Nabriva Therapeutics PLC (NBRV) 2021 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Nabriva Therapeutics Third Quarter 2021 Business Update and Financial Results Call. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Mr. Dan Dolan, Nabriva's Chief Financial Officer. Thank you.

Thank you, and good afternoon, everyone. Welcome to the Nabriva's conference call and webcast where we'll discuss the third quarter 2021 earnings and also provide a business update. The slides for today's presentation are posted on the company's website, www.nabriva.com, and can be found under the Investors tab in the Events and Presentations section. We recommend that you refer to the presentation as we'll be using those slides for today's discussion.

Before we begin, on Slide 2, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and our other periodic reports on Forms 10-Q and 8-K filed with the SEC.

Turning to Slide 3. I would like to briefly run through this afternoon's agenda. Ted Schroeder, Nabriva's CEO, will start with a business update and will present an overview of the commercial highlights from the quarter. Steve Gelone, Nabriva's President and COO, will then give an update on lefamulin and the prospects for lefamulin's life cycle management. Lastly, I will provide a financial review before Ted comes back with some summary comments and lead the Q&A session.

I would like to now turn the call over to Nabriva's Chief Executive Officer, Ted Schroeder.

Thank you, Dan, and thanks to everyone joining our call this afternoon. Before I get started, I would like first to welcome Dr. Christine Guico-Pabia, who joined Nabriva as our Chief Medical Officer in October. Dr. Guico-Pabia brings over 30 years of global biopharmaceutical experience and extensive expertise in every stage of drug development, including pharmacoeconomics and outcomes research and medical affairs. She has previously held leadership positions at small start-ups and large multinational companies, including McKesson, Merck, Wyeth, Pfizer and Metagenics. Welcome again, Christine.

Let's start on Slide 5. We are very pleased with our results this quarter and the progress we are making on multiple fronts. SIVEXTRO's performance was strong, recording double-digit quarter-over-quarter growth in both net sales and in TRxs. These figures are promising and give us increased confidence that our commercial efforts are having an impact. As mentioned in previous updates, we expect to get SIVEXTRO sales back to historical peak sales trends by mid-2022.

To help our efforts in increasing awareness of both XENLETA and SIVEXTRO, we recently launched an Inside Sales Representatives program which has supplemented our field-based team to expand the promotional reach of SIVEXTRO and XENLETA. We believe this additional program will expand our reach by targeting an estimated 2,000 top prescribers in whitespace geographies through additional personnel promotion.

Moving to XENLETA. We recently announced an agreement with Vizient, the largest health care performance improvement company in the U.S., to expand access to XENLETA in the hospital setting. For those that are not aware, Vizient provides expertise, analytics and advisory services as well as a contract portfolio that represents more than $110 billion in annual purchasing volume to improve patient outcomes and lower costs. With approximately 3 million people treated for community-acquired bacterial pneumonia, or CABP, in the hospital setting each year, we believe this partnership is a great step toward establishing XENLETA as a treatment option for CABP in the hospital setting.

In September, we also announced the approval of XENLETA in Taiwan. As many of you know, XENLETA has received regulatory approval in every country in which we have filed a regulatory application. We continue to see additional opportunity for growth with XENLETA through geographic expansion.

We recently renegotiated our agreement with Hovione. By extending our strategic partnership with Hovione through 2030, we gained near-term flexibility and cash allocation. We can now deploy additional investments towards growth-driving initiatives such as the increased advertising, non-promotional promotion and direct-to-patient initiatives as we are entering the CABP season.

Earlier this month, we published the first data demonstrating the potent anti-inflammatory properties of lefamulin. We are encouraged by these data and the potential that an agent combining antibacterial and anti-inflammatory properties may offer clinicians and patients. Steve will provide additional color on these important data later in the presentation.

As a result of accelerating revenue growth and continuing to be prudent with our resource deployment, we have now extended our cash runway to substantially through the second quarter of 2022.

