Q2 2023 AcelRx Pharmaceuticals Inc Earnings Call
Welcome to the X L. Rx second quarter 2023 financial results Conference call.
This call is being webcast live.
The events page of the investors section of Excel, our axis website at Www X L Rx dotcom.
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Hello Xs website.
I would now like to turn the call over to Rafi I was just Orient its Rx Chief Financial Officer. Please go ahead.
Thank you for joining us on the call today.
This afternoon, we announced our second quarter 2023 financial results and associated business updates in our press release.
This press release can be found within the investors section of our website.
With me today are Ben Thank God, He our Chief Executive Officer, and Dr. Pam Palmer, <unk>, founder and Chief Medical Officer.
Before we begin.
Want to remind investors 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. These documents can also be found on our website at www dot accelerates dot com.
I will now hand, the call over to them.
Thank you Rafi and good afternoon, everyone.
We're excited to provide an update you today on the progress related to our transformation, including the divestment of the Giulia and the advancement of our late stage pipeline assets with near term commenced commercial potential.
Specifically, our product candidates NIAD accelerates as lead the famous type program and our pre filled syringes.
In addition to the portfolio evolution recently, we were able to close a capital raise led by new investors about the $26 $3 million with $10 million immediately available to us.
This allows us to continue the momentum with our pivotal near term milestones.
Our lead product candidate <unk> has received FDA device breakthrough designation and is being developed for use in the U S is a novel anti coagulate for dialysis circuits.
If approved <unk> would be the only regional and I quite got approved for this indication in the U S.
As a reminder, if anti coagulants are not used in the dialysis circuit.
Patients can experience a low quality dialysis due to Ah clotted filter.
And importantly, 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.
The international guidelines for continuous renal replacement therapy.
Or C. R. R. T recommend the use of an anti coagulant infused into the dialysis circuit.
But despite this U S physicians do not always used anti coagulants patients undergoing C. U R. R T because of the limitations of currently available agents.
Credibly, a recent U S. Quantitative market research indicates 29% of patients are undergoing sea are arty get no anti coagulation and their dialysis circuit.
Which puts them in a situation of receiving treatment that is below the standard of care.
Our interactions with leaders in the field of Nephrology and critical care medicine have reinforced the urgent medical need for an alternative anti coagulant for you stink during CRT.
And this combined with a recently conducted U S market research reaffirms the potential for not yet.
Now in April we submitted a request for an emergency use authorization or EUA to the FDA for not yet.
Our submission immense a prior EUA submission to the FDA, which received an encouraging response, but the agency requested certain manufacturing related CMC information.
We address these requests and the primary amendments to our submission and we now await FDA response.
In terms of market opportunity, we estimate that the peak annual sales potential of $200 million in the U S. And this is attributed to just the inpatient.
And outpatient dialysis markets, excluding any other use and other extra coupon you'll circuits.
Note that our estimate in peak sales potential comes from a modest penetration into these markets specifically attaining only about 20% share of the current in hospital C. Our RT market in.
And 6% of the dialysis market outside of the hospital.
We're proceeding with early commercial planning after already receiving an ICD 10, CMS procedural code to facilitate reimbursement.
Finally, with our contract manufacturers, we have continued to advance the production of NIAD and.
And based on accelerated stability data of six months, we expect product to be stable for two years at room temperature.
At this point I'd like to turn it over to Dr. Palmer to discuss the upcoming NIAD clinical trial in more detail.
Pam.
Thank you Vince.
Good afternoon, everyone.
First before I discuss the study in detail I would like to say that we have recently submitted for publication. The quantitative market Research study that was performed at the end of last year.
Eight of the country's top C. R. R. T experts have co authored the study report with us anyway.
They were helpful. In interpreting the study results and continue to emphasize to us how important NIAD could be to address the problems of the currently used agents.
In fact, the clinical benefits of new families that have recently been published and a meta analysis of almost 3000 patients.
