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spk02: Stand by, your program is about to begin. If you need assistance on today's program, please press star zero. Good morning, everyone. My name is Leo, and I'll be your conference operator. At this time, I'd like to welcome everyone to Eagle Pharmaceutical's fourth quarter and full year 2020 financial results and pipeline review call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. At that time, if you have a question, please press star one on your touchtone phone. As a reminder, this conference call is being recorded today, March 2nd, 2021. It is now my pleasure to turn the floor over to Ms. Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. Please go ahead.
spk03: Thank you, Operator. Welcome to Eagle Pharmaceuticals' fourth quarter 2020 earnings and pipeline review call. This is Lisa Wilson, Investor Relations for Eagle Pharmaceuticals. With me on today's call are Eagle's Chief Executive Officer, Scott Terrace, Chief Financial Officer Brian Cahill, President and Chief Operating Officer David Purnock, and Chief Medical Officer Dr. Judith Nung Tashin. This morning, the company issued a press release detailing financial results for the three months ended December 31, 2020. This press release and a webcast of this call can be accessed through the investor section of the EGLE website at EGLEUS.com. Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation, or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Eagle Pharmaceuticals management as of today and involve risks and uncertainties, including those noted in this morning's press release and our filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Eagle Pharmaceuticals specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. A telephone replay will be available shortly after completion of this call. You'll find the dial-in information in today's press release. The archived webcast will be available for one year on our website at eagleus.com. For the benefit of those who may be listening to the replay or archived webcast, this call is held and recorded on March 2, 2021. Since then, EGLE may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings. And with that, I'll turn the call over to EGLE CEO, Scott Tariff.
spk09: Scott Tariff Thank you, Lisa. Good morning, everyone, and welcome to our conference call today. In addition to discussing our fourth quarter and full year 2020 earnings, we will also give updates on our products, including a review of vasopressin, fulvastram, pemfexine, and ryanodex as a nerve agent medical countermeasure. David Pernock, Eagle's President and Chief Operating Officer, will provide an overview of the Symbio opportunity in Japan and discuss our agreement with Time Technologies. For vasopressin, fulvastram, pemfexine, and ryanodex, You'll hear from EGLE's Chief Medical Officer, Dr. Judith Nung-Kashen, who will walk you through our approach here. Our goal is that this expanded presentation will provide clarity on the status and path forward for each of these products. Before we get to all that, let me begin by saying that 2020 was a great earnings year for EGLE and one of our strongest. $2.96 per share in the fourth quarter and $3.54 per share for the year, which is a significant 36% increase over 2019 levels. We outperformed expectations, and this performance is especially impressive given the headwinds presented by COVID-19. As we reflect, our commercial products are hospital-related and to our chemotherapy products. For most of the year, our sales reps had no direct access to their customers within the hospitals, and chemotherapy visits fell substantially due to the various constraints imposed. Many customers were destocking during the year, using their inventory capabilities to stock up on COVID-related products. Our earnings were driven by strong sales, which would have been even stronger without these challenges. We did, however, have some lower R&D expense that was deferred into 21. And we did have some pandemic-related reductions in travel expense. But all in all, we believe that we would have had an even better earnings year had it not been for COVID. As we continue to discuss the impact of COVID on the company, days of precedent is a clear example of the negative impact. The patent trial against Endo was scheduled for last May. And had that occurred, we believe we would have had a favorable decision by now, which in turn could have generated more investor confidence. The trial is now set to begin on July 7th, 2021, about a 14-month delay from the original date. Extremely important to note, as we stated previously, ENDO's asserted patents claim a formulation with a pH range of 3.7 to 3.9. Our proposed ANDA product specifies a pH outside of that range. We are confident that our ANDA, which has been prioritized by FDA and also flagged as a COVID priority, will be approved in a reasonable timeframe, and we still anticipate being on the market this year. We would obviously have loved the legal decision to have been delivered by now, but unfortunately we just have to wait. But July 7th will be here quickly. Yet this delay has affected people's perceptions about our stock and about our company. Considering all the challenges brought on by the pandemic, Eagle has done remarkably well. Our focus now is ensuring that the growth we experienced in 20 over 19 continues this year, next year, and beyond. A key component to our planning for the future is to proactively positioning ourselves to withstand the impact of losing some revenue due to trend of generics starting in December of 2022. We plan to accomplish this through a combination of organic loads, including vasopressin, confexy, and the mustine in Japan, as we advance our pipeline, including fulvastrant, nerve agent, medical countermeasures, and by looking for product opportunities to in-license or acquire, such as our co-promotion agreement with Time for its SM88 product. We are in the middle of our growth curve. We just had a big earnings year. it's very likely that we will continue this growth in 2021 as we expect to have the approval of vasopressin in time to do so. And the Penthexy