AcelRx Pharmaceuticals, Inc.

Welcome to the XLRX third quarter 2020 conference call. This call is being webcast live on the events page of the investor section of XLRX website at xlrx.com. This call is the property of XLRX and any recording, reproduction, or transmission of this call without express written consent of XLRX is strictly prohibited. As a reminder, Today's call is being recorded. You may listen to a becast replay of this call by going to the investor section of XLRX's website. I would now like to turn the call over to Rafi Asadurian, XLRX Chief Financial Officer. You may proceed.

Thank you for joining us this afternoon. Earlier today, we announced our third quarter 2020 financial results in a press release. This press release and the slide presentation accompanying this call are available in the Investors section of our website. With me today are Vince Angotti, our Chief Executive Officer, and Dr. Pam Palmer, our Chief Medical Officer. Before we begin, I'll remind listeners that during this call, we will 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 AccelRx. Please refer to our web press release in addition to the company's periodic current and annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward-looking statements. I'll now turn the call over to Vince.

Thank you, Rafi, and good afternoon, everyone. I hope you and your families are remaining safe and healthy, and we appreciate you joining our call today. Last quarter, we introduced the four pillars driving our planned revenue growth strategy – Today, I'll update you on the progress made during the third quarter on each of these pillars, which was significant and encouraging to see. In fact, the third quarter was our most successful quarter since the SUV was approved. We have momentum on all fronts, which we expect to continue as we enter into 2021. As you may recall, our first two pillars, the Department of Defense and Specialty Markets with Partners, require minimal AccelerEx commercial infrastructure to support revenue growth. We expect these two pillars to drive earlier revenue growth for Desuvia as the hospital and ASC customer growth continues to ramp. Relative to Pillar 1, after about 18 months post-Desuvia approval, demonstrable progress towards military use was finally made when a positive Milestone C review was achieved in April. Since then, in September, we announced that Desuvia was added to the Joint Deployment Formulary And in that same month, we were also awarded a $3.6 million U.S. Army contract to purchase Desuvia for DOD study. As a reminder, the Positive Milestone Sea Review provided for Desuvia to be included in all the Army sets, kits, and outfits for deployed troops effective in their new fiscal year, which began on October 1st. As such, we expect the initial ordering of D'Souvia for deployed troops in our fourth quarter. We're awaiting an indication from the Army on the expected timing and volume of D'Souvia purchases for their new fiscal year, and we expect the purchases to be somewhat irregular throughout the year, which can make quarterly revenues in the early stages of the rollout somewhat uneven. The recent addition to the joint deployment formulary extends D'Souvia's availability to all branches of the Department of Defense. and was an important step forward in gaining broader awareness and acceptance as a standard for managing acute pain across the military. For reference, we estimate the Army represents about 65% of all deployed troops. Separately, as mentioned, in September, the DoD awarded AccelerEx a $3.6 million contract for the purchase of Dissuvia. The contract covers the purchases for up to four years and will be used for studying the use of Dissuvia across multiple trauma situations. We're looking forward to continued work with the DoD to advance the SUV as training and use to become a new standard of care across the military. Our second pillar, accessing large non-core specialty markets through partnerships, is similar to the first pillar in that it requires minimal AccelerEx commercial investment. These are large market opportunities, but less concentrated than the hospitals and ambulatory surgery centers, and will be more difficult for our small commercial infrastructure to effectively access. Therefore, we intend to collaborate with companies with larger commercial infrastructures already serving these specific markets that will benefit both organizations and broaden the availability of the SUVIA to more healthcare providers. Our first partnership under this pillar was signed in July with Zimmer Biomet for the oral and dental surgery markets. This is the perfect example of how we intend to open up this UVA's use into other medically supervised settings outside of hospitals and ambulatory surgery centers. Zimmer Biomet has just completed training of their initial wave of 31 sales representatives for a soft fourth quarter launch with a broader rollout to their 250 plus dental division sales representatives expected next year. We're very excited for them to begin initiating sales calls to inform their customers about the benefits of Dissuvia. This is a large market segment of greater than 7 million surgeries with an unmet need that Dissuvia can address. Examples of other specialty markets we believe may also have potential opportunity for partnerships are in plastic surgery, emergency medical services, and ENT physicians. And similar to how we created initial demand in the oral and dental surgery market, which led to a collaboration with Zimmer Biomap, we're approaching the plastic surgery market by running a small pilot with a couple of virtual sales representatives focused on office-based plastic surgeries. We've experienced that this market makes adoption decisions quickly, and thus far the pilot is productive. We'll further evaluate its expansion and collaboration opportunity based on the results. Our core focus with our internal commercial team remains on the hospitals and ambulatory surgery centers. These customers have longer review cycles, and COVID has certainly had an impact on the progress that was being made. However, the third quarter represented our highest end-user demand since the launch of Desuvia. A significant catalyst for our team has been the publication in August about the real-world use of Desuvia in the perioperative settings for Dr. Twentonstrand. If you haven't listened to our KOL webcast held on October 7th, please go to our website, listen to the archive recording. The significant benefits to the patients and the hospital systems are clear after hearing both Dr. Twentstrand and Dr. Cassavall explain their experience with Dissuvia from a patient care, opioid stewardship, and pharmacoeconomic perspective. Our commercial team has continued to receive positive feedback from physicians as this data has been introduced to them, and even more importantly, as they begin to use Dissuvia. We see this data as a true momentum changer and are awaiting the release of data from other similar studies, including Dr. Cassaval's manuscript that has been submitted for publication. As shared on the KOL call, the results of Dr. Cassaval's study are very similar to that of Dr. Twentztrand's, demonstrating the consistency of Desuvia's perioperative impact on IV opioid utilization and PACU throughput. Also, we expect data from two investigator-initiated trials at prestigious institutions, Cleveland Clinic and Brigham and Women's Hospital, will further support the benefits of Desuvia compared to the current standards of care. Realizing Desuvia is a paradigm shift away from typical IV opioids, we believe continued generation of real-world data will be the foundation for Dissuvious adoption. To that end, we continue to receive strong interest for investigator-initiated trials, including proposed studies, for example, in sickle cell patients presenting to the emergency department, retinal surgery in the elderly, and Dissuvious application in emergency medical services settings. Now, with COVID's impact on the healthcare system, including delayed formula reviews during the second and third quarters, we shifted our commercial team focus to accounts that had already reviewed and approved Dissuvia for use. To that end, in 3Q, 73% of commercial customers were reordering customers, and greater than 90% of the commercial doses shipped were reorders as well. Both metrics indicate growing comfort with D'Souvia's use. In fact, September was our highest end user demand month to date. Also supporting the growth within the hospital and ASC pillar is our recently restructured co-promotion agreement with La Jolla Pharmaceuticals. We've agreed for La Jolla to focus on nine separate distinct territories in which they'll promote D'Souvia. Notably, these nine territories are occupied by La Jolla reps who were previously trained under the prior co-promotion agreement and do not overlap existing Accelerex territories. Our fourth and final pillar for revenue growth is business development, and we continue to aggressively explore the addition of products to add to our portfolio to support the productivity of our commercial resources. I'll now hand the call over to Rafi to take you through the financials.