Full Press Release Details
Event Name: ACRX - AcelRx 3Q16 Results Call
Event Date: 2016-11-01
Officers and Speakers
Tim Morris; AcelRx Pharmaceuticals, Inc.; CFO and Head of Business Development
Jane Wright-Mitchell; AcelRx Pharmaceuticals, Inc.; Chief Legal Officer.
Howie Rosen; AcelRx Pharmaceuticals, Inc.; CEO
Pamela Palmer; AcelRx Pharmaceuticals, Inc.; Co-Founder and Chief Medical Officer
Gina Ford; AcelRx Pharmaceuticals, Inc.; VP, Commercial Strategy
Randall Stanicky, RBC Capital Markets
David Amsellem, Piper Jaffray
Michael Higgins, ROTH Capital Partners
Hugo Ong, Jefferies LLC
Justin Collinshaw, Cowan & Co.
Ed Arce, H.C. Wainwright & Co., LLC
Operator: Hello, and welcome to the AcelRx third quarter 2016 results conference call.
(Operator Instructions)
Please note this event is being recorded.
I would now like to turn the conference over to Tim Morris. Mr. Morris, please go ahead.
Tim Morris: Thank you, operator. Good afternoon, everyone, and welcome to today's call. On this call I'm joined by Howie Rosen, our Chief Executive Officer; Pamela Palmer, our Co-Founder and Chief Medical Officer; Gina Ford, our Vice President of Commercial Strategy; and Jane Wright-Mitchell, our Chief Legal Officer.
During the call today we will make forward-looking statements, and Jane will now remind you of our Safe Harbor language.
Jane Wright-Mitchell: Thank you, Tim.
During the call today we will make forward-looking statements, including, but not limited to, statements related to financial results and trends; the process and timing of anticipated future development of AcelRx's product candidates, ARX-04, sufentanil sublingual tablet, 30 mcg, and Zalviso, the sufentanil sublingual tablet system, including the ARX-04 clinical trial results; anticipated submission of the new drug application, or NDA, for ARX-04 to the US Food and Drug Administration, or FDA; AcelRx's pathway forward towards gaining approval of Zalviso in the US, including the successful completion of the IAP 312 clinical study for Zalviso; anticipated resubmission of the Zalviso NDA to the FDA, including the scope and timing of the resubmission and the FDA review time; the status of the collaboration and license agreement with Gr nenthal, a company organized under the laws of Germany, or any other future potential collaborations, including potential milestones and royalty payments under the Gr nenthal agreement; and the therapeutic and commercial potential of AcelRx's product candidates, including potential market opportunities for ARX-04 and Zalviso.
These forward-looking statements are based on AcelRx Pharmaceuticals' current expectations and inherently involve significant risks and uncertainties. AcelRx Pharmaceuticals' actual results and timing of 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 Pharmaceuticals' ARX-04 development program, including anticipated submission of the ARX-04 NDA and the possibility that the FDA may dispute or interpret differently clinical results obtained from the Phase 3 ARX-04 studies; the Zalviso development program, including completion of IAP312 and the resubmission of the Zalviso NDA to the FDA; any delays or inability to obtain and maintain regulatory approval of its product candidates, including ARX-04 in the United States and Europe, and Zalviso in the United States; AcelRx's ability to receive any milestones or royalty payments under the Gr nenthal agreement and the timing thereof; ability to manufacture and supply sufficient quantities of Zalviso to Gr nenthal on a timely basis; the commercial success of Gr nenthal's launch of Zalviso in the European Union, or the EU; the uncertain clinical development process, including adverse events; the success, cost and timing of all development activities and clinical trials; the market potential for AcelRx's product candidates; the accuracy of AcelRx's estimates regarding expenses, capital requirements and the need for financing; and other risks detailed in the Risk Factors and elsewhere in AcelRx's US Securities and Exchange Commission filings and reports, including its Annual1 Report on Form 10-Q filed with the SEC on July 29, 2016. AcelRx undertakes no duty or obligation to update any forward-looking statements contained in this presentation as a result of new information, future events or changes in its expectations.
