Societal CDMO Inc (SCTL) 2018 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Recro Pharma First Quarter 2018 Earnings Conference Call.

(Operator Instructions)

As a reminder, this call may be recorded.

I would now like to introduce your host for today's conference, Ms. Natalie Wildenradt. Ma'am, you may begin.

Good morning, and thank you for joining us on today's conference call to discuss Recro's first quarter 2018 financial results. This is Natalie Wildenradt, and I am joined today by Geraldine Henwood, President and Chief Executive Officer; Ryan Lake, Chief Financial Officer; Mike Celano, Chief Operating Officer; and John Harlow, Executive Vice President, Commercial. Following prepared remarks today by Gerri, Ryan and John we will open the call up for questions, for which Mike will also be available.

Earlier this morning we issued a press release detailing our financial and operating results for the 3 months ended March 31, 2018. The press release is available on the News and Investors page of our website at recropharma.com.

Before we begin our formal comments I'll remind you that various remarks we make today constitute forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our financial outlook; our plans for the commercialization of IV meloxicam, if approved; the market opportunities and acceptance of IV meloxicam and other regulatory and product development plans. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our expectations and forecasts and can be identified by words such as expect, plan, will, may, anticipate, believe, estimate, upcoming, plan, should, intend, and other words of similar meaning.

Any such forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties. These risks are described in the Risk Factors and the Management's Discussion and Analysis of Financial Condition and Results of Operation sections of Recro Pharma's Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2017, which is on file with the Securities and Exchange Commission and available on the SEC's website.

Any information we provide on this conference call is provided only as of the day of this call, May 9, 2018, and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events, or otherwise. In addition, any unaudited or pro forma financial information that may be provided is preliminary and does not purport to project financial positions or operating results of the Company. Actual results may differ materially.

In addition, on this call we will include references to IV meloxicam, an investigational product. Use of IV meloxicam has not been approved by the FDA. The safety and efficacy of the investigational use of IV meloxicam has not been determined. There is no guarantee that IV meloxicam will be approved for marketing by any regulatory agency.

I would now like to turn the call over to Gerri Henwood. Gerri?

Thank you, Natalie, and thank you all for joining us this morning.

We're off to a strong start in 2018, making meaningful progress across both the Acute Care and the manufacturing divisions of the Company. For those of you new to the Recro story, IV meloxicam, our lead product candidate, is a nonopioid once-daily preferential COX-2 inhibitor currently under review with the U.S. Food and Drug Administration for the management of moderate to severe pain.

Our PDUFA action date for IV meloxicam is May 26, 2018. We have no updates from FDA but believe they intend to be on time relative to the PDUFA date. Our commercial team is well prepared for the potential launch of IV meloxicam if approved by the FDA, as you will hear from John later in the call.

I would now like to provide a brief overview of some of the key milestones achieved and activities that have taken place over the past few months.

In May 2018 Recro announced the receipt of issue notifications from the U.S. PTO for 3 patents covering IV meloxicam. We anticipate one of these patents to be Orange Book listable as a product by process patent with a patent expiry in 2030. We remain committed to protecting the valuable innovations associated with IV meloxicam, and we're striving for further expansion of our strong intellectual property portfolio.

During the quarter, as previously expected, 2 preapproval inspections of sites associated with production of IV meloxicam drug product and supporting the new drug application for IV meloxicam were performed by the FDA.

In April, we presented 8 posters at the 43rd Annual Meeting of the American Society of Regional Anesthesia and Pain Medicine. The posters highlighted IV meloxicam data from Phase II and Phase III clinical trials across several moderate-to-severe pain settings, including abdominoplasty, bunionectomy, and major orthopedic procedures, as well as opioid use in certain important patient populations like patients of advanced age with renal impairment.

At both ASRA and the American Academy of Orthopedic Surgeons 2018 annual meetings we hosted extremely well-attended scientific symposiums discussing the challenges faced in acute postsurgical pain management.

During the first quarter we also published IV meloxicam papers in 3 peer-reviewed journals, including the Clinical Journal of Pain, the Journal of Pain Research, and the Journal of Clinical Pharmacology.

In February we hosted an Investor and Analyst Day in New York City, where we featured presentations by 2 prominent thought leaders in orthopedics and pain management. Dr. Eugene Viscusi, Director, Acute Pain Management at Thomas Jefferson University, and Dr. Richard Iorio, Chief of Adult Reconstruction at NYU Langone. There was also an in-depth discussion about what Recro's commercialization strategy and launch plan would be for IV meloxicam, assuming approval.

