NRX Pharmaceuticals, Inc.

Good afternoon, everyone, and welcome to the NRX Pharmaceuticals Incorporated second quarter of 2024 results conference call. Currently, all participants are in a listen-only mode. As a reminder, this conference call is being recorded. I will now turn the call over to Matthew Duffy, the company's chief business officer. Please go ahead.

Thank you, Franzi, and welcome, everyone. 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 rules. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present 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 hereof, and the company undertakes no obligation to update or revise forward-looking statements. Information presented on this call is contained in the press release issued today and in the company's Form 10-Q, which may be accessed from the investor's page of the NRX Pharmaceuticals website. Joining me today are Dr. Jonathan Javitt, our founder, chairman, and chief scientist, Stephen Willard, our chief executive officer, and Richard Narita, Chief Financial Officer and Treasurer. Stephen and Jonathan will provide a summary of our company's progress. Rich will review the company's financial results, and then Jonathan will review upcoming milestones before making closing comments. Following the prepared remarks, we will address investor questions.

I'll now turn the call over to Jonathan. Thank you, Matt.

Good afternoon, everybody. Thank you for joining us. Steve, Matt, Rich, the rest of the team have now reached a point where years of hard work are beginning to bear visible fruit. We've reached three key inflection points on scientific, business, and financing fronts in advancing our business. First, on the scientific front, we're poised to file two NDAs for our product candidates in the coming months, NRX100 for clinic-based treatment of suicidal depression, that is intravenous ketamine, and NRX-101 for home-based treatment of bipolar depression in patients with suicidality or akathisia. That's an oral combination of d-cyclicerine and lorazodone. Second, on the business front, we've laid the foundation for a roll-up of state-of-the-art ketamine and interventional psychiatry clinics that will advance the treatment of patients with suicidal depression. In the process, as Rich will tell you, We've substantially reduced operating costs and cut our loss per share by nearly 50% compared to the prior year. Third, on the corporate financing front, we fundamentally stabilized our business from an economic perspective by attracting a fundamental investor with more than a billion dollars under management while simultaneously eliminating toxic debt that was the subject of litigation from our balance sheet. That new investor, Anson Partners, committed between $10.5 and $16 million in new funding, as announced in last night's 8K filing. Investors have expressed a repeated concern as to whether we can fund the activities required to get our drugs approved. As announced yesterday, this is no longer a concern. In announcing the funding transaction, the principal of Anson said, NRX Pharmaceuticals has a promising pipeline with the potential to transform the lives of patients and their loved ones. We are pleased to be working with NRX Pharmaceuticals' team to support these drugs in their registration and hopefully their approval phase. We intend to live up to those wishes. The funds from the Anson investment will both pay for our FDA submissions and will retire debt from our balance sheet, that has impeded our forward progress. The Anson funding brings us a substantially lower interest rate, a substantially lower conversion discount on our stock, and reduced expense in its other key features. It frees NRX from extraordinary conversion demands that in the past led to significant erosion in shareholder values. Much of the stock we allocated for this transaction is in the form of currently unregistered shares, demonstrating substantial faith on the part of the new investor that we can and will execute on our commitments to commercial success. These three inflection points, scientific, business, and finance-related, are near-term in nature rather than ephemeral. We aim to receive drug approvals for NRX 101 and NRX 100 in 2025 and to make these drugs available to patients. Until then, we will do so through compounding pharmacy relationships. The first Hope Therapeutics Clinic has been identified along with multiple follow-on acquisitions and the acquisition structure is currently in negotiation. one of the nation's leading psychiatrists who pioneered the use of ketamine more than 15 years ago, has agreed to serve as our chief medical innovation officer. These are critical steps in our quest to bring hope to life. Thus, from a scientific and financial perspective, we have a company that's now poised to bring life-saving drugs to patients and financial returns to its investors. On the scientific front, We believe that NRX101 has demonstrated a paradigm-changing breakthrough in the care of bipolar depression. Unfortunately, that breakthrough may not be completely understood because advances in drugs are so often viewed as advances in efficacy