I will now turn the call back over to Howie, our Chief Executive Officer.
Howie Rosen: Thank you, Jane.
On today's call we'll provide business highlights and accomplishments since last quarter, including an update on pipeline programs, ARX-04 and Zalviso, and a review of the third quarter financial results. Let me start with our recent accomplishments.
Our medical affairs team was busy in the third quarter making presentations of ARX-04 results at six medical meetings around the world. One such presentation at the Military Health System Research Symposium reported for the first time results of SAP302, the single-arm, open-label, Phase 3 trial of ARX-04 in patients who presented to the emergency room with moderate-to-severe acute pain associated with trauma or injury.
We also reported for the first time, results of SAP303, an open-label Phase 3 trial of ARX-04 in 140 patients who were at least 40 years old and included patients with baseline renal and/or hepatic impairment who underwent short-stay in-hospital surgeries associated with moderate to severe acute pain. Pam will discuss results from both of these studies in a moment.
1 Correction: Quarterly.
With SAP302 and 303 complete, we are now focusing on completing the new drug application, which we expect to submit before the end of the year. It goes without saying, but we're all extremely excited to have reached this milestone and look forward to bringing you further updates.
In the third quarter we also continued to make progress with Zalviso. In September we announced the initiation of IAP312, a Phase 3 trial of Zalviso in hospitalized postoperative patients. This study, as you'll recall, was designed with the FDA's input to measure device usability, including any incidence of Zalviso's failure to dispense medication as well as the incidence of misplaced or dropped tablets.
On the finance side during the quarter, we were able to make some favorable amendments to our debt agreement with Hercules Growth Technology that Tim will describe in more detail later in the call.
Let me turn the call over to Pam now for a more detailed update on our clinical program.
Pamela Palmer: Thanks, Howie.
I'll start with ARX-04. As you just heard, we had two significant announcements of ARX-04 results last quarter, the first from SAP302, our emergency department study, and the second from SAP303 in postoperative patients who were 40 years old or older.
Taking these one at a time, SAP302, if you'll recall, had two phases, one that treated 40 adults who presented to the ER with moderate-to-severe acute pain from trauma or injury with a single dose of ARX-04, and an extension phase that enrolled an additional 36 patients who were eligible to receive multiple doses of ARX-04.
Overall, the 76 study participants experienced a mean pain intensity difference, or PID, of 2.9, from a baseline of 8.1 on a 0 to 10 numeric rating scale at 60 minutes. This represents over a 35% decrease in pain intensity.
Interestingly, in the second cohort, even though patients were allowed multiple doses of ARX-04, only 7 of the 36 patients requested a second dose of ARX-04, and only 2 requested a third dose. Therefore, for 75% of patients in the second cohort a single dose of ARX-04 was sufficient for pain relief, and only 8% of patients overall received morphine in addition to ARX-04.
ARX-04 was well tolerated in the study, with 79% of patients having no adverse events. Among those with an AE, the most common was nausea, 9%; somnolence, 5%; and vomiting, 4%.
In addition to the PID, or pain intensity difference, and safety measures, we also included a cognitive assessment in the SAP302 protocol. This was not required by the FDA. Rather, we added it at the request of the Department of Defense, which is partially funding the development of ARX-04.
The Department of Defense is understandably concerned with cognitive side effects of pain medications given to wounded soldiers in the battlefield. In addition to presenting an issue on the battlefield, drug-induced cognitive effects can also be dangerous in civilian emergency rooms and can impede diagnosis and treatment.
So we used a validated test called the Six-Item Screener and found no instance of clinically meaningful cognitive impairment with ARX-04 in this study. No additional cognitive testing is planned or has been requested by the FDA or the Department of Defense.
Moving on to SAP303, this Phase 3 study was designed to study the effects of ARX-04 on moderate-to-severe acute pain in 140 patients 40 years of age or older who had undergone a short-stay inpatient procedure, or ambulatory surgery. The study included patients with renal and hepatic impairment.