Turning now to our contract development and manufacturing division, we've had a solid start to 2018, generating revenues of $19.5 million during the first quarter.

I'll now turn the call over to Ryan to discuss the financial highlights. After Ryan provides his financial commentary John Harlow will discuss our ongoing commercial preparations in advance of the potential launch of IV meloxicam. Ryan?

Thanks, Gerri. Good morning, everyone.

Since we issued a press release and our Form 10-Q earlier today outlining our full financial results I'll just review some of the key first quarter highlights. As of March 31, 2018, Recro had cash, cash equivalents and short-term investments of $51.3 million.

Revenues were $19.5 million for the first quarter of 2018, compared to $18.7 million for the first quarter of 2017. This increase of $0.8 million in revenue was primarily due to the net impact of royalties recognized from one of our commercial partners after the adoption of the new revenue recognition standard.

Cost of sales were $10.5 million and remained constant compared to the prior year.

Research and development expenses for the first quarter 2018 were $8.4 million, compared to $7.8 million for the first quarter of 2017. The increase in research and development expenses was primarily the result of an increase in pre-commercialization manufacturing for IV meloxicam, an increase in salaries and benefits expensed due to increased headcount, and a modest increase in development costs for our other pipeline products. These increases in research and development costs were offset by lower IV meloxicam clinical trial expenses compared to the first quarter of 2017.

General and administrative expenses for the first quarter of 2018 were $9.5 million, compared to $4 million for the first quarter of 2017. The increase of $5.5 million was primarily due to building of the commercial team rib structure and its related costs.

We are reaffirming our 2018 CDMO guidance and believe we will generate approximately $70 million in revenue despite the anticipated unfavorable impact from the new revenue recognition standard and taking into consideration existing contracts, timing of customer order patterns, as well as our experience with our customers' product market estimations. We have not provided revenue guidance for IV meloxicam at this time.

I'd now like to turn the call over to John to discuss our ongoing commercial organizational preparations in advance of the potential launch of IV meloxicam. John?

Thanks, Ryan. Good morning, everyone.

At Recro, we are preparing for the transition to a commercial-stage company. Over the past 12 months, we have engaged in critical pre-commercialization activities, including market evaluations, mapping customer segments, and branding and determining launch tactics, among others.

At the core of the process has been the establishment of our commercialization team. We've concentrated on building a strong and experienced team with significant acute care expertise in leading product launches at a range of world-class commercial-stage organizations.

As many of you may know, the current acute pain landscape is dominated by opioids, and the majority of inpatients treated with IV analgesia receive IV opioid monotherapy. As a long-acting nonopioid, IV meloxicam represents a meaningful, differentiated therapeutic agent as compared to currently available treatment options. In fact, 6% to 10% of patients who are opioid naive and are first exposed to opioids in a hospital setting ultimately become long-term users of opioids.

Given the increasing urgency of the national opioid crisis, we believe IV meloxicam has the potential to serve as a valuable analgesic alternative for health care institutions, physicians and patients. We believe we have identified clear, addressable segments of the market that will benefit from IV meloxicam's profile, segments in which we believe IV meloxicam's profile provides both Endologix and economic value.

From a clinical standpoint, we believe IV meloxicam can effectively treat pain while reducing opioid consumption, which reduce opioid-related adverse events. From an economic standpoint, we believe IV meloxicam's durable 24-hour dosing profile will allow ambulatory surgical centers to perform more complex procedures with same-day discharge while managing pain, and hospitals to accelerate patient discharge and reduce length of stay through reduction of opioids.

A pillar of our strategy is identifying the key surgeons, specifically orthopedic surgeons, general surgeons, and GI colorectal surgeons. The procedures conducted by these surgeons represent a primary opportunity both in ambulatory surgical centers and in hospitals.

Based on our analysis, we've determined that approximately 100 representatives will cover approximately 80% of the market opportunity. We plan to place an initial 53 representatives into the market after approval, at launch, and then, as awareness and momentum build, we will expand to approximately 100 sales representatives in roughly 6 months. We believe this approach allows us to efficiently and effectively manage expenses while maximizing launch success.

I'll now turn the call back to Gerri to briefly discuss some of our other acute care product candidates. Gerri?

Thanks, John.

While IV meloxicam's our lead product, the Acute Care division is not solely limited to this one product candidate. In April preclinical data was presented for our anesthesia, neuromuscular blocking and reversal agents at the Association of University Anesthesiologists 2018 Annual Meeting.

