NRx Pharmaceuticals Q2 2024 Earnings Call Transcript

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August 14, 2024

Key Takeaways

  • NRx is poised to file two NDAs in the coming months for NRX-100 (IV ketamine for clinic-based suicidal depression) and NRX101 (oral D-cycloserine + lorazodone for home-based bipolar depression), targeting approvals in 2025.
  • The company secured up to $16 million from Anson Partners, eliminated toxic debt, and lowered interest rates and conversion discounts, substantially stabilizing its balance sheet and extending cash runway.
  • Operational efficiencies and a planned roll-up of ketamine and interventional psychiatry clinics under the Hope Therapeutics brand cut loss per share by nearly 50% year-over-year and set the stage for future revenue.
  • Clinical data show NRX101 is the first oral antidepressant to reduce both suicidality and akathisia while matching the efficacy of market-leading drugs, signaling a potential paradigm shift in bipolar depression treatment.
  • NRx expects to file an NDA for its preservative-free ketamine formulation by end of October after FDA alignment on its pediatric study plan, positioning a reimbursable alternative to current off-label use.
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Earnings Conference Call
NRx Pharmaceuticals Q2 2024
00:00 / 00:00

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Operator

Good afternoon, everyone, and welcome to the NRx Pharmaceuticals Incorporated Q2 of 2024 Results Conference Call. Currently, all participants are in a listen-only mode. As a reminder, this conference call is being recorded. I will now turn the call over to Matthew Duffy, the company's Chief Business Officer. Please go ahead.

Matthew Duffy
Chief Business Officer at NRx

Thank you, Franzi, and welcome everyone. Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under U.S. Federal Securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports filed with the SEC. The forward-looking statements made during this call speak only as of the date hereof, and the company undertakes no obligation to update or revise forward-looking statements. Information presented on this call is contained in the press release issued today and in the company's Form 10-Q, which may be accessed from the investors page of the NRx Pharmaceuticals website.

Matthew Duffy
Chief Business Officer at NRx

Joining me today are Doctor Jonathan Javitt, our founder and chairman and chief scientist, Stephen Willard, our Chief Executive Officer, and Richard Narido, Chief Financial Officer and Treasurer. Stephen and Jonathan will provide a summary of our company's progress. Rich will review the company's financial results, and then Jonathan will review upcoming milestones before making closing comments. Following the prepared remarks, we will address investor questions. I'll now turn the call over to Jonathan.

Jonathan Javitt
Chairman and Chief Scientist at NRx

Thank you, Matt. Good afternoon, everybody. Thank you for joining us. Steve, Matt, Rich, rest of the team have now reached a point where years of hard work are beginning to bear visible fruit. We've reached three key inflection points on scientific, business and financing fronts in advancing our business. First, on the scientific front, we're poised to file two NDAs for our product candidates in the current coming months. NRX-100 for clinic-based treatment of suicidal depression, that is intravenous ketamine, and NRX-101 for home-based treatment of bipolar depression in patients with suicidality or akathisia. That's an oral combination of D-cycloserine and lurasidone. Second, on the business front, we've laid the foundation for a roll-up of state-of-the-art ketamine and interventional psychiatry clinics that will advance the treatment of patients with suicidal depression.

Jonathan Javitt
Chairman and Chief Scientist at NRx

In the process, as Rich will tell you, we've substantially reduced operating costs and cut our loss per share by nearly 50% compared to the prior year. Third, on the corporate financing front, we've fundamentally stabilized our business from an economic perspective by attracting a fundamental investor with more than $1 billion under management, while simultaneously eliminating toxic debt that was the subject of litigation from our balance sheet. That new investor, Anson Funds, committed between $10.5 million and $16 million in new funding, as announced in last night's 8-K filing. Investors have expressed a repeated concern as to whether we can fund the activities required to get our drugs approved. As announced yesterday, this is no longer a concern.

Jonathan Javitt
Chairman and Chief Scientist at NRx

In announcing the funding transaction, the principal of Anson said: "NRx Pharmaceuticals has a promising pipeline with the potential to transform the lives of patients and their loved ones. We are pleased to be working with NRx Pharmaceuticals team to support these drugs in their registration and hopefully their approval phase." We intend to live up to those wishes. The funds from the Anson investment will both pay for our FDA submissions and will retire debt from our balance sheet that has impeded our forward progress. The Anson funding brings us a substantially lower interest rate, a substantially lower conversion discount on our stock, and reduced expense in its other key features. It frees NRX from extraordinary conversion demands that, in the past, led to significant erosion in shareholder value.