Of note, 17% of study participants were 65 years of age or older and 29% had baseline renal or hepatic impairment. Patients in SAP303 were eligible to receive doses of ARX-04 every 60 minutes for up to 12 hours.
Results showed early pain reduction, and, more importantly, a sustained duration of pain relief over 12 hours. At 12 hours, patients had a mean reduction in pain intensity of 3.51, or a 57% drop from baseline.
During the 12-hour study period the mean total number of ARX-04 doses administered was 3.3, which was similar for patients with normal or impaired liver or renal function. Overall, there were no differences in adverse events between patients with normal and impaired liver or renal function, with nausea and headache being the two most commonly reported AEs. Sixty-three percent of patients in the study experienced no adverse events.
As Howie mentioned at the beginning, the medical affairs team has been very active over the last couple of months, with presentations at various medical meetings, and this is continuing this quarter. We'll be presenting a number of abstracts and presentations at medical meetings in the US featuring ARX-04 and Zalviso results.
These include the Obesity Society Meeting, which is taking place this week in New Orleans, and the Annual American Society of Regional Anesthesia and Pain Medicine Meeting in San Diego November 17 through 19, and the International Society for Pharmacoeconomics and Outcomes Research Meeting, which is taking place in Vienna this week.
I will now turn the call over to Gina to discuss the commercial preparations for ARX-04.
Gina Ford: Thank you, Pam.
In order to better understand the market for ARX-04, AcelRx has also attended a number of important medical conferences in September and October, including the Emergency Nurses Association Conference in Los Angeles; the American Society of Plastic Surgeons Meeting in Los Angeles; the European Society for Emergency Medicine Congress in Vienna, Austria; the National Conference on Correctional Healthcare in Las Vegas; the EMS World Expo in New Orleans; and the American College of Emergency Physicians Scientific Assembly in Las Vegas.
Information from a year's worth of market research and insight from these meetings is helping us shape the commercial strategy for ARX-04. Currently, that strategy is to launch ARX-04 ourselves with an internal sales force. The initial target will be emergency medicine.
We've developed our positioning and are finalizing our strategy so that as the NDA is submitted we can move into launch planning. Most of our thinking on the commercial strategy for ARX-04 in the US will be completed in the next month. We decided to hold an Analyst Meeting in December where we will review these plans with you and provide a fresh perspective of the market potential for ARX-04 in the US.
I would therefore like to formally announce that AcelRx will hold its second Analyst Meeting in New York City on the morning of December 1 at the Benjamin Hotel. This meeting will feature a presentation from Harold S. Minkowitz, MD, from Memorial Hermann Memorial City Medical Center, a principal investigator for ARX-04, of the integrated safety and efficacy databases for ARX-04 to be included in the NDA.
I will host a panel discussion with several emergency room physicians who can share with you their real-world trauma experience, both military and civilian, and their impressions of the various treatments for acute pain. The panel will consist of James R. Miner, MD, Chief, Emergency Medicine, Hennepin County Medical Center; Colonel John Holcomb, MD, Vice Chair, Professor and Chief of the Division of Acute Care Surgery at the University of Texas Health Science Center at Houston. Colonel Holcomb served in the Army for 23 years and created comprehensive trauma systems for DoD. Michael Ritter, MD, Chief of Emergency Medicine at Mission Hospital in Mission Viejo, California. The Trout Group will be sending invitations for the event, but for now please save the date and I will see you in New York City on the morning of December 1.
Tim, I'll turn the call back to you to discuss the ISPOR presentation and the Q3 financial results.
Tim Morris: Thank you, Gina.
The presentation we are giving at the International Society for Pharmacoeconomics and Outcomes Research, or ISPOR, Annual Meeting contains some interesting findings which will inform our European commercial strategy for ARX-04. The team is presenting an analysis of the cost of delivering IV opiates in the European emergency departments.
