U.S. Markets closed

Edited Transcript of CORV.TO earnings conference call or presentation 14-Nov-19 1:30pm GMT

Q3 2019 Correvio Pharma Corp Earnings Call

Dec 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Correvio Pharma Corp earnings conference call or presentation Thursday, November 14, 2019 at 1:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Brendan Payne

Correvio Pharma Corp. - Associate Director of IR & Business Development

* Justin A. Renz

Correvio Pharma Corp. - CFO & President

* Mark H. N. Corrigan

Correvio Pharma Corp. - CEO & Director

================================================================================

Conference Call Participants

================================================================================

* David C. Martin

Bloom Burton & Co., Research Division - MD & Head of Equity Research

* Sudan Naveen Loganathan

Cantor Fitzgerald & Co., Research Division - Analyst

* Swayampakula Ramakanth

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning, ladies and gentlemen, and welcome to Correvio's Third Quarter 2019 Financial Results Conference Call. There will be a question-and-answer session to follow. Please be advised that this call is being recorded at the company's request.

I would now like to turn the call over to Mr. Brendan Payne, Correvio's Associate Director, Investor Relations and Business Development. Please go ahead, sir.

--------------------------------------------------------------------------------

Brendan Payne, Correvio Pharma Corp. - Associate Director of IR & Business Development [2]

--------------------------------------------------------------------------------

Thank you. Good morning and welcome to our third quarter 2019 earnings call. With me today are Dr. Mark Corrigan, our Chief Executive Officer; Mr. Justin Renz, our President and Chief Financial Officer; and Mr. David Dean, our Chief Business Development Officer.

On the call today, Mark will provide an overview of recent corporate developments, then Justin will discuss highlights from our third quarter 2019 financial results. Mark will then provide some summary remarks, and then we will open up the call for your questions.

Earlier this morning, we issued a press release detailing Correvio's results for the third quarter 2019. The release is available on our website at www.correvio.com.

Before we begin our formal comments, I'll remind you that various statements contained during this conference call relate to future results, events and expectations and are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 or forward-looking information under applicable Canadian securities legislation. Forward-looking statements or forward-looking information involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company or industry results to be materially different from any future results, performance or achievements expressed or implied by such statements.

These forward-looking statements include, but are not limited to, the timing and outcome of any decision by the FDA on our resubmitted Brinavess New Drug Application, the timing of the FDA's Advisory Committee meeting, the timing of the launch of Brinavess in the U.S. in the event that the FDA approves the Brinavess NDA, the possibility of obtaining an extension to the Brinavess patents in the U.S., the potential for a transaction involving Brinavess, the size of the market opportunity for Brinavess in the U.S., the willingness of hospitals to embrace the use of Brinavess in the U.S., the timing of the submission of the MAA for Trevyent in Europe and the timing of the launch of the product should the MAA be granted, the possibility of gaining regulatory clarity for Brinavess from the China FDA later in 2019, the sufficiency of our current funding to extend our cash runway into mid-2020 and to fully execute on the U.S. Brinavess opportunity and predicted financial results for any upcoming time periods. A detailed discussion of the risks and uncertainties facing Correvio are discussed in our annual and quarterly reports and detailed from time to time in our other filings with the SEC and Canadian securities regulators.

With that, I will now turn the call over to Dr. Mark Corrigan. Mark?

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [3]

--------------------------------------------------------------------------------

Thanks. Thank you, Brendan, and thank you, everyone, for joining us on today's call.

Beginning on Slide 3, I'd like to discuss a few updates related to Brinavess or intravenous vernakalant, our antiarrhythmic drug for the rapid conversion of recent onset atrial fibrillation to normal sinus rhythm in patients without significant heart failure. As a reminder, Brinavess is currently approved in 41 countries and is marketed in over 30 countries, including most of Europe and Canada. Following positive discussions with the FDA in October 2018, we resubmitted the Brinavess NDA during the second quarter of 2019. The NDA was accepted by the FDA in late July and a target action date of December 24, 2019, was assigned under the PDUFA Act.

We also recently announced that FDA will hold the Cardiovascular and Renal Drugs Advisory Committee meeting in connection with its review of the pending Brinavess New Drug Application on December 10, 2019, from 8 a.m. to 5 p.m. Eastern Time.

Regarding our U.S. intellectual property state for Brinavess, we've received independent regulatory and legal opinions that Brinavess may qualify for the maximum 5-year patent extension in the United States, significantly lengthening Brinavess' exclusive commercial rights into March 2031. If Brinavess is approved by the FDA, we anticipate working with the U.S. Patent and Trademark Office to secure this formal extension, which we believe will have substantial positive implications for Brinavess' commercial potential.

And lastly, as we have stated on prior calls, since we don't have any commercial presence in the U.S., we are currently exploring strategic transaction opportunities around this asset.

Turning now to Slide 4. The Brinavess NDA is supported by a large and strong body of both clinical data and real world experience. The largest data set is from the SPECTRUM study. SPECTRUM was conducted as part of the follow-up measures agreed to with the European Medicines Agency in 2010. In this perspective and retrospective observational registry, 1,778 unique patients receiving a total of 2,009 treatment episodes were enrolled to evaluate and obtain data on patients administered Brinavess. The data for SPECTRUM was provided by 53 participating hospitals in the EU and demonstrated that treatment with Brinavess successfully converted 70.2% of all AF patients into normal sinus rhythm. Treatment with Brinavess showed a median time of conversion of 12 minutes from the start of first infusion among patients who successfully converted, most of whom were successfully discharged from the emergency department.

