Zevra Therapeutics, Inc.
Q4 2023 Earnings Call Transcript

Published: 28 Mar 2024

[Operator:]

Good afternoon, everyone. Thank you for joining the Zevra Therapeutics' Q4 2023 Corporate Updates and Financial Results Call. Today's call is being recorded. It will be made available the company's website following the conclusion of the call. With that, I will now turn the call over to Nichol Ochsner, Vice President of Investor Relations and Corporate Communications for Zevra Therapeutics.

[Nichol Ochsner:]

Good afternoon, and thank you for joining us today to review Zevra Therapeutics' progress in the fourth quarter and full year of 2023, outlining our clinical advances, operational achievements and financial results. Before we get started, let me take a moment to provide some important information. I encourage you to access the news release which was just published and available in the Investor Release section of Zevra's website. As we proceed with this call, it's important to highlight that today's discussion will include forward-looking statements. Forward-looking statements are not promises or guarantees and are inherently subject to risks, uncertainties and other significant factors that may to actual results differing materially from the projections made. Please refer to the Risk Factors section in our most recent quarterly reports on Form 10-Q and our other filings with the SEC and annual report on Form 10-K. I'm pleased to welcome Zevra's management team members participating in today's call. I'm joined by Neil McFarlane, President and Chief Executive Officer; LaDuane Clifton, our Chief Financial Officer, Joshua Schafer, our Chief Commercial Officer and EVP of Business Development; Christal Mickle, our Chief Development Officer; and Adrian Quartel, our Chief Medical Officer. Now I'll turn the call over to Neil.

[Neil McFarlane:]

Thank you, Nichol. And thank you all for making the time to join us today. During the fourth quarter and into 2024, we made solid progress transforming Zevra into a commercial stage company. On our last call, we announced that we were focused on 3 key priorities

[LaDuane Clifton:]

Thank you, and good afternoon. 2023 was a time of incredible progress as we seek to make therapies available to people living with rare diseases. Our financial results for the quarter and full year reflect our continued investment in advancing our development programs and building out our commercial capabilities. As Neil pointed out at the beginning of the call, we are restating our previously issued financial statements for the fiscal year ended 2022, including all interim periods and the interim period in 2023 due to a change in the accounting with certain cash settlement features. Warrants from 2021 has been classified as equity and are now accounted for as a liability, resulting in noncash fair value adjustments that will be recognized at the end of each reporting period. This change and the related noncash adjustments are expected to have no direct impact on the company's cash, cash equivalents and investments, our forecasted runway or our business operations. Now on our financial results for Q4 2023. We reported net revenue of $13.2 million. This was a solid quarter in which we met the milestone of $10 million under the AZSTARYS license agreement as annual net sales for that product surpassed $50 million for the year. Revenue also included royalties under the license, which rose to $1.3 million for the period comparing to $900,000 in Q3 2023. Net reimbursements from the French expanded access program for arimoclomol was $1.8 million, and there was recognition of some initial sales of approval. R&D expenses for the quarter were $1.4 million which was primarily driven by the Phase III study in KP1077 that has since been completed. Along with to compare the FDA for resubmission. General and administrative expenses were $14.7 million. The period-over-period increase was primarily related to personnel costs and professional fees associated with our investments and our commercial infrastructure as well as our business develops activities, which included the closing of the Acer acquisition. Net loss Q4 2023 was $19.6 million or $0.51 per basic and diluted share. Our full year 2023 loss included net revenue of $27.5 million, which was primarily driven by the $15 million in total net sales milestones earned under the AZSTARYS license agreement, royalties of $3.8 million and net reimbursements from the French early access program for arimoclomol, totaling $8.6 million for the year. Total R&D expenses of $39.8 million and G&A expenses of $34.3 million, we reported a net loss of $46 million or $1.30 per basic and diluted share for 2023, which includes the noncash impact of the change in fair value adjustment for the liability of $1.4 million or $0.04 per basic and diluted share. As of year-end, total cash, cash equivalents and securities were $67.7 million, which was a decrease of $15.7 million compared to September 30, 2023. Total shares of common stock outstanding were 41.5 million and fully diluted shares outstanding were 38.2 million, which includes approximately 5.6 million shares issuable upon exercise awareness. Looking ahead, our available resources are expected to support our forecasted operating cash runway into 2026, and we intend to evaluate optimization of our debt structure. Our forecast includes commercial revenue from sales of OLPRUVA and ongoing reimbursements from the French EAP for arimoclomol, but it does not include commercial revenue from sales of arimoclomol or the sale of the priority review voucher, which will follow potential FDA approval. We remain optimistic about the opportunities we have in store during 2024 and our focus is on creating long-term value for shareholders by consistently executing against our plan and support our mission to becoming a leading rare disease company. Now our colleagues, Josh, Christal and Adrian will join us for our Q&A session. Operator, please open for questions.

