NRx Pharmaceuticals, Inc. (NRXP) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the NRx Pharmaceuticals discusses FDA first cycle review conference call. [Operator Instructions] Following the presentation, we will conduct a question-and-answer session. I would now like to turn the conference call over to Brian Corp from Lester Partners.

Please go ahead. Thank you, operator. Before we begin, I'd like to remind everyone that certain statements made during today's call may be considered forward-looking statements within the meaning of applicable securities laws. These statements are based on management's current expectations and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from these expressed or implied. Please refer to the company's SEC filings and today's press release for a discussion of these risks. NR Pharmaceuticals undertakes no obligation to any forward-looking statements, except as required by law. Joining us today are Dr. Jonathan Javed, Founder, Chairman and Chief Executive Officer of NRI Pharmaceuticals and Glenn Tyson, Chief Commercial Officer. Dr. David will provide an overview of the company's recent developments and strategic priorities, followed by remarks from Glenn and commercialization activities and market readiness initiatives. Following their prepared remarks, we'll open the call for questions. With that, it is my pleasure to turn the call over to Dr. Jonathan Javed. Jonathan, please go ahead.

Thank you, Brian. Good morning, everyone. It's a privilege to meet with you and update you on the progress of our abbreviated new drug application otherwise known as an ANDA for preservative free ketamine. As you know from our press release, we have completed our first cycle review with FDA and -- and we're delighted to share with you that to the best of our knowledge, we have only 1 matter to clarify with FDA prior to approval. The agency has advised us that there are no major deficiencies related to our drug to its ingredients to its manufacturer through chemical manufacturing controls to labeling or any related matter connected to the drug itself. -- the sole remaining item is a concern raised by a reviewer that the Luer-Lock tip might to form and use and might not meet properly to the syringe. Our bile is different from the glass files that people are used to and that you don't have to open the top, put a syringe on a needle push the needle through the stopper, draw up the medicine, remove the needle from a syringe, dispose of the needle and finally administer the medicine to a patient. Instead, all you have to do is twist off the plastic cap of the vial connect to Lula syringe to the neck of the vial, drop the medicine and administer it with no chance for needle-stick injury or sharps waste along the way. The ANDA contain documentation that this file has now been used in 3 currently FDA-approved products that have collectively shipped about 11.9 million doses in the last 12 months with no complaints, no returns, no adverse events and no recalls. Moreover, the ANDA contain testing data documenting in-process testing of 500 vials per manufacturing lot for each of our 7 lots with no me functions observed in any of the 3,500 articles that were tested. The bile is manufactured under full design controls as specified in codofederal Regulations Part 20.3, which includes strict adherence to the ANC standards underlying Lulo and precise testing procedures for the list of force that's required to open our vial. We actually measure it down to new centimeters. We have a special testing rig that does this precisely and mechanically, FDA has inspected this file component on multiple occasions during its plant inspections at our manufacturer for the other products. So in a meeting on Thursday, the FDA recognized the extensive measures we took to comply with medical device law related to the Lurilavtip and the documentation of this both in the ANDA and on file at our manufacturer where it was already inspected. Accordingly, FDA asked us simply to submit an attestation from the manufacturer that our bile is manufactured on the same manufacturing lines using the same materials and methods of the 3 currently approved products with attestation is being submitted today. We believe the request we received is consistent with the final verification step rather than a request to generate new technical data because the requested information was already available from our manufacturing partner were able to respond immediately. We're delighted by this outcome, and we believe it significantly derisks the likelihood of a near-term approval of our ANDA. As a result, we are planning to increase our manufacturing order substantially beyond the first 1 million units that we already announced to 5 million units of launch stock. In today's regulatory environment, only 14% to 18% of ANDA products receive a clean approval in the first review cycle. To have emerged with only 1 item that was classified as mature where we believe we've arrived at a rapid path to resolution with FDA is way ahead of the curve from our perspective. Importantly, this is not a review cycle that identified new studies, additional manufacturing work labeling revisions or changes to our commercial plans. Based on the feedback received, we continue to move forward with launch preparation supply chain expansion, distributor onboarding and the commercial infrastructure necessary to support market entry once the review process is complete. As you know, ketamine is on the FDA drug shortage list. It's been identified as a strategic drug product by the military and the VA, hence approving a U.S. manufactured source of Ketamine at a time when hospitals and clinics are forced to buy non-FDA-approved compounded KEDNY from local pharmacies is a priority that goes all the way to senior levels of government. Our focus now is straightforward. We aim to complete the regulatory process, continue scaling inventory and to be prepared to launch into a market where reliable domestic supply remains critically important. With the regulatory review, substantially advanced and our commercial preparations accelerating, we believe NRx is well positioned to create meaningful shareholder value through disciplined execution and a clear path toward commercialization. Last quarter, we told you that we had recruited Glen Tyson to serve as our Chief Commercial Officer. And I've asked Glenn to offer some thoughts on our commercialization plans and then we'll take your questions. Glen?

