Opiant Pharmaceuticals, Inc.
Q4 2020 Earnings Call Transcript

Published: 4 Mar 2021

[Operator:]

Greetings. Welcome to the Opiant Pharmaceuticals Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Ben Atkins, Vice President of Investor Relations. You may begin. Ben Atkins

[Ben Atkins:]

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call, our 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 fourth quarter and full year ended December 31, 2020. 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.

[Roger Crystal:]

Good afternoon and thank you for joining us today. We are pleased to have this opportunity to provide an update on our progress and answer your questions. I'll begin by offering brief remarks and then hand off to David O'Toole, our Chief Financial Officer, to provide an overview of the financial highlights. Turning to our lead asset, OPNT003, nasal nalmefene for opioid overdose. We made good progress on multiple fronts with this program during the fourth quarter and into early 2021. As we announced in October, we will use Aptar Pharma's proven unidose nasal spray device, which has already been approved by the FDA with other drugs currently marketed in the United States, including NARCAN Nasal Spray. Working with our manufacturing partner, Summit Biosciences, we completed production of the clinical and registration batches, which are necessary to generate the 12 months of stability data required for inclusion in our NDA submission. In December, we met with the FDA to review the protocol for our planned pharmacodynamic study in healthy volunteers and to update the agency on our overall data generation and 505(b)(2) submission strategy. Building on that manufacturing and regulatory momentum. In February, we dosed the first cohort of patients in our confirmatory pharmacokinetic study and anticipate full enrollment in April. The study will confirm the pharmacokinetic profile of OPNT003 compared to intramuscularly injected nalmefene. Our objective is to confirm the results generated in our pilot study. We anticipate the availability of these data in June. Today, I am pleased to expand on these developments. We have filed the study protocol for our pharmacodynamic study in healthy volunteers with the FDA and have received institutional review board approval. We anticipate commencing patient's dosing mid-March. We look forward to the results of our studies and remain on track to complete our NDA for FDA review by the end of 2021.

[David O'Toole:]

Thank you, Roger. I will start with an overview of Opiant's fourth quarter, followed by our full year financial results. Additional detail about the fourth quarter as well as our annual financial results can be found in our Form 10-K that was filed with the SEC today. For the three months ended December 31, 2020, Opiant recorded approximately $10 million in revenue, compared to approximately $7.1 million during the corresponding period of 2019. We recorded approximately $8.3 million of revenue from our license agreement with emergent Biosolutions for the sale of NARCAN, compared to approximately $7.2 million in the same period of 2019. Fourth quarter 2020 sales of NARCAN were approximately $77.4 million, as reported by EBS. G&A expenses for the quarter were approximately $3.6 million compared to $2.8 million in the comparable period of 2019. The $0.8 million increase was primarily due to $1.2 million in administrative expenses associated with OPNT003, offset by $0.4 million decrease in personnel and related expenses. R&D expenses for the fourth quarter were approximately $4.5 million, as compared to approximately $2.2 million in the comparable period in 2019. The $2.5 million increase in R&D expense is primarily attributable to an increase for third-party expenses associated with our R&D programs.

[Operator:]

And our first question is from Brandon Folkes with Cantor Fitzgerald. Please proceed with your question.

[Brandon Folkes:]

Hi, thanks for taking my questions, and congratulations on all the progress. I have two questions from me and both in focus on 003. Maybe just sort of thinking ahead as we get to commercialization of 003. Using the device you're using now, granted there will be a potentially a generic, I guess, on the market. Anything we should think about in terms of supply of devices and API wants approved? Or is that all sorted out now?

[Roger Crystal:]

Thanks, Brandon, and thank you for joining the call, and the questions. So first answer on the commercialization supply, Aptar, the unidose device is widely available, and we absolutely anticipate sufficient supply for launch, and they have a way of us being able to increase inventory should demand increase as well. On the API, yes, we have no issues as far as we're aware, with adequate supply of API. On the situation of our rights and our ability to commercialize OPNT003. There's nothing in the agreement that stops us from doing this. It's not part of the – what the original covering ADAPT Pharma is not part of that license.

[Brandon Folkes:]

Great. Thank you very much.

[Operator:]

Our next question is from Carl Byrnes with Northland Securities. Please proceed with your question.

[Carl Byrnes:]

Great, thank you. Congratulations on the quarter and the progress. So in anticipation of the commercial launch of 003, how do you foresee staffing with respect to personnel and territories and regional directors and such and over what time frame? And then I have a follow-up as well. Thanks.

[Roger Crystal:]

Thanks, Carl. So the main driver for any staffing expansion would be driven by generating positive data in our clinical studies, we're not going to be spending significant amounts of capital ahead of that. But recognizing in between generating positive data and finding an NDA and ultimately launching, then that would be a period to potentially ramp up. And the exact detail on staffing will really depend on the extent that we do self-commercialize what we said in the past, and this remains so is that rest we do see an opportunity to self-commercialize this ourselves. And now that might be in its entirety, where there might be options to license this if attractive offers are out there, but also, even if it's not the whole asset, there's ways of potentially splitting it where we retain one segment of the market then a licensee would take the other segments. So all of those are under contemplation. And therefore, that drives the exact staffing requirements for the business. So yes, that's the answer for that one. You had another question.