Specifically, it was determined that the cost of IV administration of morphine ranges from 18 to 28 Pounds2 in the EU5 countries of Germany, Spain, France, Italy and the United Kingdom. Most of this cost is associated with nursing time, specifically for drug administration and patient monitoring.
2 Mr. Morris intended to say Euros.
However, when the cost of treating adverse events, or AEs, and complications commonly associated with IV morphine, such as nausea, vomiting, phlebitis are factored into the equation, this range now increases to 121 to 132 Euros per patient. Thus, while drug costs themselves may be relatively low, the economic burden of treatment with IV morphine is rather high due to the costs associated with staffing and complications of IV administration.
A product such as ARX-04, which is a fixed-dose sublingual tablet, has the potential to have a lower healthcare burden. You could find this and our other posters we presented on our website under the Publications tab.
Now, on to our financials. Earlier today we reported the results for the third quarter ended September 30, 2016. You are encouraged to review that press release for specific details.
In summary, the net loss for the third quarter of 2016 was $11.4 million, or $0.25 basic and diluted net loss per share. This compares to a net income last year of $5.1 million, or $0.11 basic and diluted net income per share.
The net loss from operations in the third quarter this year was $8 million, as compared to net income of $7.1 million for the third quarter last year. As you'll recall, we recognized a milestone payment from Gr nenthal for the approval of Zalviso in Europe in the third quarter of 2015, which resulted in positive net income for the quarter.
For the nine months ended September 30, 2016 we reported a net loss of $33.5 million, or $0.74 basic and diluted net loss per share. This compares to $13.9 million, or $0.31 and $0.37, respectively, diluted net loss per share for the same period in 2015.
At the end of September we had cash, cash equivalents and investments of $92.5 million. This compares to $113.5 million we had at the end of the year in 2015. This decrease was primarily attributable to cash used in operating activities.
Total cash used to date through the nine months ended September 30 was $21 million. We anticipate our cash balance will be approximately $75 million at the end of 2016.
Now for an update on Gr nenthal. Gr nenthal continues to roll out additional hospitals in countries in Europe. Germany, France and the UK are now in full launch mode. Belgium, Italy, the Netherlands and Ireland are still in pilot mode.
To date, Zalviso has been used in 83 hospitals over 7 countries. Informal feedback from patients and healthcare providers has been positive. We anticipate royalty revenue from Gr nenthal will continue to be modest in 2016 and into 2017 as they continue their pilot programs and commercial expansion in various countries.
One item that investors may have missed is that we amended the terms of the debt payable to the Hercules Growth Technology. This happened at the end of the quarter.
We extended the interest-only period through April 1, 2017. If we are able to obtain FDA acceptance of the NDA for ARX-04 prior to April 1, 20163, Hercules has agreed to refinance the loan into a 36-month term note with an additional 6-month interest-only period.
In addition, subject to the achievement of certain milestones, AcelRx may be able to extend the repayment period up to 48 months and extend the interest-only period up to a total of 18 months. Also under certain conditions we may be able to borrow an additional $10 million over the amount outstanding.
In the short term, the additional interest-only period will reduce cash burn over the next six months. In the long term, the potential to refinance the debt and obtain an additional $10 million will give us added flexibility to fund the anticipated launch of ARX-04.
On the investor relations front, we will present at several investor meetings in Q4, including the Global Mizuho Investor Conference on November 14 in New York City; the Jefferies Healthcare Conference on November 15 and 17 in London; and the Piper Jaffray Health Care Conference November 29 in New York City.
Now I'll turn it back to Howie for a quick update on Zalviso and a few closing comments.
Howie Rosen: Thanks, Tim.
One last update regarding Zalviso. As I mentioned earlier, we initiated IAP312, a Phase 3 trial on hospitalized postoperative patients. IAP312 is an open-label study that will enroll approximately 315 patients who will use the Zalviso system to self-administer sublingual sufentanil tablets as often as once every 20 minutes for 24 to 72 hours to manage their moderate-to-severe acute pain.
