PLx Pharma Inc (PLXP) 2019 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the PLx Pharma Q3 2019 Earnings Conference Call. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Lisa Wilson, Investor Relations of PLx Pharma. Please go ahead, ma'am.

Thank you, Josh. Welcome to PLx Pharma's Q3 2019 Earnings Results Call. This is Lisa Wilson of In-Site Communications, 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 conference 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.

The archived webcast will be available for 30 days on our website, plxpharma.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on November 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. This is an especially exciting time for us at PLx as we approach the final phases of the regulatory process for VAZALORE and make progress toward our planned launch in the middle of next year. We're tracking well against our milestones, as I'll share in a few moments, and we're particularly encouraged by the growing enthusiasm for our innovative products, both within the clinical community and from the retail trade. We're engaged in typical interactions with the FDA to clarify labeling and data requirements for our supplemental new drug application submission.

In the time leading up to our commercial launch, we're implementing our publication strategy to raise awareness in the medical community with data supporting the efficacy and safety of VAZALORE. There's a great deal of interest in aspirin therapy today, and we believe the market is ready for a novel therapeutic agent that provides faster, more reliable aspirin absorption and better platelet inhibition compared with the current standard of care while reducing GI side effects associated with aspirin.

Now I'll turn the call over to our CFO, Rita O'Connor, to discuss third quarter results. Rita?

Thank you, Natasha. We recognized revenue of approximately $41,000 in the third quarter of 2019 compared to revenue of $216,000 in the third quarter of 2018. All the revenue recognized is attributable to work performed under an award of a National Institutes of Health grant. In May of 2017, we had announced that we had been awarded a $1.9 million grant to support our formulation of aspirin for chemoprevention of colorectal cancer. This grant is nearing completion with less than $100,000 remaining through early 2020.

Research and development expenses were approximately $1.2 million for the third quarter of 2019, roughly unchanged from the third quarter of '18. The expenses in both periods included continued development and manufacturing activities for VAZALORE. The spending in the third quarter was related to continued stability testing of the registration batches manufactured last quarter. Spending in this area for the fourth quarter will remain at the same level as we move from registration batches to validation batches at our contract manufacturer, Thermo Fisher Scientific. Spending for the first quarter of 2020 in R&D will be reduced as we complete validation and then move into commercial production to prepare for the launch of VAZALORE in mid-2020. The cost of commercial production will be included in inventory and, thus, hit the P&L upon shipment to the trade as cost of goods sold.

General and administrative expense totaled $2.5 million in the third quarter of 2019 compared to $1.8 million in the third quarter of 2018. This increase is due to commercial-related activities to support the upcoming launch of VAZALORE. G&A expense is expected to increase the rest of this year and into next year as we increase sales and marketing spend. This spend will focus on the health care professional, retail trade and consumer.

Other income and expense net was $5.4 million of net other income in the third quarter of 2019 compared to $0.60 million of net other expense in the third quarter of '18. This 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 stock. This change in the warrant liability was $5.5 million of other income in the 3 months ended September 30, 2019, compared to $0.4 million of other expense in the comparable 2018 period.

Net income attributable to common shareholders for the third quarter of 2019 was $1.4 million or $0.09 per basic and diluted share compared to net loss attributable to common shareholders of $3.4 million or $0.39 per share for the third quarter of '18. This includes a noncash gain of $5.5 million or $0.55 per share compared to a charge of $0.4 million or $0.05 per share in 2018 related to the change in the warrant liability. The third quarter of 2019 also included $0.3 million or $0.03 a share for preferred stock dividends related to the Series A $15 million convertible preferred stock financing completed in February of 2019.

As of September 30, 2019, we had cash and cash equivalents of $18.5 million. Our net cash burn for the quarter was a little over $2.7 million, which reflects $3.4 million of operating expenses and includes $0.9 million of debt principal payments partially offset by $1.5 million of net proceeds from the issuance of our common stock under our equity distribution agreement or ATM. Going forward, we expect our cash burn to be around $6 million for the fourth quarter and increase by a few million dollars in early 2020 as we build commercial inventory and increase our sales and marketing expenses.

We have cash on hand to finance operations through the anticipated date of FDA approval of VAZALORE. To finance the U.S. market launch, we intend to review nondilutive financing alternatives, such as debt and royalty-based financing.

Prior to FDA approval, we may also opportunistically raise additional capital to accelerate certain precommercial activities. This could be in the form of debt or equity and might include issuing stock under our ATM. To date, we have raised just over $2 million under the ATM.

With that, I'll turn the call back to Natasha to provide more details of our commercialization activities. Natasha?

Thank you, Rita. The aspirin market is in need for innovation, and we are eager to be part of this important transformation that has the potential to benefit millions of patients. As you know, our target population for VAZALORE is the secondary prevention market, defined as people who have experienced a heart attack, stroke or have undergone a vascular procedure. We're also targeting diabetics who are at a higher risk for having an initial vascular event and are considered to be candidates for aspirin therapy. We believe VAZALORE can play an important role in treating both groups, which together represent more than 40 million patients for a $10 billion market opportunity, representing a huge potential target audience for VAZALORE.