launch to that, add the Penthexy launch to that, and 2022 will follow on as a strong growth year as well. So what can we expect in 23 and beyond? It is clear that this is what's on the minds of our investors that we speak to. I want to make it very clear that our board and management teams have every expectation that EGLE will continue to grow in 23, in 24, and 25. Not only do we have a pipeline with the potential to deliver long, sustainable growth, but we also have managed our P&L and our cash extremely well in the last several years. Our company is in excellent financial shape. We have been diligent in managing expenses. Our balance sheet is strong with more than $103 million of cash and cash equivalents at year-end. We now have bought back approximately $207 million of stock as of December 31, 2020, at a price a bit more than where we are today, but we think that will take care of itself once we launch vasopressin, pemfexi, and other products. The cash we expect to generate is combined with our clean balance sheet and our ability to use equity as we have never done before, provides us with the capability to augment our pipeline or replace it, if it should not pan out, through in-licensing or acquisitions. Whether through organic or inorganic needs, we will still grow this company beyond 23. We have built a strong foundation for growth that starts with vasopressin continues with our February 2022 exclusive Pemfexi launch, supported by royalties from Symbio, and beyond that to opportunities such as Fulvestrant, NerveAgent for countermeasures, and our stake in Time's SM88 candidate for pancreatic cancer. What this all means is that we have the commitment and the financial flexibility to capitalize on strategic opportunities as they arise. We feel confident that we have the visibility on our earnings capability and that we will be successful in extending the growth pattern of 2020 well into the future. Let me talk about these programs in general now, and then in a few minutes you'll get a more detailed type of review. I mentioned the delay of ASA press and trial earlier, but there's another piece here. We had our post-CRL meeting with FDA just late last week, It was a very productive meeting, and we have clear agreement on how to proceed. We've already done quite a bit of work since the CRL, and we have some more to do here. We hope to have all the data we need to submit by mid-year. Gazopressin is a large and important program for us, and one that we believe will drive growth. We are first to file for this polypeptide, where brand sales of the product total more than $785 million annually. This is a difficult product to get approval for, but our goal remains to do so before the end of the year and then bring this lower-price, high-quality product to the market as soon as possible. Looking to 2022, in just 11 months from now, we will be launching Pemfexi with its unique J-code and four months of exclusivity. As a reference for the size of this opportunity, U.S. sales of Olympia in 2020 were nearly $1.3 billion today. And since we are also approved for the multi-use bio, we have an even larger opportunity here. If you look at vasopressin and Pempexi together, Eagle should be launching into about $2 billion in exclusivity. Add to that the ramping up of endomustine sales in Japan through our partner Symbio, which we anticipate will eventually bring royalties and milestones of $10 to $25 million per year. Together, vasopressin, pemfexi, and symbio will represent a consistent revenue stream, all of which should contribute to meaningful growth and a stockpiling of our already strong cash provision. Turning now to Fulvestrant, we have now followed 750 subjects for 140 to 280 days. Our intention is to commence a clinical trial in cancer patients that could lead to improved outcomes in specific breast cancer patients. We have continued productive engagement with FDA and now have agreement for the clinical design and study endpoints. Our goal is to develop a differentiated product with meaningful benefits to patients and physicians. In consultation with FDA, we have agreed to continue the formulation work, and on completion of that work, we'll commence the study. We believe the new formulation work will provide a more efficient path to approval. Together, these assets make for a strong lineup of programs to support growth and to fill the gap as the Bend a Mustang franchise diminishes. We truly believe our best years are ahead of us. I think our speakers today are going to offer a lot of important context that will shed light on the complexities and the opportunities ahead. With that, I'll turn the call over to Brian Cahill to discuss our fourth quarter and full-year financials. Brian?
spk04: Thank you, Scott, and good morning. In the fourth quarter of 2020, total revenue was $49.9 million compared to $48.3 million in Q4 of 2019. Full-year 2020 revenue was $187.8 million compared compared to $195.9 million in 2019, and included a $5 million milestone payment from Symbio on Triakasem. Product sales for the fourth quarter increased by $7.5 million year-over-year, totaling $22.9 million, compared to $15.4 million in Q4 of 2019. This was primarily driven by a $4.4 million increase in Reantech sales, and a $2.6 million increase in BelRapso sales. For the full year 2020, product sales decreased $1.7 million from 2019, primarily driven by a decrease in sales of Vendeca and BelRapso, offset by an increase in sales of Ryanodex. BelRapso product sales were $10.2 million in the fourth quarter, compared to $7.6 million in Q4 of 2019. Eagle recognizes BellRapso revenue on shipments by Eagle to wholesalers. The increase in sales was the result of an increase in market share as well as the normalization of wholesaler inventory levels following compression earlier in the year. For the full year, BellRapso sales totaled $27.5 million as compared to $29.7 million in 2019. Based on IMS data, Eagle's market share of the U.S. Bendamustine sales was 9% for the fourth quarter and 7% for the year. Fourth quarter Ryanodex product sales were $7.9 million compared to $3.5 million in Q4 of 2019. Orders for Ryanodex are