[Operator:]

[Operator Instructions] We'll take our first question from Oren Livnat with H.C. Wainwright.

[Oren Livnat:]

I have a couple. Really curious about this OLPRUVA launch. It sounds like you've got your infrastructure in place and maybe are just now trying to build awareness. I know you're not giving guidance is certainly not a product-specific basis, but should we expect material revenue growth for that product this year? Or is this more about just like a sampling and awareness building year and just getting all the processes worked out, especially ahead of arimoclomol? And on arimoclomol, can you just talk about what, if anything you can say about your expectations around an ADCOM as far as what areas of focus you are most preparing for, where do you think the agency might be most interested, whether it be the connection between real-world data and your clinical data or validation and statistical issues? Anything you can provide on that would be really helpful.

[Joshua Schafer:]

Oren, it's Josh. Thanks for the question. With regards to the OLPRUVA performance, as you noted, we are in full launch. And as Neil just mentioned, effective at the end of January, we had the entire commercial and medical team out engaging with our customers. We knew at the beginning of all this that awareness for OLPRUVA and Zevra was quite low. But OLPRUVA in particular, if you'll recall, it was a true through a 505(b)(2) pathway, which meant that it had very clinical experience. And so our priorities have really been around driving awareness and ensuring that patients have access to OLPRUVA. And to do that, our team is working with physicians to identify the appropriate patients. We have a Quick Start program in place to make sure that patients can experience the benefits of OLPRUVA. And our reimbursement is increasing from 55% to over 70%. So it is too early for us to give any guidance on performance and revenue. We will be watching new patient enrollments, covered lives and net sales as we go, and we'll be providing updates on a quarterly basis. I will ask Adrian on the agency and the potential focus of the ADCOM.

[Adrian Quartel:]

So the FDA has currently not confirmed the ADCOM. So there is an to hold the ADCOM, nobody has been said preparing for ADCOM. As far as the -- there is a submission and kind of know what the questions were that the agency were looking for. We're focusing on addressing those as important though is focusing on telling the story that data shows a significant pain benefit for patients. Some additional information that we got during the 2 B meetings prior to our resubmission we also move to the we mostly looking forward about what we consider clear efficacy in these patients and a clear benefit of this profile.

[Operator:]

Next question from Jonathan Aschoff with ROTH MKM.

[Jonathan Aschoff:]

I haven't had a chance to read the press release. It came out a little late and there's a whole bunch of calls. But can you help us better understand the magnitude of benefits in IH and thus optimism for an end of Phase II meeting that so well and inform Phase III design?

[Unidentified Company Representative:]

Absolutely. First, we just really focus on what the Phase II trial is trying to Achieve. This is a trial that was designed to demonstrate safety and tolerability inform us for what the data be saying into how to design development in IH. Part of the secondary endpoints was looking at the and have some of your insomnia scoring scale. We saw clinically meaningful improvements, not only in the taxation phase, but also line phase. As said, these trial's to design a statistical significance. We are planning to present this data at 324 meeting and that we're on data embargo. So we will discuss the data there with the feedback for that will attend think.

