Q3 2024 NRx Pharmaceuticals Inc Earnings and Business Update Call
Good afternoon, ladies and gentlemen, and welcome to the NRX Pharmaceuticals 3rd Quarter 2024 Earnings Conference Call.
At this time, all lines are in listen-only mode.
Speaker Change: From the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Monday, November 18, 2024. I would now like to turn the conference over to Mr. Matthew Duffy, Chief Business Officer. Please go ahead.
Thank you, Ina, and welcome, everyone.
Speaker Change: Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.
Speaker Change: Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports filed with the SEC.
Speaker Change: The forward-looking statements may be made during this call speak only as of the date hereof and the company undertakes no obligation to update or revise the forward-looking statements.
Speaker Change: Information presented on this call is contained in the press release issued today, or issued last week, as well as the Form 10-Q, which may be accessed from the investor page of the NRX Pharmaceuticals website.
Speaker Change: Joining me today on the call are Dr. Jonathan Javitt, our founder, chairman, and CEO.
Speaker Change: and Chief Scientist, as well as Richard Narido, our Interim Chief Financial Officer and Treasurer, and Michael Abrams, our incoming CFO.
Speaker Change: Jonathan will provide a summary of our company's progress. Rich will review the company's financial results.
Mike will make some comments.
Speaker Change: And then Jonathan will review upcoming milestones before making closing comments.
Following their prepared remarks, we will address investor questions.
I'll now turn the call over to Jonathan.
Jonathan Javitt: Thank you, Matt. Good evening, everyone, and thank you for joining us.
Jonathan Javitt: As you saw, we decided to do our conference call a day or two after our quarterly report in order to make our calls a bit more convenient for the increasing number of analysts who are covering our company and to encompass today's important news.
Jonathan Javitt: The last few months have been incredibly productive for NRX and for Hope Therapeutics. In our view, they represent a positive inflection point in our path to market entry and profitability.
Jonathan Javitt: On the NRX side, we continue to advance our life-saving products, NRX100, that's our IV ketamine, and NRX101, our oral treatment for suicidal bipolar depression, for new drug application filings in 2024.
Jonathan Javitt: Further, our wholly owned subsidiary, Hope Therapeutics, aims to be in the business of delivering life-saving care to people with suicidal depression and PTSD by year end.
with its first revenues being generated. To that end,
Jonathan Javitt: Hope has signed non-binding letters of intent to acquire two foundational interventional psychiatry groups.
which are currently revenue-generating and EBITDA positive.
Jonathan Javitt: We have received initial non-binding commitments from lenders for non-dilutive acquisition financing of HOPE clinics.
Jonathan Javitt: and are in the final stages of the underwriting process for those acquisitions.
Jonathan Javitt: This puts NRX in a unique position as the only company dedicated to developing a comprehensive care path for the prevention and treatment of suicidality.
Jonathan Javitt: We recognize the need to augment drug development with a care delivery model because of the emerging evidence that ketamine may be essential but not sufficient to achieve a long-term benefit for people with suicidal depression.
Jonathan Javitt: For at least some patients, a precision psychiatry approach is required. It includes ketamine, transcranial magnetic stimulation,
Jonathan Javitt: and other modalities. This model of care is difficult to access for many patients and is not available in a typical ketamine clinic as most people think of it.
Jonathan Javitt: Only by building this comprehensive model and rolling it out nationwide can we fulfill our mission of bringing hope to life.
Jonathan Javitt: At the same time, the HOPE clinics are able to generate ravage that support NRX in advance of FDA approval of our breakthrough medicines.
Jonathan Javitt: Today we have a key personnel appointment to announce. Mr. Michael Abrams will serve as our new chief financial officer.
Jonathan Javitt: Mike is a senior finance professional with almost three decades of experience as an executive officer, investment banker, director, and senior advisor, which includes serving as the chief financial officer of Arch Therapeutics.
RISE IT Solutions and FitLife Brands.
Speaker Change: Mr. Abrams has deep experience across multiple functional areas including, but not limited to, financial operations, accounting, mergers and acquisition, financial engineering, capital raising, and shareholder communications.
Speaker Change: Mike earned his MBA with honors from the Booth School of Business at the University of Chicago and receives his BBA with honors from the University of Massachusetts Amherst as a William F. Field alumni scholar.
Speaker Change: Rich Narido has been an inspiration as our interim CFO and a valued member of our team. He will continue to support our Hope Therapeutics acquisitions.