cyclical, driven primarily by product expiry, with few customers acquiring Dantrolene unless their stock is expiring. For the full year, Ryanitex sales totaled $28.3 million as compared to only $13 million in 2019. Q4 2020 royalty revenue was $27 million compared to $32.8 million in the prior year quarter. For the year 2020, royalty revenue totaled $110.5 million compared to $112.9 million in 2019. Royalty revenue in each of the periods discussed is primarily comprised of Bendecca royalties. As we've discussed in the past, beginning on October 1st, 2019, Eagle's royalty rate on Bendecca increased from 25% to 30%, and on October 1st, 2020, the rate increased again to 31%. On October 1st, 2021, it will increase for the final time to 32%. Future royalty revenue will include royalties earned on sales of Triacism by Symbio. Gross margin was 75% during the fourth quarter of 2020 as compared to 76% in the fourth quarter of 2019. Gross margin was 76% during the full year 2020 as compared to 69% in 2019. The increase in gross margin in 2020 was primarily related to an increase in product sales of Randex and a decrease in product sales of Vendeca. On the expense front, R&D expenses were $9.4 million for the fourth quarter compared to $11.3 million in the prior year quarter. Excluding stock-based compensation and other cash and non-recurring items, R&D expense quarter was $8.7 million. The year-over-year decrease is largely attributable to lower spending for Ryanadex for EHS, partially offset by increased spend related to vasopressin. Excluding stock-based compensation and other non-cash and non-recurring items, R&D expense in 2020 was $27.8 million. We expect R&D spend in 2021 on a non-GAAP basis will be $26 million to $30 million. The anticipated 2021 R&D spend includes EA114 CMC initiatives, the Rehanidex trials for the treatment of nerve agent exposure and acute radiation syndrome, EA111 IND enabling toxicology studies and CMC scale-up activities, and CMC and analytical initiatives and launch preparedness for vasopressin. We may adjust guidance higher as we gain more clarity on initiating a clinical trial on Fulvestrant in the second half of 2021. SG&A expenses in the fourth quarter of 2020 totaled $18.2 million compared to $22.5 million in the fourth quarter of 2019. External legal spend associated with litigation on pen with tracks, it a decrease of travel and entertainment and other expenses due to Cobra 19 as well as differences in incentive pay account for most of the year over year decrease, excluding stock based compensation and other non cash and non recurring items. Fourth quarter 2020 s g a expense was $11.2 million. Full-year SG&A expenses increased by $2.2 million to $78.6 million in 2020, compared to $76.4 million in 2019. The increase primarily reflects costs related to the collaboration with time and increases in stock compensation, partially offset by T&E expenses, which decreased due to COVID-19 restrictions, coupled with lower external legal fees. Excluding stock-based compensation and other non-cash and non-recurring items, SG&A expense in 2020 was $50.9 million. We expect our SG&A spend in 2021 on a non-GAAP basis will be $56 to $60 million. The year-over-year increase is largely attributable to external legal expenses related to the vasopressin P4 litigation and a normalization of expenses impacted by COVID-19. Net income for the fourth quarter was $8.1 million, or $0.62 per basic and $0.60 per diluted share, compared to net income of $1 million, or $0.07 per basic and per diluted share in the prior year period. Net income for year end of 2020 was $12 million, or 89 cents per basic and 87 cents per diluted share, as compared to net income of $14.3 million, or $1.04 per basic and $1.01 per diluted share for 2019. Adjusted non-GAAP net income for the fourth quarter of 2020 was $12.8 million, or $0.98 per basic and $0.96 per diluted share compared to adjusted non-GAAP net income of $6.7 million or $0.49 per basic and $0.48 per diluted share in the prior year quarter. Adjusted non-GAAP net income for 2020 was $48.7 million or $3.62 per basic and $3.54 per diluted share compared to adjusted non-GAAP net income of $36.9 million were $2.68 per basic and $2.61 per diluted share in 2019. For a full reconciliation of non-GAAP net income to the most comparable GAAP financial measures, please see the tables at the end of our press release. 2020 cash flow from operations was $49.5 million for the year ended 2020. While we hope the distribution of vaccines and falling infection rates signal the coming end of the COVID-19 pandemic, we wanted to take the opportunity to discuss how we feel the crisis has impacted our business and may influence our plans and guidance for 2021. Our supply chain for ryanodex, bilrapsyl, and bendecca was uninterrupted all year as we continue to provide patients access to these important drugs. While we believe that some of the year-over-year compression of the Bendamusti market is a result of reduced patients' visits, and while we're seeing this trend continue today, we are hopeful that it will abate in 2021. Remote work and travel restrictions resulted in changes to our expense structure, but we have included an expectation of a near-term return to normal in our 2021 expense guidance. We continue to be optimistic about both a near-term end to the pandemic, and our ability to continue to provide supply and access to patients for our approved products and to advance our pipeline despite these current challenges. As of December 31, 2020, the company had $103.2 million in cash and cash equivalents and $34 million in outstanding debt. So we had $69.2 million of net cash. We had $51.1 million in net accounts receivable, $29.9 million of which was due from Teva. In the fourth quarter of 2020, we purchased an additional $4 million of Eagles common stock for a total of $35 million of Eagles common stock in 2020 as part of our $160 million share repurchase program. From August 2016 through December 31st, 2020, we have repurchased $206.9 million of our common stock. I'll now turn the call over to David Parnock, who will review our external partnership opportunities.
