Recro Pharma, Inc.
Q1 2018 Earnings Call Transcript

Published: 9 May 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to the Recro Pharma First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Ms. Natalie Wildenradt. Ma'am you may begin.

[Natalie Wildenradt:]

Good morning, and thank you for joining us on today's conference call to discuss Recro's first quarter 2018 financial results. This is Natalie Wildenradt, and I am joined today by Gerri Henwood, President and Chief Executive Officer; Ryan Lake, Chief Financial Officer; Mike Celano, Chief Operating Officer; and John Harlow, Executive Vice President, Commercial. Following prepared remarks today by Gerri, Ryan and John, we will open the call up for questions, for which Mike will also be available. Earlier this morning, we issued a press release, detailing our financial and operating results for the three months ended March 31, 2018. The press release is available on the News & Investors page of our website at recropharma.com. Before we begin our formal comments, I'll remind you that various remarks we make today constitute forward-looking statements pursuant to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995, including statements related to our financial outlook, our plan for the commercialization of IV meloxicam if approved, the market opportunities and acceptance of IV meloxicam and other regulatory and product development plan. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our expectations and forecasts, and can be identified by words such as expect, plan, will, may, anticipate, believe, estimate, upcoming, plan, should, intend and other words of similar meaning. Any such forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties. These risks are described in the Risk Factors and the Management's Discussion and Analysis of Financial Condition and Results of Operations sections of Recro Pharma's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which is on file with the Securities and Exchange Commission and available on the SEC's website. Any information we provide on this conference call is provided only as of the day of this call, May 9, 2018, and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events or otherwise. In addition, any unaudited or pro forma financial information that may be provided is preliminary and does not purport to project financial positions or operating results of the company. Actual results may differ materially. In addition, on this call we will include references to IV meloxicam, an investigational product. Use of IV meloxicam has not been approved by the FDA. The safety and efficacy of the investigational use of IV meloxicam has not been determined. There is no guarantee that IV meloxicam will be approved for marketing by any regulatory agency. I would now like to turn the call over to Gerri Henwood. Gerri?

[Gerri Henwood:]

Thank you, Natalie, and thank you all for joining us this morning. We're off to a strong start in 2018, making meaningful progress across both the Acute Care and the manufacturing divisions of the company. For those of you new to the Recro story, IV meloxicam, our lead product candidate is a non-opioid once-daily preferential COX-2 inhibitor currently under review with the U.S. Food and Drug Administration for the management of moderate to severe pain. Our PDUFA action date for IV meloxicam is May 26, 2018. We have no updates from FDA, but believe they intend to be on time relative to the PDUFA date. Our commercial team is well prepared for the potential launch of IV meloxicam if approved by the FDA, as you will hear from John later in the call. I would now like to provide a brief overview of some of the key milestones achieved and activities that have taken place over the past few months. In May 2018, Recro announced the receipt of issue notifications from the USPTO, for three patents covering IV meloxicam. We anticipate one of these patents to be Orange-Book listable, as product-by-process patent with a patent expiry in 2030. We remain committed to protecting the valuable innovations associated with IV meloxicam and we're striving for further expansion of our strong intellectual property portfolio. During the quarter, as previously expected, two pre-approval inspections of sites associated with production of IV meloxicam drug product and supporting the new drug application for IV meloxicam were performed by the FDA. In April, we presented eight posters at the 43rd Annual Meeting of the American Society of Regional Anesthesia and Pain Medicine. The posters highlighted IV meloxicam data from Phase II and Phase III clinical trials across several moderate to severe pain settings including abdominoplasty, bunionectomy and major orthopedic procedures, as well opioid use in certain important patient populations like patients of advanced age with renal impairment. At both ASRA and the American Academy of Orthopaedic Surgeons 2018 Annual Meeting, we hosted extremely well-attended scientific symposiums, discussing the challenges faced in acute post-surgical pain management. During the first quarter, we also published IV meloxicam papers in three peer-reviewed journals, including the Clinical Journal of Pain, the Journal of Pain Research, and the Journal of Clinical Pharmacology. In February, we hosted an Investor and Analyst Day in New York City, where we featured presentations by two prominent thought leaders in orthopedics and pain management