These preclinical data demonstrated not only the effective and rapid activity of the ultrashort-acting neuromuscular blocking agent in a preclinical primate model but also showcased the ability of the rapid-acting reversal agent to antagonize the molecule and induce recovery. We acquired these molecules, one of which is clinical stage, from Cornell in 2017, and we believe they have the potential to reduce time in the surgical suite and the postanesthesia care unit, providing a significant pharmacoeconomic benefit to hospitals.

We believe these assets represent significant potential future value for Recro and provide meaningful depth to our Acute Care pipeline.

I'd now like to open the call for questions. Operator?

(Operator Instructions)

Our first question comes from David Amsellem with Piper Jaffray.

So just a couple of questions. First, on IV meloxicam, Gerri, can you just give us a sense of how you're thinking about pricing? Obviously we still have to get through the PDUFA, but just help us understand your thought process regarding pricing.

And then, secondly, I wanted to pick your brain on the reimbursement landscape. Other companies in the postop space such as Pacira are trying to effectuate change regarding reimbursement, so wanted to get your thoughts on potential unbundling of these nonopioid options or what you see over the next 6 to 12 months in terms of the reimbursement paradigm.

And then, lastly, just out of Gainesville, can you just talk to your capacity and also ability to add new customers, or really expectations regarding addition of new customers as the year progresses? Thanks.

Sure. Thanks, David. And I'll get started on the IV meloxicam pricing and then I'm going to ask John to chime in on that, as well. So as you know, we have been talking about a price range notionally of between $80 to $120 originally. We've been doing a ton of pricing research and understanding the issues, the economic issues of our customers, both on the outpatient side as well as on the inpatient side, and that work has narrowed us down to a range that's smaller than that. John, I wonder if you want to talk to that.

Yes, sure. David, thanks for the question. So as Gerri stated, we originally had a range of approximately $80 to $120. We've done some extensive and comprehensive pricing work with formulary decision makers, both in the hospital setting as well as in the ambulatory surgical setting, and we believe that the customer acquisition costs which would be effective in terms of access as well as uptake is going to be in the range of $80 to $100 a day or $80 to $100 per dose. We are in the final stages of tweaking and refining that range to get to a specific number, which at approval we would go forward with that specific number.

If I may sneak in a follow-up to that, is that -- are you expecting -- what's your assumption in terms of average number of days of treatment? Is it sort of the 2- to 3-day type range or even something smaller?

So I think we have to look at the settings of care associated with that, David. So in the outpatient setting of care, while in the long term there could be a possibility of more than one dose, right now the assumptions are one dose that the patient would receive some time between intraop and discharge.

On the inpatient side, we're looking at, especially if we look at the longer length of stay procedures such as colorectal surgery, I think we're looking at 1 to 3 days. But our own forecast assumptions have focused on 2.

And David, this is Mike Celano, I'll jump in on the CDMO question that you had raised. First of all, relative to capacity of the facility we're running roughly about 2/3 of capacity. I think, as you know, we made a very significant investment in commercial tableting capability, which we have significant capacity in that area.

We continue to reaffirm our guidance of $70 million. We have some very strong activity, proposal activity, which we'll be in a better position to announce as we get into later this year.

Okay. That's helpful. And then, Gerri, just your thoughts on reimbursement on the payer landscape.

Yes. So I'll do like a macro, and then again we'll have John talk to the specifics. But we have been engaged in dialog with senior folks in the Washington space around the possibilities of carve-out of nonopioid systemic drugs from bundling. I don't know that we're actually going to see firm action on that in this year, but it is something that we continue to push for, think it would make a difference.

We'll have some benefit certainly for the first 3 years on the outpatient side with pass-through, but I'm going to pass it to John to talk chapter and verse.

Yes, thanks, Gerri, and good question, David. Let me focus a little bit on what we believe our reimbursement landscape will be and then I'll add some commentary to Gerri's question, or Gerri's answer, about where we think the market's going.

So at the time of approval and launch, we believe we will have 2 different miscellaneous codes that can be used, both a miscellaneous C code and J code, C code for Medicare payments in HOPD and ambulatory surgical space and then J code for commercial patients in all settings of care. Both of those codes are reimbursed differently based upon different calculations, which I won't get into now.

From a C code standpoint, we believe it would be separately reimbursable. Right after approval, we will file for a unique C code, which takes a quarter time, and, assuming approval, assuming acceptance of the filing, we would hear in the October time frame as from a unique C code. We will also then file by the end of the year for a unique J code, which takes some time to review and would take into effect in January of 2020. So that's just a little evolution of the coding from our standpoint.