spk05: David Parnock Thank you, Brian, and good morning, everyone. I'd like to briefly share with you how we seek to pursue external partnerships to help create value. Symbio is a great example of how we monetized our Vendamustine franchise by licensing the Japanese rights for our ready-to-dilute and rapid infusion injection products. Initially received a $12.5 million upfront milestone payment with royalties on future net sales of the license-bend Mustang products. Symbio received approval for a Triaxim ready-to-dilute formulation, and they launched it in January of 2021. Received a $5 million payment for this product's approval. Symbio, the company, is also currently conducting a critical trial for a rapid infusion product that has a line extension strategy, including new indications. We receive royalties and milestones based on sales and future indications, building to $10 to $25 million annually. Our co-promotion agreement with Time for its oral SN88 is another great example of the way we can create additional value for ego shareholders through strategic collaborations. In this case, we will have an opportunity to monetize an asset that Time is developing to treat pancreatic cancer. The way the deal is structured, Eagle will take on 25% of the sales calls in exchange for which we are entitled to 15% of all net sales in the United States. We have a great deal of expertise in the oncology space, and this collaboration has the potential to contribute to Eagle's revenue stream if SM88 receives FDA approval. It's also worth noting that we have an equity stake in the company, And that Todd has the right to buy back our U.S. rights at any time for $200 million. So as you can see, we have multiple opportunities here to generate revenue for EGLE. I'll echo here what Scott has indicated in his remarks earlier, that we have the resources that are committed to identify and capitalize on important strategic alliances that make sense for our long-term growth. Now I'll turn the call over to Judy.
spk01: Thank you, David. And good morning, everyone. starting with pemfexi, pemetrexed. In the United States, lung cancer is the second most common cancer behind skin cancer. There are two main types of lung cancer. The more common type is non-squamous, non-small cell lung cancer, which accounts for 84% of all lung cancer diagnoses. According to cancer.net, and American Society of Clinical Oncology website. This year, more than 228,000 adults in the U.S. will be diagnosed with this disease. Slide 14. Pemetrexid is FDA approved for the treatment of non-squamous, non-small cell lung cancer, as well as for mesothelioma. Pemetrexid can be administered in an inpatient or an ambulatory care setting. Slide 15. Let's look at the marketplace today. Pemetrexid is currently marketed by Lilly under the name Alimta and is available in 100 milligram and 500 milligram powder single dose vials. Its US sales totaled roughly 1.3 billion dollars in 2020. EGLE was the first to receive approval for this product using the 505 regulatory pathway and we see a sizable opportunity for our Pemetrexid presented in a 500 milligram liquid multi-dose file. we were granted a unique J-code and have an initial period of exclusivity from February 1st through May 24th, 2022. Slide 16. Our Pemfexi formulation has some key attributes that differentiate it from other available formulations, which are single-dose powder formulations that require reconstitution. For patients who may need two to three vials for their dose, this can be very time consuming for pharmacists or nurses. And wastage occurs because they are not multi-dose vials. By contrast, our formulation has a critical advantage. It is available in a 500 milligram liquid ready to be diluted multi-dose vial, making it more convenient. Pemfexi eliminates the reconstitution process wastage, and the vial can be reused while under refrigeration for 28 days. Slide 17. We believe the medical community is eager to have access to our improved product. In a survey of key opinion leaders performed by an outside research firm, 90% of respondents indicated they would prefer a liquid multi-dose over a powder, and 44 indicated that they have encountered moderate wastage with the currently available formulation. Our Pemfexi product is designed to address these issues. Moving to vasopressin, slide 19. Let me add to what Scott said earlier and share some context about vasopressin and what the market looks like today. Vasopressin injection is FDA approved to increase blood pressure in adult patients with vasodilatory shock, as can occur following open heart surgery or sepsis, who remain hypotensive despite fluids and catecholamines. Vasopressin is used in a hospital setting, typically in intensive care. Today, Endopar markets vasostrict, and in 2020, annual sales in the U.S. were roughly $786 million. Eagle is the first to file an ANDA referencing vasostrict. As Scott discussed earlier, we had our post-CRL meeting with the FDA last week. It was very productive, and we have clear agreement on how to proceed. We recognize that we have more work to do, and we have a plan in place and are diligently moving along. This is an important product for us and for critically ill patients. and we look forward to resubmitting to the agency. Turning to slide 21, to understand why we believe that our fulvestrant product, EA-114, has so much potential, I'd like to start with a brief overview of the therapeutic area, focusing on the subtype of estrogen receptor positive human epidermal growth factor receptor 2 negative or HR positive HER2 negative advanced breast cancer for which fulvestrin is indicated. Breast cancer can be broken down into three biologic subgroups, which has a direct bearing on treatment choice. One, those that express the estrogen receptor or ER positive. Two, those that express the human epidermal growth factor receptor 2, HER2 positive. And three, those that are ER negative and HER2 negative and also do not express the progesterone receptor, PR negative, referred to as triple negative breast cancer. As you can see on this slide, there are a number of treatment strategies for hormone-sensitive breast cancer. At EGLE, we are focusing specifically on selective estrogen receptor down regulators, or SIRDs, which work to block estrogen's effects. SIRDs are anti-estrogens that are pure receptor antagonists. Fulvestrant is the only available CERD that down-regulates the estrogen receptor. Slide 22. Fulvestrant is an estrogen receptor antagonist with no agonist properties. It is FDA-approved for the treatment of advanced hormone-related breast cancers. The therapeutic effect of fulvestrant relies on its ability to inhibit the estrogen receptors in cancer cells by causing degradation and downregulation of the receptor itself. As you know, Eagle has done an enormous amount of rigorous scientific discovery work on fulvestrant over the past several years with the goal of improving patient outcomes. To date, we have conducted two