Opiant Pharmaceuticals, Inc.
Q2 2021 Earnings Call Transcript

Published: 7 Aug 2021

[Operator:]

Good day, and welcome to the Opiant Pharmaceuticals Second Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ben Atkins, Vice President of Communications and Investor Relations. Please go ahead, sir.

[Ben Atkins:]

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer, Dr. Roger Crystal; and Chief Financial Officer, David O'Toole. This afternoon, Opiant issued a press release announcing financial results and providing a business update for the 3 and 6 months ended June 30, 2021. Please note that certain information discussed on the call today is covered under the safe harbor provision of the Private Securities Litigation Reform Act. We caution listeners that during this call, Opiant management will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in Opiant's news releases and SEC filings, including in our annual report on Form 10-K for the year ended December 31, 2020, and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, August 5, 2021. Opiant undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. Now I'd like to turn the call over to Roger.

[Roger Crystal:]

Thanks, Ben, and a very warm welcome to you all. We're pleased to provide you with an update on our second quarter where we have made significant progress with OPNT003, nasal nalmefene, for opioid overdose alongside strong financial performance. In July, we shared positive top line data from the confirmatory pharmacokinetic study for OPNT003. We believe the results of the study were outstanding across all key metrics. OPNT003 achieved significantly higher plasma concentrations versus nalmefene injection. It achieved rapid absorption into the blood with a Tmax of 15 minutes. We were able to demonstrate even greater levels of nalmefene in the blood with OPNT003 Cmax being much higher than that observed in the prior pilot study. And OPNT003 demonstrated a plasma half-life of approximately 11 hours, which we believe potentially provides more protection against a secondary opioid overdose known as renarcotization. Naloxone, currently the only FDA-approved treatment for opioid overdose, has half-life of approximately 2 hours. These results underscore our belief that OPNT003 has the potential, if approved, to emerge as a best-in-class therapy for opioid overdose. Having a more rapidly absorbed and durable treatment for opioid overdose could prove essential. We continue to grapple with markedly increases in opioid overdose deaths. The U.S. experienced more overdose deaths last year than at any time in our history. Primary problem remains opioids. According to data from the Centers for Disease Control, over 69,000 people died from an opioid overdose in 2020. Alongside COVID-19, the skyrocketing number of overdose fatalities have significantly contributed to U.S. life expectancy falling by 1.5 years in 2020, the biggest drop in a generation. The impacts from synthetic opioids like fentanyl shows no sign of slowing. Fentanyl represents a lucrative business opportunity for drug traffickers because it is incredibly powerful in small amounts and is easy to produce. Cutting fentanyl with drugs like heroin and cocaine dramatically intensifies the potency and makes it far more addictive, benefiting drug dealers with dependent consumers. Fentanyl is also used to create fake pills made to look like prescription medicines and sold to people widely through social media. Synthetic opioids most dangerous characteristics include very high potency, a rapid onset and a risk of renarcotization. These attributes combine to make synthetic opioids both more likely to cause a lethal overdose and produce more serious adverse health consequences following a nonlethal overdose compared to other opioids. Significantly, synthetic opioids display much lower sensitivity to naloxone. With over 8 in 10 of opioid overdose deaths linked to synthetic opioids, we believe high potency antidotes are critical in protecting the public. As we look ahead, we hope to demonstrate that the clinical advantages of OPNT003 seen in the PK study will also be seen in the pharmacodynamic study. We anticipate data later in the fourth quarter. Meanwhile, we are pleased to be making excellent progress advancing the other elements of our planned NDA submission, including required human effective assessments. We still aim to file at year-end or in the first quarter of 2022 using the 505(b)(2) pathway. Turning briefly to the rest of our pipeline. We continue with the preclinical and formulation development of OPNT004, drinabant, for acute cannabinoid overdose. These activities are on track to support a Phase I study with parenteral drinabant in 2022. The start of our Phase II study for OPNT002, nasal naltrexone, for alcohol use disorder, remains on pause. However, we are cautiously optimistic we will have an update on the start of the study in the coming months. To further support us in successfully executing on our long-term strategy, pipeline and potential launch of OPNT003, we also made two important appointments. We announced in July the appointment of Matt Ruth as Chief Commercial Officer. Matt led the launch of the NARCAN Nasal Spray, working at ADAPT Pharma. We're very pleased to have his experience on the team, and we look forward to welcoming Matt on future calls. And we're pleased to announce that we've promoted Brian Gorman, to EVP, Corporate Development and General Counsel. Brian is an integral part of our leadership, and I am personally very pleased to have him in this exciting new position as we aim to further build our pipeline and portfolio. As you can see, we have a very full plate in the near term, and we look forward to updating you on our milestones as we proceed over the back half of the year. Meanwhile, underpinning our operational progress is a very strong financial position that David O'Toole, our CFO, will now discuss. David?

