AcelRx Pharmaceuticals, Inc.

Welcome to the Accelerex first quarter 2022 earnings call. This call is being webcast live on the events page of the investors section of Accelerex's website at www.accelerex.com. This call is the property of Accelerex and any recording, reproduction, or transmission of this call without the express written consent of Accelerex is strictly prohibited. If you require operator assistance, please press star then zero. As a reminder, this call is being recorded. You may listen to a webcast replay of this call by going to the investor section of Accelerex's website. I would now like to turn the call over to Rafi Azadorian, Accelerex Chief Financial Officer.

Thank you for joining us this morning. Earlier this morning, we announced our first quarter 2022 financial results and some business updates 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 Accelerex. Please refer to our press release in addition to the company's periodic, current, and annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward-looking statements. I'll now hand the call over to Vince.

Thank you, Rafi, and good morning, everyone. A lot has changed in our first quarter of 2022, both in the macro market environment, but also at AccelerEx. We completed our acquisition of Lowell Therapeutics earlier in the quarter, which has provided us with a number of promising product candidates. We have also advanced preparation of the NDAs for our two pre-filled syringe products, ephedrine, and phenylephrine, and expect initial feedback from the FDA to our inquiries at the end of this month. In addition, Dissuvia has continued to demonstrate impressive growth in the procedural suite market, even with the limited commercial team that we've maintained. In fact, we have further aligned our cost structure to concentrate on our recently expanded development pipelines. This reorganization is expected to generate annual savings of approximately $9 million. The value of the DSUVIA for patients and healthcare providers is evident based on the feedback we continue to receive from the healthcare community, as well as the numerous studies that are being published, extolling the benefits of DSUVIA in various procedural environments. However, we realize that in this current market environment, Desuvia's full potential as a unique analgesic can be maximized by an entity with broader resources. Accordingly, we're actively discussing strategic relationships with third parties with a more robust commercial presence that can help maximize Desuvia's value for all stakeholders. Our goal is to enhance the value of Desuvia with an organization that is better resourced and equipped to carry out the ongoing launch of this very valuable product and even further reduce our cost structure. Now, let's move on and provide further details on the progress made this quarter. As we had announced in January, we closed our strategic acquisition of Lowell, which has added a family of novel Nifamistat products to our portfolio with diverse potential applications, including our lead asset, NIAID, which is intended for use in renal replacement therapy. Given the importance of this asset, we recently held a key opinion leader webinar with two leading internationally renowned physician experts specializing in acute kidney injury. The replay of this webinar is currently posted on the investor section of our website, and we'd encourage you to listen to hear many of the outstanding attributes in the Phamostat. The webinar detailed the scientific and clinical basis behind the use of NIAID for anticoagulation of the extracorporeal dialysis circuit in both adults and children. NIAID is a lyophilized form of nifamistat that is being regulated as a device by the FDA, given that its mechanism of action takes place outside of the body of the patient, that is, within the extracorporeal circuit. Nifamistat is approved and widely used for the syndication in Japan and South Korea, but it's never been developed for such use in the United States. The FDA has assigned NIAID with a breakthrough device designation, which provides us with several advantages in getting regulatory approval. Further, CMS has already assigned an ICD-10 procedural code for its use in the extracorporeal circuit, which will facilitate reimbursement. Once we've manufactured the first CGMP lot of NIAID, which is expected to occur early next year, we intend to apply to the FDA for an Emergency Use Authorization, or EUA. We're currently in the final stages of securing supply and manufacturing partners for NIAID. After manufacturing of our initial lots, our development plan that has been informed by the FDA includes a single registrational study in 160 patients, which is expected to begin in 2023. And if approved, NIAID would be the only regional anticoagulant for this indication in the U.S. A Nifamistat portfolio is promising with the potential for NIAID. However, Nifamistat has other beneficial therapeutic applications. Therefore, we'll be exploring other potential indications for Nifamistat as an intravenous synthetic serine protease inhibitor to be developed in the future under the name LTX608. In the near term, we intend to focus our resources on NIAID's approval for CRRT and and potential emergency use authorization. Currently, 60% of the patients on continuous renal replacement therapy in the US do not receive