clinical trials following 750 subjects over 140 to 280 days, comparing our formulation to Fasuadex, and we have analyzed thousands of collected data points. We further sought out numerous experts and obtained feedback on our proposed approach to Fulvestrant delivery. Based on EGLE's internal work and clinical insight, we see an opportunity to provide benefit to a significant population of patients by taking a new approach to fulvestrant delivery. Following some additional formulation work, we believe EGLE's new distinctive delivery system will address treatment challenges uncovered through EGLE's research. We have also reached agreement with FDA on the clinical study design and endpoints and plan to begin a clinical trial in patients, harnessing the lessons learned from our in-depth work and clinical insights. We are very excited and proud of this creative development pathway and look forward to updating you on our continued progress. Now moving to nerve agent medical countermeasure. Slide 24. Nerve agents are the most toxic of the known chemical warfare agents, and the U.S. military continues to be concerned about the potential for a nerve agent attack on our military or civilian populations. EGLE sees this as an important opportunity to contribute. We believe this has the potential to be a first of its kind neuroprotective treatment to combat neurological damage due to nerve agent exposure. While rapid treatment with the currently available agents decreases the risk of mortality, it does not ameliorate the risk of brain damage. In 2018, EGLE entered into a cooperative research and development agreement with the U.S. Army Medical Research Institute of Chemical Defense to conduct an animal study to evaluate the neuroprotective effects of Ryanodex in an accepted nerve agent model, the SOMEN model, which is a nerve agent poisoning challenge model. The results of this study demonstrated a statistically significant reduction in brain damage secondary to nerve agent exposure in Ryanodex-treated animals compared with control. Encouraged by this positive data, we see the potential to provide this product not only for military personnel, but also for the strategic national stockpile for civilian use and for our allies abroad. Currently, we are initiating dose-ranging animal studies investigating where antibiotics administered intravenously, as well as a new prodrug formulation, EA-111, delivered intramuscularly. Slide 25. We view the development of the next generation of ryanodine receptor modulators that allow intramuscular or IM administration as critical. IM administration has several important benefits, including easier and more rapid administration in emergency situations, both for military and civilian scenarios, point-of-care administration to patients in critical condition, and the elimination for the need for IV infusion, all of which would make the product even more relevant for the treatment of this life-threatening indication that demands quick action and countermeasure administration. Ultimately, we believe an IM formulation is a better clinical approach. Slide 26. EGLE believed in this program and has invested a great deal of effort in developing Ryanodex for this indication. Two separate rat-somen model studies, the proof of concept study at MRI Global and the GLP study conducted at the research laboratories of the U.S. Army Medical Research Institute of Chemical Defense, demonstrated that animals treated with Ryanodex exhibited lower neuronal necrosis in brain cortical areas compared to animals treated with standard therapy alone. These findings are very encouraging and will inform our work going forward. Let's take a closer look at each of these studies. Slide 27. The proof of concept study was done with MRI Global. The histogram on the left indicates necrosis scores, which are measured on a four-point scale, with one being the lowest level of necrosis. The frontoparietal cortex, which is located in the front region of the brain, was examined in this study. There were five treatment groups, including a control group. Dantrolene IV was administered at a low and a high dose at two different time intervals, 20 minutes and 50 minutes. These results indicate that the timing of treatment is critical and sooner is better than later relative to the poisoning event. In the two 20-minute groups, both the high and the low dose groups showed a significant decrease in the amount of neural necrosis compared with the other groups as reflected by their lower necrosis scores. The greatest impact was seen at the higher dose at 20 minutes. Looking at the right-hand side of the slide, the histopathology shows that there are more healthy neurons and less necrosis in the group that received dantrolene at 20 minutes versus the control group. Slide 28. Following the proof of concept rat study, we conducted a GLP study in the rat-somen model. Group D received 30 milligrams per kilogram of dantrolene intravenously, while groups E and F received vehicle or saline, respectively, as vehicle and negative controls. What we found, illustrated here by histopathology from the frontoparietal cortex of the brain, was that in the dantrolene group, group B, minimal dead neurons were present, depicted by the black arrows, while in group E, the vehicle control group, exhibited varying degrees of necrotic neurons with only a few unaffected neurons shown by the white arrows. Group F, the negative control group, showed a majority of unaffected neurons. Based on these data, we are in the process of studying the SOMAN model in larger species that might be more translatable to human physiology. Slide 29. We are continuing to engage the FDA to refine our regulatory path forward to demonstrate the efficacy of Ryanidex in the treatment of neuronal damage due to nerve agent toxicity We are planning further studies in SOMAN models using the Sinomolgus monkey as well as the guinea pig. The FDA agrees with our model selection and has requested that we submit our pivotal non-human primate study for a special protocol assessment or SPA prior to its conduct. We are working with MRI Global to develop and characterize the non-human primate SOMEN model and will conduct preliminary pharmacokinetic and pharmacodynamic studies in this model to better understand the efficacy and dose range of ryanodex in nerve agent poisoning. Potentially, our pivotal GLP study will be a PK-PD evaluation of Ryanodex in the characterized non-human primate SOMEN model to demonstrate efficacy and to predict human dosing. In parallel, we will continue developing our prodrug, EA-111, for an intramuscular route of administration for Dantramine. We will now open the call for questions. Operator, please go ahead.
spk02: At this time, if you would like to ask a question, press star 1 now on your touchtone phone. That is star 1 on your touchtone phone. To withdraw yourself from the queue, you may press the pound key. We'll take a question from Randall Stenecke of RBC Capital Markets.