rather than advances in safety. In our recently completed clinical trial, we did not demonstrate that NRX101 is more effective in reducing symptoms of depression than the market-leading drug lorazodone. It doesn't need to be in order to be an extremely effective drug. What we did demonstrate is that NRX-101 is the first oral antidepressant to reduce symptoms of suicidality and the first oral antidepressant to reduce symptoms of akathisia, a highly dangerous side effect of every known antidepressant. The NRX-101 data presented at the American Society of Clinical Psychopharmacology demonstrated a new paradigm for the treatment of bipolar depression. From the start, serotonin targeted drugs for the treatment of depression. It was known that these drugs caused side effects such as akathisia that directly caused their propensity to trigger suicidality. Doctors and patients have lived with these side effects in order to achieve the critical antidepressant effects that are needed to control this life-threatening disease. The data we presented at ASCP confirms our earlier stable B trial demonstrating that NRX101 is the first oral antidepressant to have effective antidepressant properties while simultaneously decreasing akathisia and suicidality. On the NRX100 or ketamine side, as our quarterly report was going to the printer, a major scientific breakthrough was published in the Journal of Translational Psychiatry. A retrospective cohort study that considered the electronic medical records data of more than 500,000 Americans with depression demonstrated that those treated with ketamine were substantially and significantly less likely that have suicidal ideation for up to nine months post-treatment versus those not treated with ketamine. Although FDA traditionally considers data from randomized controlled trials as its primary basis for determining efficacy, real-world data such as this, when it mirrors the findings of already demonstrated and randomized controlled trials, as we have demonstrated, can be important and persuasive As you know from our various scientific presentations, we aim to present the FDA with patient-level data on nearly 1,000 patients in which ketamine has been tested in a prospective, randomized manner against placebo, active comparator, and electroshock therapy. We thank our investors for their patience as our novel, preservative-free presentation of ketamine matures and becomes ready for FDA filing. Unfortunately, many in the public don't know that in order to seek approval of a drug, you must actually hold a fully manufactured drug in your hands that's been stable on the shelf for a year or more. Without that, the FDA will refuse to file the new drug application. We anticipate reaching the critical point in our manufacturing stability program where FDA filing is possible for NRX100 by the end of October. A second key requirement for FDA to file an NDA is alignment on a pediatric study plan as required by law. Several weeks ago, we announced that we achieved this critical alignment with FDA. The notion of a preservative-free ketamine has been surprising to some in the public. However, data have emerged from both primate and human studies that repeated doses of the currently available commercial intravenous ketamine are toxic to the brain. The commercial preparation was designed for anesthesia in a multi-dose vial where it was anticipated that doctors would draw from the same vial for multiple patients. That's no longer allowed in hospitals today, but that's how it was designed. Accordingly, Commercial ketamine preparations are manufactured with a potentially toxic preservative, benzethonium chloride. While there is no evidence that benzethonium chloride is toxic at its current concentration for the intended use of anesthesia, its safety has never been shown or even proposed for chronic use. Hence, we believe we are poised to file the first new drug application for a novel preparation of ketamine in unpreserved form that will bring substantial value to patients and be reimbursable by payers, whereas the current off-label use of ketamine is available only to patients who can pay substantial amounts of money out of pocket. In introducing Steve, I'd like to thank him for his profound contribution to our company as its first non-founder CEO. Steve joined our company on the tail of the COVID pandemic at a time when we were restarting our psychiatry program and recovering our equanimity in the wake of a world catastrophe that cost the lives of 1 million Americans and many millions more around the globe. Steve brought a methodical wisdom to our team. Steve has advised me that as we prepare for 2025 as our first year of commercial operations, We should seek a CEO who has had commercial experience in marketing and successfully selling at least $1 billion in pharmaceutical products. We're starting that search today, and Steve will be a key part of that process. Through his poise and legal discipline, Steve has afforded me the opportunity to take bolder steps in advancing our scientific agenda and our commercial prospects. They'll continue to be a key member of our team and our family. Steve?

