Talphera Q3 2023 Earnings Call Transcript

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November 8, 2023

There are 6 speakers on the call.

Operator

Welcome to the AcelRx Third Quarter 2023 Financial Results Conference Call. This call is being webcasted live via the Events page of the Investors section of AcelRx's website at www.accelerx.com. This call is property of AcelRx. Any and any recording, reproduction or transmission of this call without the expressed written consent of AcelRx is strictly prohibited. As a reminder, this webcast is being recorded.

Operator

You may listen to a replay of this webcast by going to the Investors section of AcelRx's website. And now I would like to turn the call over to Rafi Asadorian, AcelRx Pharmaceuticals' Chief Financial Officer.

Speaker 1

Thank you for joining us on the call today. This afternoon, we announced our Q3 2023 financial results and associated business updates in a press release. This press release can be found within the Investors section of our website. With me today are Vince Angotti, our Chief Executive Officer and Doctor. Pam Palmer, AcelRx's Founder and Chief Medical Officer.

Speaker 1

Before we begin, I want to remind listeners that during this call, we will make forward looking statements within the meaning of the federal securities laws. These forward looking statements involve risks and uncertainties regarding the operations and future results of AcelRx. Please refer to our press release in addition to the company's periodic, current and annual reports filed with the Securities and Exchange Commission for a discussion of the risks associated with such forward looking statements. These documents can be found on our website within the Investors section. I will now hand the call over to Vince.

Speaker 2

Thank you, Raffi, and good afternoon, everyone. Today, we look forward to updating you on NIAID, AcelRx's lead nafamostat program as well as other highlights of our business. For those of you who have followed AcelRx over time, you know that our focus on product candidates For use in the medically supervised setting has greatly evolved from acute pain. We're now at a stage where we're focusing our expertise in drug development on a very different area of unmet medical need, specifically dialysis. Our lead product candidate, NIAID, is a novel anticoagulant for use during dialysis and has received breakthrough device designation from the FDA.

Speaker 2

At the close of the Q3, we were pleased to receive approval for our NIAID IDE, allowing us to proceed with the registrational study for what could potentially become the 1st FDA approved We recently completed our investigators meeting where the participants expressed excitement at the prospect of the near term availability of an ultra short acting anticoagulant for use in CRRT. We'll now proceed with our registrational study known as the nephro CRRT study. The naphamostat efficacy in Phase 3 registrational continuous renal replacement therapy study. This 166 patient study will evaluate NIAID versus placebo, measuring clinical endpoints that have been agreed upon with the FDA. Based on the results from this study, we plan to submit a premarket approval or PMA In terms of market opportunity, We estimate NIA to have a peak annual sales potential of over $200,000,000 in the U.

Speaker 2

S. And this is attributed to just to the inpatient and outpatient dialysis markets, excluding use in any other extracorporeal circuits. Note that our estimate and peak sales potential assumes modest penetration into these markets, specifically attaining only about a 20% share of the current in hospital CRRT market and 6% of the dialysis market outside of the hospital. Our interactions with leaders in the field of nephrology have reinforced the urgent medical need for an alternative anticoagulant for use during CRRT. And this combined with our recently conducted U.

Speaker 2

S. Quantitative research reaffirms the market potential for NIAID. In fact, as announced yesterday, we're hosting a key opinion leader panel discussion on December 6th with thought leaders in nephrology and critical care to discuss the use of anticoagulation in dialysis circuits and the nephro study protocol. At this point, I'd like to turn it over to Doctor. Palmer to briefly expand on this.

Speaker 3

Thank you, Vince. Good afternoon, everyone. As Vince mentioned, we are hosting a KOL panel discussion on Wednesday, December 6 with experts from 2 prestigious institutions. Joining us for this event are Doctor. Lawrence Busse of Emory University School of Medicine and Doctor.

Speaker 3

David Bolt of UCLA School of Medicine. They are experts in continuous renal replacement therapy and are principal investigators in the nephro CRRT study. The panel discussion will focus on the current approach to anticoagulation in the dialysis circuit informed by our market research study for which both physicians are co authored on this study's manuscript recently submitted for publication. We will also discuss the nephro study protocol with Doctor. Spudy and Volt at this event.

Speaker 3

A live question and answer session for analysts will follow the panel discussion. With NIAID's breakthrough device designation, open discussion with the FDA allowed an efficient IDE submission, an agreement with respect to the protocol's patient population, key endpoints and inclusionexclusion criteria. The primary endpoint of the study is assessing the activated clotting time or ACT Resulting from the administration of NIAID to the dialysis circuit compared to the ACT in the placebo saline group over the 1st day of CRRT. We believe that this should be a straightforward primary endpoint to achieve. Since those patients on placebo will not be receiving any anticoagulant and therefore their ACT would not be expected to increase.

