Talphera Inc (TLPH) 2017 Q4 法說會逐字稿

Welcome to the AcelRx Fourth Quarter and Full Year 2017 Conference Call. This call is being webcast live on the Events page of the Investors section of AcelRx's website at acelrx.com. This call is the property of AcelRx, and any recording, reproduction or transmission of this call without the express written consent of AcelRx is strictly prohibited. As a reminder, today's call is being recorded. You may listen to a webcast replay of this call by going to the Investors section of AcelRx website.

I would now like to turn the conference over to Raffi Asadorian, Chief Financial Officer. Please go ahead.

Thank you for joining us this afternoon. Today, we reported our fourth quarter and full year 2017 financial results in a press release. Separately, we also reported the receipt of the official FDA minutes from the Type A meeting held in January. The releases and the slide presentation accompanying this call are available in the Investors section of our website. With me today are Vince Angotti, our Chief Executive Officer; and Pam Palmer, our Chief Medical Officer.

During this call, we will make forward-looking statements about events and circumstances that have not yet occurred, including, but not limited to, the process and timing of anticipated future development of DSUVIA, known as DZUVEO outside the United States, and ZALVISO, including AcelRx's plans for resubmission of the DSUVIA and ZALVISO NDAs to gain approval in the U.S.; the scientific review and approval of the Marketing Authorization Application with the European Medicines Agency of DZUVEO; the therapeutic and commercial potential of AcelRx's product candidates, including potential market opportunities for DSUVIA, DZUVEO and ZALVISO; and the company's ability to continue its cash management plan to maintain a solid liquidity position and financial flexibility and its projected cash flows.

These statements are based on management's current expectations and inherently involve significant risks and uncertainties. Actual results and timing of these events could differ materially from those anticipated in such forward-looking statements and as a result of these risks and uncertainties, which include, without limitation, risks related to AcelRx's product development programs and outcomes of any regulatory reviews; the possibility that regulatory agencies could dispute or interpret differently the results from AcelRx's clinical trials; the accuracy of AcelRx's estimates regarding expenses, capital requirements and the need for financing; and other risks, including those detailed in the company's recent SEC filings and the Risk Factors section of its quarterly report on Form 10-Q filed on November 9, 2017, and our year ended December 31, 2017, on Form 10-K, which we will file shortly.

AcelRx disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the AcelRx SEC filings for a detailed discussion of the relevant risks and uncertainties.

I'll now turn the call over to Vince Angotti. Vince?

Thank you, Raffi. Good afternoon, everyone, and thank you for joining us today.

We're pleased to begin 2018 with positive momentum coming out of what we believe was a productive Type A meeting in January, and one which puts us back on a planned path to resubmit the DSUVIA NDA in the second quarter of this year.

On the call today, I'll cover 3 primary topics: first, the outcome of the January Type A meeting; second, the expected regulatory time line for DSUVIA and our other product candidates, which includes many key near-term milestones; and third, an update on our financials and 2018 outlook.

But before jumping in, I want to highlight that in addition to the progress on the regulatory front, we continued to maintain our financial discipline during the quarter and ended 2017 with $60.5 million in cash and investments. Raffi will provide further details later on this call, but I commend the team for maintaining a prudent approach on spending while still addressing our key priority of preparing for a potential DZUVEO approval and commercial launch.

Now moving to the first topic, the outcome of the Type A FDA meeting. Our team has been diligently working on an expeditious path forward since we received a Complete Response Letter, or CRL, regarding our DSUVIA NDA in October of 2017. The 2 primary points from the FDA in the CRL were: number one, although the safety database was suitable in a number of patients, they asked us to collect additional data in 50 patients with postoperative pain sufficient to evaluate the safety of DSUVIA at the maximum daily dose in the proposed label; and two, the second point, modify the Directions For Use, or DFU, to mitigate the risk of misplaced tablets and validate the effectiveness of these changes in a human factors study.

The Type A meeting was a face-to-face meeting in late January, which included AcelRx management, our key clinical and regulatory consultants and 4 attendees from our product development partner, Department of Defense. The team collaborated exceptionally well and proposed a different approach to the FDA to address the daily maximum dose point.

Now the previously proposed label for DSUVIA dosing was on an as-needed basis not to exceed 1 tablet per hour, resulting in a theoretical maximum-available dose of 24 tablets per day. We proposed to the FDA to reduce the maximum dose in the label to not exceed 12 tablets within a 24-hour period to more closely reflect clinical utilization of DSUVIA in our trials. And to support the safety of this lower maximum dose, AcelRx proposed utilizing safety data from the higher-dosing patients in the DSUVIA and ZALVISO clinical trials.