The types of surgeries being included are abdominal, orthopedic and other surgeries. Multimodal pain therapy is also allowed.
The materials for IAP312 were manufactured by our commercial supply chain partners, and, based on our experience in previous clinical trials and in Europe, we incorporated certain software and hardware revisions to improve device usability and optimize system functionalities. We anticipate the enrollment and treatment period for IAP312 will continue through the middle of next year.
As Gina discussed, ARX-04 is advancing on schedule. With SAP302 and 303 completed now, we are working on the final sections of the new drug application, which we expect to submit to the FDA before the end of the year.
It's been a very busy time for AcelRx, with a presentation of clinical results, participation at the various medical meetings, preparations of the ARX-04 NDA and supporting Gr nenthal's launch. I want to personally thank Pam and Gina and their respective teams as well as their other employees for all their long hours and dedication on behalf of patients and their shareholders.
3 Mr. Morris intended to say April 1, 2017.
Operator, let's open the call up to questions.
Operator: Thank you.
(Operator Instructions)
And the first question comes from Randall Stanicky with RBC Capital Markets.
Randall Stanicky: Great. Thanks, guys. I just have a couple. The first one is as you think about the launch of ARX-04 yourself inside the next year, when do you start ramping commercially? How big of a sales force do you think you'll need? And then lastly I guess this is probably for Tim, where can we expect that to take your quarterly burn rate to? And then I have a follow-up, as well.
Howie Rosen: Thanks, Randall. This is Howie. In terms of sort of our launch plans and ramp and things, those are things we're going to -- we'll go into a little bit more at our Analyst Day. But we are in general thinking about starting with some sort of pilot program to get to know the intricacies of the hospitals and other places where ARX-04 might be used, and then ramp from there.
As you're probably familiar with getting through the formularies and P&T committees and things, takes some time. So we want to make sure we do a good job of that and don't get ahead of ourselves in terms of putting resources in place.
Randall Stanicky: Well, let me follow up on that one. Tim, I mean, right now you're going to end the year at $75 million. You're burning about $10 million a quarter. Do you have the ability to self-fund that launch, either with partnering OUS or other opportunities? How should we think about that for 2017?
Tim Morris: Yes, I mean, clearly with the addition of commercial and support personnel the burn rate will go up. We haven't given any guidance on that yet. With the monies we have on hand right now, well, clearly, we have enough money to get through to the approval, but I probably don't have enough money or resources to get through the full launch.
Randall Stanicky: Okay. One last question for me. Howie, this is probably for you. Should we expect an AdComm just given what we've seen with opioids in general? And then if the answer to that is yes, which I suspect it is, how do you start preparing for that? Where do you think the focus will be?
Howie Rosen: Randall, thanks. That's a good question. So we won't know for sure until after we've submitted the NDA and we get feedback from the FDA. But we are anticipating there will be one, and as a result we are planning for that.
And so we already have contracted with an outside group to help us with the preparation. And also, rather than wait until three or four months before to get going, they've actually been helping us as we finish off preparing the NDA to just give us advice and input into what's in the NDA and also thinking ahead to if we do have an AdComm making sure we've covered key topics in what we have in our filing.
Randall Stanicky: Okay. Okay, great. Thanks, guys.
Operator: Thank you. And the next question comes from David Amsellem, with Piper Jaffray.
David Amsellem: Thanks. Just a couple. So first on 04, can you provide a little color on how you're thinking about pricing? And perhaps you'll probably address that at the Analyst Day, but maybe give us a window into your thinking and how you're thinking about comparators that inform your thinking on pricing.
And then, secondly, on Zalviso, are you confident that there are no more changes you actually need to make to the device? Is it safe to assume that the tweaking of the device is something that's a thing of the past and that there's nothing you need to do? I just wanted to make sure I'm not missing anything there. Thank you.
Howie Rosen: Yes, thanks for both those questions. So, in terms of pricing, we have not done our formal pricing study yet, so that's one of the things Gina and her team will do in 2017. But there's two things that we look at from the price.