Adamis Pharmaceuticals Corporation (ADMP) on Q4 2021 Results - Earnings Call Transcript
Operator: Greetings, and welcome to Adamis Pharmaceuticals Full Year 2021 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Robert Uhl, with ICR Westwicke.
Robert Uhl: Thank you, operator, and good afternoon, everyone, and welcome to the Adamis Pharmaceuticals 2021 financial results and corporate update conference call. Thank you for joining us today for the update, and welcome -- we welcome our shareholders, analysts and anyone else interested in Adamis. Joining me today is Adamis' President and CEO, Dr. Dennis J. Carlo; Chief Medical Officer, Dr. Ron Moss; Chief Business Officer; David Marguglio; and Chief Financial Officer, David Benedicto. The format for this call will consist of prepared remarks from management, followed by Q&A. This call is being webcast and will be available for replay in the Investors section of our website, adamispharmaceuticals.com. In today's call, we will make certain forward-looking statements regarding our business based on current expectations and current information. Those statements speak only as of today, and except as required by law, we do not assume any duty to update in the future any forward-looking statement made today. Of course, any forward-looking statements involve risks and uncertainties, and our actual results could differ materially from those anticipated by any forward-looking statements that we make today. Additional information concerning factors that could affect our business and financial results is included in our most recent annual report on Form 10-K with the Securities and Exchange Commission and in other subsequent filings that we make with the SEC. These are available at the SEC's website. With that, I will now hand the call over to Dr. Dennis Carlo, President and CEO.
Dr. Dennis Carlo: Thank you, Robert, and thanks to all of you for joining us today. I want to begin with a review of how the company performed against our internal objectives for 2021. I want to start by introducing our five major corporate objectives for '21. Number one was to begin our clinical trial using Tempol for the treatment of COVID-19. Obviously, this has been completed and is ongoing. The steps necessary -- the steps we have taken to begin the trial included obtaining drug product, contracting with a major CRO and recruiting patients, finding a lead investigator and putting together a quality DSMB. Our second objective was to meet and discuss with the FDA our planned responses to the agency's 2020 Complete Response letter regarding our naloxone or ZIMHI NDA and resubmitting the ZIMHI new drug applications. This led to the third objective, which was to obtain approval for our ZIMHI product, which we received on October 12, 2021. The fourth objective was to complete an executed purchase agreement for the sale of assets relating to our U.S. Compounding subsidiary. And the fifth and final objective was to file an IND to use TEMPOL as a treatment for drug addiction. At this time, I am most pleased to report that we accomplished all of our major corporate goals for 2021. Additional accomplishments were: number one, we completed and published the cytokine study with Stanford investigators and we recently completed the COVID-19 hamster study in which animals were treated with Tempol and received high doses of Omicron virus. The study was conducted at the University of Texas and showed significant reduction in inflammation. I would like to go back and say a little bit more about funding. We have and we will continue to explore options regarding funding and design clinical study to examine the effects of Tempol for other clinical indications but not limited to the treatment of COVID, methamphetamine and cocaine use disorder, long-term COVID or asthma. We are engaged in activities to support such development should we determine to proceed with such activities. To this end, we have applied for government grant for methamphetamine use disorder and have received a fundable score but will not know if we receive funds until sometime in the second quarter of this year. In a few minutes, Dr. Moss will proceed -- will provide a detailed discussion of each of these product development programs. To summarize my opening remarks, at the beginning of 2021, we established what I believe were very ambitious corporate goals for the company and size of ours. I am pleased to say that we feel we achieved 100% of our objectives. This was with less than 15 full time employees. Additionally, I've challenged my team to set ambitious goals for this year. With the commercial launch of ZIMHI and increasing patient enrollment in our Phase 2/3 clinical trial in the first quarter of this year, I believe that 2022 is off to a very good start. With that, I'll turn it over to our CFO, David Benedicto, to provide some highlights from our recently filed financials. David?