To Gerri's point about what's going on in Washington, we know other companies have also engaged in discussions and dialogs with unbundling, which is specifically in the inpatient setting, and I think it's important to note that currently right now all the products are reimbursed within the DRG, or the bundled payment in the inpatient.

What we've seen from the news coming out of Washington is that I don't think one company is going to have an advantage over another company. If unbundling happens it will happen for all nonopioids. We'll continue to watch the space closely and engage in the discussions that we're currently having, as well. But I think at this point it really is anyone's guess of when that would happen and if that will happen.

Okay. That's helpful color.

Thanks very much, David.

Our next question comes from Ken Trbovich with Janney.

Gerri, I guess I wanted to go back to the comment you made about the patents that are going to issue here in a couple of weeks. Did I hear you correctly in saying that you expected at least one of those to be Orange Book listed? And if so, how does that change the sort of last-to-expire picture as you see it now, preparing for launch?

Sure, Ken. Good question, thanks. So as we look at those 3 divisional patents, we look at one of those in particular as a product-by-process patent. And typically product-by-process patents we're told by IP lawyers are Orange Book listable. And so we anticipate that that patent, upon issuance, and within the process of the new drug getting approved, would be added to the Orange Book.

That would have an expiry, we estimate, of May of 2030. And so we had the formulation patent in the Orange Book that would've expired at the end of 2022. This would be an additional patent that would be Orange Book listable that would expire in roughly midyear of 2030. And that is then supplemented by the other non-Orange Book listable manufacturing-related patents that expire at the end of 2030.

Got it. And then with regard to the contract manufacturing business, I know Mike sort of alluded to this and the idea that you got a tableting press. I know you guys have had some success in attracting some folks on the business development side that have some incredible credentials, so I'm trying to sort of get a sense for the timing for when you think you might be able to transform that from an underutilized asset to a partially utilized asset with some of the early-stage work, or perhaps even progressing eventually to commercial manufacturing.

Yes, so good question. I think the part of having this business available and open for business, if you will, does not usually lead to a flock of birds coming in instantly. And there are folks that come in on test projects and small projects and then in the meantime you're bidding for bigger projects, so just in terms of process, so we're all kind of on the right page. But Mike, do you want to talk a little bit about the attractiveness of that?

Right, and also key to that is it also allows for the stickiness of our customers in that we had already been providing developmental capabilities from a tableting standpoint. So it does provide additional ways to keep in building relationships.

Based on the pipeline of opportunities, we have not built into that, the upside of that, into our $70 million guidance. So we expect to announce later this year additional projects. But at this point, it's not built in to any form of our guidance.

But there certainly are bids for it and interest in it. So that's encouraging. We're going in the right direction.

Got it. And then last question, Gerri, I guess I was sort of looking back with interest in the dental model in terms of the fake tooth study that had been done for the impacted wisdom teeth. Can you help us get a sense for how that study may play into what the label looks like, and then especially as it relates to dose, because it certainly seemed like that was one of the unusual studies where there was more of a benefit from a higher dose than perhaps what had been seen in the other studies?

Yes, it's a good question and one that we've talked a little bit about in the past. So that dental pain study is sort of the classical dose-finding study that people do early in Phase II in the development of a systemic analgesic. And it did show very good effect from 30 and a somewhat better effect for 60 mg.

And that was the reason that we went on to do the next Phase II study, which was the bunionectomy dose-range study, which was 0, 30 and 60 of meloxicam in bunionectomy, because we were unsure of how sort of forecasting that study was of efficacy in even more serious bony pain.

And what we saw in that bunionectomy study was a very comparable level of pain relief. We did not see so much incremental pain relief that we thought it was worth going to the 60 mg as a routine dose, 30 being the lowest effective dose that was available.

But it is an area that brings up opportunities for the future that we are not during this immediate launch period planning on addressing, and that is there are certain orthopedic practices that are dental practices where third molar extraction and related surgeries are common, and they're set up to deal with an IV product. That could be an area that in the future opens up for either partnership with a player in that space or possible addressing otherwise. But it's not in our current mainstream focus or forecast.

Sure, and I guess maybe what I'm trying to make sure I fully understand is the language that you're hoping for in the label with regard to -- obviously you had a lot of different models for pain, not just in the Phase III efficacy studies, so the bunionectomy and the abdominoplasty, but also in the safety study. So I'm just trying to make sure I fully understand sort of the label and the language in the label as you are hoping or as you have submitted, perhaps, for the label claim itself.

