PLx Pharma Inc (PLXP) 2020 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the PLx Pharma First Quarter 2020 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Lisa Wilson, Investor Relations for PLx. Thank you, and please go ahead, ma'am.

Thank you, Chris. Welcome to PLx Pharma's Q1 2020 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 Pharma 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 May 15, 2020. 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 today. The world has changed dramatically in the months since our last earnings call. We're facing a shared adversity that has affected all of us in our family lives as well as in our professional lives. Our hearts go out to all affected by COVID-19, and our deepest appreciation and thanks to everyone working every day serving our communities.

During these challenging times, we remain steadfast in our commitment to advancing VAZALORE and ensuring that our novel aspirin product continues to progress through the regulatory and commercialization process. As you may recall from our discussions last quarter, we will be conducting a bioequivalence, or a BE, study for VAZALORE 325 milligrams to support our supplemental New Drug Application, or sNDA. At the end of April, we held a Type C meeting with the FDA to align on the study design for VAZALORE 325 milligrams. We're currently awaiting the minutes of that meeting, which will confirm the required study design.

We've engaged a CRO to conduct the BE study and are prepared to commence work once the requirements are confirmed with the FDA. Assuming no COVID-19-related delays, we are targeting filing the sNDA submissions for both VAZALORE 325-milligrams and VAZALORE 81-milligram doses to the FDA by year-end 2020.

In addition, our previously announced $8 million Series B convertible preferred stock financing with Park West and MSD Partners will be voted on by stockholders later today. We're excited to continue our partnership with Park West, our largest stockholder; and our new partner, MSD.

I will now turn the call over to our CFO, Rita O'Connor, to discuss the first quarter results. Rita?

Thank you, Natasha. We recognized revenues of $2,500 for the 3 months ended March 31, 2020, compared to revenues of $318,000 for the prior year period. Revenue in both periods is attributable to work performed under a federal grant from the National Institute of Health, which will be coming to an end in the second quarter of 2020.

Research and development expenses totaled $514,000 for the 3 months ended March 31, 2020, versus $1 million in the prior year period. This decrease reflects $300,000 of lower reimbursable expenses related to the NIH grant, which will be completed in the second quarter. Manufacturing-related spending also decreased in the quarter as we have completed the required registration batches for the sNDA submissions and are working on continued required stability testing.

Spending in this area will continue to be less than prior quarters until we start validation and commercial production at some point after the sNDAs are submitted and additional capital is obtained. Although manufacturing spending will decline, overall R&D spending is anticipated to increase in the second and third quarters as we begin our planned BE study later this month.

General and administrative expenses totaled $2.5 million in the 3 months ended March 31, 2020, compared to $2.2 million in the 2019 first quarter. The increase is primarily due to pre commercial-related activities for VAZALORE and increased noncash stock-based compensation. G&A expense is expected to remain at current levels for the next few quarters as we selectively spend on prelaunch sales and marketing activities, such as developing professional and consumer messaging and planning for retail trade merchandising and support.

Other income expense net totaled $4.5 million of net other income in the 3 months ended March 31, 2020, compared to $7.9 million of net other expense in the prior year period. 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. This change in the warrant liability is $4.6 million of other income in the 3 months ended March 31, 2020, compared to $7.7 million of other expense in the comparable 2019 period.

Interest and other expense for the first quarter of '20 was $146,000, which decreased $149,000 from the prior year period. This was due to a combination of lower principal balance on our term loan and lower interest rates. The principal balance of our $7.5 million term loan was paid down to $3.4 million as of March 31, 2020. This loan is expected to be paid off in the first quarter of 2021.

Net income attributable to common stockholders for the first quarter of 2020 was $1.2 million or $0.08 per basic and diluted share compared to net loss of $23.7 million or $2.71 per share for the first quarter of 2019. The first quarter of 2020 includes a noncash gain of $4.6 million or $0.45 per share compared to a noncash loss of $7.7 million or $0.88 per share in the first quarter of '19, all related to the change in the warrant liability.