[Ryan Lake:]

Thanks, Gerri. Good morning, everyone. Since we issued a press release and our Form 10-Q earlier today, outlining our full financial results, I'll just review some of the key first quarter highlights. As of March 31, 2018, Recro had cash, cash equivalents and short-term investments of $51.3 million. Revenues were $19.5 million for the first quarter of 2018, compared to $18.7 million for the first quarter of 2017. This increase of $0.8 million in revenue was primarily due to the net impact of royalties recognized from one of our commercial partners after the adoption of the new revenue recognition standard. Cost of sales were $10.5 million remained constant compared to the prior year. Research and development expenses for the first quarter of 2018 were $8.4 million, compared to $7.8 million for the first quarter of 2017. The increase in research and development expenses was primarily the result of an increase in pre-commercialization manufacturing for IV meloxicam, an increase in salaries and benefits expense due to increased headcount, and a modest increase in development costs for other pipeline products. These increases in research and development costs were offset by lower IV meloxicam clinical trial expenses compared to the first quarter of 2017. General and administrative expenses for the first quarter of 2018 were $9.5 million, compared to $4 million for the first quarter of 2017. The increase of $5.5 million was primarily due to building of the commercial team rib [ph] structure and its related costs. We are reaffirming our 2018 CDMO guidance, and believe we will generate approximately $70 million in revenue despite the anticipated unfavorable impact from the new revenue recognition standard and taking into consideration existing contracts, timing of customer order patterns, as well as our experience with customer's product market estimations. We have not provided revenue guidance for IV meloxicam at this time. I'd now like to turn the call over to John to discuss our ongoing commercial organizational preparations and advance of the potential launch of IV meloxicam. John?

[John Harlow:]

Thanks, Ryan. Good morning, everyone. At Recro, we are preparing for the transition to a commercial-stage company. Over the past 12 months, we've engaged in critical pre-commercialization activities including market evaluations, mapping customer segments and branding, and determining launch tactics among others. At the core of the process has been the establishment of our commercialization team. We've concentrated on building a strong and experienced team with significant Acute Care expertise in leading product launches at a range of world-class commercial-stage organization. As many of you may know, the current acute pain landscape is dominated by opioid. And the majority of the inpatients treated with IV analgesia receive IV opioid monotherapy. As a long acting non-opioid IV meloxicam represents a meaningful differentiated therapeutic agent as compared to currently available treatment options. In fact, 6% to 10% of patients, who are opioid-naive and are first exposed opioid in a hospital setting, ultimately become long-term users of opioids. Given the increasing urgency of the national opioid crisis, we believe IV meloxicam has to potential to serve as a valuable analgesic alternative for healthcare institutions, physicians and patients. We believe, we've identified clear addressable segments of the market, that will benefit from IV meloxicam's profile. Segments in which we believe, IV meloxicam's profile provides both clinical and economic value. From a clinical standpoint, we believe IV meloxicam can effectively treat pain, while reducing opioid consumption, which reduced opioid related adverse events. From an economic standpoint, we believe IV meloxicam's durable 24-hour dosing profile will allow ambulatory surgical centers to perform more complex procedures with same date discharge, while managing pain. And hospitals to accelerate patients discharge and reduce length of stay through reduction of opioids. A pillar of our strategy is identifying the key surgeons specifically orthopedic surgeons, general surgeons and GI colorectal surgeons. The procedures conducted by these surgeons represent a primary opportunity both in ambulatory surgical centers and in hospitals. Based on our analysis, we've determined than approximately 100 representative will cover approximately 80% of the market opportunity. We plan to place an initial 53 representatives into the market after approval at launch. And then, as awareness and momentum builds, we will expand to approximately 100 sales representatives in roughly six months. We believe this approach allows us to efficiently and effectively managed expenses, while maximizing launch success. I'll now turn the call back to Gerri to briefly discuss some of our other Acute Care product candidate. Gerri?