[Jonathan Aschoff:]

Okay, so when you did this trial, you optimized these people to any one of the 4 different doses. So it's a complete random smattering like it's not 16 patients per dose. It's it's whatever was their optimum dose, that's where they land. There's no balance among those 4 groups.

[Joshua Schafer:]

That is correct.

[Jonathan Aschoff:]

Okay. So after seeing the Phase II press release, are you still contemplating a narcolepsy trial, because the word narcolepsy is not in that press release on Tuesday, I was just curious why that was.

[Neil McFarlane:]

Thanks, Josh, it's Neil. We're taking this data that we've got now on our Phase II to inform a Phase III in IH. But we're also understanding our Phase I data -- some of our Phase I data data to understand how to unlock the value of the broader sleep disorder opportunities. So we're evaluating that, but we have no further comments today on it, if we're going to move forward into narcolepsy.

[Joshua Schafer:]

Okay. And just a answer now. OLPRUVA is going to until you see how you track with the first indication, correct? Or you have development plans for MSA such you could even give us a time line?

[LaDuane Clifton:]

So you are correct. We're waiting to do a full evaluation of our portfolio and strategic plan before we make any decisions on narcolepsy.

[Jonathan Aschoff:]

Okay. Lastly, when it comes to AdCom, do companies typically have any sort of back and forth with the patient as it gets the strategized in any way? And if so, do you intend anything like that? Or is it just everyone shows up?

[Christal Mickle:]

Yes, we -- this is Christal. It is very important the company to engage with Innovation MC Group, and that we are doing that. One as to the patient physicians that came through Certainly, that was something that we were very happy to see and will continue to engage and make sure that the voices of the patients that are being incurred at the AdCom in their own way.

[Jonathan Aschoff:]

I think that will be an important part of an ADCOM. So that's good to hear.

[Operator:]

We will take our next question from Sumant Kulkarni with Canaccord.

[Sumant Kulkarni:]

I have two. First 1 is, have you had any interactions with the FDA on pending arimoclomol filing announced the 3 months short of the action date and how those discussions gone?

[Joshua Schafer:]

Thank you, Sumant. Maybe I'll take that one. We get as part of the NDA resubmission information requests from the agency, which we've been to satisfy and return in a timely way. One of those requests, as we've announced previously, was a satisfied the requirement of becoming a major amendment, which then caused the delay of 3 months and our September 21 PDUFA. So we are having those discussions, information requests are coming in and we're able to satisfy information requests in a timely fashion.

[Sumant Kulkarni:]

Got it. And then on the recent Phase II data in IH, we're yet to see any quantitative details because of the sleeping related embargo. But qualitatively, would you say there was anything counterintuitive either in a positive or negative way in the data relative to your original expectations?

[Neil McFarlane:]

I think the most important lesson from this was on the primary endpoint. So we dose basis at 20 milligrams, which is a pretty high dose, high than dose in patients. And we saw no increase in the safety profile and safety. More importantly, the cardiovascular safety profile is exactly as we had expected and there's no changes in the cardiac safety profile. So have a compound that electrical safety and then to patients with liberate insomnia.

[Operator:]

We'll take our next question from Louise Chen with Cantor Fitzgerald.

[Louise Chen:]

First question on KP1077. Post results, I wanted to close competitors in IH. What differentiates KP1077? Our second question is on arimoclomol. So where pediatric this year. The much more get approved and a program becomes terminated, you how might impact the value of arimoclomol PRB.

[Joshua Schafer:]

You were challenging to hear. I understood the question to be if we were going to get a PRV with approval of arimoclomol. Is that correct? And then the other 1077 program in regards to the differentiation from competitors?

[Louise Chen:]

Yes. That's correct.

[Joshua Schafer:]

Okay. So yes, we have a PRV that will be issued upon approval with our arimoclomol's NDA approval. So that does.

[Neil McFarlane:]

I would add, Neil, that -- and in part, I think what you said is what is the likelihood or what do we think the value change is the program governing that would be ending this year. And I think the analysis we've seen or information we've heard from a variety of sources as a potential if that program ends, the value could go up. So I think we're going to assess that and look at that, but that's our current thinking on that point.