This study shows that comparison of families that anticoagulation during C. R. R T conventional anti coagulants increased mortality by 25%.
And using no anticoagulants increase mortality by 31%.
Conventional anticoagulants also increased the rate of bleeding by 45% compared to the famous stat.
Filter life was decreased by 10 five hours when no anti quake and acquaintances used compared Kenneth hemostat.
Therefore, lower mortality less.
Less bleeding.
The longer filter life were associated with the statements that you make.
Making this antiquated potentially exciting new option for C. R. R. A T.
Finally, turning to the NAIAD trial.
The study's patient population key endpoints and inclusion exclusion criteria have previously been reviewed by the FDA since now it has breakthrough device designation.
This perspective double blinded trial will be conducted in up to 10 U S Hospital intensive care units.
And will enroll approximately 160 patients equally.
Equally divided between <unk> and placebo groups.
Knight is being regulated by the FDA as a device.
Given that the mechanism of action of <unk> is on the dialysis circuit.
And not in the patient.
Device studies typically require much lower patient exposures than drug studies, too, which is an advantage for us to quickly and inexpensively Ms NIAD towards approval.
Yeah.
Patients who require C are our key for acute kidney failure, and who cannot tolerate happened or at a higher risk of bleeding are eligible for enrollment in the study.
Our quantitative market research shows us that in the U S. Helping is used in approximately 40% of patients on C. R. A T.
And therefore, approximately 60% of patients on <unk> would be able to qualify for the study.
The risk with heparin is that although it is injected into the dialysis machine.
That's a much longer half life in the same style.
Up to two hours or longer whereas in the family that has a half life of eight minutes.
They happen therefore circulate back into the patient.
And can risk bleeding side effects, which can be catastrophic.
Heparin also has the risk of inducing a sudden decrease in the patients' platelet count.
Which is termed heparin induced thrombocytopenia or hit.
Furthermore, many patients who are in the ICU have low levels of antithrombin III.
Which is required for heparin to have its anticoagulation effect on blood.
The blood of these patients would therefore continue to court and the circuit, even though heparin is being infused.
Yeah.
Patients in this study must complete at least three days on C. R. R T and up to a total of seven days if needed.
The primary endpoint for this study is the activated clotting time or a C. T over the first 24 hours of dialysis.
Anticoagulants increase the time to the patient's blood to clot and.
And E. C. T is a rapid bedside tests that shows this clotting time.
Patients can only into the study if they have an EZ key that is below a specific threshold prior to study drug dosing.
The infusion rate of MS families that were saline is to be titrated up until the patients E. C. T is prolonged to approximately 200 seconds.
The a C T does not increase in the maximum study drug infusion will be infused for the remainder of the study.
This likely will occur in the placebo group as these patients E. C. T would not be expected to increase as they will not be receiving any anticoagulants.
With that said comparing the elevated a T T resulting from night to.
So the E C T in the placebo Saline group over the first day of C. R. T should be a straightforward primary endpoint to achieve.
Secondary endpoints include duration of filter life before Ekati occurs and the number of transfusions required.
We are diligently working with our contract research organization.
And are excited to have the first patient enrolled towards the latter part of this year.
Feedback that we've heard from their perspective clinical sites is that enrollment should be robust such that the study would complete mid next year.
I will now turn the call back over to Vince.
Yeah.
Thank you Pam.
We're very confident in the success of this study is it it's evaluating the activated clotting time of a powerful anti coagulate versus stealing.
In addition, the famous that has decades of successful use in tens of thousands of patients outside of the U S with a favorable safety profile.
Based on study timing, where we plan to prepare a PMA submission to the FDA next year for the potential launch in 2025.
Now, let's move to a pre filled syringe candidates.
The need for pre filled syringe as this clear since their availability offers a significant improvement in advantage for the overall health care system.
Including less waste improved safety and the convenience of not having to dilute and prepare the syringe and advance of procedures.