Speaker 3

Secondary endpoints include duration of filter life before clotting occurs and a number of transfusions required due to red blood cell or platelet loss. As a reminder, NIAID is being regulated by the FDA as a device. Since the mechanism of action of NIAID is within the dialysis circuit and not the patient. This serves as an advantage for us to efficiently move NIAID towards approval since device studies typically require much lower patient exposures than drug studies. The feedback that we have heard from the clinical sites is that enrollment should be robust allowing top line data mid-twenty 24 and a PMA submission soon thereafter.

Speaker 3

I will now turn the call back over to Vince.

Speaker 2

Thank you, Doctor. Palmer. Knowing that nifamistat has been a standard of care for CRRT in South Korea and Japan With decades of use and a favorable safety profile, we're confident in the success of this study as it is evaluating nifamistat versus saline as the placebo for activated clotting time. As Doctor. Palmer stated, based On study timing, we plan to prepare a PMA submission to the FDA in the second half of next year.

Speaker 2

This would enable us to potentially launch NIAID in the first half of twenty twenty five. We're proceeding with early stage commercial planning Now just a few words on our prefilled syringe candidates. The need for prefilled syringes is clear since their availability offers a significant improvement An advantage for the overall healthcare system, including less waste, improved safety and the convenience of not having to dilute and prepare the syringe in advance of procedures. Our FEDSierra prefilled syringe containing the antihypertensive ephedrine Is the first of 2 prefilled syringe product candidates in our pipeline that is closest to an NDA filing. Following our capital raise in the Q2, we have continued to prioritize resources on the development of NIAID and are evaluating the timing of the NDA submission for FEDSierra.

Speaker 2

AcelRx has evolved quite a bit over the past 18 months and we're now a very different company than we were just a few years ago. To round out our transformation, the transition of DSUVIA to Alora Pharmaceuticals is still ongoing and AcelRx continues to support Alora to facilitate their success. We expect their focus to turn to commercial activities early next year as the supply chain transition is completed. As a reminder, AcelRx is being reimbursed by Alora for all support provided during the transition. We continue to lead the relationship with the Department of Defense, or DoD, to ensure continued engagement.

Speaker 2

The DoD is the single largest DSUVIA customer and has been recently placing orders on a more regular basis. 3rd quarter distributed demand from the DoD was comparable to the 2nd quarter, but revenue recognition was impacted by the timing of certain shipments. In addition, the DoD has entered into a contingency contract with a wholesaler who must now maintain A minimal amount of inventory on hand with rapid replenishment requirements. Finally, the completion of the 2 of your early evaluation of pain or DEEP trial sponsored by the DoD at the University of Pittsburgh Medical Center will be a key milestone. This study is expected to be completed in the Q1 of next year.

Speaker 2

And of note, the DoD granted UPMC a total of $11,000,000 including support of this DSUVIA trial, the results of which may lead to additional DoD branches adopting DSUVIA. As a reminder, we received a 75% royalty on all sales to the DoD, a 15% royalty on non DoD commercial sales and up to $116,500,000 and sales based milestone payments from those commercial sales. Now I'll hand the call over to Raffi to take you through the details of our Q3 financial results.

Speaker 1

Thank you, Vince. We ended the quarter with $13,400,000 in cash and short term investments. This includes the capital raised through the financing closed in July with new and existing healthcare investors. This financing provides capital of up to $26,000,000 upon the exercise of the milestone based warrants, including $10,000,000 of gross proceeds that were made immediately available. These new investors appreciate the value of NIAID and have been extremely supportive of management as NIAID development progresses and with the clinical study about to begin.

Speaker 1

Revenues for the Q3 of $100,000 were generated primarily from royalties on the sales of DSUVIA, principally from sales to the Department of Defense, on which we earn a 75% royalty from Alora. As Vince mentioned, the quarter was negatively impacted by timing of shipments in the quarter, which are expected to be realized in the Q4 of this year. Our combined R and D and SG and A expenses in the 3rd quarter totaled $3,400,000 compared to $4,500,000 last year, and excluding non cash related expenses was $3,000,000 in Q3 2023. We remain on track to stay within the range of our full year 2023 combined R and D and SG and A expense guidance excluding non cash expenses of $16,000,000 to $20,000,000 We expect 4th quarter R and D and SG and A expenses, excluding non cash expenses, to increase from the Q3 as we begin our clinical study. We anticipate top line data of this clinical study by the middle of next year, so we expect expense levels over the next several quarters to be higher than levels we've seen over the last two quarters.