Thank you, Jonathan, and good morning to you all. Happy to have this opportunity to meet you and give you an overview of our commercialization plans underway. As you're aware, -- this ANDA is the first key step in our progress toward commercialization of a portfolio of assets that we believe will provide new hope for people suffering with serious mental illness. NRx is not relying on a single product strategy to carry the story. Instead, we are deploying a staged commercialization model that starts with the ANDA and builds towards the launches of premium, reimbursed branded therapies, NRX-100 and NRX-101. If approved, these 2 products could provide much-needed options for people suffering with severe depression and suicidality. -- the interventional psychiatry market for ketamine, esketamine combined is growing rapidly and will likely exceed $3 billion in 2027. We're already in the planning stages of a commercial model for NRX-100 that we believe will achieve broad market access significant penetration in the growing interventional psychiatry space and substantial revenue. What we can see is that the insurance reimbursed market is what's driving the profitability in the sector and NRx looks to benefit from this with our portfolio of strategic assets. This launch sequencing allows NRx to generate potentially significant early cash flow from the ANA while constructing a much more robust long-term market position with multiple proprietary assets. This first launch gives us the opportunity to set up a seamless distribution network that will both ensure we can meet market demand for ketamine and help solve the problem of the ketamine drug shortage in the U.S. and the ANDA while launching into a generic market has differentiating characteristics that when paired with an optimal distribution plan, we believe, will lead to substantial market penetration. As a reminder, our ANDA product comes in a lower lock vial, as Jonathan just outlined, and this allows for needleless draws is free of all observative including benzetonium chloride, which is found in all other ketamine products currently on the market. And perhaps most importantly, we have consistent, reliable supply that is made in the U.S.A. Taken as a whole, this opportunity can expand access to ketamine in the U.S. for patients in need. Today, Ketamine remains an important tool as a non-opioid anesthetic for many common surgical procedures as well as having a place in emergency medicine, pain management and within interventional psychiatry. Our distribution plan takes into account all the various customer types and channels, and we believe our launch dosage form of 50 milligrams, which is 1 mg per ml and a 5 ML will be seen as an important product that reliability medical needs across a broad spectrum of sites and uses. At NRx, we're serious about addressing the issue of drug shortages and with an optimized manufacturing process and supply chain reliability. We can produce new batches very quickly and cover any market fluctuations created by other manufacturers in ability to guarantee consistent supply. We're pairing this with the streamlined and highly compliant ordering system that verifies the necessary licensures of all customers and then delivers product confidently. At this time, the commercial team is setting up all the necessary distributor contracts and preparing all the forms and electronic systems for accurate and timely government reporting as well as finalizing implementation of financial reporting systems. We're also building required company infrastructure by setting up pharmacovigilance and medical information functions as well as other systems to capture any customer issues. Because of what we learned in recent market research with purchasers in all channels, We've increased our plans for initial commercial supply manufacturing from the million vials already in plan to 4million to 5 million vials to meet initial launch demand. We would not be making this level of inventory commitment unless we had high conviction in the opportunity the market demand and our readiness to x. Once the end is approved and all labeling is finalized, we will be ready to launch and confident in our ability to deliver meaningful results for shareholders. That concludes my prepared remarks. I'll be able to answer questions upon the conclusion of this discussion. With that, I'll turn the call back over to Jonathan. Brian, would you like to introduce our questions?

Yes. Sounds good. Thank you, operator. Please go ahead. Appreciate it.

[Operator Instructions] And your first question is from Elemer Piros from Lucid Capital Markets.