Our highest priorities remain readiness for a potential EUA and completing the clinical study at the <unk>.
Efficiently as possible and.
And accordingly, we are currently evaluating the timing of the NDA submission for <unk> zero within 2023.
We believe that the market opportunity is very attractive for a pre filled syringe as.
We expect the fed seara commercial efforts to require minimal resources.
There are planned primarily through contracting with group purchasing organizations and hospital networks.
Okay.
Finally after closing the <unk> divestment on April 3rd we stated that we anticipated the transition to a lower pharmaceuticals to be ongoing for about six months from closing.
This is progressing as planned and acceleration, it's being reimbursed for transition services.
We continue to lead the relationship with the department of defense or Doj to ensure continued engagement and expected sale to that important customer.
Our continued efforts with the department of defense for <unk> are beginning to gain traction.
The D O D has entered into a contingency contract with a wholesaler who must now maintain a minimum amount of inventory on hand with rapid replenishment requirements.
In addition, the completion of the ongoing dispute at clinical trial being performed by the U S Army at the University of Pittsburgh Medical Center.
Our U P M C will be a key milestone.
The <unk> early evaluation of pain or deep study isn't.
It is an open label three year perspective randomized interventional trial, comparing the standard pain medication used in an emergency in the emergency department for moderate to severe pain with the studio for trauma patients in a hospital setting.
This study is expected to be completed early in the first quarter of 2020 for.
The results of which could accelerate distributor sales.
By way of background. The study is being conducted in association with a U P. M. C Research network called likes L. I T E S, which stands for linking investigations trauma.
And emergency services.
Of note the Dodie granted $11 million to support lights, and this does Julia trial.
We remind you that in addition to the 15% royalty on commercial sales by our Lora will retain 75% royalties on all net sales to the D O D <unk> single largest customer.
Which is a significant upside of our agreement.
In addition, we're entitled to up to $116 $5 million and sales based milestones from our Lora.
As a note dod's sales, where the majority of the second quarter distribution sales of Laurus commercial training will be completed this month.
In summary, as we move through the second half of this year, we're highly focused on our largest near term potential value drivers, which include initiating the NAIAD clinical study expected to begin enrollment in Q4.
A data readout from this study expected in the middle of next year and the PMA submission in the second half of next year.
We also wait feedback from the FDA on our NAIAD EUA request submitted in April and finally, we continue to assess the timing of our NDA submission for fed seara and this potential approval in 2024 as well.
Now I'll hand, the call over to Rafi to take you through the details of our second quarter financial results Rafi.
Thank you Vince.
We were very pleased to close on the financing last month that provides accelerates up to approximately $26 million should the milestone based warrants all be exercised.
Initial gross proceeds totaled $10 million and the warrants have a milestone based acceleration feature that should certain milestones be achieved trigger a 45 day exercise period for the holder.
There were two series of warrants series, a which included a milestone of the receipt of an emergency use authorization for NIAD or approval of the PMA and.
And series B, which included a milestone of a positive data readout from the NAIAD clinical study or approval of the PMA.
Our team is highly focused on achieving these milestones and as previously mentioned, we expect the NAIAD clinical study to start later this year with a data readout by mid next year.
The addition of new health care investors, including not the highlight capital management demonstrates confidence in our programs and the opportunity and potential available with the portfolio of assets we have.
The second quarter was transformative two accelerates we completed the divestment of the Subia two of Lora in April which allows us to focus resources on the development of our portfolio of late stage assets.
We are confident that our lora is the right partner for to Sylvia given their experience with hospital sales and production and supply of controlled substances.
We are continuing to work with a Laura on all aspects of the transition of the Sylvia, including regulatory supply chain and commercial activities.
We expect the commercial teams to complete training in the third quarter.
Which will provide their teams are catalysts to begin renewed commercial activities Ford to Sylvia.
Yeah.
