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spk04: 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.
spk06: 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.
spk07: 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.
spk06: Thank you, Vince. Our first Our financial position remains solid with $39.3 million in cash at March 31 and $11.4 million in senior debt. Our debt level continues to reduce each quarter as we reach maturity in Q2 2023. Total sales of $0.4 million in the first quarter was an increase of 17% over the fourth quarter of 2021. Dubia sales volume growth continues to accelerate with volume growth excluding DOD of 64% in the first quarter compared to the fourth quarter of 2021. This is the fourth consecutive quarter of commercial or ex-Department of Defense sales growth, sales volume growth, which was led by procedural suites. All of this despite a limited commercial infrastructure. Operating expenses or combined SG&A and R&D expenses were $8.7 million in the first quarter of 2022 compared to $8.6 million in 2021. Excluding non-cash depreciation and stock-based compensation, first quarter 2022 cash operating expenses were $7.7 million. The increase in operating expenses in Q1 2022 was mainly driven by increased D'Souvia manufacturing-related costs partially offset by reductions in personnel-related expenses. The restructuring Vince discussed earlier on this call is expected to generate approximately $9 million in annual savings and an estimated $500,000 restructuring charge that will be recorded in our second quarter financial statements. I'll now turn the call back over to Vince.
spk07: Thank you, Rafi. We're excited about the many upcoming potential catalysts and value drivers, our future, and the transformation we made over the past year with our late-stage development assets. And I'd like to open the line up for any questions you might have. Operator?
spk04: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Brandon Folks with Cancer Fitzgerald. Please go ahead.
spk02: Hi, thanks for taking my questions and congratulations on all the progress. Just two for me this morning. Firstly, maybe just on the OPEX savings, How should we think about those savings being reinvested back into the new programs that you do bring on board versus, or that you have brought on board, versus dropping to the bottom line? And then secondly, can you talk about the interest you've had in Desuvia? And what are you looking for in terms of an agreement to get it over the line here? How important is a lodge up front? Thank you.
spk06: Hey, Brandon, it's Rafi. I missed that last part of it, but Vince got it. So I'll answer the first question. The savings we have this year, most all of that that we'll be dropping to, if you want to call it the bottom line, but will be additional cash savings because the development costs are not significant early on for our pipeline products. So I think for this year, most of that comes back as a cash savings.
spk07: As relates to the second question, Brian, the interest in Dissuvia and kind of how that looks, it actually runs the gamut. Anything from licensing in particular aspects of the market, whether it be a segment in procedural suites, hospital, other, to full divestiture of the program. And we're entertaining all as we move through these discussions.
spk02: Great. Thank you very much.
spk07: You're welcome very much.
spk04: The next question comes from Ed Ars with HC Wainwright. Please go ahead.
spk03: Hi, good morning, everyone. This is Thomas Yip asking a couple questions for Ed. So first, announced today the headcount reduction. Can you provide an estimated number of acquisitions and what are their primary work functions in the general area?
spk07: Yeah, it's in the neighborhood. I'll give you a percentage of between 40% to 45% of our headcount, predominantly in the commercial arena, with other tangential positions that might affect that that have multiple duties.
spk03: Got it. Okay. And also, somewhat related to that, you also announced... with potential partners to support a commercial plan for sales expansion of Vesuvia. And you just talked a little bit about the general framework. Should we expect any impact on your work with the DoD, and how would that work out?
spk07: No, you shouldn't expect any impact on that. We've had a long-standing relationship now with the DOD. We are in frequent communication with them, and it wouldn't have an impact relative to that. I mean, again, the functions we're looking at is anything from a full divestiture, actually us keeping certain segments of it, like the DOD or some others that may have small resourcing, but Again, it's the full gamut of possibilities for the product, and the DoD will not be affected.
spk03: Okay, thanks for the added color. And then perhaps, as you just pointed out, we'll exclude DoD and a range of possibilities. Can you give us some ideas of how you envision this new plan either through your own effort and also through partners as well, any roadmap to kind of elevate the Soviet cells in the U.S. from current levels?
spk07: Yeah, the plan here, look, so we like the response we're getting from our communications. We made a lot of adapt, we adapted a lot of new mechanisms to move into the procedural suite market in particular during COVID, but not only because of COVID, because we see the market moving away from hospitals for many of these procedures and the selling cycle being shorter. With that said, we still think hospitals are an opportunity moving forward. We still believe the ASCs are an opportunity obviously moving forward, but all this requires a much larger infrastructure than we have, even in the procedural suites. So we're maintaining primarily a virtual sales team today, which is more efficient cost structure and has been very responsive to communications and educations for Desuvia. But it's not enough. And that not enough factor is the point where we believe for our shareholders, for Desuvia, for the educational healthcare practitioners, it has to come with a larger effort, an effort that we can't do well while we're also concentrating on the recently acquired late-stage development pipeline. So as opposed to trying to do both, we are going to really focus on that late-stage development pipeline. We'll continue the momentum on Dishuvia, but hope to expand it in a much greater degree moving forward with a partner.
