NRX Pharmaceuticals, Inc.

Good day and welcome to the NRX Pharmaceuticals Incorporated second quarter 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Matthew Duffy, the company's chief business officer. Please go ahead, sir.

Thank you, Chuck. Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under U.S. federal security laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the historical experience or present our expectations. Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports filed with the SEC. The forward-looking statements made during this call speak only as of the date to hear of, and the company undertakes no obligation to update and revise the forward-looking statements. Information presented on this call is contained in the press release issued earlier today and in the company's form TED-Q filed today. which may be accessed from the investor page of the NRX Pharmaceuticals Incorporated website. Joining me on the call are Stephen Willard, our Chief Executive Officer, Jonathan Javik, our Chief Scientist, and Seth VanBoordies, our Chief Financial Officer and Treasurer. Stephen and Jonathan will provide a summary of the company's progress. Seth will review the company's financial results. And then Stephen will review upcoming milestones before making closing comments. Following their prepared remarks, we will have to address investor questions. I'll now turn the call over to Sita.

Thank you, Matt. Good afternoon, everyone, and thank you for joining us. Our second quarter reflects an important inflection point for the company as we advance our novel NMDA platform. This expansion of our pipeline is driven by our signed partnership agreement with Alvagen and Lotus Pharmaceuticals related to the use of NRX 101 our breakthrough investigational medicine in bipolar depression with suicidality. The milestones and commitments within that partnership, as disclosed in our filings and described in the press release, provide the extensive financial resources needed to fund Phase III and commercialization of NRX 101 in the syndication without additional dilution to our shareholders should we deliver a statistically significant data readout. When we met with FDA last January, and FDA guided us to broaden our clinical indication and to develop a 1500 person safety database, investors asked how we were going to fund this program. The Alvagen deal answers this question. In our previous calls, we've explained the urgent unmet need for a medicine to treat this group of patients who have a 50% lifetime risk of suicide attempt and who have been excluded from trials of all previous antidepressants. The urgent need is detailed on our website and validated by FDA's award of breakthrough therapy designation and a special protocol agreement. As further validation of the life-saving implications of this therapy, this week we published the previously announced results of STABLE-B in the International Journal of Pipolar Disorders. a peer-reviewed, high-impact journal published by Springer Nature. The lead author is Professor Andrew Nirenberg, who leads bipolar research at Harvard Mass General Hospital. The article documents a nearly eight-point difference on the Madras depression scale when NRX is tested against lorazodone, a difference approximately two-fold greater than the difference seen when typical antidepressants are tested against placebo. Moreover, to our knowledge, this is the first oral drug to demonstrate a statistically significant reduction in suicidality, a benefit seen only previously with IV ketamine. Now we are engaged in a Phase IIb-3 trial that seeks to document the benefits of NRX-101 in suicidal patients without prior IV ketamine. We have formed a joint steering committee with our partner. Our scientific and management teams are now working regularly in partnership with teams from Alvagen and Lotus in order to collaboratively bring a lifesaving drug to market. I am pleased to announce that our clinical trial is now within 20 patients of an anticipated data readout. We are now establishing a broad base of study sites in anticipation of a substantially larger phase three initiative funded by our partner. More importantly, we are seeing promising indications of quality with 90% medication compliance and 94% concurrence of depression scores measured at the study site with the scores measured by our central master psychometric raters. Dr. Javitt will provide some insights into the quality metrics we are observing. The Alvagen partnership affords us an opportunity to explore new and broader indications for NRX 101. Because we completed our phase three commercial manufacturing program in Q1, we are able to seamlessly introduce these indications to FDA and have more than one million doses of medicine in the warehouse with which to initiate new programs. Specifically, we are exploring the use of NRX-101 in chronic pain and post-traumatic stress disorder. Jonathan, would you review the science results achieved during Q2 and reflect on our near-term goals?