Moving to Slide 7. This graph shows the TRxs for the oral antibiotic market in the United States. As you can see, the current trajectory is trending positively towards a return to pre-pandemic antibiotic prescribing. The trend is encouraging. And while not back to pre-pandemic levels, we are seeing consistent upward prescription growth overall. This is promising, especially for XENLETA, as we head into the fall and winter season when we typically expect to see a greater incidence of respiratory infections.

Looking specifically at SIVEXTRO on Slide 8, I am excited to announce that SIVEXTRO hit the 1,000th prescription mark this quarter. The first quarter this has been achieved since the second quarter of 2020. Additionally, we are excited to report that quarter-over-quarter growth demonstrated by SIVEXTRO was a 14% sequential increase. We remain confident that SIVEXTRO's sales can reach historical peak sales levels by mid-2022. Some of the factors responsible for the strength include the increased product awareness, the rate of MRSA infections in the community and the productivity of our sales force. The outstanding coverage for SIVEXTRO was another factor driving adoption.

We currently have approximately 275 million lives in the U.S. covered for SIVEXTRO. Our field-based sales representatives continue to see a high level of in-office interactions as we have progressed throughout the year. Not only are these increased office visits good for the current growth of SIVEXTRO, but we also believe this is laying the groundwork ahead of the CABP season by keeping XENLETA top of mind.

Moving to Slide 9, let me spend the next few minutes discussing our agreement with Vizient, which we signed in early September, to make XENLETA available to Vizient's pharmacy network program. Vizient is the largest health care performance improvement company in the U.S. Vizient's customer base includes 18 networks and approximately 340 health systems, which represents an opportunity to focus on improving patient outcomes. Our partnership will afford us access to Vizient's expertise, analytics and advisory services. With approximately 3 million adults treated with CABP in the hospital setting annually, this represents a significant opportunity to efficiently expand the use of XENLETA over time.

Slide 10 lays out some of the key benefits that this relationship will bring to XENLETA. Given the recent challenges of getting access to hospitals due to COVID restrictions, we believe that we have created a channel through Vizient to expand the awareness and presence of XENLETA in the hospital setting. As we have previously mentioned, we are optimistic that XENLETA will be recognized as a promising therapeutic for CABP with its novel mechanism of action, short course of therapy, low propensity to develop bacterial resistance and favorable safety profile.

What is also important about the Vizient agreement is the opportunity to expand XENLETA usage in the transition of care scenario when a CABP patient goes from the hospital to the outpatient setting. Last winter, we experienced a season of drastically reduced respiratory infections. But we anticipate that as people continue to resume normal activities, it is reasonable to expect a rise in the number of patients seeking treatment this fall and winter. We are envisioning the patient will start therapy while they're in the hospital and then get an additional prescription to take home upon discharge.

Slide 11 highlights some additional efforts we are employing to promote XENLETA and drive increased demand in Q4 to capitalize on the respiratory season. These efforts focus on expanding prescriber reach through brand messaging at the point of CABP diagnosis, generating highly qualified leads to sales representatives from nonpersonal efforts, identifying local and regional medical congresses for the sales representatives to engage with prescribers beyond the office and the introduction of the 10-count oral pack, or X Pack, for improved patient access and convenience. We are also focused on activating targeted patients by developing a XENLETA patient destination and content repository, doctor discussion guides, leave behind with key messages and leveraging website drivers to reach the most likely CABP patients.

As we turn to Slide 12, we are excited to announce the launch of our 10-count oral pack, or the X Pack, for XENLETA. The availability of a 10-count oral pack allows for an efficient option for pharmacies that carry XENLETA across their distribution networks. As a result, we believe this will enhance the overall patient experience by improving access and availability of XENLETA across the retail market. Our sales force will actively communicate the availability of the 10-count oral pack, which we believe provides another positive step for XENLETA as we enter the upcoming CABP season.