Jonathan or Glen, would you please explain how you were able to overcome what others are struggling in terms of shortage and secure U.S. supply of the drug is question one. And question 2, if you could describe the economic benefit to for this -- specifically for this first 5 million vial opportunity?

Well, thank you, Elmer. -- when you say how are we able to overcome a shortage? Well, the only way to overcome a shortage is to manufacture into that shortage. Now I think there are a couple of reasons why we are in a position to do that. Every vial of ketamine today is sold in a glass file with a rubber stopper. Pharmaceutical glass is increasingly expensive and increasingly in short supply. More importantly, a glass bottling line can generally manufacture about 10,000 units in a manufacturing run. A blow-fill seal bobbling line where you're fabricating a vial from a couple of pellets of plastic can manufacture 1 million units in the same amount of time with the same workforce or less. Because literally, the machines we're using take pellets of plastic, melt them into a little puddle that puddle is infused with air to form the shape of a vial that vial is automatically filled with medicine. The machine seals the vial, put the label on the vial, put a wrapper on the vial, puts it into a box and puts it onto a pallet without a single human being touching that process. That's very different from an old-fashioned glass bottling line. So we have almost unlimited manufacturing capacity, at least unlimited compared to the ketamine market today. and we don't need to buy pharmaceutical glass in order to satisfy that capacity.

I see. So it was mostly -- or it is not necessarily drug-related, but the entire process related and including the glass vial leads to the shorter...

Well, correct. If what you're asking is whether there's a shortage of Academy API Ketaminpharmaceutical ingredient to our knowledge, there's not, and we have a very significant amount of Ketamine API in the warehouse ready to go. Really, the shortage is the capacity of the current manufacturing lines. And 1 of the problems is ketamine is a fairly well-known drug. Its price is not exorbitantly high. So if you've got a choice between devoting a manufacturing line to a biologic that could sell for thousands of dollars per vial or an old sterile generic injectable product, the expensive new drugs are going to capture the manufacturing capacity out there. The other thing to recognize is that Much of the ketamine supply today is coming from overseas. Overseas supply lines have been significantly disruptive as anybody who reads the news knows. So there's a real need for a high-capacity supply that's manufactured in the United States, and that's what we aim to do.

Yes. And to part 2 of the question or second question, Jonathan, if you could explain what you expect...

At some point, we may give more guidance about the margins that we expect to achieve with this product. But I think just in terms of common sense, people can recognize that a couple of pellets of plastic is a whole lot less expensive than a glass file a rubber stopper a metal crimp and the machinery that's required to put all that together and recognize that glass itself is not problem-free keeping lent out of glass, wash and glass is an ongoing challenge for people who are in that sterile injectables business. So we expect that our unit margins will be significantly higher than the unit margins of people who are bottling in glass and we'll give some more precise guidance about that at the right time.

Yes. And do you think you could maybe elaborate on what sort of premium we hope to get for the preservative-free version of Ketamine?

I think it's premature to talk about what sort of premium we might get. And quite frankly, if at the outset, the preservative-free advantages simply capture additional market share, that will be a major win. -- if we're able to get a premium or that will be a win on top of it.

Your next question is from Patrick Trucchio from H.C. Warid.

It's -- are on for Patrick. I guess, has the new GDUFA date been assigned for the amended submission? And is it going to be treated as a minor amendment or a major amendment? And what does the shortest possible review cycle really mean -- and then separately, what specifically changed in the Patla reference with the drug label?

Dave hasn't been a signed. Therefore, we can't answer the rest of the question. But FDA's posture in the call was extremely collaborative. -- not only was the offset generic drug products on the call, but so is the leadership of FDA's Center 4 drug evaluation review, otherwise known as SEDAR. FDA recognizes that this is a strategic drug that's in drug shortage where the supply chain is primarily an overseas supply chain and there's a very high priority that goes all the way to the Secretary of Health & Beyond to reshore the manufacture of strategic drugs to the United States. With regard to the specific change in the RLD, certainly get it out there. but it was not a significant change. People make labeling changes all the time in old drugs. And in this case, a small change was made after we had filed the ANDA so we just needed -- we've already updated the ANDA to incorporate that change. We got that filed last day.

And then I guess, have you submitted some manufacturer certification yet? And if not, when do you expect does?