PLx Pharma Inc (PLXP) 2018 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to PLx Pharma Inc. Fourth Quarter 2018 Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Lisa Wilson, Investor Relations for PLx Pharma. You may begin.

Thank you, Nicole. Welcome to PLx Pharma's Fourth Quarter 2018 Earnings Results 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.

Before we get started, I would like to remind everyone that any statements made on today's call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to PLx Pharma's management as of today and involve risks and uncertainties, including those noted in our press release issued this morning and our filings with the SEC.

Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. PLx specifically disclaims any intent or obligation to update these forward-looking statements except as required by law.

A telephone replay of the call will be available shortly after completion for 2 weeks. You'll find the dial-in information in today's press release. The archived webcast will be available for one year on our website at plxpharma.com.

For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on March 8, 2019. Since then, PLx may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings.

And with that, I'll turn the call over to PLx's CEO, Natasha Giordano.

Thank you, Lisa. Good morning, everyone, and thank you for joining our call. We are now within 16 months of our planned launch of Vazalore, and we're very excited about the progress we're making toward that goal. Our focus remains on increasing our strategic presence both commercially and within the scientific community. We believe that Vazalore, our next-generation novel aspirin, has the potential to transform the present standard of care for high-risk cardiovascular patients and grow this historically flat over-the-counter category. We're happy to report that we successfully completed the development scale batches and are now in the process of gathering the data to be included in the briefing packet for the FDA Type C meeting.

We're tracking well on all of our near-term milestones, which include preparing the briefing packets for the FDA meeting in Q2, as I just mentioned, completing the registration batches in Q3, filing the sNDA submission for Vazalore 81 milligram in the end of 2019 and launching Vazalore in mid-2020. We're excited about our recent successful $15 million financing with Park West as it validates our business strategy, our commercialization plans and our commitment to addressing the large unmet need among the more than 40 million high-risk cardiovascular patients who are in need of a better aspirin.

Other recent highlights include the addition of Tony Bartsh, Portfolio Manager at Park West Asset Management, to our Board of Directors. We appreciate Park West's confidence in the PLx management team and Vazalore's potential to impact so many patients' lives. We also welcome Dr. Mark Alberts, a renowned leader specializing in stroke care and intervention, to our Scientific Advisory Board. Dr. Alberts provides an important perspective as a neurologist treating patients at risk for a cerebrovascular accident or stroke.

With that, I will turn the call over to our CFO, Rita O'Connor. Rita?

Thank you, Natasha. In the fourth quarter of 2018, we recognized revenue of $288,000 compared to revenue of $340,000 for the 3 months ended December 31, 2017. All the revenue recognized in 2018 and $140,000 of the revenue recognized in '17 is attributable to work performed under an award of a National Institutes of Health grant. This grant is in support of PLx's novel formulation of aspirin for the chemoprevention of colorectal cancer.

2017 also included the recognition of $200,000 of deferred revenue associated with the Lee's Pharmaceutical license agreement that was terminated in October 2017.

Research and development expenses were $890,000 for the fourth quarter of 2018 compared to $2.4 million in the fourth quarter of '17, a decrease of $1.6 million. The expense in both periods reflects continued product development and manufacturing activities for Vazalore. The fourth quarter of 2018 included spending related to the development, dissolution and stability testing of the new formulation of Vazalore. The 2018 spending was lower than the fourth quarter of '17 as much as the formulation development work was done in-house in our Houston lab, thus saving costs. The fourth quarter of '17 also included more actual manufacturing-related spending until we ceased manufacturing in early 2018 as a result of some inconsistencies in a key ingredient.

As we turn to the first half of 2019, spending will increase in this area as we begin to manufacture development-scale batches and continue to gather stability data to be included in our briefing package to be submitted to the FDA in the second quarter of '19. After we attend the FDA Type C meeting, spending will increase further as we manufacture cGMP registration batches to be included in the sNDA submission planned for the end of this year.

General and administrative expense remained roughly flat at $1.9 million in the fourth quarter of 2018 compared to the fourth quarter of 2017. The fourth quarter of '18 included incremental prelaunch marketing spend of $200,000 and some additional headcount as we get closer to the commercial launch of Vazalore.

The fourth quarter of 2017 included $200,000 noncash loss on the lease of the former Dipexium headquarters in New York City as well as higher noncash stock-based compensation of $200,000.

In the fourth quarter of 2017, we had an impairment of intangibles line in the P&L, where we recorded a noncash charge of $2.3 million or $0.26 per share. This charge is due to the write-off of the in-process R&D and intangibles related to the former Dipexium product, Locilex. Other income net of expense totaled $5.5 million for the fourth quarter of 2018 compared to $1.6 million of net other expense in the prior year period. The change is largely attributable to the change in the fair value of a warrant liability of $5.7 million of other income in '18 versus $1.4 million of expense in 2017.

The change is largely attributable to the noncash change in fair value of the warrant liability, primarily due to the fluctuation of the price of the company's common stock. An increase in the company's stock price causes an increase to the liability, thus higher expense for the period, whereas a decrease in the stock price causes a decrease to the liability, thus an increase in income.