Our prelaunch activities are centered on raising awareness, education and engaging our 3 key constituents: the health care professional, the retailer and the consumer. It's important to keep in mind that even though VAZALORE is an over-the-counter product, the doctor will play a critical role in recommending VAZALORE to patients who can benefit from lifelong daily aspirin therapy. And as our research confirms, for the patients we're targeting, when a doctor recommends an OTC product for their patient, they will seek out that product in the store and will be willing to pay a premium for it.

I'd like to discuss each one of these important groups a bit further. We know that the health care professionals are data-driven when it comes to making prescribing decisions. Critical to our launch into the specialist community is that we continue to provide them with data and information supporting VAZALORE and its unique mechanism of action and performance versus both enteric-coated aspirin and regular aspirin. Part of this is clarifying which patients benefit the most from aspirin therapy and to affirm its foundational use for secondary prevention. Some of the key metrics that really resonate with physicians are that VAZALORE offers up to 5x higher absorption and 2x better platelet response than coated aspirin and 71% lower risk of ulcers than regular aspirin.

To share this data, we've increased our presence at major cardiovascular and neurology conferences and have developed a publication strategy to inform physicians of the compelling data they will need to understand in treating their patients at risk for cardiovascular disease. In early September, our abstract was presented at the European Society of Cardiology, the ESC congress in Paris. Dr. Dominick Angiolillo, a world-renowned interventional cardiologist and esteemed member of our scientific advisory board, was the lead author and presented the abstract entitled Pharmacokinetic and Pharmacodynamic Assessment of a Lipid-based Aspirin Formulation: Results of a Prospective, Randomized Crossover Study. The data presented at ESC is the data that supported the FDA's approval of VAZALORE 325 milligrams and demonstrated that its novel liquid formulation delivers fast and reliable aspirin absorption, which is bioequivalent to that seen with immediate-release aspirin.

These findings, together with results from previous studies showing significant reductions in the risk of gastric erosions and ulcers with VAZALORE, suggest that our novel compound has the potential to provide a superior benefit/risk profile compared with currently available aspirin options. The presentation was very well received by cardiologists in attendance, and we're happy to share that the abstract was simultaneously published in the Journal of Thrombosis and Thrombolysis.

Following ESC, we attended the Annual Transcatheter Cardiovascular Therapeutics, the TCT conference, while -- where we sponsored a Continuing Medical Education event entitled Aspirin for the Interventionalist: More Than Meets The Eye. Dr. Gregg Stone from Mount Sinai and Dr. Angiolillo from the University of Florida, chaired this symposium, which addressed the critical role of aspirin therapy in the treatment of cardiovascular disease. This event was sponsored in partnership with the Cardiovascular Research Foundation and was supported through an educational grant that PLx provided.

This well-attended engagement with the experts in the field is extremely important in these months leading up to our commercial launch. These conferences are an excellent platform for us to raise awareness and build brand familiarity among health care professionals and key thought leaders. Going forward, we plan to generate data for publication in peer-reviewed journals. We plan to expand our presence at all key cardiology, neurology and pharmacy conferences over the next few quarters.

Turning now to the trade. Our interactions with several key retailers continue to be very positive as we've initiated the commercial planning phase. This shift speaks to the enthusiasm retailers have shown for our innovation around aspirin therapy as they look to VAZALORE to breathe new life into a category that has been flat and declining.

And lastly, I'd like to highlight the importance of the consumer who has a critical voice in the decision to purchase VAZALORE. These patients are typically very motivated and take responsibility for their own health in an effort to avoid having a heart attack or stroke. They, therefore, rely quite heavily on their doctor's recommendation and have indicated a strong intention to follow that guidance. We are currently developing consumer-focused educational marketing campaigns. All 3 of these groups are critical to the success of VAZALORE, and we're very pleased that we're making significant progress to position VAZALORE as the new standard of care in the treatment of high-risk cardiovascular patients.

Let me conclude by saying that the enthusiasm within the medical community today for a novel aspirin therapy is growing. Health care professionals are eager for a new aspirin to address this critical unmet medical need for patients who require lifelong maintenance doses of aspirin. We're excited that we're advancing toward approval and launch of a product that we believe will be transformative.

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

(Operator Instructions) Our first question comes from Donald Ellis with JMP Securities.

I have 3 questions. I'll ask them all at once and then listen to the response. The first question is regarding the PK and the PD data you presented at the ESC. And basically, are there any differences between the acceptance of your technology, U.S. versus Europe physicians?

Second question is regarding the medical education at the TCT conference. What kind of turnout do you get for events like this? And what are your medical education plans for the first half of 2020?

And my last question is about the approval, I guess going to happen middle of next year. What type of activities have to be completed between the actual approval and the launch? And how much time will that take?

Okay. Thanks, Don. We'll try to take all 3 of your questions. So the first question was about the recently published study on PK and PD, and that was against the immediate-release aspirin in the market to show bioequivalence, and that's what gained us our FDA approval in the U.S.