Jonathan, thank you for those very gracious comments. The chance to lead NRX has been one of the great joys of my life, and I look forward to helping guide NRX to its success as a commercial enterprise. I'm incredibly proud of the process and progress our team has made over the past months, and I'm grateful to our partners and investors. as well as to all of the patients who have participated in our clinical trials. We look forward to continuing to build value for our shareholders and deliver life-saving treatments to patients. Most importantly, we continue to believe that these steps represent the beginning of our transition from a purely research and development company to a revenue-generating pharmaceutical company. We have made important progress with our clinical development pipelines this year, Suicidality is a national epidemic. Approximately 3.8 million Americans make an active plan to commit suicide each year, according to the CDC. We plan to bring NRX100, clearly a life-saving product, to market as soon as possible. The current market for intranasal ketamine is already $800 million, which has not demonstrated anti-suicidal properties. We expect our market to be much larger. We continue work toward a distribution of shares in Hope Therapeutics to our existing shareholders. We plan to seek public listing for the company on a national exchange. Hope is planned to be a care delivery company developing a best-in-class network of clinics that currently offer ketamine and other life-saving therapies to patients with suicidal depression and related disorders. together with digital therapies designed to augment and preserve the clinical benefit of NMDA-targeted drug therapy. We expect funding for HOPE to be independent and thus non-dilutive to NRX. At the same time, we believe this will continue to build value for NRX shareholders with this important asset on its balance sheet. I will now ask Rich Nerito, our CFO, to review the first quarter financials. Rich?

Thanks, Steve. For the three months ended June 30th, 2024, we at NRX Pharmaceuticals reduced our net loss from $8.7 million in the second quarter of 2023 to $7.9 million in 2024, representing nearly a 10% improvement year over year. For that same period, we reduced research and development expenses from $3.9 million in 2023 to $2.8 million in 2024, The $1.1 million decrease is related primarily to decrease of $2.4 million in clinical trial and development expenses offset by an increase of $1.3 million related to the Alvagen warrants. Also in the three-month period, we recorded an increase in general administrative expenses from $4.1 million in 2023 to $4.2 million in 2024. The increase of $0.1 million is related primarily to an increase in consultants and legal fees partially offset by lower insurance expenses. For the six months ended June 30th, 2024, NRX Pharmaceuticals reduced its net loss to $14.4 million compared to $19.8 million in the prior year. These efficiencies represent an improvement in net loss of $5.4 million year over year and a $1.32 or 47% improvement in net loss per share year over year. Over that six-month period, we recorded $4.6 million of research and development expenses compared to $7.5 million for the same period in 2023, representing a 39% decrease year-over-year. The decrease of $2.9 million is related primarily to a decrease of $4.1 million in clinical trial and development expenses, $0.3 million related to fees paid to regulatory and process development consultants, while offset by $1.3 million related to the allergen warrants. and $0.4 million related to fees paid to regulatory development consultants. Also in that six-month period, we decreased G&A by $1.4 million from $9.9 million in 2023 to $8.5 million in 2024, nearly a 15% decrease year-over-year. As of June 30th, we had $1.9 million cash-in-cash equivalents. As previously stated, we recently announced that we secured up to $16 million of Senior Secured Debt Financing from AdSense Funds. This financing is expected to support 2024 filing of new drug applications for NRX 100 and NRX 101 and to support the launch of all therapeutics as well as retire historical debt with more favorable terms and a lower annual interest rate. NRX continues to implement operational efficiencies to extend cash runway and maintain focus on our path to generating revenue and value for our shareholders. With that, I will turn it back to Jonathan for closing remarks.

Jonathan? Thank you, Rich.

With 2MDA's plan for the current month, coming months, the initiation of Hope's clinic acquisition program to be financed through a non-dilutive mechanism, together with a stabilized cash position, we're in a solid position to build shareholder value. Most importantly, we are poised to address critical unmet medical needs for patients suffering from suicidal bipolar depression, suicidal major depression, and those with limited access to advanced psychiatric care. In other words, we intend to deliver on our promise to bring hope to life. Operator, we're ready to take questions from the audience.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. Again, to ask the question, that star followed by the number one. Your first question comes from the line of Ed Wu from Ascendia. Your line is now open.

Yeah, congratulations on all the progress. It seems like your initial focus will be on the US market, but have you given thought about international opportunities for both NRX 100 and 101?

Well, there's no question that the rest of the world is important to us, and we've consistently listed a large number of foreign patent approvals. As you know, we have composition of matter patent protection on NRX 101.

And so far it's been approved in just about every jurisdiction where we've applied.

So that rest of the world opportunity is It's something we're very much focused on. As you know, we've added Professor Marion Lavoie, who's one of the leading psychiatrists in France, the professor of psychiatry at Inserm in Paris, to our advisory board. And it's something we think about on a regular basis. That said, we do anticipate that the initial launch will be in the United States.

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

Operator, we've received some electronic questions as well. I think this is for Dr. Javits. Would you please tell us more about the whole business plan, how the funding is going to work, and what the benefits and our shareholders may be?

