Q2 2023 Zevra Therapeutics Inc Earnings Call
Speaker 2: To all sites on hold, we appreciate your patience and ask that you please continue to stand by!
Our goal is to decrease the time from diagnosis to treatment through market access and create a best in class patient and caregiver experience through education patient services and reimbursement assistance.
We are developing a tailored patient services program to support insurance approval patient access and positive treatment experiences.
And we will seek to continue our close collaboration with key stakeholders, including key opinion leaders and patient advocates to established ever as a trusted and committed partner within the N B C community.
Throughout this journey, we are committed to working on site people with N B C. Their families and caregivers advocates and medical community members. We are extremely grateful for everyone, who continues to participate in trials FDA meetings and discussions and all of those who are supporting the development of treatments for M. P. C.
Now, let's turn our attention to KC 10, 77, our development program for rare sleep disorders.
Beginning with idiopathic hypersomnia or I H. We are pleased to report that our phase II clinical trial evaluating KC 10, 77 is progressing nicely.
We are currently enrolling at over 30 sites across the U S.
As you may recall, the trial as a dose optimizing double blind placebo controlled randomized withdrawal study.
Valuate the safety of KC 10 77.
As well as potential efficacy endpoints, such as sleepiness brain fog and sleep inertia.
Interim phase II data that will be used to inform the design of the phase III clinical trial are expected by the end of Q3 2023.
Potential key differentiators include alignment of peak efficacy with patient need through dose optimize timing.
An expanded exposure range through unique pharmacokinetics.
Based on the current pace of enrollment, we anticipate reporting topline data for the phase III trial sometime during the first half of next year.
In addition to the ongoing phase II trial, and IH, we expanded our KC 10, 77 clinical programs in April by opening an investigational new drug application or <unk> in narcolepsy with the goal of exploring the possibility of adding an indication for narcolepsy and there what.
By expanding the potential that K P 10, 77 could address multiple sleep disorders.
The R&D opening study, which is a phase one clinical trial in healthy adults was initiated during the second quarter and enrollment has begun.
As we move forward with programs in both IH and narcolepsy, we plan to evaluate the potential to initiate a phase III trial in narcolepsy by speaking to leverage key data points from our IH program.
As well as landing on the robust data generated for Sears, that's methylphenidate or S. Yes, as part of the Starz development program.
As you May recall S. T X as a sole active pharmaceutical ingredient in K P 10 77.
This strategic approach is aimed at enhancing our efficiency and developing K P 10, 77, and bringing this potentially life changing therapy to people in need across both indications.
As you can see we have been working diligently to drive progress in our regulatory and development program.
Now I'll hand, the call over to La Duane who will provide an update on our financial results and outlook.
Duane.
Thanks, Crystal and good morning, everyone.
As Christal mentioned, we are pleased to announce that Starz has reached a key milestone in the second quarter, surpassing $25 million in annual net sales for the first time.
This achievement triggered a $5 million milestone payment to zebra, which has also been received after quarter end in August 2023.
This underscores the growing demand for this important therapy within the ADHD treatment landscape.
We also earned royalties on net sales of 800000 for the second quarter and we are encouraged to see a stars continuing to obtain new record weekly prescription counts.
With the momentum that Starz is exhibiting through second quarter. The trend supports the potential to earn a second net sales milestone by the end of 2023.
We also anticipate that the quarterly royalties on net sales will continue to grow over the next several years beyond.
Beyond the first and second net sales milestones there are several more we believe are attainable in the near future, bringing the potential to drive increased value for our shareholders.
For Q2, 2023, net revenue was $8 $5 million, which was driven by the $5 8 million from our stars, including the net sales milestone and royalties earned in the second quarter and $2 8 million in reimbursements from our French early access program for our remarkable.
We ended with a net loss for Q2 of 2023, which was $5 $1 million or <unk> 15 per basic and diluted share driven primarily by R&D expenses of $7 $4 million and G&A expenses of $7 million offset in part by the eight $5 million in revenue and $1 5 million.