Revenues for the second quarter of zero point $3 million were generated primarily from royalties on the sales of <unk> principally from the sales to the department of defense on which we earn a 75% royalty from our Lora.
Cash and cash equivalents were $7 $4 million at the end of the quarter or $17.4 million on a pro forma basis, including the $10 million of gross proceeds received from the July financing.
Concurrently with the closing of the disused divestment, we repaid the remaining senior loan outstanding.
We ended the quarter with no outstanding loans.
[laughter].
Our combined R&D and SG&A expenses in the second quarter totaled $4 $2 million compared to $5 $1 million last year, and excluding noncash stock based compensation was $3 $8 million in Q2 2023.
Our estimated full year 2023, combined R&D and SG&A expenses, excluding noncash related expenses remains in the $16 million to $20 million range.
As a reminder, all historical sales and expenses related to Sylvia are reflected in a single line item entitled net loss from discontinued operations.
There were minimal the CVA related expenses in the second quarter of this year given that the Soviets divestment closed at the beginning of the quarter.
Okay.
Now ill turn the call back to this thank.
Thank you Rafi.
And I'd like to open the line for any questions you might have operator.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
The first question comes from Ed Arce of H C. Wainwright. Please go ahead.
Hi, good afternoon, everyone business travel.
A couple of questions for it thank you.
Let's go to questions.
First regarding UA or my Oh.
Cool.
And though it was mentioned that the timing is not very precise but there's the decision still expected this year.
Yes, it's a good question Theres no regulatory.
Guidelines as you were off Thomas for responses on an EUA, but we've done a lot of research on E ways that have been submitted over the course of the past couple of years and what we've found is that.
Outside of the.
The vaccines for.
That were approved under EUA as quickly.
The balance of the EUA submitted took on average around six months for review time.
So if you consider our submission in early April and you consider the six months is some type of guidelines you answer would be yes, typically we would we would expect to hear this year, but there's no guarantees on that.
Got it.
And then the other the other partner equation.
The PMA.
Approval.
Betsy.
Support by the restoration of study that is expected to begin later this year.
Can you pinpoint you are any interaction with the FDA, specifically regarding what endpoints.
There will be agreed with <unk> to support their Google.
Thomas Thanks for the question we'll.
Have Pam answer that question.
Yeah. So the the agreed upon primary endpoint again. This is after our meetings with the F D. A.
Is the activated clotting time, you know over the first 24 hours.
And that's important because although a number of studies and the families that have been published.
From Japan, and South Korea.
Looked at other primary end points, such as filter life or amount of bleeding et cetera.
The FDA actually likes the primary end point to be a measure of what the drug or device is actually accomplishing. So in this situation. It's an anticoagulation. So they wanted to see a coagulation time as the primary endpoint are secondary end points are the clinical ramifications of antiquated in your circuit.
Which means you know feels her time before it clots.
You know any.
Are there do you also look at E C T overcame two and three.
So those are important secondary endpoints.
And there's other types of things, we're looking at urea clearance and things like that so there's a number of endpoints that have been agreed with them, but the primary endpoint is the activate accounting timing over the first 24 hours.
And I think Thomas with what I'd like to just reemphasize on that as Pam mentioned in our prepared comments was it'll be our activated clotting time are being night adds.
Versus saline. So you have a powerful anti coagulant over those first 24 hours being administered for CRT versus a placebo.
We're confident in <unk> ability to perform clearly against.
Placebo control arm.
Okay understood.
Understood. Thank you. Thank you for the additional details.
Perhaps switching gear to.
The revenue.
The royalty revenue will be severe so for.
Laura.
It was noted that.
It was mostly related to bnb ourselves loyalty, how should we look at Sofia royalty revenue within the next 12 months or so.
Yeah.
So as.
As mentioned the majority of those to Cvs sales on which we earned revenues was related to the D. O D and given that our Lora is still transitioning a we are working on the transition with them.