Jonathan Javitt
Chairman and Chief Scientist at NRx

Much of the stock we allocated for this transaction is in the form of currently unregistered shares, demonstrating substantial faith on the part of the new investor that we can and will execute on our commitments to commercial success. These three inflection points, scientific, business and finance related, are near-term in nature rather than ephemeral. We aim to receive drug approvals for NRX-101 and NRX-100 in 2025 and to make these drugs available to patients. Until then, we will do so through compounding pharmacy relationships. The first Hope Therapeutics clinic has been identified, along with multiple follow-on acquisitions, and the acquisition structure is currently in negotiation. One of the nation's leading psychiatrists, who pioneered the use of ketamine more than 15 years ago, has agreed to serve as our Chief Medical Innovation Officer. These are critical steps in our quest to bring hope to life.

Jonathan Javitt
Chairman and Chief Scientist at NRx

Thus, from a scientific and financial perspective, we have a company that's now poised to bring life-saving drugs to patients and financial returns to its investors. On the scientific front, we believe that NRX-101 has demonstrated a paradigm-changing breakthrough in the care of bipolar depression. Unfortunately, that breakthrough may not be completely understood, because advances in drugs are so often viewed as advances in efficacy rather than advances in safety. In our recently completed clinical trial, we did not demonstrate that NRX-101 is more effective in reducing symptoms of depression than the market, than the market-leading drug, lurasidone. It doesn't need to be in order to be an extremely effective drug. What we did demonstrate is that NRX-101 is the first oral antidepressant to reduce symptoms of suicidality and the first oral antidepressant to reduce symptoms of akathisia, a highly dangerous side effect of every known antidepressant.

Jonathan Javitt
Chairman and Chief Scientist at NRx

The NRX-101 data presented at the American Society of Clinical Psychopharmacology demonstrated a new paradigm for the treatment of bipolar depression. From the start, serotonin-targeted drugs for the treatment of depression, it was known that these drugs caused side effects such as akathisia, that directly caused their propensity to trigger suicidality. Doctors and patients have lived with these side effects in order to achieve the critical antidepressant effects that are needed to control this life-threatening disease. The data we presented at ASCP confirms our earlier STABIL-B trial, demonstrating that NRX-101 is the first oral antidepressant to have effective antidepressant properties, while simultaneously decreasing akathisia and suicidality. On the NRX-100 or ketamine side, as our quarterly report was going to the printer, a major scientific breakthrough was published in the Journal of Translational Psychiatry.

Jonathan Javitt
Chairman and Chief Scientist at NRx

A retrospective cohort study that considered the electronic medical records data of more than 500,000 Americans with depression demonstrated that those treated with ketamine were substantially and significantly less likely to have suicidal ideation for up to nine months post-treatment versus those not treated with ketamine. Although FDA traditionally considers data from randomized controlled trials as its primary basis for determining efficacy, real-world data such as this, when it mirrors the findings already demonstrated in randomized controlled trials, as we have demonstrated, can be important and persuasive. As you know from our various scientific presentations, we aim to present the FDA with patient-level data on nearly 1,000 patients in which ketamine has been tested in a prospective, randomized manner against placebo, active comparator, and electroshock therapy.

Jonathan Javitt
Chairman and Chief Scientist at NRx

We thank our investors for their patience as our novel, preservative-free presentation of ketamine matures and becomes ready for FDA filing. Unfortunately, many in the public don't know that in order to seek approval of a drug, you must actually hold a fully manufactured drug in your hands that's been stable on the shelf for a year or more. Without that, the FDA will refuse to file the new drug application. We anticipate reaching the critical point in our manufacturing stability program, where FDA filing is possible for NRX-100 by the end of October. A second key requirement for FDA to file an NDA is alignment on a pediatric study plan as required by law. Several weeks ago, we announced that we achieved this critical alignment with FDA. The notion of a preservative-free ketamine has been surprising to some in the public.