spk03: Understood. That makes a lot of sense. And perhaps one final question. Speaking of Nifamistat, can you discuss what are the next steps to move Nifamistat into Phase III and has the study protocol been agreed with the FDA?
spk07: Yeah, I'll have that question relative to Nifamistat moved to Dr. Palmer about the next steps on Nifamistat and our plan over the course of the next year.
spk01: Yeah, so Thomas, we're planning on initially making the first batch of product, and as Vince mentioned, applying for an EUA, which has already received very favorable feedback from the FDA, and we talked about that on the KOL day that we had recently. But the protocol itself, the endpoints have been agreed upon. They're very straightforward. Again, it's a simple study of 80 Nefamistat patients versus 80 placebo patients. So that's a patient getting no anticoagulation while they're undergoing renal replacement therapy. And the primary endpoint is looking at the activated clotting time. So it's straightforward. It's been informed by the FDA and we're excited to start that phase three program after batches of the drug are made.
spk03: Thank you so much, Dr. Varner, and thank you very much, Vince. Looking forward to your progress in the coming months.
spk04: Thank you, Thomas. The next question comes from Robert LaBoyer with Noble Capital. Please go ahead.
spk05: Good morning. There was a mention of the use in the procedural suites, and it sounds as if... Robert, just a comment.
spk07: You went blank on us there at the start. Could you... Repeat the question at the beginning, I apologize.
spk05: Okay, there was a mention that the Suvia is being used and growing in the procedural suites, which sounds like you're identifying procedures and settings where the drug is growing and could continue to grow. Could you just elaborate a little bit on the types of surgeries and the procedures where it's being used?
spk07: Absolutely. I'll refer this to Dr. Palmer in one moment, but there's three main categories where physician disciplines are using it. And I think the thing you have to commonly think of are awake surgeries. Those three disciplines are primarily plastics, oral maxillofacial, and ENT. And within those three disciplines, Pam, maybe you can talk about the results we've seen in the concentration of efforts on certain procedures.
spk01: Sure. Plastics has been the most straightforward one for years and years. Plastics have been working away from hospitals and ASCs into the procedural suites. It's more patient-friendly. Frankly, it's less expensive. And as we know, a lot of plastic surgeries are self-pay from the patients. So they have adopted Desuvia fairly quickly. Something like ENT, for example, that's a specialty that only recently has been focusing their painful procedures in an outpatient setting. They typically were done in hospitals and ASCs before, but because of a reimbursement to the physicians, that's changed recently. They get actually more reimbursement for performing use in an outpatient procedural suite. then we've seen a large volume of those sinuplasties, et cetera, move into that setting. And so they've been more recently very interested in learning more about Dysubia. And the ENTs that have adopted it are really excited about what they're able to do comfortably with the patient in an office-based setting. And then oral surgeons, of course, we've been interested in that group for a while. There has been a slow and steady adoption with the oral surgeons, but we really feel that it could be reaching a tipping point soon as more of them are hearing about Dysubia. And that's just the three. I mean, we've always believed that colonoscopies, as the scopes become smaller with time and a little less painful on the actual procedure, they don't need that heavy sedation they typically had in the past with your IV propofol, IV fentanyl, etc., So we're really excited about Desuvia to be going into those areas as well. So from a procedural suite standpoint, that's the movement. All procedural painful procedures are really sort of moving in that direction. And we believe Desuvia is just the perfect opportunity to create a non-invasive analgesic that can really address the unmet need in that market.
spk07: Robert, so while we've had personal exposure to the plastics for anything from liposuction to radiofrequency microneedling, which we just saw a published paper on more recently, neck lifts, awake neck lifts, and blepharoplasties, and for the ENTs, as Pam mentioned, the sinoplasties, for oral maxillofacial, full mouth, tooth extractions, and full arch implants, really painful procedures for these patients. That's only where we've concentrated our efforts, and I think that's an important point that Pam mentioned. And as we move to a strategy where others can be involved, markets like GI, as she mentioned, OBGYN, others that we can't address just based on limited resources, I think will now become more transformational for our product within their particular practices moving forward. Okay, thank you. That was very helpful. You're welcome.
spk04: This concludes our question and answer session. I would like to turn the conference back over to Vince and Gadi for any closing remarks.
spk07: Yeah, well, thank you for joining us today and for your continued support of AccelerEx. We're especially grateful to our employees for all their hard work and dedication. Again, we believe we're well positioned for the future. We're excited about the prospects of our development pipeline, maximizing the potential for Desuvia, and we'll remain focused on driving shareholder value while controlling expenses. We look forward to sharing more developments in the near future. Thank you. Be safe and take care.
spk04: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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