And other income.
R&D R&D expenses reflect the ongoing investments in the K P 10, 77 clinical program as well as our ongoing work to prepare the aramark one NDA for Resubmission to the FDA.
G&A expenses reflect the investments, we're making in our in house commercial capabilities as well as operational support needed to underpin the needs of our team as we prepare for success.
As of June 32023, total cash cash equivalents and investments were $87 4 million a decrease of $7 9 million compared to $95 3 million as of March 31 2023.
The decrease was driven in part by increased third party R&D costs related to the ongoing phase II trial for J P 10 77.
Aero marketable program and increased G&A expenses during the period.
Of note our available cash as of June 32023 does not include the cash payment of the $5 million net sales milestone from a starz, which was received after quarter end.
The total shares of common stock outstanding as of June 30 were 33 million 928, 005, and fully diluted common shares outstanding were 49 million 315097, which includes about $4 3 million shares issuable upon exercise of warrants.
The company's current operating forecast existing cash and cash equivalents and investments are expected to support our cash runway into 2026.
Our forecast includes the ongoing reimbursement from the French for early access program for Aramark them, all completion of the <unk> NDA Resubmission commercial.
Commercial activities to support the launch of Aramark them, all if approved and completion of the $10 77 development program for IH up to and including NDA submission.
Our forecast, notably does not include revenue from our remarkable or the potential sale of the priority review voucher would which would be received upon approval of our remarkable.
It also does not include the investments needed. If we determined to proceed with a phase III trial for <unk> 77 in narcolepsy.
Separately remains committed to strategic financial management, focusing on prudent approach.
Our approach to capital allocation to support the advancement of our pipeline programs and ensure the successful development of transformative therapies.
In addition, we continue to be vigilant in our business development efforts, we continue to scan for opportunities where in addition to our internal development programs, we may be able to add other rare disease product candidates to our pipeline.
As we look forward to the second half of this year and into next year. There are multiple catalysts that has the potential to deliver value for our shareholders.
We are encouraged by our progress to date.
And with that we will now return the call to the operator for questions.
Thank you.
At this time, if you wish to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue by pressing star two and again that was star one if you would like to ask a question.
We will take our first question from Louise Chen with Cantor.
Hi, Good morning, everyone. This is crazy uncle movies in Canada. Thank you for taking our questions. My first question is on a potential second net sales.
No. It was a milestone achieved in 2023.
Is this potential milestone secondly, what are the expectations heading into the interim phase two issue, we know what causes it to be a homerun scenario.
Sure.
Well thanks for your question and I'll take the first one crystal.
The second milestone, we've not been able to disclose its magnitude or the sales threshold that we have to achieve in order to earn that milestone, but I think it's safe to say that it will be larger than the one we just earned in Q2, which was $5 million. So I'm a bit limited there, but I think that we can look forward to a continued sort of growth.
Not only in net sales, but also in royalties and the size of the milestones.
Crystal, yes, great and as far as your question regarding the interim data.
As you May remember the.
The point of the interim data is really to Ah Ah.
Inform us on the phase III trial, moving forward and so what we're really interested in is looking at the multiple dosing that we're looking at so if you remember we're looking at either a once dosing and the evening prior to going to sleep or twice dosing once a month.
Evening and before waking so looking at that and then also looking at the the doses that are being used and and seeing that those doses are.
Higher than than what is being used for other.
Stimulants that are out there and making sure that we're in the right right range for us as we move forward.
Got it understood. Thank you so much and congrats on the results.
Thank you.
And our next question comes from Oren <unk> with H C Wainwright.
Hi, Thanks for taking my questions. Congrats on the austerity progress, but I wanted to focus on neuromuscular mall.
I just want to make sure I'm hearing correctly and not misinterpreting I think you said.