Jonathan Javitt
Chairman and Chief Scientist at NRx

However, data have emerged from both primate and human studies that repeated doses of the currently available commercial intravenous ketamine are toxic to the brain. The commercial preparation was designed for anesthesia in a multi-dose vial, where it was anticipated that doctors would draw from the same vial for multiple patients. That's no longer allowed in hospitals today, but that's how it was designed. Accordingly, commercial Ketamine preparations are manufactured with a potentially toxic preservative, benzethonium chloride. While there's no evidence that benzethonium chloride is toxic at its current concentration for the intended use of anesthesia, its safety has never been shown or even proposed for chronic use. Hence, we believe we are poised to file the first New Drug Application for a novel preparation of ketamine in unpreserved form that will bring substantial value to patients and be reimbursable by payers.

Jonathan Javitt
Chairman and Chief Scientist at NRx

Whereas the current off-label use of ketamine is available only to patients who can pay substantial amounts of money out of pocket. In introducing Steve, I'd like to thank him for his profound contribution to our company as its first non-founder CEO. Steve joined our company on the tail of the COVID pandemic, at a time when we were restarting our psychiatry program and recovering our equanimity in the wake of a world catastrophe that cost the lives of 1 million Americans and many millions more around the globe. Steve brought a methodical wisdom to our team. Steve has advised me that as we prepare for 2025 as our first year of commercial operations, we should seek a CEO who has had commercial experience in marketing and successfully selling at least $1 billion in pharmaceutical products.

Jonathan Javitt
Chairman and Chief Scientist at NRx

We're starting that search today, and Steve will be a key part of that process. Through his poise and legal discipline, Steve has afforded me the opportunity to take bolder steps in advancing our scientific agenda and our commercial prospects. He'll continue to be a key member of our team and our family. Steve?

Stephen Willard
CEO at NRx

Jonathan, thank you for those very gracious comments. The chance to lead NRX has been one of the great joys of my life, and I look forward to helping guide NRX to its success as a commercial enterprise. I'm incredibly proud of the process and progress our team has made over the past months, and I'm grateful to our partners and investors, as well as to all of the patients who have participated in our clinical trials. We look forward to continuing to build value for our shareholders and deliver life-saving treatments to patients. Most importantly, we continue to believe that these steps represent the beginning of our transition from a purely research and development company to a revenue-generating pharmaceutical company. We've made important progress with our clinical development pipeline this year. Suicidality is a national epidemic.

Stephen Willard
CEO at NRx

Approximately 3.8 million Americans make an active plan to commit suicide each year, according to the CDC. We plan to bring NRX-100, clearly a life-saving product, to market as soon as possible. The current market for intranasal ketamine is already $800 million, which has not demonstrated anti-suicidal properties. We expect our market to be much larger. We continue work toward a distribution of shares in Hope Therapeutics to our existing shareholders. We plan to seek public listing for the company on a national exchange. Hope is planned to be a care delivery company, developing a best-in-class network of clinics that currently offer ketamine and other life-saving therapies to patients with suicidal depression and related disorders, together with digital therapies designed to augment and preserve the clinical benefit of NMDA-targeted drug therapy. We expect funding for Hope to be independent and most non-dilutive to NRX.

Stephen Willard
CEO at NRx

At the same time, we believe this will continue to build value for NRx shareholders with this important asset on its balance sheet. I will now ask Rich Narido, our CFO, to review the Q1 financials. Rich?

Richard Narido
CFO at NRx

Thanks, Steve. For the three months ended June 30th, 2024, we at NRx Pharmaceuticals reduced our net loss from $8.7 million in the Q2 of 2023 to $7.9 million in 2024, representing nearly a 10% improvement year-over-year. For that same period, we reduced research and development expenses from $3.9 million in 2023 to $2.8 million in 2024. The $1.1 million decrease is related primarily to decrease of $2.4 million in clinical trial and development expenses, offset by an increase of $1.3 million related to the Aljem warrants. Also, in the three-month period, we recorded an increase in general and administrative expenses from $4.1 million in 2023 to $4.2 million in 2024.

Richard Narido
CFO at NRx

The increase of $0.1 million is related primarily to an increase in consultants and legal fees, partially offset by lower insurance expenses. For the six months ended June 30th, 2024, NRx Pharmaceuticals reduced its net loss to $14.4 million, compared to $19.8 million in the prior year. These deficiencies represent an improvement in net loss of $5.4 million year-over-year, and a $1.32 or 47% improvement in net loss per share year-over-year. Over that six-month period, we recorded $4.6 million of research and development expenses, compared to $7.5 million for the same period in 2023, representing a 39% decrease year-over-year.