[David O'Toole:]

Thank you, Roger. Today, I'll summarize our financial results for the second quarter and year-to-date. For full details of our financial results for the second quarter and first 6 months of 2021, please refer to today's press release. And as usual, our report on the quarter is also available in our Form 10-Q filed today. In summary, increased demand for NARCAN Nasal Spray in the current quarter meant we recognized significantly higher-than-expected royalties this quarter. This resulted in stronger-than-expected revenue for the second quarter and the upward revision of our full year financial guidance in 2021. We also maintained disciplined cost containment while executing on the clinical development and regulatory advancement of OPNT003, nasal nalmefene. Total revenues were $11.3 million in the second quarter and $17.6 million year-to-date in 2021. This compares to $6.3 million and $10.6 million, respectively, during the corresponding periods of 2020. Growth over 2020 reflects increased revenue from our license agreement with Emergent BioSolutions, Inc., or EBS, for the sale of NARCAN Nasal Spray as well as increased funding received from NIDA and BARDA for the development of OPNT003. Second quarter and year-to-date 2021 sales of NARCAN were approximately $106.2 million and $180.4 million, respectively, as reported by EBS. Research and development expenses were $3.2 million in the second quarter and $7.2 million for the first half of 2021. R&D expenses have increased significantly over the same periods in 2020, which we anticipated as there has been increased activity on our lead investigational candidate, OPNT003. Illustrating our commitment to cost containment, we kept G&A expenses essentially flat in the second quarter and first half of 2021 at approximately $2.7 million and $5.4 million, respectively, compared to the comparable periods in 2020. Sales and marketing expenses were $1 million in the second quarter and $2 million for the first half of 2021. This compared to $1.7 million and $2.7 million for the comparable periods in 2020. With Matt joining Opiant to lead the commercial organization and as we progress to NDA filing, we expect to increase spending on our commercial activities in future quarters. Net income for the 3 months ended June 30, 2021, was approximately $1.7 million, or income of $0.39 per basic share and $0.31 per diluted share compared to a net loss of approximately $0.2 million or a loss of $0.05 per basic and diluted share for the comparable period of 2020. Net loss for the 6 months ended June 30, 2020, was approximately $1.2 million or a loss of $0.27 per basic and diluted share compared to a net loss of approximately $1.9 million or a loss of $0.45 per basic and diluted share of the comparable period of 2020. As of June 30, 2021, we had $48.5 million in cash, cash equivalents and marketable securities. As indicated previously, reflecting higher-than-expected sales of NARCAN Nasal Spray, we are raising our 2021 financial guidance. We are now aligning our guidance to the upper range of the full year 2021 guidance for sales of NARCAN Nasal Spray, provided by EBS of $325 million. And with that, we now expect full year 2021 royalty revenue from the sale of NARCAN Nasal Spray of approximately $28.9 million. We are also now expecting to end 2021 with cash, cash equivalents and marketable securities in the range of approximately $42 million to $44 million, not including potential receipt of any additional tranches from the convertible debt deal. As a reminder, we have two additional tranches of the convertible debt deal we completed in December of 2020, $10 million available on NDA filing and $20 million upon FDA approval of OPNT003. In conclusion, we continue to have strong financial strength to invest in our pipeline and our commercial readiness. Thank you. And with that, let me open the call for questions.