In terms of Europe, I can tell you that our presence at several of the larger cardiovascular conferences has shown us that the European cardiologist, in particular, is very interested in VAZALORE and is looking to us to say, "Okay, when are you going to bring this to the European market?" And of course, there's a different regulatory process in Europe that we would need to undergo, and typically, it's country by country. We, though, intend to focus on the U.S. market primarily and initially, but we are thinking about strategically how we want to address the European market, whether it be on our own or through partnerships.

In terms of TCT conference, what we sponsored was a CME event, and the event was chaired by Dr. Gregg Stone of Mount Sinai and Dr. Dominick Angiolillo of the University of Florida. Gregg Stone is a very, very well-known top cardiologist in the country. This is his conference that he runs and draws a lot of attention from many, many cardiologists.

I will tell you that our conference -- our symposium was on -- in the early morning, and it was extremely well attended. And I think it's because of 2 things: One, the aspirin question and therapy decisions on what patients really need to benefit from lifelong aspirin therapy is in every conference right now. It's a hot topic. Physicians are very interested in understanding how to prescribe or how to recommend aspirin for especially their secondary prevention patients. They're also very eager to hear about a new formulation. And in that symposium, Dr. Angiolillo did speak about the options available to the U.S. market and the fact that VAZALORE is coming to the market in next year but also the benefits of providing better efficacy as it relates to antiplatelet benefit but also better GI safety, and there's a great deal of interest there. I was extremely encouraged and excited to see how many cardiologists came to that very early event that morning.

In terms of approval and activities between approval and the actual launch, that will involve hiring on the field force. That will involve doing more prelaunch marketing in the market through different regional and national advisory boards, potentially setting up our speaker programs as well. So those couple of months will be certainly very robust in terms of resource but preparing the market for the first day that a representative will walk through a physician's door. Hopefully, I've addressed all 3 of those.

Yes. No, you -- definitely. And if I could add a fourth. VAZALORE seems like an obvious product to be recommended by a retail pharmacy. What are your efforts going to be as far as that part of the channel?

So we've been meeting with the retailers, key retailers over the last couple of years. And we've progressed from meetings where we're educating the retailers in terms of VAZALORE and its benefits into initiating the real commercial planning phase. And so now the retailers that we're meeting with, or we're sitting with very regularly is planning on where the product will sit on the shelf, how we will partner to promote the product together because they look to VAZALORE as a product that can reinvigorate the aspirin therapeutic class. That class has been flat and declining recently. And so they're really excited about having a new product, especially that it's innovative. It's different and it brings very key benefits in terms of both efficacy and safety, which is such an unmet medical need at the moment for millions of patients.

Our next question comes from Esther Hong with Janney.

So a couple of questions from me, too. So first, can you elaborate on any expectations around labeling in that process with a product like VAZALORE? And then second, my question is can you speak about -- so there's a lot of good feedback from cardiologists. And so I was wondering if you could speak about any feedback from endocrinologists who are treating diabetics, which is a large population who benefit from a drug like VAZALORE. And then particularly, given that there are GI issues associated with some diabetic medications, what benefit can we expect from diabetics who would take VAZALORE versus aspirin.

Okay. Thank you, Esther. Yes. So around labeling, we've invested a lot of time and resource into developing the design of the package for VAZALORE 325 milligrams. And as you know, in the over-the-counter industry, the packaging that the product sits in is considered its labeling. So we've spent a lot of time and a lot of discussions with retailers, consumer market research, incorporating that feedback into our packaging. And we've had what I would call typical interactions with the FDA regarding labeling for 325 milligrams. And as we continue to get their feedback, we will incorporate that feedback and finalize the packaging for 325 and then apply that to the 81-milligram packaging and submit that labeling with our submission towards the end of the year. So it's quite different from the way that an Rx product labeling discussion goes with the FDA because of the labeling aspect of being the package itself.

In terms of feedback, what we're hearing in many of these conferences -- actually, the diabetic is a big topic for the medical community because they are at far greater risk of having a cardiac event than a person that has not -- does not have diabetes. So they're very much encouraged by the data especially as it relates to efficacy.

From a GI perspective, you imagine that, yes, diabetics are on a number of medications, some of which may include a PPI. Here, you have VAZALORE which has far greater benefit in terms of gastric erosions and ulcers, and specifically ulcers with a 71% reduction in the risk of having ulcers. I think the feedback that we're hearing is that the endocrinologists, especially for the diabetic patient, is really looking forward to a product that could provide better efficacy but also potentially eliminate the need for a PPI and have less risk of GI upset. And that GI upset can range from dyspepsia all the way through ulcerations.

And I'm not showing any further questions at this time. I would now like to turn the call back over to Natasha Giordano for any further remarks.

Thank you, Josh. In closing, let me reiterate our enthusiasm for the potential of VAZALORE to disrupt the aspirin market and to offer patients a more effective and safe alternative. The market is eager for an innovation in this space, and we believe that our proprietary drug delivery platform will enable us to lead this transformation. Thank you so much for your time this morning, and have a great day.

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