Speaker Change: as he has so ably done. Pending finalization of those initial acquisitions, Dr. David Feifel, the founder and president of Kadima Clinic in La Jolla, California, has joined us as a key advisor.
Speaker Change: Dr. Feisal is an internationally recognized expert in the use of precision psychiatry to treat suicidal depression and PTSD.
Speaker Change: He's believed to be the first to have taken ketamine outside the walls of university-based psychiatry clinics and demonstrated that it can safely be used in the outpatient setting.
Speaker Change: David will be working hand-in-hand with leading professors of psychiatry at Harvard, Yale, Columbia, Baylor, Northwestern,
Speaker Change: and the University of Nîmes and Inserm in France to advance our medicines through the FDA and the European Medicines Agency while bringing our network of hope clinics to life.
Speaker Change: On the financial front, we are pleased to share that last quarter we achieved a 74% reduction in net operating losses compared to third quarter 2023.
Speaker Change: And we're forecasting probability in 2025 with revenue and EBITDA from Hope Therapeutics, along with projected sales of our medications.
Speaker Change: Further, we recently announced the closing of our second tranche of funding from an institutional investor.
Speaker Change: bringing the total amount of funding to $10.8 million. In connection with this financing, we retired our prior and more expensive debt and settled outstanding litigation with Streeterville Capital.
Speaker Change: Collectively, these actions position us to enter the next business stage for the company in 2025, with two potential drug approvals to make us a revenue-generating biotechnology company.
as well as an EBITDA positive care delivery company.
Speaker Change: In sum, we're building a company that is now poised to bring life-saving treatment to patients and financial returns to investors.
Speaker Change: What drives this mission for the NRS team? It's simple. Suicidality is a national epidemic. Approximately 3.8 million Americans make an active plan to commit suicide each year, according to the CDC.
Speaker Change: An American dies from suicide every 11 minutes in the United States and worldwide someone dies of suicide every minute.
Our overriding goal
at NRX is to ensure that all patients
Speaker Change: who need life-saving precision psychiatry care with ketamine and other therapies.
Speaker Change: are able to get it. That's not currently the case. For the most part, ketamine is available today only to those who can pay out of pocket and will remain so until FDA approval of ketamine for treating suicidal depression is obtained.
Speaker Change: Our planned NDA, if approved, would bring NRX100, clearly a life-saving product, to patients in a safe, accessible format as a preservative-free formulation that has insurance coverage.
Speaker Change: The current market for intranasal ketamine is already approximately $1 billion a year, and the label for intranasal ketamine states that it has not demonstrated anti-suicidal properties.
Speaker Change: Let's talk specifically about what we need to do to bring NRX 100 through the FDA.
Speaker Change: Originally, FDA granted us fast-track designation for NRX100 in 2017 for use in combination with NRX101 to treat bipolar depression. We've now asked FDA to expand that fast-track designation and grant priority review to our NDA for use of NRX100 in all forms of depression, including bipolar depression.
Speaker Change: To get a new drug approved, a manufacturer must demonstrate efficacy, safety, and manufacturability.
Speaker Change: The slides on nrxpharma.com summarize the data we will be sharing with FDA that includes nearly 1,000 patients treated in randomized controlled trials against placebo, active comparator, and electroshock therapy.
Speaker Change: In summary, intravenous ketamine is far more effective than both placebo and active comparator in treating suicidal depression.
Speaker Change: It is non-inferior to and may in fact be superior to electroshock therapy without the memory loss caused by ECT.
Speaker Change: Last June, the aggregator of those data reported results from intravenous ketamine were superior to those seen with intranasal S-ketamine, although that real-world comparison was not based on a randomized trial.
Speaker Change: A key component of any new drug application is a comprehensive chemistry, manufacturing, and control, or CMC, package.
Speaker Change: also known as Module 3. In our last conference call, we pointed to this requirement and to our nine-month stability data. We've now completed this requirement with the 12-month stability data required to file an application for new drug approval.
Speaker Change: Another key requirement for FDA to file an NDA is alignment on a pediatric study plan as required by law.
Speaker Change: As noted previously, we've reached this critical alignment with FDA, and I would like to commend the clinical regulatory team at NRX for achieving this milestone.
Speaker Change: Our development of a preservative-free ketamine may be surprising to some.
Speaker Change: The basis for this development path is the result of data from both primate and human studies that show repeated doses, on the order of 60 doses or more, of the currently available commercial intravenous ketamine may be toxic to the brain.