We would expect that to be for the for the third quarter are pretty similar because theyre. Just now as we mentioned there are finishing up their training in the third quarter. There are continuing that that transition and then the renewed kind of activities on the commercial front on their end.
Probably going to begin sometime in the fourth quarter.
So I would expect D O D sales to be the primary driver this year of our of our royalty revenues.
And I think as Vince mentioned, there's a lot of activities going on with the with the D O D. So.
Hope hopefully, it's a consistent and growing but again, that's a we're not controlling.
Outside of outside of that those revenues, but we do expect our lora will be ramping up you know by the by the end of this year in terms of commercial activities.
Okay.
Got it. Thank you, perhaps one more question from us on Oh Sarah.
Regarding the regulatory progress.
What are the major steps.
Approval expected in 2024.
What are the major moving parts that they won't go away.
To that point.
Yeah.
We've pretty much completed that project as it relates to readiness for the NDA.
So we've got the package prepared it'll be a matter of paying that produce a fee and submitting it to their electronic portal.
As we mentioned to try to continue stress not yet is the absolute priority for us.
And we're trying to pull every lever we can with the resources available to us.
To be able to expedite that study in any way shape or form whether it's the clinical trial materials or some other mechanism.
We still plan to submit the fed seara.
Application before the close of this year, but we want to keep that flexibility of our resources available.
To expose any possibility to continue to accelerate not yet.
So the simple answer to your question Thomas is we're ready for that one it's all about doing everything we can to accelerate.
The movement in investment on NIAD.
Got it.
Thank you thanks, everybody because there's other questions on that.
We're definitely looking forward to a decision on.
Sure.
You know us as well thank you Thomas.
The next question comes from Jim Malloy of Alliance Global. Please go ahead.
Okay.
Hello. This is Lars are all calling in for Jim Malloy. Thank you for taking our questions. So for NII.
They'll run the Registrational study, that's being planned to you know to be starting before the end of the year. Even if you end up getting the EE Wang or do you think the FDA will still require a confirmatory stage chart to be conducted regardless the announced he likes that.
Yeah. That's a great question, Laura Pam do you want to comment on the requirements, even beyond an EUA for Registrational trials.
Yeah, we will absolutely conduct the Registrational trial.
F T. It gives out E raise which see a tacit understanding that the sponsor will actually move towards a full approval and in fact, when the public health emergency.
Ended in May.
The F D. A put on notice all of the current people, who how do you raise.
That they had to get their products approved through the normal regulatory pathway within two years. So it is not a way to avoid a phase III study or a full approval. So we will absolutely be coupon arsene timelines, regardless, if we get the EIA or not.
I think it's important to emphasize in that and we did that on the last call that whether the public health emergency.
Timing changed or not the ability for the FDA to continue to move forward with the review of those submitted and actually you could continue to submit.
<unk> moving forward, so it's really unrelated.
Got it.
And also I know focus right now is on NII, but for you are there for L. T X six so a candidate.
Do you have any prospective timelines on when phase two trials might begin on you know its designated indications of the IC Colgate or art.
No right now we're going to continue to remain focused on getting this first indication across the finish line with.
And our quad relation of the dialysis circuit as well as our pre filled syringe candidates I. Thank those on the table for us are enough.
For our resources to do as efficiently as possible right now so our focus will remain there.
Understood. Thank you for taking the question.
Thank you Laura.
This concludes our question and answer session I would like to turn the conference back over.
Yeah.
She Vince Vince I'm, sorry, and some closing remarks.
Thank you operator.
And thank you for joining us today and for your continued support of accelerates we remain absolutely focused on driving long term shareholder value.
As a newly focused company with late stage development.
High value assets going forward.
We're very pleased that our plan has attracted new investors.
And we look very much forward to the key milestones outlined for not only the balance of 2023.
But throughout 2024 as well.
So please feel free to contact us after the call. If you have any additional questions and we look forward to sharing our future developments. We believe it's very exciting moving forward. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You May you may.
Now disconnect.