[Operator:]

. Our first question comes from Carl Byrnes with Northland Capital Markets.

[Carl Byrnes:]

Congratulations on all the progress. I was just wondering if you have any updates with respect to legislation that's ongoing for co-prescribing. I believe they were getting very close, if not at signature in New York State, for example. Anything that you could help -- provide would be helpful.

[Roger Crystal:]

Yes. So in general, there's been good progress already this year. And if I'm not mistaken, by year-end, it's realistic to think there will be about 15 states or so that will have some form of co-prescribing legislation in place. And that tends to vary state to state exactly what the guidelines are. But to your point, yes, New York, there has been a bill circulating in the New York State for many years apparently. And finally in the last month or two, they have overcome that first -- I understand to be major hurdle at the level of the assembly, and it's now waiting for New York governor to sign, and that ought to still happen this year from what we understand. So that's where New York are.

[Operator:]

Our next question comes from David Bautz with Zacks Small Cap Research.

[David Bautz:]

So when we're looking at the target market opportunity, particularly in terms of like supplying EMS, fire departments, police with 003, do you guys foresee this product as being a NARCAN replacement? Is it going to be on the shelf with NARCAN? I'm just trying to figure out where 003 is going to fit in that dynamic?

[Roger Crystal:]

So when we look at the potential product profile for 003, we do believe we get good pharmacodynamic data as well that it's better suited for the current state of the opioid crisis, and therefore, has the potential to save more lives. But that said, the choice of which opioid overdose reversal agent a consumer might use, whether that consumer, to your point, is a first responder market, whether it's a physician co-prescribing, however might make that choice, is up to the individual. And we strongly believe that the marketplace does require choice. And we do believe the addressable market will continue to grow, perhaps related to my previous answer around co-prescribing as well, we see that growing year-on-year. So a larger addressable market alongside more products out there provides more choice, we believe that absolutely the OPNT003 should we deliver on good data and should we obviously have FDA approval, then has the potential to save more lives not just in synthetic opioid overdose setting, but for all opioid overdoses. And therefore, that's something that should be considered in deciding which opioid overdose reversal agents to choose from.

[David Bautz:]

Okay. Great. And David, I got a couple of quick questions for you. So Emergent Bio did not raise their guidance, but I see that you guys have aligned your guidance more with the upper end of their limit. I mean is that just a case of them kind of setting the bar low? Or did they know something else about what the revenue is going to be in the second half of the year? And then the other quick one is, how much is left on the NIDA and the BARDA grants?

[David O'Toole:]

David, thanks for joining, and thanks for the questions. I really can't comment on why EBS left their guidance the same. The only thing that we have the choice of doing is to -- we have been using the midpoint to determine what our revenue guidance was going to be for the year. And given the results for the first half of the year, we see that the best thing to do is to increase our guidance to the upper end of their guidance. We can't go any further than that because we don't know what -- as far as their projections on NARCAN sales are for the rest of the year. And so that's why we upped ours regardless of whether or not they -- and they decided not to. And as far as the NIDA and BARDA grants, the NIDA grant and the BARDA contract, a good portion that -- of those -- that grant and the contract have been spent. As you can see from our BARDA -- our contract revenue, grant and contract revenue that we recognized this quarter and year-to-date, we still have a good amount on it for the second half of the year and also into when we file the NDA because the NDA filing fee is also covered under the BARDA contract. And so there is -- the specifics around the numbers, we haven't given that guidance yet, David. But at the same time, it is hovering the majority of the development program for 003.

[Operator:]

That does conclude today's question-and-answer session. At this time, I would like to turn the conference back to Roger Crystal for any additional or closing remarks.

[Roger Crystal:]

Thank you, operator. It is an exciting time at Opiant. Thank you for joining us today and for your interest. Enjoy the rest of your day, and please stay healthy.

[Operator:]

That does conclude today's conference. We thank you for your participation. You may now disconnect.