[Carl Byrnes:]

Great. Thank you. Just sort of looking at potential generic entry in, let's call it, the latter part of the year. But considering the challenges with respect to COVID and other aspects of a generic launch, how do you see the potential – or do you see – I think that there's a potential that a generic could be pushed out or lagged into 2022? And this is, of course, assuming that EBS and Opiant prevail in litigation. Thanks.

[Roger Crystal:]

I mean it's hard to exactly anticipate how a generic might play out. Don't need to say that when we consider the prospects of 003, we factor in the potential of the generic, we always have done that in prior to the outcome of the double litigation last year. We take a very conservative view point in that sense. And the decision and the timing and the success of a generic launch, obviously, there's various factors that come into play. Hard to know exactly how that will impact this market. But I think what really overrides everything should be – if the data are positive in 003, then we think this will set our products apart from a generic and essentially let the data speak for itself. And combined with that, it's not that this product, we anticipate pricing irresponsibly. It will be a sensibly priced product and therefore, access will still be widely available and we anticipate this being widely affordable for all stakeholders.

[Carl Byrnes:]

Thanks. That’s awesome. And if I could just chime in one more question. If we look at the NIDA and BARDA grants, $7.4 million on the NIDA grant on the upsized BARDA grant. Adjusting for what you spent, it looks like you've got about $11 million remaining to fund 003. How would you expect that to be sort of peanut buttered out between this year and next year, given the timing of the anticipated NDA submission? Thanks.

[David O'Toole:]

Thanks Carl, I appreciate you being on the call and the question. Given that we're doing the clinical work this year for 003, and we are anticipating at this point in time filing an NDA by the end of the year. The majority of that will come this year. There will be some potentially in the first quarter of next year, but the majority of that would be in 2021 with the bulk of it being towards the end of the year.

[Carl Byrnes:]

Great. Thank you.

[Operator:]

And our next question is from David Bautz with Zacks. Please proceed with your question.

[David Bautz:]

Hi, good afternoon everyone. Roger, is the pharmacodynamic trial that you're going to be running, is that a required part of the NDA? And then also, what results are you expecting to get from that trial?

[Roger Crystal:]

Hi David. So we'll make full disclosure on the study design in the next few weeks or so. But essentially, what we're looking to do in the other study is generate data that really supports this being a differentiated product from what's out there at the moment in terms of opioid overdose reversal. So anything naloxone-based essentially? And is it required – I mean, certainly, from our interactions with the FDA, they have implied that generating efficacy data, if you like, would be beneficial for the NDA submission. And we saw this as actually an opportunity, as I just stated, really to show that this product is differentiated, and this is what the PD study, the pharmacodynamic study enables. So more details on this to come, but that's where we are today.

[David Bautz:]

Okay. And sorry if I missed this early, but I don't know if you commented on when you anticipate making a decision about whether to commercialize 003 on your own or to partner or license it? What do you have a time frame set?

[Roger Crystal:]

I mean decision will come well, I guess, on the one hand, if offers come in the whole way, then obviously, we might be forced to make decisions. It is an extremely attractive offer to acquire the asset. We want to do what's right for our shareholders. So we would absolutely entertain that. There's no eager in the room where we must self-commercialize the sake of it. But we do recognize that, in general, a successful commercial launch does generate significant shareholder value. So that's what we would like to pursue. And the decision, again, we are – well, I think two things to say. We are absent of any offers anyway, building that infrastructure to allow self-commercialization. So some of that that has been decided already in many ways. But second, once we generate data from the PD study and the PK study, so I would say, towards the end of Q3 overall. And that will really trigger that additional spending to self-commercialize. And – but would also be a time where the asset value will be significantly increased if the data are positive. So that would be the right time if the decision made to license as well.

[David Bautz:]

Okay. So David, I was wondering if you could talk about some of the reasons why you decided to go with the convertible debt financing as opposed to other means to raise cash.

[David O'Toole:]

Well, our stock price at – during that period of time, and still, we believe, is significantly undervalued. We wouldn't want to raise equity at these levels. And so building some sort of debt financing that is tranched based on milestones seem to be, to us, the best way to secure financing at a very attractive rate so that we can commercialize 003 if we so choose. The interest rate on it on an average is less than 10%. And if you look at the conversion price, $19.64, you have, in my mind, two funds that are out there in the marketplace that believe that the stock is undervalued and that they're comfortable with a conversion price of $19.64. So it was by far one of the most attractive financing transactions that we looked at. And we're glad that we're partnering with Pontifax and Kreos as we move the programs forward.

[David Bautz:]

All right. Thanks for taking the question.

[Roger Crystal:]

Thanks, David.

[Operator:]

And we have reached the end of the question-and-answer session. And I'll now turn the call over to CEO, Dr. Roger Crystal for closing remarks.

[Roger Crystal:]

Thank you, operator. Thank you for joining us today and for your interest in Opiant. We had an extremely busy start to this year, and we look forward to an exciting one ahead, during which, we expect to update investors on a series of important milestones. Enjoy the rest of your day and please stay healthy.

[Operator:]

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.