Interest expense of $296,000 for the fourth quarter of '18 includes $178,000 of cash interest related to our term loan with Silicon Valley Bank and the rest includes the amortization of the debt discount and payoff fee at the end of the loan. Cash interest in 2017 was $159,000, slightly lower than 2018 due to higher interest rates year-over-year.

The $7.5 million loan was entered into in August of '17, and we had a right to borrow an additional $7.5 million on or before December 31, 2018, assuming $20 million of equity financing and approval of Vazalore 81 milligram. These conditions were not met prior to December 31, 2018. We had been paying interest-only payments on the term loan. But starting March 1, 2019, we paid our first monthly principal payment of $313,000. Interest income of $78,000 in the fourth quarter of '18 was slightly higher than $64,000 in '17 due to higher interest rates in '18 versus '17.

Net income for the fourth quarter of 2018 was $2.9 million or $0.34 per share compared to a net loss of $7.9 million or $0.90 per share for the fourth quarter of '17. Note that 2018 included $5.7 million of income or $0.65 per share related to the change in the fair value of the warrant liability.

We ended December 2018 with $14.3 million in cash and cash equivalents and our cash burn for the quarter was $2.3 million.

Natasha mentioned our exciting news on the $15 million convertible preferred stock financing. As a reminder, on December 20, we announced entering into a stock purchase agreement with funds affiliated with Park West Asset Management to purchase 15,000 shares of newly issued Series A convertible preferred stock for gross proceeds of $15 million. The preferred stock is convertible into common shares at a conversion price of $2.60 per share. Holders of the preferred stock will be entitled to the initial dividend rate of 8% per annum, which will stop accruing at the date of the FDA approval of Vazalore.

The dividends are compounded quarterly and payable in cash or preferred stock at the company's option. The agreement was subject to the approval of the company's stockholders, which was received February 19 with official closing of the transaction on February 20. With the addition of $15 million convertible preferred stock financing and careful planning of our prelaunch marketing spend, we anticipate having sufficient cash flow through the approval of Vazalore expected in early 2020.

With that, I'll turn the call back to Natasha to share more details of our commercialization plans.

Thank you, Rita. To best understand our strategic approach, I'd like to provide some additional color on the large market opportunity we see and the very compelling scientific data that we have in hand to support Vazalore, the first ever FDA-approved liquid-filled aspirin capsule.

Roughly 27 million Americans suffer from atherosclerotic cardiovascular disease, or ASCVD, meaning they had a previous vascular event, such as a heart attack or a stroke, or a previous vascular procedure, such as a stent placement, bypass operation, carotid operation or have imaging evidence of significant vascular disease, such as an ultrasound or an angiogram. There are an additional 16 million patients with diabetes who do not currently have ASCVD, but the fact that they are diabetic makes them at much greater risk for an event.

This addressable patient population of about 43 million translates into a total retail market size of approximately $10 billion, wherein even a small market share for Vazalore would generate significant revenue. Aspirin is considered a foundational treatment for patients with ASCVD and is the most extensively used drug worldwide. Now, there will be a better aspirin for these high-risk patients.

Let me explain why Vazalore is better than the currently available aspirin products. Using our patent-protected PlxGuard technology, Vazalore delivers both better antiplatelet efficacy over the standard of care coated aspirin and improved G.I. safety. When clinicians prescribe aspirin, they expect to block platelets by completely suppressing thromboxane generation. The FDA and clinical practitioners consider thromboxane inhibition to be the best indicator of aspirin effectiveness.

However, it turns out that many patients on coated aspirin still generate thromboxane, putting them at risk for a heart attack or a stroke. Physicians seeing their patients suffer more events while on aspirin therapy have named this clinical problem aspirin-resistance. We now know that this is really a bioavailability or formulation issue.

What's unique about Vazalore and the reason we believe that Vazalore has the potential to transform the market is that Vazalore delivers fast, reliable and safe aspirin therapy. First, Vazalore's action is fast. In fact, it can achieve a complete antiplatelet response 4x faster than coated aspirin. Second, Vazalore has a very reliable and predictable absorption resulting in better bioavailability compared with coated aspirin. In fact, PK studies demonstrated that Vazalore delivered 5x more aspirin in the bloodstream compared with the coated aspirin formulation after 3 days of treatment.

This greater bioavailability translates into better and more sustained antiplatelet efficacy with twice as many patients achieving a complete antiplatelet response after 3 days of treatment compared with coated aspirin. The faster and more reliable platelet inhibition achieved with Vazalore may be particularly important in the hospital management of acute vascular events where the speed of onset and reliability of antiplatelet effect can be lifesaving.

A major component of aspirin narrative amongst healthcare providers is its potential adverse effects on the G.I. system. Patients who experience G.I. upset from aspirin often fail to comply with the recommended aspirin regimen. In a randomized double-blinded study published in the American Journal of Gastroenterology, our objective was to determine whether Vazalore, with its unique delivery platform, could reduce gastric erosions and ulcers. The study compared upper G.I. damage of immediate-release aspirin and Vazalore in healthy subjects following 7 days of oral 325 milligram once-daily dosing. The findings were extremely encouraging.