spk08: Great. Thanks, guys. And thanks for all of the extra detail this morning. It's helpful. A couple of questions for me. Just first, to start off on Baselstrick, a lot of focus here. Does any of those formulation changes or new patent issue impact at all, Scott, the way you're thinking about the generic opportunity? And specifically, do you expect approval to come before the July trial? And then if you can't get a deal done with endo. It sounds like you're prepared to launch at risk based on your prepared comments around launch preparedness spend, but what would that look like? That's the first question. And then the second question I had is bigger picture, and it feeds into some of the pipeline detail and commentary that you provided. I want to go back, just thinking about the growth of the business over the next three to five years. When you sit down with the board and you talk about the most effective way to create value, What does that entail? You're clearly excited about the pipeline, but you've also got net cash in the balance sheet. How should we think about your capital deployment goals over the next one to two years? And what does EGLE look like in three years? Is it critical care, oncology, diversified? Maybe just provide some commentary around that. That would be helpful. I know that's a lot.
spk09: Thank you, Randall. Appreciate it. Good morning, everyone. So let's start out, Randall, with vasopressin. So the new patents that were issued as of today we don't see to be an impediment in any way to our plans. And so that does not impact how we think about the launch and the opportunity. As far as timing goes, you know, nothing has changed significantly since our last communication. We had this meeting with the FDA last week. we have this additional study we need to run. The exact timing of it is not exactly known, but it's near term. And so what we said in our comments today would be that we would have the data most likely completed prior to the first half of the year. We'll see exactly what that date is. Maybe we'll have an update in a couple of weeks when we know more. But we should certainly have the submission filed here in reasonable time. The review time, you know, let's see. But we have priority review. We have the COVID priority review. And FDA has been great. You know, we really commend them. They've been very communicative. The back and forth has been wonderful, reiterated the priority. And so the expectation is that we'll get through this last study and we'll have the product approved by the end of the year and that will give us the opportunity to launch. Does that answer the VASO question as well?
spk08: Yeah, I mean, I guess the other part of that, what would a – you're prepared to launch at risk. What would that look like?
spk09: Well, you know, we would have the – we need the approval in order to launch. And when we have that approval in hand, we have the opportunity to launch the product. And that's what we're considering. Now, we have the trial in July. We won't have the approval before – July 7th. I can't see that happening. That's going to be tight. I mean, it's possible, right? Depends on how quickly the FDA works with us. It could be right around that time, right? We'll have to see exactly when it is. It would be nice to see the trial before we make the decision and go to the market. But, you know, I guess the best way we can continue to explain it is that we have a We have the expectation that we're going to be victorious in that trial. We're not extremely concerned about that. We need to get the approval, and once we have that in hand, we can go to the market. I know people ask us about settlement. Our obligation is to optimize the value of the asset for our shareholders. We think the way to do that is to bring value into the company, the time and value of money, and bring it bring a value to the company in the near term. If it winds up being that a settlement gets us to that place, well, so be it. But our goal is to optimize the asset and bring value into the company as soon as we can. Okay. Is that any further color, Randall? Yeah. No, that's helpful.
spk08: And then on the strategic outlook for the platform, how are you thinking about that free goal?
spk09: Yeah, you know, look, we're very excited about our ability to grow. I think we and our shareholders will be rewarded for the way we've managed our cash and our balance sheet, especially when you look at the cash flow that we expect to have from Bezos Press and the launch in Japan and Pemfexi. That's about $2 billion of exclusivity that we'll be launching into the cash generation from these launches. are pretty significant. And I believe we continue to do a really good job managing our expenses and being prudent in the way we spend and invest. That leaves us with a lot of opportunity to use, you know, equity, debt, cash. And so we believe that we have all the capability in the world between the pipeline and external opportunities to continue the growth. Maybe at this point I'll turn it over to David, who's on the line with this, who's heading up this function for us. But before I do that, you know, how we look going forward is we still consider ourselves a hospital company. We have this great sales force. We can drop in products. So I think you'll continue to see us as an oncology and critical care company. unless something major happens and we find an opportunity along the way. But, David, do you have any comments you'd like to make on the transition as we look to acquire?
spk05: Sure, Scott. And hello, Randall. How are you? Scott said basically our major focus is on oncology and acute care. We think that that's where we have a great deal of expertise and a lot of synergy. So we believe that with our infrastructure, with very little addition in infrastructure, we'll be able to add on another product or so. to complement each one of those businesses. So that's our major focus. Obviously, we look at market attractiveness, uniqueness of the opportunity, you know, timing, timing of the opportunity, and, you know, how risky is it to kind of get through the regulatory pathway, et cetera. So all those are really careful considerations, and, you know, we'll do it. You know, we're looking at things to be very prudent and looking to add on to our pipeline. Great.
spk09: Appreciate it, guys. Thanks. I think the summary there is that, as I stated, we are quite focused on making sure we continue to grow. And we do believe that between the pipeline and the cash and the balance sheet and everything we've done to manage the company to this point, that we find ourselves in a really great position to have the capability, the firepower to go and make the moves that we need to. in addition to the pipeline, if need be. And we're very aggressively looking, and we're very focused on making sure we grow. That's the message we need to deliver.
spk02: Our next question comes from Tim Lugo of William Blair. Your line is open.
