PLx Pharma Inc.
Q4 2020 Earnings Call Transcript

Published: 12 Mar 2021

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the PLx Pharma Fourth Quarter 2020 Earnings Results and Business Update Call. I would now like to hand the conference to your speaker today, Lisa Wilson. Please go ahead, ma’am.

[Lisa Wilson:]

Thank you, Victor. Welcome to PLx Pharma’s Q4 2020 earnings results and business update call. This is Lisa Wilson, Investor Relations for PLx. With me on today’s call are Natasha Giordano, President and Chief Executive Officer and Rita O’Connor, Chief Financial Officer of PLx. You can also access the webcast of this call through the Investors section of the PLx website at plxpharma.com.

[Natasha Giordano:]

Thank you, Lisa. Good morning, everyone and thank you for joining us today. As we announced on March 1, we are excited that the FDA has approved the supplemental new drug applications for both the 81 milligram and the 325 milligram dose strength of VAZALORE, the first and only liquid filled aspirin capsule. It has taken several years of hard work and dedication to develop this innovative aspirin therapy that uses our proprietary PLxGuard drug delivery platform to deliver this lifesaving drug. Having the patient, top of mind, has always been our motivation to overcome the challenges we experienced over the past few years. And now, we are very proud that our vision can be realized to launch VAZALORE in the third quarter to the medical community and to those patients who need a reliable and predictable aspirin therapy to inhibit platelets. Aspirin is the most widely used drug in the world, and yet, there has been no innovation in the category in decades until now. The valiant proposition for VAZALORE is straightforward. VAZALORE demonstrates fast, reliable and predictable platelet inhibition thus addressing the limitations of the current standard of care, enteric-coated aspirin. It’s been well established that enteric-coated aspirin is radically absorbed in the GI tract and VAZALORE significantly reduces the risk of stomach erosion and ulcer than immediate release aspirin as observed in our published clinical trial. This is a large commercial opportunity for us. With the retail market estimated at about $10 billion, this market includes more than 40 million patients in two groups, both with vascular disease, defined as those who have already suffered from an event like the heart attack or stroke and those with diabetes were at high risk for having such an event and thus maybe candidates for aspirin therapy. We believe VAZALORE will transform the standard of care. Importantly, VAZALORE’s novel mechanism of delivery is the reason we have 58 patents extending into 2032, quite unique for an over-the-counter product.

[Rita O’Connor:]

Thank you, Natasha. I would like to echo Natasha’s enthusiasm for our approval as we move into the execution phase of our commercial plan. First, I will discuss the cash flow for the fourth quarter of 2020. As of December 31, 2020, the company had cash and cash equivalents of $22.4 million, with a cash burn of $3.5 million for the fourth quarter. In November, we secured an $18 million private placement that will be used primarily to build commercial inventory and prepare pre-launch marketing materials. Last week, we closed on an underwritten public offering of 7.9 million shares of our common stock at a price of $8 to the public. Gross proceeds to the company were approximately $63 million before deducting underwriting discounts and other operating expenses. We expect this $59 million of net proceeds, plus our existing cash of $22 million, should be sufficient to execute our commercial activities for VAZALORE for at least the next 2 years. We have been very busy on the manufacturing front too with our partner, Thermo Fisher in Cincinnati. We completed our validation batches for both doses and began commercial inventory production in this quarter. We expect to have sufficient inventory ready to supply retail stores across the country this summer. We expect cash burn to be around $5 million for the first quarter of ‘21 as we made our final payments of $1.2 million on our term loan and continued manufacturing activities. In the second quarter of ‘21, the cash burn will increase as we continue to build commercial inventory and increased sales and marketing activities to prepare for the launch of VAZALORE in the third quarter. Once we are closer to launch and we received purchase commitments from the retailers, we will share more details on distribution and shelf placement as well as our sales and marketing spend.

[Natasha Giordano:]

Thank you, Rita. We are extremely proud of the two FDA approvals we announced last week. As a reminder, we took the time to align with the FDA in a series of meetings to understand completely what they require for those two submissions. These sNDAs were considered chemistry and manufacturing control, or CMC filings, as they included information on the change in formulation, the new manufacturing sites for VAZALORE 325 milligrams and new product strength for the 81 milligram dose. The submission for the 325 milligram dose also contained the results of the clinical study conducted, demonstrating VAZALORE’s bioequivalent to immediate release aspirin, further supporting the change in formulation. The submission for the 81 milligram dose built off with the information in the original approved NDA and the sNDA submitted for VAZALORE 325 milligrams. All of this information formed the basis for two strong submissions to the agency as evidenced by their approval for both doses earlier than expected. Now, with the FDA approvals in hand, the PLx team is excited to do what we do best, launch products. This management team has launched many mega brands successfully and we look forward to turning VAZALORE into a household name. Collectively, our leadership team has been involved in successful launches of products across the prescription and OTC segments and build household names such as Mucinex, Lipitor, Zantac and Zicam, just to name a few. This depth of experience is highly relevant to successfully launching VAZALORE. We understand the challenges that HCP is faced in clinical practice and how consumers make their buying decisions. We also have extensive experience with retail trade customers and understand the intricacies of U.S. distribution channels. The world has certainly changed in the past 12 months with COVID. In this more virtual world, it’s important now to leverage this evolving market dynamics. Our commercial launch plans are advancing and specifically focused on healthcare professionals, retailers and consumers. Additionally, central to our marketing strategy is raising awareness, educating and informing our three stakeholders about VAZALORE as the first and only FDA-approved liquid filled aspirin capsule, its unique mechanism of delivery and our supporting published clinical data. We firmly believe that our compelling data, support from the clinical community, our focus on the consumer and the depth of this management team’s experience represents a winning combination for a successful launch. We look forward to sharing more information on our retailer commitments and commercial plans as we get closer to launch.