A third-party blinded review of the endoscopic study revealed that Vazalore demonstrated a 71% lower risk of ulcers than regular aspirin. These compelling clinical findings validate the benefits of Vazalore and its novel targeted release mechanism of action. Our patented PLxGuard delivery system selectively releases the aspirin into targeted areas of the G.I. tract. We recently developed a mechanism-of-action video for our website, which can be accessed by the healthcare professional. This drug delivery platform offers clear and distinct advantages, namely greater absorption, efficacy, safety and tolerability, and is the reason for our strong and extensive patent life.

We are intensifying our focus on preparing for our commercial launch of both dosages, the already approved 325 milligram and its companion product, the 81 milligram, subject to regulatory approval. We expect to submit an sNDA to the FDA in late 2019.

Aspirin is the foundational therapy for all ASCVD patients and is represented in all guidelines as a Class Ia recommendation. We plan to focus our messaging to the healthcare professional on prescribing Vazalore for patients while in the hospital for an acute event and maintain them on therapy as they transition into chronic treatment.

Our research also shows that when therapies are initiated in the acute care hospital setting, adherence is dramatically enhanced.

To help us with our communications and outreach plans to the healthcare professionals, in January, we held our second annual meeting of our esteemed Scientific Advisory Board in Boston, once again chaired by Dr. Deepak Bhatt, Professor of Cardiology and Head of Interventional Research at Brigham and Women's Hospital and Harvard Medical School. Our esteemed advisers expressed their continued commitment to education on the unmet need for a better aspirin and enthusiastically endorsed our commercial strategy and value proposition.

We are also thrilled to share that in February, Dr. Mark Alberts joined our Scientific Advisory Board. Dr. Alberts is the Physician-in-Chief of the Ayer Neuroscience Institute at Hartford HealthCare and Chief of Neurology at Hartford Hospital. A renowned thought leader, Dr. Alberts has been instrumental in developing the National Stroke Center standards for U.S. hospitals.

Our Scientific Advisory Board now includes key thought leaders across cardiology, interventional cardiology, gastroenterology and neurology to help us raise awareness about the benefits of Vazalore and the potential to address a critical and very sizable unmet medical need.

We are continuing our presence in key cardiology and neurologic conferences in order to cultivate relationships within the medical community and contribute to the educational narrative for a better aspirin option. Last November, Dr. Deliargyris, our Chief Medical Officer, who is an interventional cardiologist and an internationally recognized expert in thrombosis, gave an invited lecture on improving the benefit-risk balance of antithrombotic therapies at the Cardiovascular Clinical Trialists Convention, or CVCT, in Washington, D.C.

We also attended the American Heart Association Conference, where we, again, took the opportunity to interact with thought leaders in the field, but also began engaging with AHA's dedicated patient organization and women's health task force.

Finally, we are delighted to announce the 2 abstracts on Vazalore's value proposition have been accepted for presentation at the upcoming ISPOR Conference, the leading global conference for health economics and outcomes research.

Ultimately, our commercial strategy targets the prescriber and the patient by using a combination of a physician-directed field force, the retail trade and consumer marketing programs. Our market research shows a very high intent to prescribe with more than 80% of specialists polled indicated that they would prescribe or recommend Vazalore for their secondary prevention patient.

We're extremely encouraged by these numbers as well as the findings that consumers indicated that they were far more likely to purchase specific over-the-counter products when prescribed by their doctor and likely to pay a premium. We will continue to build advocacy through our esteemed Advisory Board and develop regional thought leaders with our field force.

We are continuing discussions with the retail trade, including the top chain drugstores and mass merchandisers as we emphasize how Vazalore can help patients and at the same time breathe new life into this category, which hasn't seen innovation in decades.

We're also currently developing a consumer marketing program to build brand familiarity for our targeted patient profile using appropriate media channels and expect to execute shortly after launch to ensure pull-through at retail shelf.

Let me wrap-up by saying that we are tracking well in all functional areas leading up to the regulatory submission at the end of this year and commercial launch of Vazalore in mid-2020. We have an outstanding opportunity in front of us to transform the aspirin market and to leverage our proprietary PLxGuard targeted delivery platform to change the standard of care in the secondary prevention market.

With that, I'd like to open the call for questions. Operator, please go ahead with the instructions.

(Operator Instructions) And our first question comes from [David Lucy] from Rox Pharmaceuticals.

Thank you very much to the PLx team. It's an exciting opportunity.

(Operator Instructions) I am not showing any further questions at this time. I will now return the call back to Natasha Giordano, CEO, for any further remarks.

Thank you. We believe that Vazalore's unique mechanism of action and its exemplary efficacy and safety profile offer the potential to transform the aspirin market and to become the new standard of care for healthcare professionals treating ASCVD and diabetic patients at risk. We are very excited about this market opportunity, and we're confident that we'll execute on our strategy to bring this novel, best-in-class therapeutic product to market. Thank you, again, for your time this morning, and have a great day.

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