The first quarter of 2020 included $320,000 or $0.03 per share related to the Series A preferred stock dividend, while the first quarter of 2019 included $12.8 million or $1.47 per share for the beneficial conversion feature and preferred stock dividends related to the Series A transaction completed in February 2019. As discussed last quarter, we entered into the purchase agreement with Park West Asset Management and MSD Partners to purchase 8,000 shares of Series B convertible preferred stock for gross proceeds of $8 million. The preferred stock will be issued at $1,000 per share and will be convertible into common shares at a conversion price $3.10 per share.

Holders of the preferred stock will be entitled to an initial dividend rate of 8% per annum, which will stop accruing on the date of the FDA approval of the sNDAs for VAZALORE 325 and 81 milligram. The dividends are compounded quarterly and payable in cash or preferred stock at PLx's option. While we issued warrants along with this financing, the warrants are canceled upon stockholder approval. Our stockholder meeting to approve the transaction is scheduled for later today, and the related results will be included in an 8-K to be filed next week.

As of March 31, 2020, cash and cash equivalents were $9.3 million with the cash burn for the quarter of $4.7 million. The $8 million Series B preferred stock financing should provide cash runway until the second quarter of 2021. The company will need additional financing upon submission of the sNDAs. The timing of submissions and the amount of capital raised will determine the level of prelaunch marketing spend and commercial inventory build prior to the approval of VAZALORE. We expect quarterly cash burn to be closer to $4 million as lower manufacturing spending is replaced with costs associated with the BE study.

Regarding COVID-19 outbreak, we are fortunate that we have not experienced any significant impact to supply chain or other operational or administrative functions. Thermo Fisher Scientific manufactures our product in Cincinnati, Ohio and is currently fully operational as it relates to VAZALORE.

With that, I'll turn the call back over to Natasha, so she can share additional updates about our recent activities. Natasha?

Thank you, Rita. We are looking forward to completing the regulatory requirements to support VAZALORE through these final steps of the regulatory process. Our goal is to submit strong sNDAs that address all of the FDA's requirements and demonstrate that the new formulation of VAZALORE performs like the approved formulation.

The minutes from our April Type C meeting will confirm the FDA's study design requirements we discussed. We have a good understanding of the FDA's preference on the design of the study, and we've already engaged a CRO to conduct a study. Assuming there are no significant delays due to COVID-19, we plan to begin enrollment once all details have been confirmed with the FDA.

Let me briefly summarize the key reasons we are confident about VAZALORE's potential to transform the aspirin market. VAZALORE has demonstrated faster and more complete platelet inhibition, providing a more reliable anti-platelet effect than enteric-coated aspirin. As the first liquid-filled aspirin capsule, it is truly a novel addition to the aspirin category.

Our target market includes vascular patients. Those people who have had a heart attack, stroke or a vascular procedure, also known as patients who need secondary prevention. The guidelines for treatment of these patients require aspirin as a foundational and long-term therapy. Our addressable market also includes diabetics at a higher risk of having an initial vascular event and whose doctors recommend aspirin therapy. Today, these 2 patient groups together represent more than 40 million people in the United States and a potential $10 billion retail market.

We continue to engage with health care providers across cardiology, neurology and gastroenterology to ensure that VAZALORE's unique mechanism of action and robust clinical profile are well understood. These specialists will have a central role in treating these patients and encouraging them to comply with recommendations. COVID-19 has impacted live attendance at many of the large global medical conferences that we typically attend to showcase VAZALORE's clinical profile. We continue to execute upon our medical, education and publication strategy as many of these conferences have been converted to virtual presentations.

Over the last couple of years, we've seen a universal growing interest in aspirin amongst clinicians. To that end, we continue to analyze our data to better understand and highlight the benefits of improved bioavailability and absorption of VAZALORE, including various sub analyses and subpopulations.