[Gerri Henwood:]

Thanks, John. Well, IV meloxicam is our lead product. The Acute Care division is not solely limited to this one product candidate. In April, preclinical data was presented for anesthesia neuromuscular blocking and reversal agents at the Association of University Anesthesiologists 2018 Annual Meeting. These preclinical data demonstrated not only the effective and rapid activity of the ultra-short acting neuromuscular blocking agent in a preclinical primate model, but also showcase the ability of the rapid-acting reversal agent to antagonize the molecule and induce recovery. We acquired these molecules, one of which is clinical stage from Cornell in 2017, and we believe they have the potential to reduce time in the surgical suite and the post-anesthesia care unit, providing a significant pharmacoeconomic benefit to hospitals. We believe these assets represent significant potential future value for Recro, and provide meaningful depth to our Acute Care pipeline. I'd now like to open the call for questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from David Amsellem with Piper Jaffray. Your line is now open.

[David Amsellem:]

Thanks and good morning. So just a couple of questions. First, on IV meloxicam, Gerri, can you just give us a sense of how you're thinking about pricing? Obviously, we still have to get through the PDUFA. But just help us understand your thought process regarding pricing. And then secondly, I wanted to pick your brain on the reimbursement landscape. Other companies in the post-op space, such as Pacira are trying to effectuate change regarding reimbursements. So I wanted to get your thoughts on potential unbundling of these non-opioid options or what you see over the next 6 to 12 months in terms of the reimbursement paradigm. And then lastly, just out of Gainesville, can you just talk to your capacity and also ability to add new customers or really expectation regarding addition of new customers as the year progresses. Thanks.

[Gerri Henwood:]

Sure, thanks, David. And I'll get started on the IV meloxicam pricing and then I'm going to ask John to chime in on that as well. So as you know, we have been talking about a price range notionally of between $80 to $120. Originally, we've been doing a ton of pricing research and understanding the issues, the economic issues of our customers, both on the out-patient side, as well as on the in-patient side. And that work has narrowed us down to a range that's smaller than that. John, I wonder if you want to talk to that.

[John Harlow:]

Yeah, sure, David. Thanks for the question. So as Gerri stated, we originally had a range of approximately $80 to $120. We've done some extensive and comprehensive pricing work with formulary decision makers, both in the hospital setting, as well as in the ambulatory surgical setting. And we believe that the customer acquisition cost, which would be effective in terms of access, as well as uptake, is going to be in the range of $80 to $100 a day or $80 to $100 per dose. We are in the final stages of tweaking and refining that range to get to a specific number, which at approval we would go forward with that specific number.

[David Amsellem:]

If I may sneak in a follow-up to that is that - are you expecting - what's your assumption in terms of average number of days of treatment is, is it sort of the two to three day type range or even something smaller?

[Gerri Henwood:]

So I think we have to look at the settings of care associated with that, David. So in the out-patient setting of care, while in the long-term there could be a possibility of more than one dose right now. The assumptions are one dose that the patient will receive sometime between interop and discharge. On the in-patient side, we're looking at - especially, if we look at the longer length of stay procedures, such as colorectal surgery. I think we're looking at one to three days. But our own forecast assumptions have focused on two.

[Michael Celano:]

And, David, this is Mike Celano. I'll jump in on the CDMO question that you have raised. First of all, relative to capacity of the facility, we're running roughly about two-thirds of capacity. As you know, we made a very significant investment in commercial tableting capability, which we have significant capacity in that area. We continue to reaffirm our guidance of $70 million. We have some very strong activity, proposal activity, which we'll feel be in a better position to do analysis as we get into later this year.

[David Amsellem:]

Okay. And then, that's helpful, and then, Gerri, just your thoughts on reimbursement on payer landscape?

[Gerri Henwood:]

Yeah, so I'll do like a macro, and then again, we'll have John talk to the specifics. But we have been engaged in dialog with senior folks in the Washington space around the possibilities of carve out of non-opioid systemic drugs from bundling. I don't know that we're actually going to see firm action on that in this year. But it is something that we continue to push for. I think it would make a difference. We'll have some benefit certainly for the first three years on the outpatient side, with pass-through. But I'm going to pass it John to talk [chapter reimburse] [ph].