Okay. Good point. I wasn't seeing that angle when you asked it at first. So yes, we believe that based on the guidance document and our interactions to FDA to date that we have appropriately requested an indication for the management of moderate to severe pain, and that would be an indication not tied to any one instance or multiple instances of trial designs that have been done, but really reflect the spectrum of pain that patients experience going from soft-tissue pain to hard-tissue pain, and that concept is expressed in the FDA guidance, and that's what we have relied on in filing for that. So hopefully we will see the indication where when appropriate to use an IV nonopioid product we can be used for moderate-to-severe pain management.

Got it.

Our next question comes from Scott Henry with Roth Capital.

I just wanted to start with a follow-up to the patent question with regards to the Orange Book listing, because I think that's pretty important. First, as far as getting that patent into the Orange Book, is that simply a procedural event, meaning you put it in there and it automatically goes in until later challenge, or do you have to make a case and are there merits to the process? As well, when will you know if that patent can be in the Orange Book? And I'm making the assumption that the 30-month provision is automatically included in that patent. So any color along those lines.

Sure. So I'll start with the layup first and then we'll go to the slightly more complex stuff. So patents, when accepted for listing in the Orange Book, are associated with a 30-month stay. So we wouldn't expect anything different for this one.

We believe based on what we've heard from more than one patent counsel that this patent qualifies and meets the requirements of a product by process, and product-by-process patents are typically listable. Anybody that knows me knows that we're conservative, and until it's done and listed in that listing we will remain conditional about it. But we believe we've got all the characteristics that would be needed.

The process is that you make an application and you write up the basis for which you believe the patent should be added to the Orange Book for the product. We are so proximate to the filing date that is it -- it's on the bubble right now whether we amend the filing, or there is a provision when you get an NDA approved for you to update any, subsequent to your initial filing, any findings that would impact the Orange Book listings you have or additional Orange Books.

So we will definitely be on one or the other side of that equation so that we're meeting the time frames that exist for notification of additional Orange Book patents.

Okay. Thank you. That is helpful. As well, on the PDUFA data, let's say you get approval May 26. How much time do you need between approval to launch the drug, how much lead time would we expect?

Yes, so I'm going to ask John to just go through in sort of the macro steps that we would have from that point until we would have folks in the field.

Yes, good question, Scott. So we've had a tremendous response to our ongoing hiring activities from building the sales force organization, and our overall plan is we will make contingent offers to these individuals over the next few weeks. Assuming approval, those contingent offers will transition to formal offers. We would anticipate then to onboard them in the middle of June and have a comprehensive training program to validate their skill set compliantly, get them prepared and ready for ultimate launch, and then plan to launch very early in July.

Okay. Thank you. That's helpful. And then final question, on the manufacturing front, are you expecting a dip in 2Q or Q3? And my understanding was the accounting changes took place in Q1. So would that already effect those changes, or should I factor that into 2Q? Just trying to get a sense of that trajectory.

It is the gift that keeps on giving, Scott, but I'll let Mike address it.

Go ahead, Ryan.

Yes, so the new revenue recognition standard is based on shipments, more or less. So there will be some fluctuations quarter to quarter, in addition to the fact that that type of business, with contract manufacturing, there is some lumpiness amongst the ordering patterns that we receive from customers. So again, as Mike, and what we reiterated earlier is we feel very confident in the guidance that we reaffirmed earlier of $70 million.

Okay, great.

Our next question comes from Patrick Trucchio with Berenberg Capital. Your line is now open.

I have several follow-up questions. First, just on the IP announcement can you discuss the significance of the flake-like substances, why this matters, why it's important IP for IV meloxicam? And then how will these soon-to-be issued patents impact the NDA filing for IV meloxicam, if at all?

Yes, thanks, Patrick. So as many of you who have had the misfortune of hearing me go on about the snow, we believe that the intrinsic manufacturing patent that preexisted this most recent set of approvals was very important to the product because of the ability of meloxicam to form flake-like substances on standing in solution. Those being not acceptable under U.S. Pharmacopeia standards would cause that product to not be able to be used, and certainly theoretically could pose a clinical risk in terms of clot formation around a nidus like that, and that's why we believe USP standards has what it has.

So we've looked at that as an important patent because the method of making for the parent patent allowed us to avoid that occurrence. These divisional patents were based on further knowledge and unobvious facts that came forward, including the product-by-process one of those patents, that product-by-process being different than method of making, and it is an allowable Orange Book category of patent.