In February, an original poster entitled Bioavailability of Aspirin in Fasted and Fed States of a Novel Formulation of a Pharmaceutical Lipid-Aspirin Complex was accepted and presented at the 2020 International Stroke Conference, the premier meeting dedicated to the science and treatment of cerebrovascular disease. The study was simultaneously published in the Journal of Thrombosis and Thrombolysis.

At the end of March, 2 original abstracts that showcased important advantages of VAZALORE were presented at the American College of Cardiology's virtual annual scientific session. The first entitled Improved Pharmacologic Profile of a Novel Liquid-Aspirin Formulation compared with Enteric-Coated Aspirin, a Pooled Patient Level Analysis of 2 Randomized Crossover Studies, described the improved pharmacologic profile over enteric-coated aspirin and was presented as a moderated poster by Dr. Deepak Bhatt of Brigham and Women's Hospital and Harvard Medical School.

The second abstract entitled Impact of Weight on the Anecdotal Effects of Aspirin, Results of a Pooled Analysis of 2 Randomized Crossover Studies, comparing a liquid-aspirin formulation with enteric-coated aspirin, assessed patient weight in response to aspirin and discussed VAZALORE's ability to mitigate the negative impact of increasing weight on enteric-coated aspirin efficacy. These prestigious conferences offer an important opportunity for us to engage with the experts in the field and to highlight VAZALORE's unique qualities.

We are pleased that we have 2 more abstracts accepted for presentation at 2 leading global conferences, EuroPCR and the European Society of Cardiology, which is the largest cardiology conference in the world. Let me conclude by stating that our highest priority is delivering VAZALORE to help the millions of vascular patients who can benefit from a novel aspirin formulation and to the health care professionals treating them. We're excited to complete the remaining regulatory requirements and submit our sNDAs to the FDA by year-end in order to bring this innovative therapy to market.

With that, I will open up the call for questions. Operator, please go ahead with the instructions.

(Operator Instructions) Our first question comes from the line of Elliot Wilbur with Raymond James.

I guess I'm old enough or have been around long enough to realize that companies aren't going to give us quite a bit of detail about their interactions with the agency, particularly ahead of receipt of the actual minutes of the meeting. But I guess the basic question investors always want to know is, is -- or were there any surprises or significant deviations from your prior expectations with respect to the path forward for VAZALORE? And then I want to make sure that I have this down pat. So the 325 and the 81 will be submitted simultaneously in the same package, is that the plan? Or is that, in fact, perhaps not correct?

Okay. So let me take your first question. We have had many interactions with the FDA, and our meeting in late April specifically addressed the bioequivalent study design. And so we have a good understanding of what they prefer and what they require for the sNDA filing. However, I do want to wait until the meeting minutes come across. And since it was late April, we expect those meeting minutes to come shortly. They typically come within 30 days of the meeting. In terms of the sNDA filing for 325 milligrams and 81 milligrams, we will be submitting 2 filings but in parallel. So 325 and then 81 milligram will be submitted shortly thereafter.

Okay. And then perhaps just as a quick follow-up to that. In thinking about -- so obviously, you're not going to disclose the minutes themselves or the details of them. But what data points or announcements might we get in advance of the actual sNDA submission? And I'm thinking about maybe announcements around at least the commencement of the BE studies or perhaps a more detailed announcement with data post the actual completion of that. Just wondering what your current line of thinking is around those milestones.

Okay. We'll continue to disclose and update the market with every quarterly release for certain. But what I would say to you, Elliot, is that we do have a good understanding of what the FDA will require, and we've factored that into our targeting the submissions for the end of this year.

Okay. And just last question. Obviously, there's been quite a bit of disruption on the commercial side. Just -- so wondering about your ability to kind of stay engaged with potential retail partners down the road. Just any updates on conversations you've had with them and sort of what activities you're still able to maintain, are currently ongoing in order to put you in the best possible position for launch post the actual sNDA submission.