Speaker Change: The currently available ketamine preparation was designed for use of the product in anesthesia.
Speaker Change: Ketamine is currently sold in a multi-dose vial where it was anticipated that doctors would draw from the same vial for multiple patients.
Speaker Change: But of course, in anesthesia, it's expected that the patient will only get the medicine once.
Speaker Change: Back in the 1960s, when this preparation was formulated, it was manufactured with a potentially toxic preservative, benzothonium fluoride.
Speaker Change: While there is no evidence that benzathonium chloride is toxic at its current concentration for the intended use in anesthesia, its safety has never been shown or even proposed for repeated use.
Speaker Change: Hence, we believe we are poised to file the first new drug application for a novel preparation of ketamine.
Speaker Change: That will bring substantial value to patients and will be reimbursable by payers.
Speaker Change: Access to NRX100 is a critical focus of our company. The current off-label use of ketamine and CNS disorders is generally only available to patients who can pay out-of-pocket.
We expect NRX 101, once approved, to be widely reimbursed.
Speaker Change: Thus, providing access to the vast majority of people in need, not just to those with the means to spend thousands of dollars in cash for treatment.
Speaker Change: Let's turn to NRX 101, our oral combination of D-cycloserine, which is an NMDA blocker, and lirazodone, which is the standard of care in bipolar depression.
Speaker Change: We believe the product represents a paradigm-changing breakthrough in the care of bipolar depression. This breakthrough is driven by a dramatic improvement in the safety of our medicine compared to the standard of care in bipolar depression in clinical trials.
Speaker Change: In our recently completed clinical trial, we demonstrated that NRX-101 is comparable in its ability to reduce symptoms of depression when compared to the market-leading drug lorazetone.
Speaker Change: Critically, however, NRX 101 demonstrated that it's the first and only oral antidepressant to receive symptoms
Speaker Change: of suicidality and the first oral antidepressant to reduce symptoms of akathisia, a highly dangerous side effect of nearly all antidepressants.
Speaker Change: The NRX 101 data presented at the American Society of Clinical Psychopharmacology demonstrated a new paradigm for the treatment of bipolar depression.
Now, 850-ish is not a household term.
Speaker Change: However, key opinion leaders regard it as the worst side effect of any antidepressant.
Speaker Change: A cathesia is frequently described as an irresistible urge to move. Patients frequently describe it as a feeling of jumping out of their skins.
Patients with akathisia are known to
Speaker Change: Currently, there's a petition before the Supreme Court of British Columbia regarding a Canadian citizen who's applied to end her life by medically assisted suicide because she cannot tolerate the akathisia caused by common antidepressant medication.
Speaker Change: and also, the general public. And we are all here to support you. And we want to thank you for your time. And we hope that you have a great day. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Speaker Change: Serotonin-targeted drugs for the treatment of depression are known to cause akathisia and suicidality.
Speaker Change: Doctors and patients have listed those side effects in order to achieve the critical antidepressant effects that are needed to control life-threatening depression.
Speaker Change: The data we presented at ASCP, however, confirms data from our earlier STABLE-B trial, demonstrating that NRX101 is the first oral antidepressant to have effective antidepressant properties
while simultaneously decreasing akathisia and suicidality.
Speaker Change: We believe this product profile could lead to NRX101 becoming the drug of choice in bipolar depression.
Speaker Change: To that end, we're filing an NDA for accelerated approval of NRX 101 for suicidal bipolar depression with suicidality or apathesia.
Speaker Change: Given our strong data and the lack of treatment options for this segment of people with bipolar depression, we and our Regulatory Council believe this to be a vital unmet medical need and worthy of accelerated approval.
Finally, let's turn to our progress with HOPE Therapeutics.
Speaker Change: In the six months since HOPE was founded, we've considered nearly 100 potential flagship acquisitions.
If you Google on ketamine clinics, you'll find many.
Speaker Change: However, they are known to come and go, and too many of them administer ketamine one day, vitamin drips another day, and a variety of services that are colloquially known as med spa services throughout the week.
Speaker Change: Our objective is to build a national umbrella of precision psychiatry clinics that can safely treat the 3.8 million Americans who make a plan to kill themselves each year
Speaker Change: Prevent another death every 11 minutes and take the stigma out of suicidal depression.
Speaker Change: We've shared with investors that we aim to assemble an organization generating $25 million in revenue by the end of this year and an organization generating more than $100 million in revenue by the end of next year.