Richard Narido
CFO at NRx

The decrease of $2.9 million is related primarily to a decrease of $4.1 million in clinical trial and development expenses, $0.3 million related to fees paid to regulatory and process development consultants, while offset by $1.3 million related to the Aljem warrants, and $0.4 million related to fees paid to regulatory development consultants. Also, in that six-month period, we decreased G&A by $1.4 million, from $9.9 million in 2023 to $8.5 million in 2024, nearly a 15% decrease year-over-year. As of June 30th, we had $1.9 million in cash and cash equivalents. As previously stated, we recently announced that we secured up to $16 million of senior secured debt financing from Anson Funds.

Richard Narido
CFO at NRx

This financing is expected to support 2024 filing of new drug applications for NRX-100 and NRX-101, and to support the launch of Hope Therapeutics as well as retire its historical debt with more favorable terms and a lower annual interest rate. NRX continues to implement operational efficiencies to extend cash runway and maintain focus on our path to generating revenue and value for our shareholders. With that, I will turn it back to Jonathan for closing remarks. Jonathan?

Jonathan Javitt
Chairman and Chief Scientist at NRx

With 2 NDAs planned for the current month, coming months, the initiation of Hope's clinic acquisition program to be financed through a non-dilutive mechanism, together with a stabilized cash position, we're in a solid position to build shareholder value. Most importantly, we are poised to address critical unmet medical needs for patients suffering from suicidal bipolar depression, suicidal major depression, and those with limited access to advanced psychiatric care. In other words, we intend to deliver on our promise to bring hope to life. Operator, we're ready to take questions from the audience.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number 1 on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. Again, to ask a question, that's star followed by the number 1. Your first question comes from the line of Ed Woo from Ascendiant Capital Markets. Your line is now open.

Ed Woo
Ed Woo
Director of Research and Senior Analyst at Ascendiant

Yeah, congratulations on all the progress. It seems like your initial focus will be on the US market, but have you given thought about international opportunities for both, you know, NRX-100 and NRX-101?

Jonathan Javitt
Chairman and Chief Scientist at NRx

Well, there's no question that the rest of the world is important to us, and we've consistently listed a large number of foreign patent approvals. You know, as you know, we have composition of matter patent protection on NRX-101, and so far it's been approved in just about every jurisdiction where we've applied. So, that rest of the world opportunity is something we're very much focused on. As you know, we've added Professor Marianne Leboyer, who's one of the leading psychiatrists in France, the professor of psychiatry at Inserm in Paris, to our advisory board. And it's something we, you know, think about on a regular basis. That said, we do anticipate that the initial launch will be in the United States.

Ed Woo
Ed Woo
Director of Research and Senior Analyst at Ascendiant

Great. Thanks for answering my questions, and I wish you guys good luck. Thank you.

Matthew Duffy
Chief Business Officer at NRx

Operator, we've received some electronic questions as well. I think this is for Dr. Javitt. Would you please tell us more about the Hope business plan, what how the funding is gonna work and what the benefits to shareholders and our shareholders may be?

Jonathan Javitt
Chairman and Chief Scientist at NRx

So one of the things we've realized is that while there is some outstanding ketamine clinics run by dedicated psychiatrists in the U.S., many of the initial attempts to create ketamine clinic networks across the country have been private equity driven, focused on minimizing costs of care, but not necessarily maximizing quality and innovation of care. And what we intend to do through Hope Therapeutics is to bring together a best-of-breed ketamine and interventional psychiatry clinics together with networks of clinics that want to learn from them, want to bring their standards up to you know the best possible standards. And we've seen a fair degree of investor enthusiasm for that structure.

Jonathan Javitt
Chairman and Chief Scientist at NRx

We'll certainly have more to say in coming months, but I think you'll see Hope as a living, breathing entity in the coming quarter.

Matthew Duffy
Chief Business Officer at NRx

Thanks. Another, another one came in, and the question is: How do you see NRX-101 fitting into the treatment paradigm for bipolar depression?

Jonathan Javitt
Chairman and Chief Scientist at NRx

I think if, if we're able to get accelerated approval for NRX-101 in patients who have akathisia and/or suicidal ideation on the current generation of, of 5-HT2A antagonist drugs, so you're talking about lurasidone, olanzapine, cariprazine, that family of drugs, I think you'll see NRX-101 become a preferred drug, in that category. Because akathisia is, as, one leading psychiatrist put it to me, the worst side effect of every antidepressant. It can have lethal consequences, and until now, people didn't talk about it too much because there wasn't much to do about it. All of a sudden, there is something to do about it, and, and we hope to be that solution.