The FDA stated that the proposed revision to the maximum daily dosage appeared reasonable and that in light of a lowered maximum daily dose, it was expected that the higher-exposure DSUVIA patient data, combined with the higher-exposure ZALVISO patient data, may be acceptable to support the DSUVIA NDA resubmission.

To address the second point in the CRL, AcelRx submitted to the FDA an updated Directions For Use and an updated protocol for the human factors, or HF, study required to validate the effectiveness of the DFU changes. The FDA has reviewed and recently provided its comments to the updated DFU and HF study protocol, and we expect this study to be completed next month. In the NDA resubmission, we'll provide these HF study results along with the additional DSUVIA and ZALVISO safety data analysis supporting the reduced maximum daily dosage. So overall, we believe the meeting outcome was favorable and allows us to resubmit the DSUVIA NDA once we complete the HF study.

Moving now to our regulatory time line. There are a number of key milestones this year, beginning with the expected DSUVIA NDA resubmission in the second quarter. Based on this resubmission timing, we're expecting an advisory committee meeting sometime this summer and a PDUFA date in the fourth quarter of 2018.

We're also expecting to receive a CHMP opinion in the second quarter this year regarding DZUVEO, as DSUVIA is known in Europe. We've received 180-day questions and are in the process of preparing our response, which we expect to be submitted by the end of this month. Now as a reminder, ZALVISO is already approved in Europe and being marketed by our partner, Grunenthal.

Our final milestone for the year is the resubmission of our ZALVISO NDA, which has already been prepared and is ready to resubmit. We've incorporated the positive Phase III IAP312 study results, and we were prepared to resubmit the NDA at the end of last year. However, given our belief that the DSUVIA CRL was manageable, we decided to wait to resubmit ZALVISO until the second half of 2018. This decision to lead with our main product opportunity, DZUVEO, was based on multiple factors, including our belief that launching DSUVIA first will provide us a better platform on which ZALVISO can more easily follow after health care professionals are educated on and experienced with the benefits of sufentanil sublingual tablets in the management of moderate-to-severe acute pain.

Now before I hand the call over to Raffi to cover our third and final topic, our financial results and 2018 outlook, I'd like to highlight that our partner in Europe, Grunenthal, continues to see a positive trend in ZALVISO product demand from their enhanced focus on penetration into existing hospital customers. Total amount of patient exposures to the end of 2017 was approximately 16,200, in line with estimates from last quarter.

And while Grunenthal's launch in 2016 was slower than initially expected, the adjustments they've made to their launch strategy have provided positive momentum and improved sales results. Now importantly Grunenthal's real-world experience in 2017 was absent of concerns over inadvertently dispensed tablets or device errors. And of course, their insights have helped us prepare our launch strategy.

Now let me turn to Raffi to provide an update on our financial results and outlook for 2018.

Thanks, Vince, and good afternoon, everyone. The fourth quarter, much like last quarter, was managed conservatively from a financial perspective as we continue to hold on ramping up commercial resources prior to a potential PDUFA date for DSUVIA. We will continue to manage our cash prudently to ensure we have adequate financial resources as we focus on obtaining approval for our product candidates.

Our full year 2017 revenues were $8 million, which consisted of $7.1 million in revenue under our collaboration agreement with Grunenthal and the remainder relating to our Department of Defense contract for DSUVIA development. The total revenue decline of $9.4 million from the full year of 2016 was attributed mainly to lower invoicing under our DSUVIA contract with the Department of Defense as there was reduced DSUVIA development-related work and costs in 2017. To date, we have recognized a total of $22 million in revenue under DOD grants and contracts and have agreed on an additional $500,000 for new DSUVIA development costs incurred or expected to be incurred in 2018.

Looking forward, Grunenthal's positive sales growth trend will not always closely align with the timing of our product sales as Grunenthal sells down existing inventories. Therefore, despite Grunenthal's continued growth expectations for ZALVISO in 2018, we expect our collaboration revenues to decline this year before an anticipated increase in 2019. As a reminder, these collaboration revenues are not expected to have a significant impact on our cash flows in the near term since a significant portion of European ZALVISO royalties and milestones were already monetized with PDL in 2015.