Thank you, Elliot. Well, our Vice President of Trade Sales, Steve Valentino, has been managing those relationships and those partnerships and those meetings. And yes, certainly meetings are not being held live, but conversations continue, virtual meetings continue. They continue to be engaged and they're eager, as much as we are, to bring VAZALORE to market. So we're feeling pretty good about the conversations we're having with them and updating them as we do the market.

Our next question comes from the line of Esther Hong with Janney.

So what steps remain prior to sNDA filing other than the bioequivalence study and the completion of stability studies? And then can you remind us of the potential timeline from filing submission -- filing to an approval decision? And then with the potential approval in 2021 next year, what could we expect in terms of prelaunch activities when a U.S. launch could take place? Any additional details on that?

Thanks, Esther. Okay. So the first question was what other steps do we need to take prior to the filings. We do indeed need to execute or conduct the bioequivalence study, and we have already engaged a CRO. We are ready to commence that work just as soon as we get the confirmatory meeting minutes from the FDA. That, alongside the manufacturing data that we will fill into the CMC portion of the filing, those 2 elements together is what makes this, what we think, as a very strong filing for VAZALORE. So those are really the 2 things that we need to accomplish.

As far as the CMC portion of the filing, we've been working on that for a while now. So I anticipate that everything will come together very nicely, and we're confident that we will submit a very strong sNDA package. In terms of the timeline to approval, we continue believe that this is a CMC supplement, where we will provide not only the CMC portion of the filing, but now also the bioequivalence data as well. So we do continue to believe that this will be a 4- to 6-month review period for the FDA. But of course, we will always wait for the FDA to respond and give us their target PDUFA approval timeline.

What to expect on prelaunch, we're going to continue to focus on our 3 major constituents, right? The health care professional with which we are very much committed to medical education and our publication strategy. The retail partnerships that we're building and continue to build and to plan for this launch. And of course, the consumer. We will continue, and we have been working on the consumer and the health care professional messaging commercial plan. But of course, we also will need to secure additional financing typically around the submissions, and that will dictate the level of spend that we'll put across those 3 areas. But those 3 areas are our main pillars for our commercial strategy.

(Operator Instructions) Our next question comes from the line of Jason Butler with JMP Securities.

I had 2. Just first one, as you think about longer-term impacts of the COVID pandemic and how are -- to what extent had you already been considering health care provider education, virtual tools like e-education, et cetera? And is that changing now as you think about the impact of the pandemic? And then second question, just on supply chain. Can you talk about how you think about longer-term diversification from a -- is it a single site? Would you diversify to multiple sites or multiple suppliers?

Jason, so in terms of COVID and longer-term impact, I'll start by saying we have not skipped a beat in terms of our medical education plans. Because many of these conferences and the meetings that we're having are all being held virtually even with our scientific advisory board, which really comprises the key thought leaders in this therapeutic space.

In terms of e-education, that has always been part of our commercial planning and strategy. So we will continue to explore new venues and how to get to these cardiologists and neurologists specifically. The education of clinicians is a key fundamental aspect of our strategy, but it links with the retail partnerships and the consumer education as well. So we're exploring all of those factors. In terms of the supply chain, I'll let Rita answer that.

Sure. In terms of supply chain diversity, it's a great question. It's one that the team and I are always talking about. And right now, we have a single site for our manufacturing of our capsules, but it is U.S.-based. It's in Cincinnati, Ohio, and they have been fully operational during this time. And as well as we have enough supply of our key ingredients right now. However, as always, some of these issues, it's always good to take a look at backup suppliers. So once -- it's a little difficult, as you can imagine, to validate a lot of different suppliers and manufacturing sites. It costs some money. So -- but that is one of our strategies long-term to diversify both our sites as well as our supply with raw materials.

And this does conclude today's question-and-answer session. I would now like to turn the call back to Natasha Giordano for closing remarks.

Thank you, Chris. Thank you for your time this morning. We look forward to keeping you updated as we continue to advance VAZALORE through the regulatory process and prepare to bring this transformational aspirin product to market.

During these challenging times, we hope that you and your families remain safe, and have a great day.

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