Speaker Change: Those who wish to gain insight into the market value of such an achievement might wish to look at the early development of similar entities such as DaVita for treating kidney failure.
Speaker Change: although we and others have used the colloquial term ketamine clinic in association with Hope Therapeutics.
you'll hear us increasingly use the term precision psychiatry.
Speaker Change: The data from the field demonstrate that ketamine alone is not sufficient to maintain remission from suicidality in many patients with depression and PTSD.
Speaker Change: There seems to be little question that ketamine has achieved a 50% reduction in suicidal ideation in numerous trials and real-world settings.
Speaker Change: The magnitude and rapidity of effect is a dramatic change from a prior 50 years of experience with SSRI and other serotonin targeted antidepressants.
Speaker Change: However, maintaining that ketamine effect and enhancing it will, in our view, require additional therapies such as transcranial magnetic stimulation, an FDA-approved therapy, newly developed digital therapeutics, and oral medicines such as NRX 101.
Speaker Change: Our focus is built on building a comprehensive site of care that can achieve remission in 80 to 90 percent of patients, not just 50.
Speaker Change: Over the past two quarters, we've obtained preliminary funding commitments from financial institutions and have identified several leading precision psychiatry organizations and signed non-binding letters of intent to acquire key clinics on both the east and west coasts of our country.
Speaker Change: We've initially targeted these clinics because they'll serve as foundational elements of our network.
Speaker Change: From our perspective, they epitomize the compassionate, comprehensive, and efficient operational structure that will serve as a model for additional facilities as we bring them into the HOPE network.
Speaker Change: These are critical steps in our quest to make a range of lifesaving treatments available to patients across the country.
Speaker Change: As of last week, our accounting teams have finished confirming the financial statements of these flagship acquisitions, and we've moved into the financial underwriting phase.
Speaker Change: Hope Therapeutics will offer a comprehensive menu of state-of-the-art precision psychiatry treatments.
Speaker Change: including IV ketamine, Spravato, transcranial magnetic stimulation or TMS, and medication management, together with planned digital therapeutics designed to augment and preserve the clinical benefit of NMDA targeted drug therapy.
Speaker Change: On the financial front, the best-of-class clinics we target are already generating profit margins of around 30%, with significant opportunities for growth.
We expect funding for HOPE to be independent.
Speaker Change: and thus non-dilutive to NRX and to its shareholders. However, we expect that a portion of the earnings generated through HOPE will support NRX's path to profitability.
Speaker Change: Now that the streeter bill litigation is settled, we continue to work toward a distribution of shares of Hope Therapeutics to existing shareholders, and we plan to seek a public listing for Hope on a national exchange.
Speaker Change: Our auditors have finalized the initial audit for Hope Therapeutics, and we are now able to draft and file the SEC forms to register the stock.
Speaker Change: I want to once again thank Rich Narido for his exceptional service as our interim CFO. Over the past years, we've financially re-engineered our company and worked to build what we hope will be a bright future. Rich will now review our third quarter financials.
Thank you, Jonathan.
Rich Narido: For the three months ended September 30, 2024, NRX Pharmaceuticals reduced its operating net loss by nearly 75% year-over-year from $6.1 million in the third quarter of 2023 to $1.6 million in 2024.
Rich Narido: For that same period, research and development expenses decreased from $3.3 million in 2023 to $0.6 million in 2024.
Rich Narido: The $2.7 million decrease is related primarily to the decrease of $2.1 million in clinical trial and development expenses.
Rich Narido: due to the conclusion of the Phase 2B3 study relating to NRX-101 and the company's cash conservation efforts.
Rich Narido: Also in that three-month period, NRX achieved a slight decrease in general administrative expenses from $2.5 million in 2023 to $2.4 million in 2024.
Rich Narido: For the nine months ended September 30th, 2024, NRX Pharmaceuticals reduced its net loss to $16.1 million compared to $25.8 million in the prior year.
Rich Narido: These efficiencies represent an improvement in net loss of $9.7 million year over year and a $1.89 or 54% improvement in net loss per share year over year.
Rich Narido: Over that nine-month period, we recorded $5.2 million of research and development expenses, compared to $10.8 million for the same period in 2023, representing a 52% decrease year-over-year.
Rich Narido: The decrease of $5.6 million is related primarily to the decrease of $6.1 million in clinical trial and development expenses due to the conclusion of the Phase 2b-3.
study relating to anorexia 101.