[John Harlow:]

Yeah, thanks, Gerri, so - and good question, David. Let me focus a little bit on what we believe our reimbursement landscape will be. And then, I'll add some commentary to Gerri's question - or Gerri's answer about where we think the market is going. So at the time of approval and launch, we believe we will have two different miscellaneous codes that can be used, both miscellaneous C Code and J Code, C Code for Medicare patients and HOPD and ambulatory surgical space, and then J Code for commercial patients in all settings of care. Both of those codes are reimbursed differently, based upon different calculations, which I won't get into now. From a C Code standpoint, we believe that it'd be separately reimbursable. Right after approval, we will file for a unique C Code, which takes a quarter time and, again, assuming approval, assuming acceptance of the filing, we would hear in the October timeframe as of from a unique C Code. We will also then file by the end of the year, for a unique J Code, which takes some time to review and would take into effect in January of 2020. So that's just a little evolution of the coding from our standpoint. To Gerri's point, about what's going on in Washington, we know other companies have also engaged in discussions and dialogues with unbundling, which is specifically in the in-patient setting, right. And I think it's important to note that currently right now all the products are reimbursed within the DRG or the bundled payment in the in-patient. What we've seen from the news coming out Washington is that, I don't think one company is going to have an advantage over another company. As unbundling happens, it will happen for all non-opioids. We'll continue to watch this space closely and engage in the discussions that we're currently having as well. But I think at this point, it's really is anyone's guess of when that would happen and if that will happen.

[David Amsellem:]

Okay. That's helpful color. Thanks for taking the questions.

[Gerri Henwood:]

Thanks very much, David.

[Operator:]

Our next question comes from Ken Trbovich with ‎Janney. Your line is now open.

[Ken Trbovich:]

Thanks for taking the question. Gerri, I guess, I wanted to go back to the comment you made about the patents that are going to issue here in a couple of weeks. Did I hear you correctly in saying that you expected at least one of those to be Orange-Book listed? And if so, how does that change the sort of last to expire picture as you see it now preparing for launch?

[Gerri Henwood:]

Sure, Ken, good question. Thanks. So as we look at those three divisional patents, we look at one of those in particular as a product-by-process patent. And typically, product-by-process patents were told by IP lawyers are Orange-Book listable. And so, we anticipate that that patent upon issuance and within the process of the new drug get approved would be added to the Orange-Book. That would have an expiry we estimate of May of 2030, and so we have the formulation patent in the Orange-Book that would have expired at the end of 2022, this would be an additional patent that would be Orange-Book listable that will expire in roughly mid-year of 2030. And that has been supplemented by the other non-Orange-Book listable manufacturing related patents have expired at the end of 2030.

[Ken Trbovich:]

Got it. And then, with regard to the contract manufacturing business, I know, Mike sort of alluded to this, the idea that you got a tableting press. I know, you guys had some success and attracting some folks on the business development side, they have some incredible credentials. So I'm trying to sort of get a sense or the timing for when you think you might be able to transform that from a underutilized asset to a partially utilized asset with some of the early stage work or perhaps even progress and eventually to commercial manufacture?

[Gerri Henwood:]

Yeah, so good question. And I think the part of having this business available and opened for business if you will. It does not usually lead to a flock of birds coming in instantly and there are folks that come in on test projects and small projects. And then, in the meantime, you're bidding for bigger projects. So this in terms of process, who are all come on the right page, but Mike you want to talk a little bit about attractiveness of that.

[Michael Celano:]

Right. And also key of that is - it's also allows for the stickiness of our customers and that - we had already been providing developmental capabilities for metabolic standpoint. So it does provide additional ways to keep in building relationships. Based on the pipeline of opportunities, we have not built into that the upside of that into our $70 million guidance. So we expect that to announce later this year in additional projects. But at this point, it's not build into any form of our guidance.

[Gerri Henwood:]

So they're certainly in our biz for it and interest in it. So that's encouraging we're going in the right direction.