Speaker 1

We will provide further financial guidance for 2024 at a later date. I'll now turn the call back to Vince.

Speaker 2

Thanks, Raffi. Now I'd like to open the line for any questions you might have. Operator?

Operator

Thank you. We'll now begin the question and answer session. If you're using a speakerphone, you may need to pick up your handset before pressing any keys. And our first question comes from Ed Arce with H. C.

Operator

Wainwright. Please go ahead.

Speaker 4

Hi, good afternoon, everyone. It's Thomas asking a couple of questions for Ed. Thank you for taking the questions. So First question for the Nephros ERT study, can you discuss what's your estimated timeline to full enrollment in order for the mid 2024 readout and also given the start day as we approach the end of the year, How do you anticipate slower pace around Christmas New Year timeframe?

Speaker 3

Hi. Yes, it's Pam here. These are ICU patients. So in fact, the holidays really don't affect Their enrollment whatsoever, they have acute kidney failure unfortunately sort of regardless of the time of year. So we don't anticipate, coming into the end of the year here your normal clinical trial slowdown that you would see with many studies.

Speaker 3

It's a small study. So as far as last patient out till top line data, there shouldn't be a large delay. We'll be making sure we clean up the database as time goes on. And so there shouldn't be a large lag. So we're expecting the study to end sort of mid next year and then also have top line data soon thereafter at about the same time.

Speaker 4

Got it. Understood. Perhaps, what more detail around the FOCRT study? Of the 10 ICU centers that were selected for this study, can you describe some major attributes For the selection?

Speaker 3

For the patient selection?

Speaker 1

The site selection.

Speaker 3

The site selection, sorry. Yes. Site selection Our actually major academic centers. They're the top names in this field. In fact, Many of them were our advisors.

Speaker 3

Our RR advisors, when we took on Lowell, and looked at this protocol And had to reach out to folks who are knowledgeable in this area to help us define inclusion, exclusion criteria, etcetera. Also when we did our quantitative market research to help us analyze that data, we relied on these folks. So they're also the co authors in that manuscript that's been submitted. So that's really who we're, That's been submitted. So that's really who we're leaning on for the clinical trials as well.

Speaker 3

And they're sort of they all know each other, they're all friends. And it's a small tight knit community and it's the major centers, Emory, UCLA, various centers like that.

Speaker 4

Got it. And then perhaps one just one last question from us and then we'll jump back on the queue. Assuming Nephros CRT study data positive, which we would expect to be Q4, PMA. Can you outline what are some other major components of the PMA for NIAF?

Speaker 2

Maybe talk about components or endpoints of the study, you mean components of the PMA?

Speaker 4

Yes, components of the PMA in addition to the registrational study data.

Speaker 3

Yes. Yes. So there's going to be just a couple of preclinical tox studies that are very short and easy to run. We'll be doing that concurrently with the trial and of course there's our stability data as well that we're actually generating right now.

Speaker 2

Maybe expand on the secondary endpoints just quickly. I know we mentioned them, but just to reinforce what you asked.

Speaker 3

Yes. For the clinical endpoints on the trial, the primary endpoint is activated clotting time Over the first 24 hours and then the secondary endpoint is looking at that same activated clotting time over the first 72 hours along with The number of transfusions, filter changes due to clotting, etcetera, the first 72 hours. So all the primary and secondary endpoints are over within 72 hours And therefore, a completer is somebody who's gone to the study for at least those 3 days. They can be enrolled up to 7 days per the protocol, but they will be considered a completer after just 3.

Speaker 4

Okay. Thank you so much for further details. So looking forward to the study start and very shortly.

Speaker 2

Thanks, Thomas.

Operator

The next question comes from James Molloy with Alliance Global Partners. Please go ahead. Hey,

Speaker 5

I had a question on, I guess, I'm presuming good data and ultimate FDA approval. I want to walk through a little bit the opportunity to potentially be taking from heparin to citrate and obviously there's a 30% of the people out there, no end of coagulant citrate is We're going to be trying to grab from as well. Is there an opportunity to try to take from the 43% of heparin as well?

Speaker 2

Yes. So you know that that's considered often a standard of care. One thing I'll ask Pam to do quickly is And then we'll address that question even further. Is maybe you can comment Pam on what is considered standard of care at many of these clinical sites that are involved in the trial To give them some type of flavor.