Rich Narido: and offset by $1.3 million related to allergen warrants and $0.2 million related to fees paid to regulatory and development consultants.
Rich Narido: Also in that nine month period, we decreased G&A by 1.4 million from 12.3 million in 2023 to 10.9 million in 2024, representing an 11% decrease year-over-year.
Rich Narido: As of September 30, 2024, we had $1.6 million in cash-in-cash equivalents.
Rich Narido: Subsequent to September 30, 2024, we added the cash by closing tranche 2 of the Secured Debt Financing from Anson Funds in the amount of $5.4 million.
Rich Narido: This financing is expected to support filing of new drug applications for NRX-100, ketamine, and NRX-101.
Rich Narido: general corporate purposes as well as the retired historical debt on more favorable terms and lower interest rates.
Jonathan Javitt: NRX continues to implement operational efficiencies to extend cash runway and maintain focus on our path to generating revenue and value for our shareholders. With that, I'll turn it back to Jonathan.
Jonathan Javitt: Thank you, Rich. We look forward to your ongoing support as HOPE takes shape.
Jonathan Javitt: and we're able to bring life-saving therapies to patients across the world.
Jonathan Javitt: Today, we announce that NRX has appointed Michael Abrams as our permanent CFO. Mike brings a wealth of experience both as a public company CFO and in the capital markets, a background well-suited to our long-term goals.
Welcome, Mike. Please introduce yourself to our shareholders.
Thank you, Jonathan.
Mike: I'm excited to join the NRX team at such an important time for the company. In prior engagements, I've joined companies just as they were poised to transition to revenue generation and look forward to shepherding NRX through that exciting phase. With major milestones expected in the near term, I see NRX as a unique opportunity and look forward to great things for the company and our shareholders.
John?
Thank you, Mike. We're looking forward to working with you.
Speaker Change: NRX is dedicated to preventing and treating suicidality in patients with depression and PTSD.
Speaker Change: filing our two NDAs in the near term and continuing the development of Hope Therapeutics National Network for Care Delivery, our transformative steps for the company and for the treatment of patients.
Speaker Change: I'd like to thank our team, our investors, and most importantly, the patients who participated in our clinical trials for their steadfast support in pursuit of this mission. Operator, we're ready to take questions from the audience.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and should you wish to cancel a request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question.
and many more. Thank you. Thank you.
Speaker Change: Your first question comes from the line of Jason Colbert from the Borough Capitol. Please go ahead.
Speaker Change: Good afternoon. Thanks for the update. Jonathan, I'd like to zoom in a little bit on the accelerated approval, what you think is involved in that process, and if you get it, what does that mean in terms of a PDUFA data and the timeline for both?
Speaker Change: And I know you're really talking about NRX 101, but kind of what is the PDUFA date, do you think, and the timeline likely for NRX 100 as well? Thanks.
Speaker Change: So, in order to sort of unpack those questions, accelerated approval is a process, and people can look this up on the FDA website, where a sponsor has identified an important intermediate endpoint for a drug.
Speaker Change: but has not necessarily identified sufficient efficacy data for permanent approval of that drug.
Speaker Change: So, in the case of NRX101, what we've not yet done is a 300- to 500-person clinical trial of NRX101 against placebo to prove that it's better than placebo, although we know that its components
The End.
have beaten placebo in multiple trials, especially lorazidone.
The End
Speaker Change: On the other hand, we now have two clinical trials where NRX-101 has demonstrated reduction in suicidality and akathisia compared to lorazidone.
Speaker Change: And we believe that apathesia and suicidality are critical intermediate endpoints.
Speaker Change: You know, we don't have proof that they're associated with long-term survival, but we certainly know that suicidality can be associated with short-term demise.
Speaker Change: So, therefore, we intend to seek accelerated approval, which is a process by which FDA grants five years of marketing rights to a drug.
during which time
Speaker Change: permanent data, permanent approval can be obtained. Now you may say how are we ever going to get that long-term data? Well there's a national PCORI study spinning up.
Speaker Change: where patients are being randomized to different currently marketed drugs for treating bipolar depression.
And within that study, there is not yet any arm.
Speaker Change: for drug therapy of patients who have suicidality and akathisia. The only treatment that's approved for suicidality today is electroconvulsive therapy.
Speaker Change: in large numbers are randomized to NRX 101 over the next five years in a manner that gains permanent approval.