[Ken Trbovich:]

Got it. And then last question, Gerri. I guess, I was sort of looking back with interest in the dental model in terms of Phase II study that has been done for the impacted wisdom teeth. Can you help us give a sense for how that study may play into what the label looks like. And then especially it relates to dose, because it certainly seem like that was one of the unusual studies, where there was more of the benefits from higher dose than perhaps what have been seen in the other studies?

[Gerri Henwood:]

Yeah, it's a good question. One, that we've talked a little bit about that. So that dental pain study is sort of the classical dose finding studies that people do early in Phase II in the development of a systemic analgesic. And it did show very good effect from 30 and somewhat better effect for 60 milligrams and that was the reason that we went on to be the next Phase II study, which was the bunionectomy, those ranging study which was 0, 30 and 60 of meloxicam and bunionectomy, because we were unsure of health sort of forecasting that study was of efficacy and even more serious bunion pain. And what we saw in that bunionectomy study was a very comparable level of pain relief, we did not see so much incremental pain relief, so we thought it was worth going to the 60 makes us a routine dose, 30 being a lowest effective dose, but that was available. But it is an area that brings up opportunities due to that we are during this immediate launch period, planning on addressing, and that is, there are certain - orthopedic practices that are - dental practices where third molar extraction and related surgeries are common, and they are setup to deal within IV product. That could be an area that in the future opens up for either partnership with the player in that space or possible addressing otherwise, but it's not in our current mainstream focus or forecast.

[Ken Trbovich:]

Sure. And I guess, maybe what I'm trying to make sure, I fully understand, it's a language that you're hoping for in the label with regard to - obviously, you had a lot of different models for pain, not just in the Phase III of efficacy studies for the bunionectomy and the abdominoplasty, but also in the safety study. So I'm just trying to make sure fully understand sort of the label and the language of the label as you were hoping or as you've submitted perhaps for the label plan itself?

[Gerri Henwood:]

Okay. Good point. I wasn't seeing the Langone when you asked it first. So yeah, we believe that based on the guidance document and our interactions to FDA to date. That we have appropriately requested an indication for the management of moderate to severe pain, and that would be an indication not tied to anyone instance or multiple instances of trial design sort of being done. But really reflect the spectrum of pain that patients experience going from soft tissue pain to hard tissue pain. And that concept is expressed in the FDA guidance. And that's what we've relied on in filing for that. So hopefully, we will see the indication where - when appropriate to use in IV non-opioid product, we tend to use from moderate to severe pain management.

[Ken Trbovich:]

Got it. Thank you.

[Gerri Henwood:]

Thanks.

[Operator:]

Our next question comes from Scott Henry with ROTH Capital. Your line is open.

[Scott Henry:]

Thank you, and good morning.

[Gerri Henwood:]

Good morning.

[Scott Henry:]

I just want to start with the follow-up to the patent question with regards to Orange-Book listing, because I think that's pretty important. First, as far as getting that patent into the Orange-Book, is that simply a procedural event, meaning you put it in there and it automatically goes in until later challenge. Or do you have to make a case in the merits to the process as well, when will you know if that patent can be in the Orange-Book? And I'm making the assumption that the 30-month provision is automatically including in that patent, so any color along those lines.

[Gerri Henwood:]

Sure. So I'll start with the layout first, and then I'll go to slightly more complex stuff. So patents when expected for listing in the Orange-Book are associated with the 30-months stay. So we wouldn't expect anything different, but this one. We believe based on what we've heard from more than one patent counsel that this patent qualifies and meets the requirements of product by process and product by process patent to typically listable. Anybody that knows me knows that we're conservative and until it's done and listed in that listing, we will remain conditional about it. But we believe, we've got all the characteristics that we've been needed. The processes that you make an application and you write up basis for which you believe the patent should be added to the Orange-Book for the product. We are so proximate to the filing date that it is - it's on the bubble right now, whether we amend the filing or there is a provision when you get an NDA approved or you to update any subsequent to your initial filing any findings that would impact these Orange-Book listings you have or additional Orange-Book. So we will definitely be on one of the other side of that equation, so that we're meeting the timeframes that exist for notification of additional Orange-Book patent.