Thank you, Steve. So as Steve shared with all of you on the phone, our near-term priority remains the delivery of data for NRX-101 and bipolar depression with suicidality. sufficient to trigger the first $10 million milestone payment in our partnership agreement. As you know, we're the first pharmaceutical company to enroll patients with suicidal bipolar depression in a clinical trial of a potentially lifesaving oral medicine. These are patients who have been excluded from the clinical trials of all previous antidepressant drugs. The high-risk nature of this population has required us to take a high level of caution in recruiting, selecting, and monitoring the care of these vulnerable patients. In March, we advised you that the Independent Data Safety Monitoring Board identified no safety concerns and no futility. And now we're pleased to share with you that no unexpected serious adverse events have occurred in this high-risk population since that time. More importantly, Clinical trials in psychiatry succeed or fail based on patient compliance with study medicine, on the consistency with which depression and other key endpoints are measured from one study site to another. And the things I'm about to talk about are scientifically complex. We've posted a paper to the preprint service, which you're free to read. and reflect on what I'm about to say. So the quality metrics we're seeing in terms of study retention, safety, medication compliance, and rating reliability give us added confidence that the trial in which we are engaged has the potential to be submitted for drug registration should we prove efficacy. In other words, we don't know that the drug is going to work, but we do have increased confidence that we're measuring the results of the trial in such a way that we will be able to identify efficacy if it's there. We track the execution of this trial in a number of ways on a daily and weekly basis. Today I'd like to share the results to date from three of the key metrics we evaluate, namely compliance with the prescribed treatment, concordance of efficacy evaluations, otherwise known as inter-rater reliability, conducted at the study sites compared to those conducted by the central raters at our company. And lastly, patient enrollment. So first, treatment compliance. So far in our trial, we've seen greater than 90% compliance with patients' prescribed regimen as measured by pill counts of patient visits. We're encouraged by this high level of compliance as we believe this is key to patients experiencing relief from their symptoms. Now, let's talk about concordance or inter-rater reliability. Psychiatry trials exceed or fail based on their ability to control the accuracy with which the endpoints of the trial are measured. In our case, those endpoints are relief from depression and relief from suicidality. During the first quarter of 2023, we refined their ability to validate the psychometric ratings that are used to assess those efficacy endpoints. We rely on a team of veteran psychometric raters, master's level or PhD, who both train the raters at the independent study sites and rate and monitor the technical quality of each rating. In other words, we get an audio file of each and every psychometric rating from the study sites, and our in-house raters re-review that information. to see whether they agree with the information obtained by the study site. We set a standard that requires the measurements reported from study sites on a patient-by-patient basis to be within three points of the Master Rater Score on the standard 60-point Montgomery Asperger Depression Rating Scale, or MAGRS. This rating scale is the primary efficacy endpoint that FDA has required for all recently approved antidepressant drugs. Now, the three-point standard we pre-specified in our protocol is substantially stricter than the looser six-point standard recommended in the literature, but we felt it was essential to reducing site-to-site variance that diminishes the statistical reliability of psychiatry studies. In fact, people have often asked, how could we obtain a statistically significant endpoint in the stable B study with such a small population? And we attribute that to really tight measurements around those endpoints with very low variance to be accounted for. So we also set a standard of 90% or better inter-rater reliability, which is the measure of what percent of ratings meet that three-point standard. Today, we posted a research report of blinded results from the first 50 patients enrolled in our clinical trial and interviewed in their primary spoken language, documenting 94% inter-rater reliability across study sites. In other words, we have no idea who's on drug and who's on lorazodone. All we know is how the ratings obtained in the study sites backed up against the ratings obtained from the same patients same audio files by our master raters. This finding substantially exceeds their pre-specified baseline requirements and also exceeds the inter-rater reliability that's routinely published in the literature of the trials. We believe that this rigorous approach to measuring our primary endpoint is key to being able to successfully prove efficacy in our clinical trials should there be efficacy to prove. In order to meet our Phase 3 objectives, we need the ability to recruit a substantial number of patients over a short period of time. As we previously noted in April 2023, we contracted with One in Health to initiate a recruitment campaign that may cover up to 45 states in the U.S. to recruit sufficient patients for our Phase 3 program. The company has similarly broadened its previously announced relationship with Science 37, a CRO that conducts decentralized clinical trials to enroll participants identified by the 1M Health Initiative and to randomize them to be treated within the broadened clinical trial. So let me explain that for a sec. In most clinical trials, you set up study sites in particular locations. Those study sites recruit patients they treat patients, they measure the results, but somebody who lives 100 miles or even 50 miles away from those study sites is really unable to participate. Science 37 has the ability to recruit patients nearly anywhere in the country and send a team of nurses to their door in order to administer the investigational medicine, in order to measure the endpoints of the study, so that our dependence on brick and mortar study sites is substantially diminished. And now One in Health has additionally engaged the MITEI, a voice of the patient organization with national reach, to publicize the clinical trial to their 800,000 plus subscribers who have indicated a personal focus on bipolar depression and suicidality. And all of you on the phone you're