So one of the things we've realized is that

While there are some outstanding ketamine clinics run by dedicated psychiatrists in the U.S., many of the initial attempts to create ketamine clinic networks across the country have been private equity driven, focused on minimizing costs of care, but not necessarily maximizing quality and innovation of care. And what we intend to do through Hope Therapeutics is to bring together best of breed ketamine and interventional psychiatry clinics together with networks of clinics that want to learn from them, want to bring their standards up to the best possible standards.

And we've We've seen a fair degree of investor enthusiasm for that structure.

We'll certainly have more to say in coming months, but I think you'll see hope as a living, breathing entity in the coming quarter.

Thanks. Another one came in, and the question is, how do you see NRX 101 fitting into the treatment paradigm for bipolar depression?

If we're able to get accelerated approval for NRX 101 in patients who have akathisia and or suicidal ideation on the current generation of 5-HT2A antagonist drugs, are you talking about lorazodone, olanzapine, periprazine, that family of drugs, I think you'll see NRX 101 become a preferred drug in that category because akathisia is, as one leading psychiatrist put it to me, the worst side effect of every antidepressant. It can have lethal consequences, and until now, people didn't talk about it too much because there wasn't much to do about it. All of a sudden, there is something to do about it, and we hope to be that solution.

Okay, thank you.

The last electronic question that we received is Steve mentioned that ketamine, sorry, inhaled ketamine had not shown an improvement in suicidality. Why would IV be better than that?

Well, and it's certainly possible that a future trial will show that intranasal ketamine has improved properties against suicidality compared to placebo, although that wasn't the case either with inhaled racemic ketamine or so far hasn't been shown with inhaled S-ketamine. It's possible that the, and, you know, some doctors have hypothesized this, that the steady state nature of an intravenous administration is important compared to the more sort of, you know, wax and wane, the more of an acute blast of ketamine that you get when it's given intranasally.

Rather than focus on,

other people's approaches. I think if we just focus on ours and say we've seen an important decrease in suicidality in the clinical trials that we're presenting to the FDA, and that decrease has now been echoed in a 500,000-person cohort study, that's really the important message.

Okay, thank you. Those are all of our electronic questions.

Ed Wu has, I believe, asked another one. Operator, would you please take his question?

Thank you. We have a follow-up question from Ed Wu. Your line is now open.

Yeah, thanks for taking up my follow-up question. As you guys are planning on submitting NDAs this year and possible approval for next year, have you thought about your commercial strategies, whether you will develop your own commercial team or whether you'll look for commercial partners?

Thank you.

Well, in the case of NRX100, we already know who the customers are because it's a clinic-based drug, and there's a limited number of clinics, about 600, and it could grow to 1,000 by next year, who are using the drug. And some of those clinics are going to be clinics that hope therapeutic zones. So, there's no need for the overhead of a large commercial partner to reach customers who already want to talk to you. In the case of NRX 101, it's also a fairly compact footprint. There are approximately 1,600 psychiatrists in the United States who currently prescribe the lorazodone class of drugs. And you can reach that number of doctors with a fairly compact sales force of about 50 people. Now, I'm possibly the least qualified person in the company to talk about that. Matt Duffy started out doing that for a living. And Matt, why don't you comment?

Thanks, Jonathan. Sure. You can look at a number of different parameters in terms of number of prescribers, in terms of geography, and access to representatives. There's a number of ways to approach it, but you can very effectively get out with reps in the 20 to 30 rep range. Not necessarily reps, but field force. and really blanket the key prescribers in actually, as Jonathan pointed out, both of these drugs. And as you do so, really target the highest prescribing folks out there. I've done this before at Lev and at MedImmune, and the targeted Salesforce is a really good way to go. It's very efficient, and you can really get the word out there very quickly. And so those are, I think, the important parameters as we look into taking this really to the next level because there's just a tremendous amount of opportunity.

Great.

Thank you, and again, I wish you guys good luck.

Thanks, Ed.

And speakers, we don't have any questions over the phone. Please continue. I'd like to hand the call over to Mr. Matthew Duffy.

Thank you, Franzi. And thank you, everyone. That's all the time we have for questions and our time for our call. So thank you, everyone, for joining us this evening. And this concludes the NRX Pharmaceuticals second quarter 2024 results conference call. Thank you for participating.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.