[Adrian Quartel:]

Adrian here. In regards to the competition in the space. So a differentiated profile, -- different pharmacokinetic profile in the market and also a specific mode action being stimulant. There's only scheduled 4 program. And as I said previously, the cardiovascular safety jumps out when you look at the benefit of this program compared to go on the market.

[Operator:]

[Operator Instructions] We will take our next question from Tim Lugo with William Blair.

[Unidentified Analyst:]

This is Lachlan on for Ken. I guess first 1 is just on the oral it sounds like obviously lower awareness maybe don't have a ton of experience. But can you maybe talk about the feedback that you've got thusfar I know you do have experience? And then second, I understand meant to lose exclusivity at some point in the next year or 2. So can you just sort of talk about your expectations for that and what it might mean for the market and for all maybe what sort of scenario is there?

[Neil McFarlane:]

Sure. Thanks for the question. Yes. So has been more for the reasons that I stated. And our primary objective now is to really build that awareness, working with physicians to identify those appropriate patients and to put in place programs so that patients can gain that experience with OLPRUVA. The initial feedback that we're getting is those patients who have had experience with OLPRUVA are continuing on that. We have a number of patients who are continuing to get refills of OLPRUVA and that really bodes well for future uptake. In terms of RAVICI and the patent exploration are, I guess, it's really the entrance of authorized generics. We are aware that later next year, it's likely that an authorized generic come into the market and potentially a second thereafter. We view that really as entrance into the higher end of the market, specifically a product team with the same formulation. OLPRUVA is very much slightly differentiated from and in the off-price generic that comes into the market. And we believe that we've got a great and were well priced to be able to compete in this market.

[Operator:]

And next, we have a follow-up question from Oren Livnat with H.C. Wainwright.

[Oren Livnat:]

Just to follow-up again on OLPRUVA. I know it's quite early, but as you get more patients hopefully into the funnel, to the referral network and then as you try to get them through adjudication to paid therapy. Are you finding that you're being held to the hurdle of compared to a generic from a cost perspective? Or is the bar more likely lower and that you're essentially being benchmarked against market-leading. And regarding the patients you're going after, are you assuming current RAVICTI patients are low hanging fruit given you've got a presumably much superior product here from the patient perspective conversely, are they maybe the stable business and your target?

[Joshua Schafer:]

Yes. Al products -- all branded products in this space are required to have some form of set at it. And so it's not unique for ora to have a set at where a generic fan is required first. So we're seeing patients setting through that very, very quickly. And physicians and patients are making the decision as to what's the next best of clinical benefit opportunity for the patients. Many the physicians that we have been speaking with and albeit in just a few short weeks that we've had really find OLPRUVA to have the most clinically differentiated beneficial profile for these patients. So it's a little too early to give you incentive answers to that, Oren, because the early signals are that again, the profile of OLPRUVA is really towards patients switching both Cetrine and Revlon. Caren.

[Unidentified Company Representative:]

I'm going to add 1 additional comment to that. Yes, 1 additional comment to that. So I think that's an important perspective. As Josh mentioned, the approach to getting patients on therapy is fairly consistent, our improvement of the reimbursement of covered lives from 55% up to 70%, really puts us close to par also in that area, which then can drive that awareness and clinical differentiation from the other products in the market and with Quick Start program and other awareness campaigns that we're moving forward with will allow us to be able to give patients an option and physicians an option.

[Operator:]

And this does conclude the portion for today's call. I'd now like to turn the call back over to Neil McFarlane for any closing remarks.

[Neil McFarlane:]

Thank you, operator. The fourth quarter 2023 was a pretty period of tremendous transformation for Zevra. We made solid progress towards achieving our mission of building leading patient-focused rare disease company. As we look to 2024, our key strategic priorities are clear, and we look forward to updating you in the future. Thanks for joining us today.

[Operator:]

This does conclude today's program. Thank you for your participation, and you may disconnect at any time.