So in terms of the importance of it, it is important, we think, to have created a shelf-stable product that is and remains safe to administer within the confines of normal clinical use and judgment and according to the label.

In terms of impact on the NDA, we would not see that it has an impact one way or the other, the NDA. We just want to be sure that we are following, we're taking guidance on this right now, following the appropriate pathway to get it added to the Orange Book listing in the timely fashion.

Okay. And then just on the new revenue recognition policies, can you just discuss how precisely these impact the CDMO business and whether the change will impact how IV meloxicam revenues are recognized?

So knowing that I am not the pronouncer of accounting goods, we'll ask Ryan to talk about that.

Yes, so the most significant impact for the CDMO business really related to our evaluation of our customer agreements, where we concluded that the license agreement couldn't be accounted for separately from the manufacturing revenue that we recognize. And what that requires us to do is recognize a portion of those revenue streams when the product is shipped, versus under the previous guidance when it was reported as sold by our customers.

So there are a lot of estimates and judgments that go into those projections, and as we look out at the full year we saw that it was favorable for the first quarter, but as we look at our estimates and projections of our customer ordering patterns as well as the forecasts that we have in-house and when those projected shipments are expected to occur, we're expecting a slight unfavorable impact as a result for the full year compared to the prior year.

And that's all considered in our $70 million guidance.

Okay. That's helpful.

At this time I am -- our next question actually comes from Jonathan Aschoff with National Securities.

I was wondering, assuming FDA approval, triggering the Alkermes milestone and drawdown of any remaining debt that you have, how long will the cash last?

This is Ryan. Thanks for the question. So we ended March with $51.3 million in cash, and we expect to fund the launch principally from our existing cash. Certainly the nondilutive cash flow from the CDMO business, which provides approximately $25 million to $30 million annually in free cash flow will help contribute to that, as well as the $40 million in nondilutive financing from the remaining Ethereum facility tranches that we have.

And certainly, as we look out kind of over the next 12 months we would anticipate another equity raise, which would also support our acute care pipeline as well as the postapproval meloxicam clinical and other activities.

Looking forward to approval.

Our next question comes from Leland Gershell with Oppenheimer.

Just one more question on the new IP, if you could comment on how that -- those issuances might carry over to the intramuscular formulation of meloxicam?

So at this time, the analysis of the applicability of that to that dose form would await some more compatibility data with the prefilled syringes. So it's not as easy to predict, but the hope would be we believe that the issue of avoidance of the flake-like substances would, of course, be key for an IM product, as well, so we believe there should be applicability, but there's some more demonstration data we would need to assure that that is the case.

Thanks. And then just one pipeline question. On the neuromuscular blocking and reversal agents that you had recently taken in, you had mentioned one of those as clinical stage. If you could, comment on which one that is and what your near-term plans are for the advancement of that compound. Thanks.

Sure. Thanks for the questions, Leland. So the neuromuscular blockers, which are agents used in anesthesia to produce paralysis, there are 2 of those. The RP1000 is an immediate-duration agent that can be used by single injection immediately or in principal could be infused for continuous suppression of reflexes, for instance, such as for abdominal surgery or the like.

And that agent is the one that is clinical stage. It had a prior clinical trial conducted in human volunteers to look at the induction of paralysis, the ability to successfully intubate subjects and its tolerability. And it had a favorable profile in that trial.

We have had a recent meeting with FDA to discuss the development profile. There is some expansion of tox limits, I think, as we'd like to explore somewhat higher doses. And so we are working toward the ability to have completed that and then potentially initiate another of the Phase I studies before the end of this calendar year.

The RP2000 is the ultrashort-acting agent, and that one is one that we are hoping to file an IND, assuming that we -- API availability for both of these agents is a little bit of a gating factor, but we are hoping to be in a position where we could have performed some of the tox and file an IND either late in the fourth quarter or possibly early next year. Thanks for the question.

Great.

At this time I'm showing no further questions. I'd like to turn the call back over to Gerri for closing remarks.

Thank you. I appreciate all of you joining us here this morning. We have remained committed to developing efficient and effective development plans and executing on these strategies well. The upcoming PDUFA date for IV meloxicam is fast approaching, and other milestones across both the Acute Care and Contract Development and Manufacturing divisions of the Company.

Now is certainly a very exciting time for us, and we look forward to sharing updates on the Company in the near future. Thanks again for your time. Have a great day.

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