David Benedicto: Thank you, Dennis. This afternoon, we were pleased to file our Form 10-K for the year ending December 31, 2021. As Dennis indicated, I only intend to highlight key parts of our financials in this discussion, and I encourage you to thoroughly review the 10-K for additional details and disclosures. I should point out that our financial statement presentation is very different this year from past years because of our sale of assets relating to our compounding pharmacy business formerly conducted by our U.S. Compounding subsidiaries and our decision to wind down that business and sell or dispose of the remaining assets relating to that business. As a result, revenues and expenses relating to that business and those assets and liabilities are reflected in the discontinued operations items in our income statement and our balance sheet. First, despite the significant increase in retail scripts and unit sales of SYMJEPI in 2021 compared to 2020, reported net revenues from continuing operations for 2021 were $2.2 million compared to $2.8 million in 2020, reflecting the effect and impact of a $2 million reserve reflected in the company's financial statements related to the SYMJEPI recall. The company may be able to be reimbursed by certain third parties for some cost of the recall under the terms of its manufacturing agreements, but there are no assurances regarding the amount or timing of such recovery. Selling, general and administrative expenses year ending December 31, 2021 and 2020 were $16.1 million and $20.1 million, respectively. The decrease was primarily attributable to the reduction in expenses related to legal, compensation related to employee terminations, including forfeitures of stock compensation and depreciation and amortization. Those decreases were partially offset by the fees paid to the financial adviser related to the sale of the assets of USC and other administrative expenses. Research and development expenses were $11.3 million and $8 million for 2021 and 2020, respectively. The increase in research and development expense was primarily due to development expenses related to ZIMHI and Tempol products. Net loss from discontinued operations for 12 months ended December 31, 2021 and 2020 were approximately $11.2 million and $13.5 million, respectively. The decrease in loss was primarily due to the offset by a gain from the sale of certain assets of U.S. Compounding to a third party. Cash and cash equivalents at December 31, 2021, totaled approximately $23.2 million. In 2022, we expect to receive additional proceeds resulting from amounts payable to us pursuant to our sale of certain USC assets to Fagron and from the disposition of the remaining USC assets, which include the land, the building, the machinery and the equipment. Once again, please see our Form 10-K for the year ended December 31, 2021, for additional details and disclosures. I will now turn it over to our Chief Medical Officer, Dr. Ron Moss, for an update on product development.
Dr. Ron Moss: Thank you, David. In March, as previously announced, Adamis initiated a voluntary recall of four lots of SYMJEPI prefilled syringe from the marketplace due to a manufacturing issue with one of our contract manufacturers, Catalent Pharma Solutions. Even though there has been no confirmed complaints for this issue from consumers, in an abundance of caution, certain lots for distribution are being recalled. The lots are being recalled due to the potential clogging of the syringe needle preventing the dispensing of the product. US WorldMeds exclusively markets and distributes SYMJEPI in the United States under a license from Adamis, the NDA holder. US WorldMeds will handle the entire recall process for Adamis with Adamis oversight. Manufacturing of SYMJEPI is currently on hold, pending the results of the investigation underway at Catalent to determine the root cause of this issue. Adamis anticipates the resolution and resumption of manufacturing after the investigation is complete and resolved. We do not anticipate this issue to impact on the exciting ZIMHI launch whatsoever. ZIMHI will be the highest IM dose of naloxone on the market to combat the more potent opioids such as fentanyl. As we recently announced data from experiments at University of Texas demonstrated that Tempol significantly decrease inflammation in the lungs of hamsters compared to control animals when challenged with high levels of Omicron variant virus. As Dennis mentioned, this is important as the BA.2 Omicron variant is now circulating throughout the world and in the U.S. This data complements earlier reported data that also showed decreased inflammation in the same model when challenged with the unmutated SARS CoV-2 virus, the cause of COVID-19. These experiments and other data support the design of the current ongoing Phase 2 trial. Earlier this year, we applied for Fast track designation for Tempol for the treatment of COVID-19. However, the designation was not granted. Fast track is defined as the process designed to facilitate the development of drugs to treat serious conditions and fill an unmet medical need. This decision by FDA appeared to be administrative in nature and not based on any clinical data related to Tempol. However, we believe that the Phase 2 trial is positive, the FDA will provide a timely review of the data and feedback due to the ongoing COVID-19 pandemic. Currently, as you know, there are no oral anti-inflammatory drugs approved for the treatment of COVID-19 or for long COVID disease. Since opening the enrollment of our Phase 2/3 trial last year, we have exceeded the number of subjects needed for the second interim analysis scheduled for May. As a reminder, the objectives of the study are to determine Tempol's effect on clinical development, inflammation and the rate of hospitalization. We are also measuring long COVID symptoms in this trial, a significant unmet medical problem as no treatments are approved for this debilitating disease. Our trial requires individuals with moderate COVID symptoms to have comorbidities such as heart disease as those patients typically have worse outcomes sometimes requiring hospitalization. The trial is a double blind, which means only the Data Safety Monitoring Board, or DSMB, knows what treatment a subject may be getting during the trial. At the trial's interim analysis, the DSMB carefully reduced the data and can stop or continue a trial and can also make recommendations to modify the trial if there are major concerns. To be clear, Adamis is blinded to the data and will not see the final results until the trial is completed. In March, the Data Safety Monitoring Board, which oversees the trial meant to review the interim data from the first 50 patients. Based on the analysis of safety and clinical data, the DSMB recommended that the trial continue without any additional modifications. We and others believe this is a good time. The DSMB will meet again in May to review the data from approximately 124 patients and will provide us with a new recommendation. We believe the next and final analysis of this study will allow the DSMB to provide meaningful feedback on the clinical and safety aspects of the trial. We will provide an update on the trial after the next meeting by the DSMB. The time to completion of the trial, of course, depends on many other factors on both COVID infection rates and on the DSMB's recommendations. Following completion, we anticipate that the key clinical data will be made available to the public. If the trial is successful, we will also submit a clinical center report and request a meeting with the FDA as soon as possible. Finally, as Dennis mentioned, we are looking at potential other clinical uses of Tempol and continue to seek government and commercial nondilutive funding. At this time, I will turn it over to David Marguglio.