[Scott Henry:]

Okay. Thank you. That is helpful. As well, on the PDUFA date, let's say, you get approval on May 26, how much time do you need between approval to launch the drug. How much lead-time would we expect?

[Gerri Henwood:]

Yeah, so I'm going to ask John to discuss through in sort of the macro steps that we would have from that point until we would have folks in the field.

[John Harlow:]

Yeah, good question, Scott. So we've had a tremendous response to our ongoing hiring activities from building the sales force organization. And our overall plan is we will make contingent offers to these individuals over the next few weeks, assuming approval those contingent offers will transition to formal offers. We would anticipate them to onboard them in the middle of June, and have a comprehensive training program that validate their skill set compliantly get them prepared and ready for ultimate launch, and then plan to launch very early in July.

[Scott Henry:]

Okay. Thank you. That's helpful. And then, the final question on the manufacturing front. Are you expecting a dip in 2Q or Q3? And my understanding was the accounting changes took place in Q1. So would that already affect those changes or should I factor that into 2Q? Just trying to get some sense of that trajectory.

[Gerri Henwood:]

It is the gift that keeps on giving, Scott. But I'll let Mike address that.

[Michael Celano:]

Go ahead, Ryan.

[Ryan Lake:]

Yeah, so the new revenue recognition standard is based on shipments more or less, so there will be some fluctuations quarter-to-quarter. In addition to the fact that that type of business with contract manufacturing there is some lumpiness amongst the ordering patents that we received from customers. So, again, as Mike and what we reiterated earlier as we feel very confident in the guidance that we reaffirmed earlier of $70 million.

[Scott Henry:]

Okay, great. Thank you for taking the questions.

[Operator:]

Our next question comes from Patrick Trucchio with Berenberg Capital. Your line is open.

[Patrick Trucchio:]

Thanks. Hi, good morning. I have several follow-up questions. First, just on the IP announcement, can you discuss the significance of the flake-like substances, why this matters, why it's important IP for IV meloxicam? And then how will the soon-to-be-issued patents impact the NDA filing for IV meloxicam, if at all?

[Gerri Henwood:]

Yeah, thanks, Patrick. So as many of you who hasn't in short-term hear me go on about this, no, we believe that intrinsic manufacturing patent that preexisted this most recent set of approvals was very important to the product, because of the ability of meloxicam to form flake-like substances on standing in solution. Those being not acceptable under U.S. Pharmacopeia standards, who would cause that product to not be able to be used, and certainly theoretically, could pose a clinical risk in terms of clog formation around the nidus like that. That's why we believe USP standards has what it has. So we've looked that as an important patent, because the method of making for the parent patent allowed us to avoid that occurrence. These divisional patents were based on further knowledge and unobvious facts that came forward, including the product-by-process form of these patents, that product-by-process being different than method of making, and it is an allowable Orange-Book category of patent. So in terms of the importance of it, is important we think to be have created shelf-stable product that is - and remains safe to administer within the confines of normal clinical use and judgment and according to the label. In terms of impact on the NDA, we would not see that it has an impact one way or the other at the NDA. We just want to be sure that we are following. We're taking guidance on this right now. Following the appropriate pathway to get it added to the Orange-Book listing in a timely fashion.

[Patrick Trucchio:]

Okay. And then just on the new revenue recognition policies, can you just discuss how precisely these impact the CDMO business and whether the change will impact how IV meloxicam revenues are recognized.

[Gerri Henwood:]

Sure. Knowing that I'm not the pronouncer of accounting goods, we'll have Ryan to talk about that.

[Ryan Lake:]

Yeah, the most significant impact for the CDMO business really related to our evaluation of our customer agreements where we concluded that the license agreement couldn't be accounted for separately from the manufacturing revenue that we recognize. And what that requires us to do is recognize a portion of those revenue streams when the product is shipped versus under the previous guidance when it was reported as sold by our customers. So there are a lot of estimates and judgments that go into those projections and as we look out at the full year, we saw that it was favorable for the first quarter. But as we look at our estimates and projections of the - or customer ordering patterns, as well as the forecast that we have in-house and when those projected shipments are expected to incur, we're expecting a slight unfavorable impact as a result for the full year compared to the prior year.