Speaker 3

Yes. And I think that 43% that James mentioned, it comes from our quantitative market research where We asked 150 physicians, about half were nephrologists and half were critical care specialists. What is the current state Of the state of the art with anticoagulation as it relates to CRRT and 43% said, 43% of the patients are getting heparin And the rest of it, the other 60% is split evenly between getting no anticoagulant or getting citrate. And so each of these sites that we're actually enrolling in the study, there is no United States sort of standard of care. They're sort of all over the map and they'll admit that.

Speaker 3

We've got sites that don't use any anticoagulation at all. We have sites that are only using citrate. We have sites that are only using heparin, or nothing. And it's so it's really interesting how When you don't have good options, you have a very sort of fractured approach to clinical protocols. So we're really hoping with nifamistat to streamline that and finally give them a good option that they can use in many patients.

Speaker 3

So I think we'll be pulling mainly from the Commercially, we'll be looking at folks who aren't using anything or using citrate and we'll break into that market. But I actually believe That there's many folks that are getting, they're using heparin in patients they otherwise don't think it's really a good option and I think we could also erode into that as well.

Speaker 2

So when we've communicated commentary about our potential peak sales, the bulk of that is really coming from citrate no anticoagulation. So anything we generate from those patients that are where the site is utilizing heparin at risk Because they're either ill equipped to use citrate and don't want to not anticoagulate, we think that there's opportunity to get that, but that has not really been a Significant or any part of our projections to date. So that would certainly be upside.

Speaker 5

Thank you for that. I think you guys talked a little bit about the potential for potential to go into the intermittent hemodialysis market. Can you talk a little bit Is your thinking evolved in that at all? Is there an opportunity there to go into that space beyond continuous?

Speaker 3

Yes. I mean, it's, it's an extracorporeal circuit. It's, got the same problem that CRRT has. Blood hits a foreign object and starts to clot. And there's not any really good options for that as well.

Speaker 3

The patients with intermittent hemodialysis And to not be as sick as the folks who require continuous re replacement therapy, so many more of them can tolerate heparin. So that's why it was not as big a market as far as the percentage, but the actual denominator is much larger than CRRT. So that is something that would benefit from nafamcin as well and we've just got to make sure that We're blocking and tackling in all those reasons.

Speaker 2

Hey, Jim, I'm going to circle back to the previous segment of that question as well where you asked To take any of that market share away from heparin, I think it's important to understand that Doctor. Palmer, you can comment on this. When patients or I'm sorry, The sites are going to use nafamostat. Can you clarify, is there any new training or difference relative to what they typically do with heparin when they utilize nafamostat?

Speaker 3

And that's the beauty of nivamastat is that it's as simple to initiate That's why heparin has been used for so long. It's very simple. Citrate avoids the bleeding risk that heparin Has, but it's got so many other risks and it's very difficult to run for these sites. And so to simplify The treatment, get back something as simple as heparin, which is what nifamistat would do with potentially much less bleeding And some of the other problems with heparin like heparin induced thrombocytopenia or heparin resistance, It's just it really is going to make it hopefully be an anticoagulant that is easy to use in all the patients

Speaker 5

Okay. Maybe last question for me then I'll hop back in the queue. Looking down the road, is there are there opportunities that you guys are seeing beyond obviously the prefilled syringes to complement nifanastat and your sales team?

Speaker 2

Yes. So first of all, we'll be evaluating the potential development opportunities with LTX608 where they've already been proven ex U. S. Pam, some of those disease states again are?

Speaker 3

Yes. Acute pancreatitis disseminated intravascular coagulation.

Speaker 2

Actually approved indications ex And there's other potential applications as well. So again, I'll reiterate that LTX608 Really, it's a pipeline and a product for us and our goal, of course, in the short term is to get it across the finish line as efficiently as we can over the course of this next year. Beyond that, we are in business development discussions. We have the This is the development discussions in particular ex U. S.

Speaker 2

For some parties that are interested in NIAID. So we'll continue to evaluate those opportunities moving But want to be sure that we absolutely maximize the value of this asset for our shareholders.

Speaker 5

Great. Thank you for taking the questions.

Speaker 2

Thank you, Jim.

Operator

This will conclude our question and answer session. I'll turn the conference back over to Vince for any closing remarks.

Speaker 2

Thank you, operator, and thank you all for joining us today and for your continued support of AcelRx. We remain focused on driving long term shareholder value, Absolutely with targeted investment in our late stage development high value assets. Please feel free to contact us after the Call if you have any additional questions and we look forward to sharing our future and in particular near future developments. Thank you.

Operator

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

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