welcome to read the late press articles that the MITEI is sharing with the bipolar community. So based on these broad coordinated efforts, we expect that data will be available near year end of 2023 to meet the Albertson milestone. As you know, we began talking to public investors about NRX 101 in March 2022 on the tail of the COVID pandemic. Now, while we've explained the potential impact of our combined formulation of d-cycloserine and lorazodone for bipolar depression, it's also important to recognize the broader applications of this drug-class combination. At NRECT, we discovered the unique synergy between NMDA and 5-HT2A targeted drugs, those being two different chemical receptors in the brain, specifically that each component effectively blocks the potential adverse effect of the other, creating a potent new therapy with an advantageous safety profile. Additionally, we've identified and patented the critical doses at which desexosterine may be effective in various conditions. These discoveries are at the core of our company and at the core of our NMDA platforms. These discoveries have resulted in a portfolio of 90 patents around the world, 48 of which have now been issued, related to the treatment of bipolar depression, major depressive disorder, PTSD, and other central nervous system conditions. Now, the AlbaGym agreement anticipates that NRX will develop additional products containing d-cycloserine or other NMDA antagonists in combination with one or more antidepressants or antipsychotic ingredients for use outside the field of bipolar depression with suicidality, such as chronic pain with or without depression and post-traumatic stress disorder, or PTSD. Last week, we announced the licensure of Professor Afkar Karian's patent for the use of desycloserine in the treatment of chronic pain. There are approximately 7 million Americans who live with bipolar disorder and episodes of depression. In contrast, more than 50 million Americans live with chronic pain. Just as those with bipolar depression and suicidality have no approved treatments other than electroshock therapy, those who live with chronic pain are frequently dependent on opioid-based medications, the risks of which have become trashy visible to all over the past few years. Just a few weeks ago, the White House announced that 165,000 Americans die from opioids annually. We've now posted a paper to the scientific literature, which you can see on our website, documenting more than 20 years of research, which demonstrates extensive non-clinical and early clinical evidence that desequestrian interrupts the pain pathway at each step between the peripheral pain sensors and the central nervous system, while potentially decreasing craving for opioids in those who are afflicted with chronic pain. We've recently published peer-reviewed studies documenting that NRX 101 is not neurotoxic and is not addictive. We believe that chronic pain affords a unique opportunity for NRX 101 and for our shareholders. When we began our work in bipolar depression, opioids were a predominant and widely accepted treatment for chronic pain. At that time, market wisdom suggested that non-addictive, innovative analgesic drugs could not compete effectively with generic opioids. Today, the situation is quite different. Today, an overwhelming shift in public health policy and public awareness as reflected in the popular press, recent television series, and multi-jurisdictional litigation documents a widespread movement against the use of opioids and creates a unique opportunity for non-addictive, non-neurotoxic treatments for chronic pain, an established $72 billion market that is expected to grow to more than $100 billion by 2030. Of key importance is the recognition by the U.S. Department of Defense of the 2016 study published by Northwestern University's research group that identified a statistically significant reduction in pain scores at a 400 milligram daily dose of these types of syringes. That's the threshold dose that's also predicted in our patent portfolio. The DOD acted on this finding by funding a $5 million congressionally directed medical research program awards to Northwestern University to study D-cycloserine in several hundred patients with chronic pain. As shown on clinicaltrials.gov, patient recruitment in this trial is complete and study results are anticipated in the near future. Thus, a large public investment in chronic pain therapy, completely non-dilutive to our shareholders, using the key ingredient of our drug, namely D-cycloserine, already has the potential to provide a rapid path to drug approval to the efficacy be shown. The lorazidone component of our drug may also independently treat chronic pain. As previously announced, we've completed our phase three in commercial manufacturing program for NRX-101. This week, we're opening an investigational knee drug file with the FDA for use of NRX-101 to treat chronic pain. The rationale for treatment of chronic pain with desycloserium is outlined in the review article that we've recently posted and is on our website and in the 2016 scientific paper published by Professor Schnitzer, Akarian, and their co-workers. In brief, B-cyclopserine, which acts as an NDA antagonist drug above threshold doses, has demonstrated extensive non-clinical and early clinical efficacy in, one, decreasing the response to nociceptive pain, that is, the pain that's triggered by pain receptors in the body, and, two, decreasing craving for opioid drugs, with evidence that DCS is both non-addictive and non-neurotoxic. Regarding post-traumatic stress disorder or PTSD, we've previously identified the rationale for treating PTSD with NMDA antagonist drugs and shared with you evidence that DCS decreases the pure memory associated with PTSD in non-clinical studies. We plan to investigate Nrx101 and PTSD as an additional indication. and to commence planning for that Phase II clinical trial in 2023. In summary, I believe our progress this quarter solidifies our ability to reach patients with suicidal bipolar depression. While the results of our ongoing trial remain blinded, we've shown scientific evidence that the trial is being effectively executed and rigorously monitored. Additionally, Our chronic pain program has expanded the company's market opportunity tenfold and positions the company for future growth with near-term data readouts. Our programs address more than $100 billion in market opportunity while serving patients with significant unmet medical needs. As always, I'd like to express my gratitude to the patients, the NRX team, the clinical trial investigators, And most importantly, you are shareholders for your continued support. Seth and Boris will now discuss our financial performance.