Speaker Change: we're not ruling out the possibility that a pharmaceutical company might step in and want to finance that definitive study as
Speaker Change: as a traditional industry sponsored study but we believe that there's another path one that's far less dilutive to our shareholders as well.
Speaker Change: Now, you asked about NRX100, and that's a situation where we now have
randomized control data demonstrating
that NRX 100
Speaker Change: that is IV ketamine, reduces suicidality and depression compared not only to placebo
Speaker Change: but to active comparator, and as you know from the recent actions related to MDMA, FDA has been pretty clear that if you're studying a drug that can have psychedelic effects, and certainly ketamine can have psychedelic effects,
it's important to compare it not only to placebo.
Speaker Change: but to an active comparator that may be less likely to tip the patient off as to whether they got ketamine or got the comparator.
Speaker Change: Moreover, as people know from our slide deck, recent data show that ketamine is at least as good.
as electroshock therapy.
Speaker Change: in treating depression, and although the design of that trial was a non-inferiority design, post-hoc analysis shows that ketamine was superior to electroshock therapy in reducing symptoms of depression.
Speaker Change: So in terms of PDUFA dates, we expect to have PDUFA dates both on NRX 101 and NRX 100 during 2025. Does that answer the question, Chase?
It does. It's a great answer. Thank you.
Speaker Change: Can I ask you to talk a little bit in switching gears and thinking about hope?
Speaker Change: You know and you talked a little bit about the difference between kind of
Speaker Change: ketamine clinics that that focus on doing various infusions for people and a real psychiatric center.
Speaker Change: So my question is, are you finding motivated folks that really want to build that all-in-one comprehensive psychiatric center, and do you think you're going to be able to acquire them in a way that you really will develop a national footprint?
[inaudible]
Well, I think what's fair to say is that we...
Speaker Change: having done a pretty broad canvassing of what's out there, we have identified some clinics
Speaker Change: that are doing it the right way, that are combining ketamine, TMS,
Speaker Change: good psychiatric medical management and traditional therapy in an integrated model that best serves patients.
Speaker Change: that those clinics are able to operate at a healthy operating margin, somewhere in the neighborhood of 30%.
Speaker Change: And by virtue of the fact that some of those organizations have signed letters of intent to be acquired by us, we believe that our business model is a feasible one.
Speaker Change: Are these clinics the minority of what's out there today? For sure. People have seen private equity acquisition models with clinics that have sort of come and gone. Some have succeeded, some have not.
Speaker Change: We believe that that integrated precision psychiatry model is what's needed to have both staying power in the marketplace and really to provide the maximum benefit to patients.
Speaker Change: Perfect. Thank you. And I just want to try to throw a question at Mike.
Speaker Change: today. Mike, Jason, Colbert, great to hear you again. We've known each other for a while.
Thank you.
Speaker Change: A great company. You should be excited to be there. I'm sure you are. In the press release for the third quarter, there was language talking about revenues this year and profitability next year. So can you talk a little bit about kind of what, when you did your due diligence to join the firm, how you're looking at kind of the revenue build over the next year?
Speaker Change: So, in full disclosure, thank you, Jason, in full disclosure, that's not my bill, right, but I did... I know, it's not a fair question, but I know you did due diligence.
Speaker Change: Yeah, but I did due diligence on it. So look, it's a function of, in a lot of respects, these things are a numbers game, right? There are a certain number of clinics that meet the model that Jonathan and his team have built. There's certain levels of profitability that can be expected from those.
Speaker Change: So, if you look at the clinics that they've already had discussions with in terms of LOIs and extrapolate the additional ones that can be added into the fold, it's not difficult to see because they've already done and completed a good number of audits on those potential acquisitions.
Speaker Change: So, it's just, you know, building a model from, you know, A plus B plus C plus D, and then, you know, the numbers kind of fall out of it. So, while there's still a lot of work to be done, obviously, they've made a—my results of my initial diligence were that—
Thank you.
Speaker Change: The numbers are there, and they can build on them. So I had a lot of confidence. Obviously, there's a lot of execution that needs to happen in that regard.
Speaker Change: And secondly, on the larger one, now you start getting into factoring both NRX100 and NRX101.
Speaker Change: So you can start building the model by multiple sources there.
Speaker Change: And there you just have to look at, or what I did.
Speaker Change: look at the overall market opportunity. And when we talk about quotations from the CDC and the staff from the CDC...