[Operator:]

Our first question will come from the line of Elliot Wilbur from Raymond James. You may begin.

[Elliot Wilbur:]

Good morning. So I think last call, I congratulated you on completing an Odyssey when you resubmitted the VAZALORE sNDA. I am not sure what follows in Odyssey, a pilgrimage maybe, but I just want to – my congratulations obviously on the approval as well. So Natasha, maybe just first, it’s been a little while since you have talked in detail about the launch strategy and launch plans outside of maybe timing? Is there anything you can share with us at this point in terms of the initial strategy with respect to having a primary detailed force on the ground, what numbers you maybe thinking about? How the pandemic has maybe altered your initial plans or given you ideas that you may have not considered previously, just thinking about more sort of the initial primary detail effort and just remind us who in fact will be the primary call initially, obviously, cardiologists, but maybe beyond that physician audience? And then I have got an additional question as well, but I will hold off until you respond.

[Natasha Giordano:]

Okay. So, that was loaded. So, let me as I say unpack the question. First of all, thank you. We are so excited about having two FDA approvals and then efficiently securing the capital that we need to successfully launch this very important product. The patient really is central to our beating for this management team. It really does drive us. We do believe we are going to make a huge impact in the market with addressing this very serious unmet need. And so you raised the pandemic, certainly COVID has changed the way that all of our stakeholders are doing business, not only the cardiologists, the consumer is buying more online, picking up in store. So, we need to be everywhere that, that consumer is. And the retailers also have built up their e-commerce business. Last year, when we spoke, it was about Amazon. Now, all the top retailers have accelerated their e-commerce platforms. And so of course, we have incorporated that into our strategy. I think what it did was enabled us to allocate our resources in a very balanced way, because now more than ever, all three stakeholders are really very important to us. And we need to generate awareness, educate and inform and get patients enter this trial. So with that, we’ll be doing a very much multi-channel, integrated approach. And we’ve said those words before, COVID, but now more than ever, we’re going to be doing things in media, and in search, to digital, will be extending towards the HCPs in that way as well. We will be using non-personal and personal promotion. And I think that, that will be even more effective and the way that we’ve all launched products before, it’s going to enable us to broaden our reach because it is done for a virtual way. I know that everybody though is very interested in numbers and want to understand how many people that we’re going to put out there on the ground, with our HVPs? And of course, I’m not going to share that for obvious reasons. However, what I will tell you is that yes, the cardiologist is essential to our strategy. And we will – and we have developed very deep sales plans and they are very laser-focused plans on generating volumes through our cardiology practices, which may entail several different professionals in those group practices. We also are looking at the top hospitals in the U.S. that are heart and stroke hospitals, and we’ll integrate that into our plans as well. And as we got closer, I know that that you all are very interested in some more detail. As we get closer, we’ll talk to you about the specifics as we get closer to launch.

[Elliot Wilbur:]

Okay. And then I wanted to ask you another question around – on the specifics of the launch itself. So obviously, timing, third quarter, with respect to shipments to retailers. But are we – should we be thinking about kind of a phased or stage launch effort with supply being provided to just a limited number of initial retailers across their entire networks? Or should we be thinking about a broader launch strategy initially hitting all retailers, but maybe not all of their locations?

[Natasha Giordano:]

What we are planning is a very balance, but very deep plan to reach those three stakeholders. So, the consumer, the retailer and the HCP and no, not in a phase approach. We really want to hit the ground day 1 with this product and get as much uptake as quickly as we can through our very unique plan. And we are expecting this to be a national launch. So no, it’s not regional. It’s not – it’s a national approach.

[Elliot Wilbur:]

Okay. And then just last question here. Just in thinking in terms of patient expense, presume that you are anticipating VAZALORE will largely be paid for out of pocket. I know that aspirin is a covered category under the ACA. Just wondering if you think, longer term, there is an opportunity here to maybe gain more favorable formulary positioning so that the product could actually eventually be covered?

[Rita O’Connor:]

Sure. It’s Rita. So yes, right, at launch, we’re modeling is that it will be all out of pocket. But you’re right. There is certainly a market for that, and we could, as this launch rolls out, really approach managed care and the ACA. I mean right now, ACA covers generic aspirin. So we would have to do some work to really show – improve the value of VAZALORE, which we know we can do, but we’re just not targeting that audience at launch.

[Elliot Wilbur:]

Alright. Thank you.

[Operator:]

Our next question comes from the line of Jason Butler from JMP Securities. You may begin.