With that as the commercial update, I will now pass the call over to Steve Gelone who can discuss the progress of lefamulin in cystic fibrosis and the recent promising data showing lefamulin's anti-inflammatory activity. Steve?

Thank you, Ted, and it's my pleasure to provide a brief update on some of the ongoing XENLETA life cycle management activities. As we have previously disclosed, Nabriva is evaluating the potential of XENLETA in the management of bacterial exacerbations caused by staph aureus in patients with cystic fibrosis.

As a reminder and to help frame the unmet medical need, Slide 14 depicts the most recent data from the Cystic Fibrosis Foundation Patient Registry Report from 2019, showing that staph aureus remains the most common respiratory pathogen identified in patients with CF, even after the introduction of CFTR modulator therapy.

Importantly, as shown on the right side of the slide, the presence of methicillin-resistant staph aureus, or MRSA, in a respiratory tract culture negatively impacts the median survival time in CF patients with an observed reduction of 6.2 years as compared to CF patients with a respiratory culture that is negative for MRSA. While clinicians have a number of anti-staphylococcal antibiotics in their treatment armamentarium, they have had to rely upon agents that have either not been demonstrated to be reliably effective for the treatment of MRSA, that require intravenous administration in order to be effective or have significant safety and tolerability issues limiting their clinical utility. Given that XENLETA is available as both an oral and intravenous formulation, has been shown to be a potent anti-MRSA agent and is well tolerated, we believe it may provide an attractive treatment option for this difficult-to-treat patient population.

Slide 15 provides an overview of the multifaceted approach we are taking to demonstrate the potential clinical utility of XENLETA in patients with CF. In collaboration with experts in the field, we have identified the most important challenges present in treating exacerbations in patients with CF, including that this patient population is often heavily pretreated with antibiotics, placing them at increased risk for the presence of resistance to many existing antibacterial classes; that these patients have a unique inflammatory environment present in their lung; and that they take concomitant medications that may pose potential drug-drug interactions as we constructed our approach to optimize the key attributes of XENLETA.

For example, we have demonstrated the potent anti-staphylococcal activity of XENLETA against strains of staph aureus isolated from CF patients and have completed modeling the potential for drug-drug interactions with the most commonly prescribed CFTR modulators. Additional ongoing work will describe the efficacy of lefamulin in CF mouse infection models. And we are on track to dose the first patient in our Phase I study, evaluating the safety and pharmacokinetics of XENLETA in patients with CF in the first quarter of 2022. We are very excited to be working with many of the world's experts on this program and are anxious to continue to share our progress with the scientific community over the coming months.

In addition to our ongoing work, to further describe XENLETA's direct-acting antibacterial effects, we have recently published results that demonstrate XENLETA also possesses potent anti-inflammatory and immunomodulatory properties in the journal, PLOS ONE. In 2 different animal models of lung inflammation, one simulating acute respiratory distress similar to that caused by the SARS CoV-2 virus; and another caused by the H1N1 strain of influenza virus, also known as the swine flu that caused the pandemic in 2009, XENLETA was shown to reduce the number of neutrophils, which are a specific kind of white blood cell that get recruited into the lung of these animals. It inhibited the production of pro-inflammatory cytokines, including TNF-alpha and interleukin-6, that have been associated with poor outcomes in patients with pneumonia. It reduced alveolar inflammation and lung consolidation and, importantly, was shown to increase the survival rate in animals infected with the H1N1 influenza virus.

XENLETA's activity was notably shown to be similar to that observed with dexamethasone, a known potent anti-inflammatory corticosteroid; and superior to azithromycin, a macrolide antibacterial agent that is commonly used for its anti-inflammatory activity.