We ended the year with $60.5 million in cash and investments, which was a decline of $7.4 million from Q3 2017. The decline was mainly driven by our cash operating expenses plus $4 million of debt service on our senior loan with Hercules in the fourth quarter. The $4 million represents regular debt service of $2.3 million plus the payment of a $1.7 million deferred fee. Offsetting these outflows was the utilization of our ATM facility early in Q4 to raise $2.7 million before fees.

Excluding the net proceeds from the ATM stock sales, the net cash outflow during the fourth quarter was $10 million, which was in line with our expectations and the guidance provided.

Our combined G&A and R&D expenses, net of stock-based compensation, were $6.6 million in the fourth quarter of 2017, which declined from $7.4 million in the third quarter of 2017 and $9.4 million in the fourth quarter of 2016. The declines were mainly attributed to lower DSUVIA and ZALVISO-related development costs incurred compared to those prior quarters. Operating expenses were the main driver of our cash flows and will continue to be in the near term.

Looking forward, we expect our quarterly pre-commercialization net cash burn to remain in the $10 million to $11 million range prior to prelaunch prep costs, which we expect will ramp in the fourth quarter of 2018 if DSUVIA is approved by our anticipated PDUFA date. This includes approximately $2 million to $2.5 million per quarter of debt service as our senior loan began advertising in the fourth quarter of 2017. We will provide further cash flow guidance as we get closer to a potential DSUVIA approval date.

With that, let me turn the call back over to Vince.

Thanks, Raffi. We're also pleased to be participating at several upcoming investor conferences. We'll be presenting this month at the ROTH conference, Cowen health care conference and the Oppenheimer health care conference. We're optimistic about the upcoming milestones with an expected DSUVIA NDA resubmission in the near term and PDUFA date later this year. We remain focused on completing the necessary steps to get the NDA resubmitted in Q2, specifically initiating and completing the HF study. And we intend to keep the positive momentum and look forward to updating you throughout 2018.

With that said, I'd now like to open the line up for any questions you may have. Operator?

(Operator Instructions) The first question comes from Matthew Andrews with Jefferies.

Vince, can you -- what does the adjective reasonable mean? Is that language that the FDA used? And if so, how would your advisors describe what that means?

Yes, we're very careful about the selection of the language, Matt, as you can imagine. And reasonable was language that they used in response to our discussion, and our advisors felt that was a positive outcome related to the answer to that question.

And is it a term that they've seen before in discussions with FDA in terms of meeting minutes?

I can't comment on that in meeting minutes, but we can tell you it was an accurate reflection of the discussion we had with them and that our advisors were comfortable with that language.

And as it relates to the expected FDA AdCom, did they specifically communicate that to you? Or are you just being proactive in preparing for that type of event?

No, we asked them actually in the submission of the Briefing Book prior to the actual FDA Type A meeting whether we should expect an AdCom, and they said yes, and that the timing of that AdCom will be communicated to us after receipt of the resubmission.

Got you. And then lastly, can you talk about your thoughts relative to how the commercial opportunity may be impacted with this potential labeling language in terms of the lower maximum dosage? Do you think it restricts the opportunity for you assuming the product is approved?

Yes. So we do not -- when we consider modeling moving forward, we're clearly not modeling doses up to 24 tablets on average per day. So we don't believe it affects our commercial potential of these products whatsoever. I'll remind you that the DSUVIA market is significant, as we've communicated previously, a target patient market around 92 million in the U.S. alone. And again, we're focusing on 2 particular areas in that market. Our initial target with DSUVIA is in the emergency department, where we estimate 18 million patients are receiving IV for pain only. And certainly, their doses wouldn't be very high. It's a simple, efficient replacement for these ER nurses and doctors, let alone it's a noninvasive delivery system that's a benefit to the patients. In addition to the emergency room, we're targeting outpatient surgery. We believe the profile of DSUVIA fits well the needs of the hospital to quickly move patients to discharge, and we estimate about 11 million outpatient surgery patients suffering from moderate-to-severe acute pain. So again, market is very sizable. And with the reduction in dosing from 24 to 12, we don't believe it has any effect on our commercial potential moving forward.

(Operator Instructions) As there appears to be no further questions, I would like to turn the conference back over to Vince Angotti for any closing remarks.

Thank you, operator.

And now we're clearly excited about the progress we've made on the regulatory front, both from a DSUVIA perspective in the U.S. as well as a DZUVEO perspective in Europe. We'd like to thank everyone for joining us on the call today and for your continued support of AcelRx. We look forward to updating you on our continued progress with our upcoming milestones, which are many in 2018. Thank you.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.