[Jason Butler:]

Hi, thanks for taking the question. And let me add my congratulations on the approvals as well.

[Natasha Giordano:]

Thanks.

[Jason Butler:]

Can you me – sure. Could you talk about some of the education activities that you’re going to be doing ahead of the launch? Will you be using peer-to-peer educational forums? When could that start? When could we start to see DTC campaigns rollout?

[Natasha Giordano:]

Sure. So essential to our marketing strategy and our VAZALORE launch plan is communication and education, obviously. We’ve been participating in all the top key cardiology conferences for a few years now, and we are continuing to do so even in in a virtual way. We will have a strong presence at ACC and AHA. We are wrapping up those plans as we speak. And with that, also a publication strategy for me is extremely important for the cardiologist, knowing how cardiologists educate themselves and who they listen to publication is really very important. So we are very proud of the fact that our study have been published in top peer review journals like the General American College cardiology with the investigator, principal investigator to keep on track, but also from our published study in the journal of gastroenterology. These things are really important. Last year, we spent a number of conferences, talking about different abstracts and posters of our data. Those data will be converted into its manuscripts and submitted for publication, also led by our publication committee that’s made up of Deepak Bhatt, Dominick Angiolillo and others. o we will continue to do that all along the way, pre-launch and certainly post launch. Our media campaign, to address the consumer, is really also to raise awareness and drive the consumer to their cardiologist. What we do know about our specific consumer, the secondary convention patient and the potential diabetic patients, maybe a candidate for aspirin therapy is that they listen to their physicians. That’s number one influence. They also need to see and have brand familiarity. So you’ll see our media campaign will be centered around that during the launch in Q3.

[Jason Butler:]

Okay, great. That’s helpful. And then Rita, I know you’re not guiding for the spend for the rest of the year. But can you just give us a sense in terms of the manufacturing and inventory build? Is that cost going to primarily occur earlier in the year in 2Q or will that be spread out through the remaining three quarters of the year?

[Rita O’Connor:]

Pretty much the second quarter will be the bigger ones of them. And then the third quarter, I mean, we still have sales and marketing expenses in the third quarter. They will go up. But as we get into the third quarter, we’ll still have cash burn on the inventory build. But our goal is to have it ready to go in the DC this summer. So it should be fairly evenly spread between the second and third quarter in inventory, and sales and marketing will be heavier in the third than it is in the second. Is that helpful?

[Jason Butler:]

Okay, great. Thanks helpful. Thanks for taking – yes, thank you.

[Operator:]

Our next question will come from the line of Leland Gershell from Oppenheimer. You may begin.

[Leland Gershell:]

Hey, good morning. Natasha and Rita, thanks for taking my questions and my congratulations again on everything that you have accomplished. I wanted to ask a couple of questions first. With the product like VAZALORE being a very consumer-driven product, OTC wanted to just ask your thoughts about kind of a customer loyalty program that might be facilitative in terms of end users kind of coming back to stay on the product? And then also I wanted to ask maybe some time away, but what you may see for ex U.S. opportunities for VAZALORE? Thank you.

[Rita O’Connor:]

So it’s Rita, I’ll take the first question, and I’ll forward to Natasha on the international question. So yes, actually, the retailers are very big on their customer loyalty programs especially the top chain drug stores have a lot of customer loyalty programs. So we have actually been working with all of those chain drug stores for several years now and working with them on the best strategy to launch VAZALORE. And yes, that does include customer loyalty programs. So we plan to use that channel as a significant part of our reach.

[Leland Gershell:]

Okay. That’s all for me.

[Natasha Giordano:]

And we expect U.S. opportunities we are absolutely open and have had some discussions in that area. But our real primary focus is to make this a huge success. And help as many patients as we millions of patients that we can possibly have a little with this great product because in the end, that is the key, right, to help physicians manage patients that are high-risk for vascular disease. And so we – our priority is to launch here. However, yes, that’s always an opportunity. And in fact, we have presentation on our scientific advisory board. With Gabriel today, who is world-renowned in this category as a cardiologist and very well published as well. He participates in our scientific advisory board for the last 4 years. So, yes, there is absolutely discussions in that regard.

[Rita O’Connor:]

And also, a lot of our patents are all over the world as well in the big European and Asian markets. So, we do have patent protection for quite a lot of years.

[Natasha Giordano:]

Yes, good point. Thanks.

[Leland Gershell:]

Terrific. Thank you very much for the excellent information and good luck.

[Natasha Giordano:]

Thanks.

[Rita O’Connor:]

Thanks, Leland.

[Operator:]

Thank you. And there are no further questions in the queue. I’ll turn the call back over to Natasha for any closing remarks.

[Natasha Giordano:]

Thank you. Thank you for your time this morning. We are so excited to achieve these critical milestones, two FDA approvals and the capital needed to launch VAZALORE. We believe VAZALORE will transform the standard of care for millions of patients at risk for vascular disease. We thank and sincerely appreciate the support of our partners, for all the dedicated hard work and our shareholders for their continued confidence in the PLx management team. Stay healthy and safe, and have a great day.

[Operator:]

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.