Speaker Change: where in the United States of America, someone dies by their own hand once every 11 minutes and once every minute internationally, obviously the demand is there. So if we can truly prove, this company can truly prove that it is a solution that provides better outcomes for patients, the market's there and then it's just about executing on it.
Speaker Change: So those are the things in my diligence that made me excited and very enthusiastic about joining the company.
Speaker Change: Does that answer your question? Yeah, it does. You know, it sounds like you share Jonathan's vision and what I see in the company, which is
Speaker Change: You know, it's a fractured system with many different therapies and nobody seems to be pulling it all together in one central place for patients, which is what has to be done.
Speaker Change: Thank you. And your next question comes from the line of Ed Will from Ascendian Capital. Please go ahead.
The End
Speaker Change: Yeah, congratulations on all the progress. In terms of, you know, the valuations for these precision psychiatry clinics,
Speaker Change: Are there any issues in terms of finding enough of these clinics at a reasonable valuation?
Or do the valuations really fluctuate wildly?
And have you thought about possibly...
building as opposed to buying. Thank you.
and many more. Thank you. Thank you.
Thank you, it's really a great question.
I think...
Speaker Change: we're going into this knowing that there aren't nearly enough clinics that meet our model, the model that we've laid out in this call to build a national network.
Speaker Change: So then our choices will be acquiring clinics that meet some piece of the model and enhancing their offering to where they're able to meet the whole model versus literally going and building out space and hiring caregivers and building a clinic from the ground up.
We know that capital is available for both of those.
Speaker Change: and we'll be opportunistic in terms of of what we do. You know what you probably won't see us do is take over a med spa that's doing ketamine on Monday and vitamin drips on Tuesday and put our name on it.
The End.
Speaker Change: Great, well thanks for answering my questions and I wish you guys good luck. Thank you.
and many more. Thank you. Thank you.
Speaker Change: Thank you. And your next question comes from the line of Bernina Bernardino from HC Wainwright. Please go ahead.
Bernina Bernardino: Hi, good afternoon, everyone. Congrats on the progress and the exciting changes and structure of the company to come. Just had a question as far as revenue recognition, perhaps. You're pretty confident, Jonathan, about recognizing some form of revenue this quarter. Just wondering, that's...
that's contingent on all the things that are...
Bernina Bernardino: pointing to signing on the dotted line, right? And in that recognition and signing, is that something where...
Bernina Bernardino: The revenue generated from that day plus one, is the revenue be recognizing or will you also, as part of the acquisition, be recognizing?
Bernina Bernardino: the, let's say, historical for the beginning of this quarter, when you have the structure. Yeah, that's...
Speaker Change: That's really a Mike Abrams question, and it may even be one where he needs to come back to you in a note that we'll share with both you and the public, but what I said is
Speaker Change: We expect to have aggregated organizations that are generating revenue. I'm not an accountant.
Speaker Change: and I certainly am not an expert on US GAAP as it relates to recognition of revenue from medical services.
So, you know, if Mike's comfortable talking about...
Yeah, our general approach
Speaker Change: to recognizing revenue, he's welcome to, but at the same time, you know, he's now about to go into a series of conversations with our public auditors where, you know, we set some ground rules for how and when we're going to recognize revenue.
So, Mike, let me turn it over to you.
complicated
Mike Abrams: subject, and that's gone through a lot of change with different ASC announcements, 606 notwithstanding, over the last couple of years.
Mike Abrams: and compliance. But other than that, I really don't feel it's appropriate at this point to get into any more detail or specifics on the road recognition side.
Speaker Change: Okay, as a follow-up to that though, when you do perhaps give some kind of insight or maybe even some guidance, will you be providing some level of detail as far as how well are, you know, the level of business these entities actually realize?
Speaker Change: yes when we when we do discuss it publicly the description and the disclosure will be complete and and and you know encompass all of the known facts at the time that we disclose it but at that point at that we're not quite there yet
Speaker Change: Thanks for taking my questions. Congrats. Welcome aboard, Michael. Looking forward to working with you. Thanks, Jonathan.
Thank you.
The End
Speaker Change: Thank you. There are no further questions at this time. I want to hand the call back to Mr. Matthew Duffy for any closing remarks.
Matthew Duffy: Thank you, Ina, and thank you everyone for joining us this evening. We're extremely excited about the coming months and quarters and years with two potential drug approvals and a subsidiary targeting multiple profitable precision psychiatry clinics.