Opiant Pharmaceuticals, Inc.
Q3 2020 Earnings Call Transcript

Published: 12 Nov 2020

[Operator:]

Greetings and welcome to the Opiant Pharmaceuticals' Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ben Atkins, VP of Investor Relations Communications of Opiant Pharmaceuticals. Please go ahead.

[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 third quarter ended September 30, 2020.

[Roger Crystal:]

Good afternoon and thank you for joining us today. We are pleased to share today’s results that reflect the progress of our lead program in opioid overdose and the overall essential value proposition of our mission to treat addiction and overdose, as well as our strong cash position. I will begin with an update on our lead development program, then, our CFO, David O'Toole will review our financials. With a focus on strong execution, we have achieved important progress in further advancing our lead development program, OPNT003 nasal nalmefene opioid overdose. As announced recently, we will use Aptar Pharma’s Unit Dose Nasal Spray device or OPNT003. This nasal spray device has already been approved by the FDA with many other drug products currently marketed in the United States including NARCAN Nasal Spray. Developing nalmefene nasal spray using the Aptar unit dose device aligns with the FDA’s focus on proven device safety and help mitigate device-related risks to the program. They’ve also made recent advancements with our U.S.-based development and manufacturing partner, Summit Biosciences to manufacture our nalmefene nasal spray. Importantly, the Summit facility has successfully passed FDA inspection and has commercial capacity. Summit is on track with the production of the clinical and registration patches. I think for the momentum, we will meet with the FDA in December to review the protocol of our planned Pharmacodynamic study in healthy volunteers, as well as our overall data generation and 505(b)(2) submission strategy.

[David O'Toole:]

Thank you, Roger. We had another solid quarter with royalties from NARCAN nasal spray increasing and a continued focus on minimizing expenses. For the three months ended September 30, 2020, Opiant recorded approximately $9.1 million in revenue, compared to approximately $20.6 million during the corresponding period of 2019. For the three months ended September 30, 2020 we recorded approximately $8.6 million of revenue from our license agreement with EBS for the sale of NARCAN. This compared to approximately $20.5 million in the same period of 2019, which included a final milestone payment of $13.5 million, as sales of NARCAN Nasal Spray exceeded $200 million for 2019. Third quarter 2020 sales of NARCAN were approximately $88.8 million, as reported by EBS, which is a greater than 20% increase from the second quarter of 2020. G&A expenses for the quarter were $2.7 million, compared to $3.2 million for the same period in 2019. The decrease was primarily attributable to lower legal and professional fees of $0.8 million, partially offset by an increase of $0.3 million in personnel and related expense. Research and development expenses were $2.8 million, compared to $1.8 million in the third quarter of 2019. This $1 million increase was due to external development expenses, as well as personnel and related costs. Sales and marketing expenses were $0.9 million, compared to $100,000 in the third quarter of 2019. The increase of $800,000 was due to pre-commercial efforts related to OPNT003 nasal nalmefene. Royalty expense for the second quarter was approximately $2 million, compared to $4.9, million for the same period in 2019. Royalty expenses for payments that we make to our net profit partners on the royalties we receive from the net sales of NARCAN. Net income for the third quarter was approximately $700,000 or $0.17 per basic and $0.15 per diluted share. This compares to net income of approximately $10.7 million or $2.64 per basic and $1.97 per diluted share for the comparable period of 2019. For the nine months ended September 30, 2020, Opiant recorded $19.7 million in revenue, compared to $32.9 million during the corresponding period of 2019. This includes $19.1 million of revenue from our license agreement with EBS for the sale of NARCAN, compared to approximately $30.4 million in the comparable period of 2019. The decrease in revenue of $11.3 million was primarily attributable to a milestone payment of $13.5 million earned in the third quarter of 2019, offset by increased royalties for the current quarter, compared to the third quarter of 2019.

[Operator:]

Our first question comes from Brandon Folkes with Cantor Fitzgerald. Please go ahead.

[Brandon Folkes:]

Hi. Thanks for taking my questions and congratulations on the progress during the quarter. Crystal, maybe just on the Aptar device, I understand, probably if you think that that’s actually current friction when the product comes to market in terms of switching, just given that it will be a device that’s having patient and physician responded channel that they are familiar with that staying on that. Do you think its stability will have, using this device, did you have that stability before, any color there would be helpful? And then lastly, what are the gating factors between now and filing the NDA for 003? Thank you.

[Roger Crystal:]

Okay. Thank you, Brandon. And to just answer your – the last question first, as I say, the gating factors are this upcoming FDA meeting and as I said as we’ve seen from the final protocols through this study and 505(b)(2) registration strategy. The other two gating items are the pivotal PK studies. So, we already have some very encouraging initial PK data as you know and it’s – that’s taken up in the larger group of healthy volunteers and the – outpatient recruitments at the end of this year of - healthy volunteer recruitment at the end of this year for that after Q1 2021. And then, on the basis of that FDA meeting then comes out I think this pharmacodynamic study also in Q1 on healthy volunteers. So those are the gating activities and this is the final one that then relates to your second question around facilities, but because we are using a different device what we were using before, we will need to generate patient stability data in this new device or we can submit the NDA. However, it’s essentially using the same formulation that was used in the previous device. So we have high confidence that the real issue is here, having until we’ve actually gone through that nevertheless and once we have the 12 months of stability data, then that’s another gating item for one can submit for an NDA. So those are pretty much the key activities as well. And in terms of the Aptar device and the familiarity, I think the differences between the initial device we were using and the Aptar device in terms of that functionality are very similar that those single shot devices, the net nasal spray devices it can be used in a multi-directional manner and they don’t need priming.