spk07: Thanks for taking the question. And, Scott, if you took a step back, Would you still use the ANDA pathway for VAZO, given the pH differences? It seems like a 505 route would also have been available. And there still is risk around VAZO, both from the litigation as well as you need another iteration of work and filing. Um, so how, I guess, how do we become confident that that, you know, kind of total adjustable market you lay out is available, um, to the company in 2022? It still seems to me that there's plenty of risk for next year.
spk09: Um, good question, Tim. So let me try to take it. Maybe let me take the second point first. You know, we're in three years into the development of vasopressin ANDA, and we have done a remarkable amount of work with our product. Fortunately, our product appears to be rather robust and is standing up really very well. I don't believe the vaso issues that we're facing per se are an issue with our product. I think it's an issue about how FDA looks at peptides and polypeptides. Having gone through now, I guess, two CRLs and just had a meeting with them last week, we are rather confident that there's an agreement with the agency of what we need to do to clean up the last work. There's a study we need to run. You know, hopefully we'll be running it really soon. We'll know more, you know, in the next couple of weeks, but we have high confidence we're at the end of the road. We need to run a study. That's the post-CRL meeting we just had a few days ago. And that we'll be able to file that drug by mid-year. And we also think the review time is relatively short based on the priorities that we have with the ANDA. And so nothing is definite and nothing is perfect. We have confidence today that we will have the approval prior to As far as the trial goes, which is the other hurdle we would need to ultimately get over, you know, we just don't view this as an overly complicated trial. It's relatively simple. The claims are pretty specific about the pH range. We knew about that situation, and we have a product that, you know, we don't think is within the range that would cause us any trouble. That's why we've been aggressive in our view about launching. And so from our standpoint, with the knowledge that we have from three years of working on the litigation and on the ANDA, it's our belief that these two things are marrying up now and that our internal expectation is that we'll prevail in the litigation and have approval here soon. And once we get through those two, then it's our obligation to to maximize and to optimize the value of that asset for a shareholder. So as we sit here, Tim, we feel pretty confident. In terms of ANDA or NDA, I will tell you, it's an interesting point you raised. It feels a lot more like we've already developed a 505 than an ANDA. We've performed as much work on this ANDA as we do typically on our 505 . We've been asked to do a lot, which is fine. um we have the expertise at the company i don't think we would have done it differently but i don't believe we realized when we filed the amount of work that would be required but we've dug in we've done it it looks like we're at the end here and we expect to get the product to the market hopefully before the year's over okay fair enough and for you know scott you're obviously uh
spk07: very extremely familiar with the generic industry. Uh, how would you kind of model or how would you project the generic Bend the Mustang impact on Bendecca and Bell Rapso? What kind of degradation do you expect? And understanding that, you know, you sat on both sides of that issue and, We typically hear from an analyst perspective, developers discuss how much tail their products have, but yet generic seem to always degrade the product more than developers expect.
spk09: Very good point, Jim. Obviously, we're cautiously optimistic. we're still consistent with what we've been saying for the last couple of years. And that is that we expect to lose about 30 to 40% of the value of the product. The unique aspect here is that each product is deemed to be a different product. There's three different, uh, CMS codes for one for trend and one for bell rap. So, and one for Bendecca. And so when we analyze the opportunity going forward, we analyze each of those three products separately, and that's how we get to this 30% to 40% decline. Having said that, that's where the approval in Japan helps. Let's see where we wind up in 2023, but if we start to get to that $20 million-ish amount of revenue coming out of Japan, we've now picked up half of the loss in the United States through the Japanese royalties. And so that does not seem what's left to be a critical gap that we need to make up. We think everything else we have going on more than makes up and allow us to grow. Now, in fairness as well, Fenda Mustin is an entity, you know, isn't growing any longer. And we recognize that. And, you know, our point is let's get Vesa to the market and Pemfexi and let's move the pipeline along. Let's use the capabilities that we have to bring additional products into the company. And we don't see any reason why we shouldn't be able to overcome that steady decline of endomustine. It seems like we should be able to do it. But you're right. If it winds up being more than we're projecting, you know, we just need to be more aggressive in the pipeline and how we build the company externally as well. But, you know, we're very confident that we'll get through all of it. David, is there anything else you wanted to add to how we view the decline after 22?
spk05: Yeah, I think you covered the points there, Scott, very well. You know, essentially we do have, you know, unique codes, which is very important. And, you know, the 10-minute infusion will continue to be important. And as Scott said, you know, basically, you know, continue to diversify with internal products and potentially some external opportunities as well. So we're confident in our abilities to do both.
spk07: Thank you for the details. And maybe just one last one. Obviously, business development becomes more of a focus as we approach 2022. When should we expect to see kind of fruition of these DD discussions? You know, we've obviously had a clean balance sheet for many years. But, you know, we are still approaching 2022. And it does seem like there's still plenty of opportunities.
spk09: Yeah, we agree, Tim. There's still plenty of opportunity. I mean, clearly, as you get closer to the end of next year, we need to be more focused. And so we are doing quite a bit of work. David has a great team. We have our R&D team very focused on getting these products to the market through the clinic, and we have another team working aggressively and looking at other opportunities to build the company. We're doing both. And my suspicion is, you know, things will start to happen before too long.
spk07: All right, thank you.
spk09: Thank you, Tim.
spk02: Our next question comes from David Amselem of Piper Sandler.