Matthew Duffy
Chief Business Officer at NRx

Okay, thank you. The last electronic question that we received is, Steve mentioned that inhaled ketamine had not shown an improvement in suicidality. Why would IV be better than that?

Jonathan Javitt
Chairman and Chief Scientist at NRx

Well, and it's certainly possible that a, you know, a future trial will show that, intranasal ketamine, has improved properties against suicidality compared to placebo. Although that wasn't the case either with inhaled racemic ketamine or, so far hasn't been shown, with inhaled, esketamine. It's possible that the and, you know, some doctors have hypothesized this, that the steady state nature of an intravenous administration is important compared to the more sort of, you know, waxed and waned, the more of a, acute blast of ketamine that you get when it's given intranasally.

Jonathan Javitt
Chairman and Chief Scientist at NRx

Rather than focus on, you know, other people's approaches, I, I think if we just, you know, focus on ours and say we've seen an important decrease in suicidality in the clinical trials that we're presenting to the FDA, and that decrease has now been echoed in a 500,000-person cohort study, that's really the important message.

Matthew Duffy
Chief Business Officer at NRx

Okay, thank you. Those are all of our electronic questions. So Ed Woo has, I believe, asked another one. Operator, would you please take his question?

Operator

Thank you. We have a follow-up questions from Ed Woo. Your line is now open.

Ed Woo
Ed Woo
Director of Research and Senior Analyst at Ascendiant

Yeah, thanks for taking up my follow-up question. As you guys are planning on submitting NDAs this year and possible approval for next year, have you thought about your commercial strategies, whether you will develop your own commercial team or whether you'll look for commercial partners? Thank you.

Jonathan Javitt
Chairman and Chief Scientist at NRx

Well, in the case of NRX-100, we already know who the customers are because it's a clinic-based drug, and there's a limited number of clinics. So, you know, about 600, and it could grow to 1,000 by next year, who are using the drug. And some of those clinics are gonna be clinics that Hope Therapeutics owns. So there's no need for the overhead of a large commercial partner to reach customers who already wanna talk to you. In the case of NRX-101, it's also a fairly compact footprint. There are approximately 1,600 psychiatrists in the United States who currently prescribe the lurasidone class of drugs. And you could reach that number of doctors with a fairly compact sales force of about 50 people.

Jonathan Javitt
Chairman and Chief Scientist at NRx

Now, I'm possibly the least qualified person in the company to talk about that. Matt Duffy started out doing that for a living. Matt, why don't you comment?

Matthew Duffy
Chief Business Officer at NRx

Thanks, Jonathan. Sure. You can look at a number of different parameters in terms of number of prescribers, in terms of geography and access to representatives. There's a number of ways to approach it, but you can very effectively get out with reps, you know, with reps in the, you know, the 20-30 rep range, or not necessarily reps, but field force, and really blanket the key prescribers in actually, as Jonathan pointed out, both of with both of these drugs. And as you do so, really target the highest prescribing folks out there. I've done this before at Lev and at MedImmune, and the targeted sales force is a really good way to go.

Matthew Duffy
Chief Business Officer at NRx

It's very efficient, and you can really get the word out there very quickly. And so those are, I think, the important parameters, as we look into taking this really to the next level, because there's just a tremendous amount of opportunity.

Ed Woo
Ed Woo
Director of Research and Senior Analyst at Ascendiant

Great. Thank you, and again, I wish you guys good luck.

Matthew Duffy
Chief Business Officer at NRx

Thanks, Ed.

Operator

Speakers, we don't have any questions over the phone. Please continue. I'd like to hand the call over to Mr. Matthew Duffy.

Matthew Duffy
Chief Business Officer at NRx

Thank you, Franzi, and thank you, everyone. That's all the time we have for questions and our time for our call. So thank you, everyone, for joining us this evening, and this concludes the NRx Pharmaceuticals Q2 2024 Results Conference Call. Thank you for participating.

Operator

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

Analysts
    • Ed Woo
      Director of Research and Senior Analyst at Ascendiant
    • Jonathan Javitt
      Chairman and Chief Scientist at NRx
    • Matthew Duffy
      Chief Business Officer at NRx
    • Richard Narido
      CFO at NRx
    • Stephen Willard
      CEO at NRx
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