[Michael Celano:]

And that's all considered in our $70 million guidance.

[Patrick Trucchio:]

Okay. That's helpful. Thanks so much.

[Gerri Henwood:]

Thanks, Patrick.

[Operator:]

At this time, I'm - our next question actually comes from Jonathan Aschoff with National Securities. Your line is now open.

[Jonathan Aschoff:]

Thank you. I was wondering, assuming if the approval triggering the Alkermes milestone and drawdown of any remaining debt that you have, how long will the cash last?

[Ryan Lake:]

This is Ryan. Thanks for the question. So we ended March with $51.3 million in cash and we expect to fund the launch principally from our existing cash. Certainly the non-dilutive cash flow from the CDMO business, which provides approximately $25 million to $30 million annually in free cash flow will help contribute to that, as well as the $40 million in non-dilutive financing from the remaining Athyrium facility tranches that we have. And certainly, as we look out kind over the next 12 months, we would anticipate another equity raise, which would also support our Acute Care pipeline as well the post-approval meloxicam clinical and other activities.

[Jonathan Aschoff:]

Great. Thank you, looking forward to approval.

[Gerri Henwood:]

Thanks, Jonathan. Cross your fingers.

[Operator:]

Our next question comes from Leland Gershell with Oppenheimer. Your line is now open.

[Leland Gershell:]

Good morning, thanks for taking my question. Just one more question on the new IP. If you could comment on how that - how those issuances might carry-over to the intramuscular formulation of meloxicam.

[Gerri Henwood:]

So at this time, the analysis of the applicability of that, to that dose form would await some more compatibility data with the pre-filled syringes. So it's not as easy to predict. But the hope would be - we believe that the issue of avoidance of the flake-like substances would of course be key for an IM product as well. So we believe there should be applicability. But there is some more demonstration date we would need to ensure that that is the case.

[Leland Gershell:]

Thanks, and then just one pipeline question. On the neuromuscular blocking and reversal agents that you had recently taken in, that you had mentioned one of those is clinical stage. If you could comment on which one that is and what your near-term sense are for the advancement of that compound. Thanks.

[Gerri Henwood:]

Sure, thanks. Thanks for the question Leland. So the neuromuscular blockers, which are agents used in anesthesia to produce paralysis, there are two of those. The RP1000 is an intermediate duration agent that can be used by single injection intermediately or in principal, could be infused for continuous suppression of reflexes, for instance, such as for abdominal surgery or the like. And that agent is the one that is clinical stage. It had a prior clinical trial conducted in human volunteers to look at the induction of paralysis, the ability to successfully intubate subject and it's tolerability and it had a favorable profile in that trial. We have had a recent meeting with FDA to discuss the development profile. There are some expansion of tox limits, that because we'd like to explore somewhat higher doses. And so, we are working towards the ability to have completed that and then potentially initiate another of the Phase I studies before the end of this calendar year. The RP2000 is the ultra-short acting agent and that one is one that we are hoping to file an IND, assuming that we API availability for both of these agents is little bit of gating factor. But we are hoping to be in a position where we could have performed some of the tox and file an IND either late in the fourth quarter or possibly early next year. Thanks, good question.

[Leland Gershell:]

Great. Thank you for taking my questions. Thank you.

[Gerri Henwood:]

Sure.

[Operator:]

At this time, I'm showing no further questions. I'd like to turn the call back over to Gerri for closing remarks.

[Gerri Henwood:]

Thank you. I appreciate all of you joining us here this morning. We have remained committed to developing efficient and effective development plans and executing on these strategies well with the upcoming PDUFA date for IV meloxicam fast approaching and other milestones across both the Acute Care and contract development and manufacturing divisions of the company. Now is certainly a very exciting time for us and we look forward to sharing updates on the company in the near future. Thanks again for your time. Have a great day.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.