In terms of how to deal with missing data and you get a certain patient events. You said you are going to move forward with the FDA preferred primary analysis I can't remember if thats like a change from your prior expectations or ambition I know there was a couple of different cuts you had highlighted earlier when you did the deal sort of like a re scored without.
Ms Shen from swallowing changes.
Versus sort of an FDA analysis, which originally had different P value and so can you just help us understand what compromises were made what changes if any were there and all of that.
Appreciate the question. So no we actually are continuing with our strategy.
As we're moving forward with the Resubmission, so I'm going with with.
The FDA recommended analysis is not something that is new.
And then when you were talking about the validation and and those those other points. Those are also things that are that will be included in the NDA. So those those are all still moving ahead as we have originally.
Our plan to do.
Okay, and so that timing change, which is not material necessarily but I'm. Just curious if that's just more you know calibrating. After your meeting with the FDA or is there new stuff you've been working on whether it was non clinical stuff in animals or just analysis that our re analysis.
Of the data.
So it really boils down to we had our FDA meeting a very recently and so it's a refinement of making sure that we presented the data in a way that the FDA would like to see it and so with that I'm. There are a few additional analyses.
There is no refinement and the way that we're presenting are our arguments and our data so even though what we're planning to present hasn't hasn't changed there is some nuances there that we are going to.
To look at and so that pushes that you know a little bit out from that end of Q3 that we had originally talked about.
Okay, and I guess you characterized this meeting as I think collaborative productive or both which is great.
I think in the past made I don't know if is in response to questions are if he volunteered it upfront you talked about if necessary you could take a guess less collaborative birthmark yet.
Congrats on approach with dispute resolution and things like that if necessary is it am I detecting a change in tone here because I know.
That was mentioned or in the deck I don't think that you know you feel actually more optimistic now maybe after your meeting with the FDA then.
And then you did before and that you don't think youre going to have to pursue anything like that and do you expect to request an AD com sort of upfront.
So to answer your first question are those options are always still available and still on the table. We do we were hopeful with with this meeting that we had because it wasn't a collaborative meeting we were.
We're appreciative of the tone that the FDA had and so they do seem to be working with us to to get the resubmission and.
And then as far as what was your second point, there or your last point.
Whether you would expect I guess upfront to request a and F D. A.
Tom.
So so that's a that's an interesting question I don't think we will we will.
Ask for it upfront we welcome it if it comes from the FDA and that's still a consideration if the FDA does not asked for it that we may ask for it ourselves, but it's not something that we will ask for immediately upon resubmission.
Okay, and if I just may look a little further down the line assuming this all goes well.
Any progress.
Very interesting talking about on Eric alcohol lifecycle management I think there was some hopes to improve dosing.
Some more additional IP around that.
The project anything to report there.
So as.
You know right now we are focused on approval, but those are always things that we will look for.
You know as as we move forward.
Alright.
I appreciate the answers thanks.
And just a reminder that was star one if you would like to ask a question and our next question comes from Sumatra Kulkarni with Canaccord.
Good morning, Thanks for taking my questions I have a couple so on the resubmission of the AD market.
Productive and collaborative process with the FDA, which portion of the parts of the complete response letter on your ongoing response.
The majority of your last interaction with your team is focused on and then I have a problem.
So we really are.
We presented everything because it's we did treat this as a a pre submission meeting, but a large part of it was also focused on the confirmatory evidence that the FDA hadn't seen in the past.
Got it and then in the last meeting with the FDA.
Specifically that no additional clinical data would be required.
Any suggestions on additional clinical data that maybe did quite well.
On the left to the discretion is nothing I've got I'm going to do that prior to this.
There was no discussion about additional clinical data being needed.
Great. Thanks for the question.
Okay.
And our next question comes from Jonathan Aschoff with Roth M K yet.
Oh, hi, Thanks. Good morning, guys I was so I was curious so that that was just the 670.
<unk> thousand dollar booking for Srs revenue versus 630 in the prior quarter I was just kind of curious if that math is correct. Because you said a remarkable mall was $2 8 million.