Thank you, Jonathan, and good afternoon, everyone. I will now review the highlights for our second quarter 2023 financial results. In June, the company raised $6.3 million in a registered direct offering and negotiated an amendment with Streeterville Capital, the company's current debt holder, to address the company's current debt facility to best support the ongoing needs of the clinical trial. The amendment targets reduced monthly redemptions of the loan to $400,000 per month through year-end 2023. For the three months ended June 30, 2023, NRX recorded $3.9 million of R&D expenses compared to 3 million for the three months ended June 30th, 2022. The increase is related primarily to an increased clinical trial enrollment in our ongoing phase 2b3 trial. For the same three month period, we recorded a 38% reduction in general administrative expenses from 6.6 million in the second quarter of 2022 to 4.1 million for the three months ended June 30th, 2023. The decrease of 2.5 million is related primarily to decrease in legal insurance and accounting costs. The six month period from January through June of 2023 similarly shows decreased expenditures as reflected in our financial statement compared to the prior year. As of June 30th, 2023, we had $15 million in cash and cash equivalents. These working capital assets are expected to fund the company's operations through the fourth quarter of this year, which is the expected delivery of data for our Phase 2B3 trial. Additionally, we are evaluating operational efficiencies to extend this runway. With that, I'll turn it back to Steve for closing remarks. Steve?

