where you guys see the poll coming from each of those markets?
Speaker 6: should you get approval from NIAD and how does an EUA approval versus a full approval potentially impact the ability to penetrate into those markets.
Speaker 3: Yeah, so I'll comment on the first part of that question. So we see the poll primarily coming from the no anticoagulant and citrate markets in bulk to a much lesser degree the heparin market, just because it's inexpensive, been around a while, and if a patient could tolerate it, it makes sense for them to actually use that.
Speaker 3: Although, as Dr. Palmer mentioned in our recent interactions with our advisory team, there was less satisfaction with Heparin than we had originally anticipated. So I think the quote Dr. Palmer utilizes...
Speaker 3: These physicians said we have two bad choices right now, and they're just trying to make the best of it between heparin and citrate So when we consider those markets the larger pull from the no anticoagulation in the citrate market which again citrates only available today under an EUA
Speaker 3: We're estimating a market share penetration within the CRRT space only.
Speaker 3: That being the in-hospital dialysis, where they're receiving the dialysis for call it five to seven days, 24 hours a day, just over 19% market penetration.
Speaker 3: That will account for about half of the $200 million in sales at peak sales that we've currently estimated, obviously, that appears a bit conservative.
Speaker 3: When we think about the market outside of the hospital, the classic dialysis, where the patients are going in calling it three times a week from maybe three to five hours a session,
Speaker 3: very, very, very large market of which we would get a smaller percentage, only about 5 to 6% of that market, realizing that many of them in that particular may not need an I-coagulation.
Speaker 3: Again, it's shorter term, but there's a small portion, a small subset according to our specialists that say we'll need it. So again, a modest penetration in that market of only about 6%. That makes up the other 100 million. So that gets us to your 200 million total.
Speaker 3: in our preliminary forecast to date for peak sales, which again we feel are more than reasonable and modest.
Speaker 3: based off of our calculations and experience so far talking with the physicians. I think you had mentioned the second part of that James was EUA versus FDA approval. I think under an EUA you'll be more out
Speaker 3: of these institutions at 20 to 30 machines.
Speaker 3: or even more. Those were where we would primarily advance our efforts early on because they tend to house the specialists or the thought leaders nationally and internationally within those institutions.
Speaker 3: and we would have limited resources at least to the start.
Speaker 3: of the launch to penetrate anything beyond those large thought leader institutions. While there is a fair amount of business outside of those, they're spread a little bit more thinly and it will take more time to educate those particular institutions. I hope that helps answer the question on a ramp for EU versus full approval. I think it's full approval and especially if we have a partner involved, then we'll be blanketing the US.
Speaker 3: in a more uniform fashion. And I do want to reiterate that we are talking with partners as we speak for both ex-US and US commercialization.
Speaker 6: but of the sort of the twenty percent or citrate you guys think you get half of that or third of that and then of the no-inch wagon ticket you know half of that are three quarters of that group or i was wondering how that breakdown with a hundred million but you know it comes from within those within those groups again assuming you have more specific sorry about that more specific rock you give us more details yeah i'm without getting to all those details in terms of market penetration on each
Speaker 2: James, like Vince said, the biggest is going to come from that sit-trade and the no-anti-coagulation markets. That's going to be probably close to 70% of that total peak sales opportunity.
Speaker 2: The heparin though, there is, as we've been talking also to some of these physicians, they'll use heparin. They don't like it, but they'll use it if there's nothing else available, because citrate is so complex to use, they have to use, they feel like they have to use something, but citrate is so complex that they can't use it.
Speaker 2: We do expect to get some share out of that heparin market. It's just not nearly as much as the citrate and no anti-coagulant market.
Speaker 6: Okay. Thank you for that. And then maybe my final question would be, I'm sure you guys are well aware, you know, the challenge is facing smaller companies with single products in the bag, even though obviously this is a much smaller sales force here, so a lot of the issues can be avoided. But what are your thoughts on bringing in additional products and how does that opportunity look for potentially in-license something to put something else in the bag of this sales force?
Speaker 3: Right now, honestly, we've got our hands full because with the NIAD potential EUA, the completion of that study, et cetera, NIAD is clearly our primary focus, but we've got things right on the back end of it with the two prefilled syringes. And again, while that won't use much sales force, it will be contracting, but we'll have other potential revenue streams.
Speaker 3: from that as well. I think the other key is for licensing in. We're always on the lookout for licensing in, but I think you have to remember that. The Famous Statter Niant, LTX 608, is a pipeline in a product.
Speaker 3: with multiple other potential indications that we could pursue moving forward. We want to get these under our belt, get the revenue streams working accordingly, the income statements moving in the right direction, and while we'll be opportunistic on bringing in additional products, we also don't want to eliminate the opportunity to
Speaker 3: advance Nefamistat or LTX608 for the other indications. Thank you for taking my question.
Speaker 3: take some of the pressure off before where we had no pipeline. We were only a distributed company, now we've got multiple avenues to head with the current assets within our portfolio.
Speaker 1: Great, thank you again. Thanks, James. This concludes our question and answer session. I would like to turn the conference back over to Vintane Gotti for any closing remarks.
Speaker 3: Thanks Jordan, and thanks to all of you for joining us today and your continued support of AccelerX. We're clearly excited about the transformation through the progress we've made with NIAID and our pre-filled syringes. We're going to remain focused on driving long-term shareholder value as a newly focused company with late-stage development, what we believe as high-value assets going forward.
Speaker 3: We'll look forward to answering any additional questions you might have offline and we'll certainly continue to share with you our future developments and I'm excited about the progress we've made. So Jordan, thank you and thank you all for attending. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.