5 million milestone just sleep 670 <unk>.
Why was that kind of flat like that after the growth in the last couple of quarters.
Oh no.
It was it was not flat so I guess when I read through all the components of revenue.
When you add it all together there is the.
Cost of revenue of 677 months I guess, if you look at the press release for the detail so to be clear we had $800000.
Net sales royalties from our stars so it was not flat.
Okay. So the net aramark them all is not $2 8 million, it's a little less or peak or it is $2 8 million kind of can't be $2 8 million.
There is a cost of revenue associated with.
The milestone if you remember we pay a 10% royalty to a cluster and so we had to recognize a 10% reduction based on that that's the difference that you're thinking of.
Okay and I was curious in your response to the first question you were talking about the interim IH data to inform the phase III trial, but I was thinking you know why do you care about that final date is a few blocks away isn't that vastly more important and informative.
The phase III what comes at the end of this quarter.
So actually no [laughter] the whole point of this phase III trial was to inform the phase III trial. It's ultimately this pro drug as a stimulant and so we know that there's going to be affect them and.
And so what we wanted to get out of this trial is really those those nuances that we'll need to understand as we're as we're preparing for the phase III trial and preparing the protocol for the phase III trial.
So that's getting this interim data is going to allow us to kind of refine that a phase III trial move forward with FDA meetings and and further preparations for those for the phase III trial, while we finish up the phase two.
Okay, and lastly, I guess, it's fair to assume maybe you can say this about your historic milestones that they will.
Actually decrease as a percentage of the sales figure that triggers that here its a 20% ratio, but that should substantially decrease as we go forward is that at least fair to say.
I Havent made that statement, so no I wouldn't say that.
So they might actually stayed fairly in line with that 20% pay out kind of ratio.
I mean, I think that'd be a great outcome, if it did and I would say this.
I would just remind you that when we went back and had a chance to renegotiate. These milestones back in April of 'twenty one.
We really were looking for a way to all.
Paul milestones forward, if you will and so those ratios are probably a little bit different than what you might think are typical of.
A market license. So the fact that the first fewer in this range I think speaks to some of those amendments we were able to get.
Agreed to back in that timeframe.
Oh, Yeah, I mean to have 25 million trigger sales milestone of anytime there's a pleasant surprise for sure. So you guys really did a good job on the phone after that.
Well thank you.
Thank you and this does conclude the Q&A portion of today's call I would now like to turn the call back over to Crystal nickel for any additional or closing remarks.
Great. Thank you very much.
We're excited about our progress in the first half of 2023 and are looking ahead to continue our momentum as we look forward to the second half and into 2024, we're focused on the following three top priorities.
First to resubmit, the air miles from our NDA to the FDA and strengthened key functions and capabilities to support a successful launch if approved.
Second to complete the phase II trial in idiopathic hypersomnia and prepare to advance <unk> pen 77 into a phase III trial sometime next year and third to continue our work to expand our KC 10 77 program into narcolepsy.
Corporate development also remains a priority as we actively engage in conversations to potentially acquire new pipeline assets that would be complementary to our portfolio and that could benefit from the potential application of our pro drug technology.
We're building something really special here at Sempra, we have a legacy of drug development success upon which we are expanding our capabilities by adding an innovative patient first commercial team, which we believe has the potential to drive meaningful value for our shareholders.
But not only that we're fully committed to our Michigan, bringing much needed therapies to people living with rare disease.
Patients caregivers and all of those who are supporting the rare disease communities that we serve are at the forefront of everything that we do.
I want to thank our shareholders for your continuing support of our effort.
Additionally, I want to give a special thanks to our employees for their energy and enthusiasm and relentless commitment to make several success we're.
We're excited about the prospects opportunities and potential for success in front of us.
Thank you for joining us today, and we look forward to speaking with you in the future.
This concludes today's Zephyr Therapeutics second quarter 2023 earnings call and webcast. You may disconnect. Your lines at this time and have a wonderful day.
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