With grant support from the Austrian Research Promotion Agency, our team is advancing work designed to elucidate the potential mechanism of action of XENLETA's anti-inflammatory and immunomodulatory effects as well as to validate these effects in in vivo disease-specific models that will help guide potential future clinical applications such as the treatment of acute respiratory tract infections, bacterial exacerbations of cystic fibrosis, autoimmune conditions and fibrotic diseases. We look forward to the next steps in this important project and to providing updates on our progress.

It's now my pleasure to turn the presentation over to my colleague, Dan Dolan who will provide the briefest corporate financial update. Dan?

Thanks, Steve. As we turn to Slide 18, I'd like to touch on some key highlights for the third quarter of 2021. Total revenues of $8.9 million grew 8% sequentially versus the second quarter of 2021. This was primarily driven by SIVEXTRO net product sales sequential growth of over 14% versus the second quarter of 2021. Revenue also includes $1 million in collaboration revenue and grant funding from the Austrian government.

Within the third quarter results, we recorded a special return reserve adjustment for the shelf life expiration of the initial launch bottles of XENLETA, which had 3-year dating. With the newly available 10-count oral pack, which will have 4-year dating, we anticipate wholesalers will replenish some of the soon-to-be expiring product with this new 10-count oral pack.

During the third quarter, we continued to focus on disciplined balance sheet management as we renegotiated our supply agreement with Hovione, the API manufacturer for XENLETA, the amended agreement provides for near-term cash flexibility, easing the amount of cash we need to allocate towards inventory and allowing us to put more cash to work behind growth initiatives for both XENLETA and SIVEXTRO.

We also entered into an equity line of credit agreement with Lincoln Park Capital, which provides an efficient option to access capital at our discretion over the course of the next 2 years. We will continue to maintain a laser focus on our cash allocation strategy, driving efficiencies in our operating expense mix to ensure we are maximizing our investment while driving commercial execution and revenue growth.

We exited the quarter with cash and cash equivalents of approximately $52 million, providing us cash runway substantially through the second quarter of 2022.

Moving on to Slide 19. We look at our P&L for the 3 months ended September 30, 2021 versus the same period for 2020. We experienced significant year-on-year growth on our top line revenues driven by net product sales of SIVEXTRO as well as the recognition of collaboration revenue upon the achievement of milestones from our Chinese partner. You will see that our cost of sales increased approximately $4.2 million versus the prior year driven by supply purchases of SIVEXTRO. This was in line with our expectations around how the P&L would evolve following the launch of our own NDC for SIVEXTRO in the second quarter of 2021.

The increase of approximately $1.3 million in SG&A reflects a full quarter run rate of our community-based sales representatives compared to a scale-back run rate in our commercial efforts during Q3 of 2020, resulting from the initial impact of COVID-19. Our net operating loss showed improvement year-on-year, highlighting the impact of SIVEXTRO on the shape of our P&L and highlighting the scalability of our commercial infrastructure to drive operating leverage.

Turning to Slide 20, we take a look at our balance sheet as of September 30, 2021. As mentioned earlier, our cash and cash equivalents at the end of the quarter were approximately $52 million, an increase of approximately $11 million from December 31, 2020, driven primarily by activity in our ATM during the second quarter of 2021. This was offset by our operating cash burn, which included SIVEXTRO supply purchases in the quarter. The increase in accounts receivable can be attributed to the timing of cash receipts due from our wholesalers on sales of SIVEXTRO. As we pivot our attention to the liability section, you'll notice that we continue to carry a minimal amount of debt, maintaining focus on our continued commitment towards disciplined balance sheet management.

If we can now turn to Slide 21, I'd like to take some time to highlight the impact that the launch of Nabriva's own SIVEXTRO NDC has on the shape of our P&L as well as some of the work we have done recently to maximize cash flow has had on our operating cash burn. In April 2021, we moved from a model of receiving a percentage royalty from sales of Merck's NDC of SIVEXTRO, pivoting to launching our own Nabriva NDC of SIVEXTRO, realizing the full benefit of net sales in our reported revenues. You will see on the chart the step-down in operating cash burn this provided to Nabriva from the first quarter of 2021 to the second quarter of 2021.