David Marguglio: Well, all I want to talk about today is ZIMHI. So after more than six months of close working with -- closely working with US WorldMeds and their team as well as our manufacturers, I am very pleased to share with you today that US WorldMeds has commenced the commercial launch of ZIMHI. As a reminder, ZIMHI is our high-dose, naloxone injection product approved by the FDA last year for the treatment of opioid overdose. Naloxone is generally considered the drug of choice for immediate administration for opioid overdose. It works by blocking or reversing the effects of the opioid, including drowsiness, slow breath or loss of consciousness. With most -- the most recent CDC data showing the highest number of drug overdoses recorded in any 12-month period and drug overdose now becoming the leading cause of death for Americans under the age of 20 -- or excuse me, under the age of 50, we are excited to provide patients and health care workers with a powerful new weapon to come back this growing epidemic. ZIMHI is approved for use in adults and children and is exclusively marketed as set by US WorldMeds. US WorldMeds has a proven track record of successfully commercializing several different pharmaceutical products, and we believe ZIMHI is synergistic to and a perfect companion product for their LUCEMYRA product. US WorldMeds has a first-in-class and only approved product for the treatment of opioid withdrawal symptoms in LUCEMYRA, and we are confident that they can leverage this existing commercial infrastructure as well as their presence in the opioid addiction market to hit the ground running with ZIMHI. I would encourage everybody to explore the new zimhi.com website for additional information on the product and its availability. And with that, I will turn it back to Dennis for closing remarks.
Dr. Dennis Carlo: Thank you. This will conclude our call, and we will now open up to questions.
Operator: Our first question is from Elliot Wilbur with Raymond James. Please proceed.
Unidentified Analyst: This is on behalf of Elliot. Regarding Tempol, there appears to have been some adjustments to the clinical trial protocol, including change in primary endpoint, reduction in hospitalization to resolution in symptoms as well as a change in the enrollment criteria from acquiring at least one comorbidity to at least one risk factor for progression. Can you please walk us through the rationale for the changes and how this may impact enrollment trends and data of readout, please?
Dr. Ron Moss: Well, this is Dr. Moss. Yes, we changed the endpoints or move them around quite a bit so that they were more consistent with endpoints or other antivirals such as Relenza and Tamiflu. So we're looking at resolution of symptoms as the primary endpoint because we believe the Tempol's inflammatory activity and antiviral activity would greatly impact on this endpoint. And we still are tracking hospitalizations, but that is now a secondary end point due to the lower hospitalization rate in the United States. The inclusion criteria has been expanded to include patients who have been vaccinated because we didn't have that information when we started the study, but many individuals who are vaccinated end up getting quite sick. And so from our standpoint, as long as they have moderate symptoms to begin with, it doesn't matter if they're vaccinated or unvaccinated. So overall, that's the rationale for the changes and we are continuing to work very closely with the FDA feedback on this protocol. And we believe that the current end points are going to be very important at the end of the day when we unblind the study.
Operator: Ladies and gentlemen, there are no further questions at this time. I would like to turn the call back to Robert Uhl for any closing remarks.
Robert Uhl: Okay. That will conclude our call today. I thank you for participating and for your interest in Adamis Pharmaceuticals. Have a good evening, everyone.
Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