spk10: Hey, everyone. This is Zach on for David. Thanks for taking my questions. I know you already talked about this a little bit, but just a couple more from me on Be So Strict. Can you just provide any additional color on the latest CRL and what you qualitatively think the FDA might be looking for in this latest study that you have to do? And I know you briefly mentioned before that a settlement should be on the table, but given the latest CRL...
spk09: does that sort of like push you in the direction towards a settlement at all a little bit further in that direction especially given that endo has already uh mentioned that they're open to settling and has already sold with a number of other filers thanks thanks jack so how can i describe this so you know we really can't give any more color on the crl these peptides these polypeptides are just complicated products to move through And it's likely that the filers behind us are going to need to do the same work that we're doing, so it doesn't make any sense for us to give other people a roadmap about the agreement that we have with the FDA and what we're doing. But let's be clear. We've already had our post-DRL meeting, and what we're trying to project here is that we're confident that we're going to be able to run these last tests here. um quickly shortly and that again that we expect to have the data that we need to resubmit and we just believe that we'll have the uh a good likelihood strong likelihood of having the product approved this year and i don't think it's more difficult than that as far as we can see right now unless something comes up our expectation is that we're going to get this responded to and approved here, you know, in a reasonably short timeframe. Let's see how that unfolds. And so, no, it doesn't push us any further to settlement. We think we're going to get through this. We feel more confident, obviously, having just had the post-CRL meeting, and that only took place a few days ago. Did that help, Tom? Yeah. Thank you.
spk02: And once again, that is star one to ask a question. We'll move next to Brandon Foulkes of Cantor Fitzgerald.
spk06: Hi, thanks for my question, and yeah, thank you very much for the info today. So I know we've spoken at length and made that today, but I just want to, and look, I think it comes across that you're all very confident in getting this approved. One thing I've picked up, and look, maybe it's just semantics, but You were a little bit more hedged in your timing today, saying sort of mid-year versus the press release, which you sort of talked about responding shortly. I mean, did anything new come up in the FDA meeting that sort of drove that hedging in terms of timing, or was it really just a function of when you got to sit down with the FDA? And then maybe secondly, on terms of TREXA, you talked about wasted and some other points of differentiation. Anything you can say at this stage? How are you thinking about pricing strategy for Pematrixit when it comes to market? Is it sort of going to be, you know, a potential life cycle extension, you know, as we may have seen with Vendeka? Is it generic pricing, premium generic? Anything you can say at this stage would be helpful.
spk09: Thank you. Thanks, Brandon. So, let me take the first one and turn the Pematrixit question over to David. In terms of the timing, no, I mean, it's not semantics. I didn't mean to in any way change the way we view it. The work that we do on this particular topic is done external to the company. And so our ability to be able to determine exactly when the test is going to be run and when we get results is up to somebody else's timing in their labs. It's an outside vendor that does this for us. And since the details were just – determined late last week with the meeting with the FDA, we don't have an exact timeline and commitment with our vendor when the study could be done. That's the only reason I'm not being as specific as to when we'll run the study and then when we'll get the results. That work is being done this week. We'll have firm timelines in the next week or so. At that point, we'll be able to be more specific as to when we think we'll be able to refile. And so when we say by mid-year, we're trying to give ourselves enough of a hedge without having full understanding exactly when we'll be able to run the work that we need to be to finish up with and when to get those final reports to be able to put into the submission to the CRL. That's all. But we'll be meeting with the team here over the next couple of days, and we should get much clearer timelines from our outside labs at that point. Okay, so I think that sums that up. And David, do you want to take the Pemetrex question?
spk05: Yeah, yeah, sure, Brandon. Thanks for the question. You know, Brandon, we feel like we have a very strong competitive profile, right, between the ready-to-use and the multi-dose file and unique J-code. Those are three major benefits, right? And the other thing that we're really good at under the leadership of Mike Moran is our access to basically the channels that will be most interested in our product. And so we think we have You know, really good strategies laid out, really good solid plan, and I think it's going to be a very, very nice launch for us, right? You know, the product is doing, you know, $1.3 billion roughly per year, so it's a huge brand. We know we're delivering something that the customers really want with the three advantages that we have, and we just know that space really well. So, yeah, talk about pricing for competitive reasons, as you know, but, you know, we know how to get the job done in that particular segment of the market.
spk06: Great. Thank you very much. That's very helpful.
spk02: And at this time, I'd be happy to return the call to Scott Tara for any concluding remarks.
spk09: Well, thank you. First, I want to thank the management team who was on the call today. So pleased that everyone on the call had the time and the opportunity to hear from our key executives, very experienced, detailed people. I think we're well on our way to get the job done. And to sum up, I just want to reiterate that the board and the management team are extremely focused on making sure that this company grows and grows consistently in 23 and beyond. We will use the strength of our balance sheet to capitalize on opportunities that we believe will benefit shareholders. And I'm proud of the performance in the face of the COVID challenges. And we will continue to put our energy into advancing our pipeline and to create the next generation of Gray Eagle products. And we're looking forward to getting vasopressin to the market. We're obviously working pretty hard at that. That's job number one right now. And, you know, we'll see how it goes, but we're pretty confident. And with that, I'd just like to thank everybody for being on the call today. Thank you.
spk02: This does conclude today's conference. You may now disconnect your lines. And everyone, have a great day.
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