In the third quarter, we saw the impact of how SIVEXTRO net product sales, showing double-digit growth compared to the second quarter, further improving our operating cash burn. As you see on the chart, total revenues increased 8% versus Q2 of '21 and operating expenses remained consistent with Q2 of '21. This evolution in the revenue composition on the P&L for Nabriva provides increased profit margins and improved operating leverage. This operating leverage, coupled with our recent revision in our supply agreement with Hovione for XENLETA, helped to drive a steady decrease in our operating cash burn quarter-over-quarter.

I will now turn the presentation back over to Ted. For the next part of the call, Ted will make some closing remarks, and then we will head into a Q&A session. Ted?

Thank you, Dan. Before we move to Q&A, let me summarize our achievements in the quarter and touch on where the company stands for the remainder of 2021, which can be found on Slide 22. First, we were thrilled with the performance of SIVEXTRO in the quarter, the first quarter since the onset of the pandemic where the drug saw 1,000 prescriptions. It's truly a major milestone for the company.

Given the efforts of our field force, as respiratory infections continue to increase in the fourth quarter, we expect to gain market share for XENLETA. During this quarter, we highlighted several new programs and partnerships to enhance all the hard work that our commercial team has done in the field. We launched the Inside Sales Representatives program. We completed an agreement with Vizient for XENLETA in the hospital, we've renegotiated our agreement with Hovione and we layered on top of that our other achievements like getting another approval for XENLETA in Taiwan and sharing important first-time data on the anti-inflammatory effects of lefamulin.

Over the past year, we have adapted to changing market conditions, and we think we are now appropriately positioned to maximize our commercial performance while further broadening our pipeline opportunities. I look forward to updating you on our progress in the coming quarters.

Operator, we are now ready to open up the line for questions.

(Operator Instructions) Our first question comes from the line of Carl Byrnes with Northland Capital.

Congratulations on the progress. Can you break out the SIVEXTRO and lefamulin sales for the third quarter? And then I have a follow-up as well.

Yes. So SIVEXTRO sales were roughly, I think, $7.9 million in the current quarter. And lefamulin net sales where we took a onetime special returns reserve of a little over $1 million, so that had us record a negative $900,000 in the quarter for lefamulin.

That's helpful. And then also, can you provide an update with respect to the anticipated NDA filing of lefamulin in China?

Yes. Thanks, Carl. Our partner, Sumitomo, still expects to file that NDA before the end of the year.

(Operator Instructions) Our next question comes from the line of Suji Jeong with Jefferies.

I have a few questions on XENLETA. You said that XENLETA is going to be available in the hospital formulary network. Is it your plan to reestablish the hospital sales force for XENLETA? And also, could you comment on how the primary care sales force is ongoing for XENLETA and SIVEXTRO?

Sure, Suji. Thanks for the question. We have no current plans to reestablish a hospital sales force, at least not a traditional sales force. As you may be aware, because of COVID and lockdown restrictions broadly across hospitals, access in the hospitals for traditional sales reps is very difficult, in fact, almost nonexistent. So we are leveraging other opportunities to optimize our contract with Vizient, including leveraging Vizient's insights and analytics that help us present the opportunity for lefamulin in the hospital. So it's not an overnight type of occurrence for the Vizient system, we'll still need to get on formularies. But most of the effort will be driven through our community-based sales force.

And then the second part of the question regarding our outpatient focus on XENLETA, so as we mentioned previously, we kept the promotional effort high during the summer months so that XENLETA would be top of mind as we move into the fourth and first quarters of the year where, traditionally, we see an increase in respiratory infections. And as we mentioned, last year, the CDC reported that influenza-like infections were down 95% in the U.S. We do expect to see a stronger respiratory season this year as some of the restrictions have come off and children are back to school and people are moving around more freely. And with our sales force and the positioning of XENLETA, we think that we're in a great position to gain market share as we move into the colder weather months.