anticoagulants, often due to the risk of currently available options. We believe NIAID could address this unmet market need. In addition, we believe the potential peak sales for NIAID alone exceed $200 million annually. And this amount is attributed to just the inpatient and outpatient dialysis markets. The markets for the other target indications for LTX608 are also sizable. Now, consistent with our priority of advancing our late-stage pipeline assets, we've made progress on the regulatory pathway for our pre-filled syringes. The pre-filled ephedrine and phenylephrine syringes were licensed from Agaton, who is also our European partner for Desuvia, or Desuveo, as it's named in Europe. We anticipate feedback from the FDA by the end of this month on our plan for the first pre-filled syringe product candidate, ephedrine, or PFS01. Assuming agreement from the FDA, we expect to submit NDAs for these two products, these two product candidates, this year. With two NDAs filed in 2022, we expect to have approved products to launch next year. The market opportunity for these assets exceeds $100 million and we believe we'll be able to obtain a large share of this market with minimal commercial investment. And while we're eager to concentrate resources on our pipeline, we've made very good progress focusing our commercial efforts for Desuvia into procedural suites over the last three quarters. As a result of this continued growth and what we strongly believe are favorable prospects for Desuvia, there's interest from other parties related to commercializing the product. Accordingly, to ensure value is maximized for our shareholders, we're in active discussions with more resourced potential commercial partners to take on Desuvia. This would potentially provide AccelerEx the opportunity to benefit from a stronger commercial presence from a larger company, reduce investment required by AccelerEx, and provide an accelerated return on investment to our shareholders as Desuvia continues to accelerate its growth trajectory. The adoption for Desuvia for use in procedural suites remains encouraging and is the largest driver of use. This is an important market as many painful procedures are now being performed in procedural suites, which are more cost-effective than hospitals and ASCs. In 1Q22, Desuvia achieved historical highs in new ordering customers, reordering customers, total number of unique orders, doses to end users, and new REMS enrollments. This growth was driven by the procedure suite market, as it now represents 71% of all commercial sales in 1Q22. That's up from 59% in 4Q21 and up from 28% in 1Q21. Now that we have identified where Desuvia can be successful, an increased presence is required in these locations to further grow sales. This is why we're confident that working with a commercial partner on Desuvia is a necessary next step. In the meantime, we've restructured our commercial resources to consist of a small virtual sales team focused on procedural suites, which we believe is the most efficient approach. Year to date? We've had a number of publications about Dissuvia, specifically for its use in plastic and cosmetic surgery, providing further real-world evidence of the many benefits both to patients and the overall healthcare system that can be experienced when administering Dissuvia in a procedural suite setting as well as other settings. In terms of other markets for Dissuvia's application, you may have seen our year-end earnings release announcing a commentary published in the Journal of Military Medicine highlighting the favorable pharmacological properties of Desuvia for use in the military setting. In addition, more recently, an editorial was published in this same journal describing Desuvia's potential psychological benefits to injured soldiers by initiating timely pain management on the battlefield. The editorial identified Desuvia as, quote, certainly a step forward in improving acute pain management in combat settings. End quote. We're further encouraged that the DOD has finally initiated two studies that were originally planned to commence 18 to 24 months ago. We believe that the initiation of these two studies, as well as the recent military publications, further cement the DOD's commitment to Dissouvia for battlefield use. However, despite the US military deeming Dissouvia the preferred treatment choice for those in the battlefield, things have moved slower than anticipated to formally roll out Dissouvia in this setting. We continue to wait on final clearance related to the administrative and logistic prerequisites that, once cleared, will facilitate the U.S. Army in purchasing Desuvia for their sets, kits, and outfits, or SKOs. The Army continues to make purchases for their pre-positioned stockpiling program, but we expect an increase once the Army begins supplying the SKOs for deploying and deployed troops. We remain excited about the upcoming launch of Desuvia, or Desuvio in Europe, We expect Agatant will launch Desuvio in the third quarter of this year and then remain focused on all their pre-launch activities. We look forward to monitoring the uptake of this important drug in a new market and believe that Agatant will definitely benefit from our experience in launching Desuvio in the U.S. as they further their launch plans. I'll now hand the call over to Rafi to take you through the first quarter financial results.