[Brandon Folkes:]

Great. Thank you very much. It’s very helpful. Could I sneak in more if I may? Not - very little discussion about the rest of the pipeline today in the press release, is that just given kind of – I know you have talked about COVID impact end of March or is that a strategic decision to focus on 003 putting over the line?

[Roger Crystal:]

That’s a great question. I mean, the headline is, our development program, we are still ascertaining when we can kick that off. And there is not a decision not to do at this stage. It’s a matter of – we hope to do it right now, kick it off. And then, with the UK being the main country that’s the Phase 2 study is going to take place in and again, you see they’ve gone into national lockdown as well as it’s like first time we hope to kick it off with the March, April time where the – beaten they are speaking about beginning it with and they were then about the decision. On 004, we are obviously progressing that still. We have this collaboration with NCATS, the NIIH, and work is underway to reformulate that as an injectable can be then taken into clinical development and ultimately used in the ER to reverse key kind of an opioid overdose.

[Brandon Folkes:]

Great. Thanks so much, Roger.

[Operator:]

Our next question comes from Carl Byrnes with Northland Securities. Please go ahead.

[Carl Byrnes:]

Great. Thank you. Congratulations on the great results. I am wondering if you can quantify the remaining balances on the NIDA and BARDA grants. And also if you can talk to anticipated timing of recognition from those grants over the next four, five quarters or whatever timeframe that you are comfortable discussing. And then also, if you have any comments with respect to cash requirements for 2021. Great. Thanks much.

[David O'Toole:]

Carl, thank you for the question. Your first question around the NIDA grant and BARDA contract, most of that – both the grant and the contract balances will be incurred over 2021, because they are for the – basically the development program, the PK and PD studies and the FDA filing fee. So, all of that money primarily a good portion of it, I am not going to quantify it exactly, Carl, but a good portion of it will be considered as income and we’ll draw it down from NIDA and BARDA next year. And then, your second question around cash requirements for 2021, at this point in time, we are in a very strong cash position. And as we go into 2021, I believe that NARCAN sales and EBS believes that NARCAN sales will continue at a – unfortunately at a quick pace. And so, our royalties for next year will give us some cash coming in the door. And until we get through the PK and PD study, we aren’t going to really be deciding on what we are going to do as far as commercialization of 003. That will be in the latter part of next year, as we get closer to an NDA filing. And so, the cash requirements for this upcoming year, at this point in time, we are in a very strong position.

[Carl Byrnes:]

Great. Thanks again.

[Operator:]

Our next question comes from David Bautz with Zacks Investment Research. Please go ahead.

[David Bautz:]

Hey. Good afternoon, everyone. Roger, I am curious about Aptar Pharma’s unit doses since that have been used for NARCAN Nasal Spray, why would have it not being used originally for 003?

[Roger Crystal:]

It’s simply because it wasn’t acceptable to us originally. So, we went with another supplier.

[David Bautz:]

Was it an IP issue or?

[Roger Crystal:]

That was an agreement that a lot of the companies who use it to discuss of that agreement that’s now been revoked. So, it allows other companies to use it.

[David Bautz:]

Okay. Great. I appreciate that. And I am curious, so over the next year, if you have any insight into how many additional states in the U.S. may pass co-prescribing laws?

[Roger Crystal:]

Yes. Thanks. This is a question because we talk about co-prescribing laws. We have seen New Jersey an example, rather they go through formal legislation and then – at the attorney general and that like an emergency legislation in response to the COVID-19. So they have, if you like, a temporary co-prescribing mandate. And New Jersey is an example where that might be formalized long-term and it might be that we see other states undertake this as we see further growth in opioid overdose deaths as a result of COVID-19. If we didn’t have COVID-19, so there wasn’t this potential for emergency enactment, then there are about five states who have – like on the legislative docket for 2020. Again, some of that seems being delayed again because of COVID-19. But in a year or so these five states in the year 2020 and there is guarantee that all of them will formally take it on and one of those states for example is New York there is a significant patients and they decided the population to clearly see the merits of doing this.

[David Bautz:]

Okay. Great. Appreciate taking the questions. Thank you.

[Operator:]

Thank you. I would like to turn the floor over to Roger for closing remarks.

[Roger Crystal:]

Thank you, operator. Thanks for joining us today and for your interest in Opiant. We believe that our opportunities of value creation remain compelling, given the significant medical needs in the diseases we are pursuing. We look forward to keeping you updated on our progress in the months ahead. Enjoy the rest of your day and please stay healthy. Thank you.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.