Thanks, Jeff. 2023 has been an incredibly productive so far, and we look forward to advancing our NMDA platform in general and specifically our NRX 101 program in suicidal bipolar depression with our partners at Alverton, as well as our very exciting chronic pain program all in the near term. We believe that NRX 101 is a potentially life-saving medicine that could change the treatment paradigm for a wide range of serious and life-threatening conditions, which is the driving force behind our mission of meeting the needs of these underserved patients. With the shared commitment of our investors, our team, and our researchers, we aim to bring hope to life for the millions of patients who may benefit from our unique products. Operator, we are ready to take questions from the audience.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star then two. And at this time, we'll pause momentarily to assemble our roster.

Operator, we've received a couple of written questions that I'll proceed with now. This one is for the company. How is the partnership with Alvagen going so far?

I think it's going very well. We had a joint executive meeting in person last week. The teams are melding well. I think it's going very well.

Thanks. This one's for Dr. Javitt. How potent do you believe D-cycloserine and NRX-101 may be in treating chronic pain?

Please let me hear the question again. I didn't hear the second word.

Sorry. How potent do you believe D-cycloserine and NRX-101 may be in chronic pain?

Well, if you look at the 2016 publication by Schnitzer and Apkarian and their coworkers, the reduction seen in treating chronic pain was certainly deemed clinically meaningful. It's a reduction that is probably larger than what you can obtain from non-opioid pain medicine and may even be comparable to what you can obtain from safe doses. of opioid medicines. We're gonna know an awful lot more when the DOD trial reads out, because that's a couple hundred patients treated over 12 weeks. But there's reason to hope that an MDA antagonist drug may be quite potent. In fact, anesthesiologists already treat chronic pain with IV ketamine, but of course recognize that to get IV ketamine, You've got to be in a hospital environment. You know, it's not a simple process. But there's no question that NMDA antagonist drugs block the pain pathway at each step. There are three nerve cells that go between your fingertip and your frontal cortex. And at each step, the connection between nerve cells is regulated by the NMDA receptors.

Can you go, oh, here's another question. Can you talk a little bit about the patients who are going into the Phase II and III, study how they're doing, and are they continuing through the trial and how that's going sort of in the big picture?

Well, I think we've shared just about everything we can in the context of a randomized double-blind trial. We're steadily enrolling patients. we're doing it with a great degree of caution. So, for instance, a study site will identify a patient as potentially eligible. They'll review the eligibility criteria with us ahead of enrolling the patient. And then they'll submit the audio files of the Madras score rating sessions, the suicidality rating sessions, and our in-house master raters will validate those scores before somebody gets into the clinical trial. So I think we're being as careful as we can possibly be about who gets in and how the primary and secondary endpoints are ascertained once they're in the trial.

Very good. Last written question that we've received, can you talk about the genesis of the Department of Defense study in there with D-cycle serine and the genesis of the larger trial and the bigger picture around that?

Well, we had nothing to do with the Department of Defense study. So, just as Dan Javits, the co-founder of this company, began engaging with D-cycloserine as a potential antidepressant drug around 2004. Professor Epcarion and his coworkers similarly began studying the potential for D-cycloserine to be used to treat chronic pain. They developed a substantial basic science base which is cited in the review paper that we've posted for you. And they performed that first 40-person trial, which yielded the positive results. The trial itself was not deemed to have met its primary endpoint because they studied patients with 50 milligrams, 100 milligrams, 200 milligrams, and 400 milligrams of desexosterone. and they didn't see a benefit across all of those doses. They saw statistically significant benefit only at the highest dose. They reported that out in 2016, and they applied to the Department of Defense, who responded with a $5 million grant to do a larger confirmatory trial. And we don't know any more about that trial. then is available to the public. You can read about it on clinicaltrials.gov. But we do know that data collection is complete, and the study is anticipating a readout this year. So we're very excited that the study happened, and we're making plans to initiate registration studies should that study yield a positive readout.

Thank you. The next question will come from Ed Wu with Ascendant Capital. Please go ahead.

Yeah, congratulations on the progress. My question is on the partnership that you guys found recently with Lotus and Alvogen. Lotus is obviously very strong in Asia. How much efforts are you going to be doing to expand you know, these drugs into Asia or is it pretty much just focused on US approval first before you move into Asia? Thank you.

Thanks for that question. I think it's significant that Lotus is a full partner in this because they are very strong in Asia. I think as we go through into the phase three trial and get closer to commercialization, some of those decisions will be made. But I know that, for example, in our meetings on the commercial side, Lotus is always present at the table, and I think that bodes well for a major effort in Asia as well as in the U.S. That said, of course, the U.S. is a much larger market for the product.

Great. Well, thank you for answering my questions, and I wish you guys good luck. Thank you.

Thank you.

Again, if you have a question, please press star, then one. This concludes our question and answer session. I would like to turn the conference back over to Mr. Steve Willard for any closing remarks. Please go ahead, sir.

Thank you very much. And we very much appreciate your interest in NRX Pharmaceuticals. We thank you for listening to our presentation on this very exciting quarter. And we hope that you will follow us closely in the weeks and months to come. Thank you very much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.