In addition to the sales force activity, we have 60 people promoting the product, and then we just started a pilot program with inside sales reps that are making outbound calls into whitespace geographies and responding to inbound product inquiries. And then we have a full suite of digital and nonpersonal efforts to support the treatment decision at the time of prescribing.

Our next question is from Ed Arce with H.C. Wainwright.

This is Thomas Yip, asking a couple of questions for Ed. Perhaps first question, related to XENLETA Phase I study in cystic fibrosis, as you outlined in the slide, first patient dosing expected in the first quarter. So in addition to safety and PK data, keeping in mind that it's a Phase I study, can you discuss any other key end points that we can focus on?

Thanks for the question. The main end points are safety and PK. It's our first time dosing patients with cystic fibrosis with XENLETA. And as you may be aware, sometimes patients with CF have altered pharmacokinetics and handling of drug products. So that really is our primary objective. There's not an efficacy readout. It's a single-dose study. We're looking at both the oral and intravenous form in patients. And hopefully, we'll get a read on the PK and what dosing might make sense and how well it's tolerated.

Got it. And then perhaps, after the Phase I, is the plan to develop into Phase II on your own or partner with a nonprofit such as Cystic Fibrosis Foundation?

No, it's a great question. I think obviously, the data readout from Phase I, along with some of the nonclinical work that I alluded to, will help inform the broader development plan. And so I think it's a little bit premature to speak about what that looks like until we see the data. But we're excited to see what that looks like and see what optionality we have as we move ahead here.

Understood. Perhaps, one final question from us. So this is for both SIVEXTRO and XENLETA. Can you just discuss some upcoming catalysts that we can highlight in 2022?

Sure. So upcoming catalysts, we'll announce the NDA filing in China when Sumitomo files the NDA. Of course, the progress with sales at the quarters. And we are working feverishly on additional out-licensing opportunities for Europe and other rest of world territories. So we do anticipate in the coming quarters that we'll have announcements around those partnerships as well, in addition to commencing dosing of the Phase 1 cystic fibrosis PK and safety study. So I think those are the main catalysts as we look forward to the coming next few quarters.

Got it. And we look forward to continue tracking SIVEXTRO's traction and your next update.

All right. Thank you.

Our next question comes from the line of Carl Byrnes with Northland Capital.

Great. Just going back to cash, you referenced that you expect cash balances to be sufficient to fund operations through rather the second quarter of '22. Is that inclusive of the Lincoln Park agreement as that was assumed -- you called out '23, but that's over 2 years. So how do you look at that?

Yes. Thanks, Carl. So the substantially through Q2 of '22 is just based on operations. It doesn't take into account anything we would do otherwise through the line of credit. We have access to it. It's an efficient way to get to capital if we need it, but we don't factor anything like that into our cash runway.

Great. And then going back to my prior question with SIVEXTRO sales at $7.9 million in the lefamulin sales basically being adjusted to a negative $900,000, effectively, the quarter on a normalized basis would have been more like $10 million plus in terms of revenue. Would that be correct?

I think that's fair. Just to make sure, we reported $7.9 million total. So SIVEXTRO was about $8.9 million and then the XENLETA number was about $900,000. So yes, there was about $1 million. It was for the onetime reserve we took on the short-dated product. We've entered a returns window, so we took that reserve on XENLETA. If you strip that out, you could say we would have been $900,000 to $1 million higher in the quarter on sales. But SIVEXTRO was $8.9 million. XENLETA was negative around $900,000 for $7.9 million total in net sales.

And there are no further questions. I'll now turn the call back over to Mr. Dolan for closing remarks.

Thank you, everyone. Thanks for joining the call. I appreciate your questions, and we look forward to updating you as we continue to make progress. Thanks again, and have a good evening.

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