With regard to the safety results, the cumulative incidence of health outcomes of interest, defined as significant hypertension, ventricular arrhythmia, atrial flutter or bradycardia were reported in less than 1% of patients. 28 serious adverse events reported for 26 patients, and no deaths nor torsades des pointes were reported in the study.

Since its approval in Europe 8 years ago, numerous prestigious investigators and institutions have studied Brinavess in both investigator-sponsored and post-marketing approval studies across many countries in Europe, Scandinavia and South America, gathering extensive data about its real-world clinical settings. As we await the FDA's decision on Brinavess, we can proudly say that to date, approximately 59,000 patients have been treated with Brinavess, not including patients treated in the SPECTRUM study.

In parallel with all of our regulatory efforts, we are also laying a strong foundation for Brinavess by raising awareness with physicians. To that end, we recently presented SPECTRUM at the European Society of Cardiology 2019 Congress in September in Paris. A new post hoc analysis, which looks at a subset from SPECTRUM specifically treated in the emergency department setting was recently selected for presentation at the upcoming American Heart Association 2019 Annual Meeting taking place this weekend in Philadelphia. I'll provide an overview of these data in just a moment.

In addition to data presentations, we have submitted the SPECTRUM data to a prestigious American medical journal with the goal of publication during the first half of 2020 to coincide with potential Brinavess launch. And finally, we have already begun planning for a strong presence at next year's annual meeting of the American College of Cardiology, which should take place in Chicago in March.

On Slide 6, we have an overview of the new SPECTRUM data being presented at AHA 2019 this weekend. Again, this was a subset of 1,289 patients who were specifically treated in the emergency department setting. In this analysis, Brinavess successfully converted 70.2% of all AF patients to normal sinus rhythm with a median time conversion of 12 minutes. The median length of hospital stay for these patients was 7.5 hours, and only 13% were in the hospital for greater than 24 hours. For safety, there were 12 adverse events of special interest reported in 11 patients, a rate less than 1%. No serious adverse events resulted in sequelae, and there were no deaths and no reported cases of torsades des pointes.

Moving to Slide 7. The market opportunity for vernakalant in the U.S. is substantial. Correvio recently commissioned market research conducted by a top-tier independent research firm. The report concluded that atrial fibrillation is very common and the incidence is growing rapidly. Today, there are 7.1 million Americans who experience atrial fibrillation each year, and that number is expected to grow to 9.8 million by 2030. Of those, over 0.5 million are treated with cardioversion. If approved, we believe Brinavess would address many of the real-world limitations of existing pharmacotherapies for cardioversion and electric cardioversion.

The other pharmacologic agents that are currently available are generic and aren't currently promoted. They are also either very resource or time intensive or have safety issues or both. And this in-depth market research also concluded that Brinavess has an overall market opportunity of at least $0.5 billion. Collectively, all of these data give us real confidence that Brinavess could have a meaningful impact on the U.S. cardiology marketplace.

So that concludes the Brinavess section of this call. Turning now for a quick overview of our other portfolio of products and product candidates. Our market products portfolio generated $21.3 million for the first 9 months of 2019, an 8% increase compared with the same prior year period. This year-to-date growth would have been in the range of approximately 13% to 14%, but we encountered certain currency exchange headwinds during the third quarter, and along with certain distributor logistic constraints, which resulted in a lower 8% growth. That being said, our product continued to perform well, and we remain on track to achieve our full goal of 2019 revenues to deliver greater than 20% growth over full year 2018 revenues.

The fastest-growing segment of the business continues to be the territories where we market the products directly and control our business. Very quickly, our marketed products are Aggrastat for acute coronary syndrome, which is sold in over 60 countries, both directly in Western Europe as well as through distributors; Brinavess, for acute-onset atrial fibrillation, which is sold directly in the Nordic countries and Western Europe and through distributors in various other territories; Xydalba for acute bacterial skin and skin structure infections, which is sold directly in 8 countries in Western Europe; Zevtera/Mabelio for hospital-acquired pneumonia, which we acquired from Basilea in 2017 and have rights across European countries and Israel; and in the bottom, Trevyent for pulmonary arterial hypertension. We licensed the rights to Europe and currently working with United Therapeutics on this program.

If you'll now turn to Slide 9, we have a quick update on the Trevyent program. Trevyent is a reformulation and novel delivery of the drug treprostinil, also known as Remodulin, for the treatment of pulmonary arterial hypertension. In August, Trevyent licensor United Therapeutics announced the resubmitted Trevyent NDA had been accepted by the FDA. United Therapeutics has since granted Correvio access to the Trevyent NDA. And we're actively preparing a marketing authorization application for Trevyent in Europe, which we plan to submit during the second half of 2020 due to new CE mark requirements for drug device combination of products in Europe. On United Therapeutics' recent third quarter earnings call, Chairman and CEO, Martine Rothblatt, made several statements communicating their enthusiasm for Trevyent and how they see it fitting into their overall PAH strategy.

With that, I'd like to now turn the call over to Justin for the financials. Justin?

--------------------------------------------------------------------------------

Justin A. Renz, Correvio Pharma Corp. - CFO & President [4]

--------------------------------------------------------------------------------

Thank you, Mark. On Slide 10, we have some highlights from our anti-infective franchise. You may see from this slide that our anti-infective initiatives continue to positively impact sales trends for Zevtera/Mabelio and Xydalba, as both assets continue to perform well.

The third quarter is historically the weakest of the 4 quarters for our antibiotic sales, but we were able to maintain our sales run rate from the second quarter through the European summer months. We had approximately $6.2 million in anti-infective franchise revenue in 2018, and we are on track to nearly double this amount for the full year 2019.

On Slide 11, we have an overview of our third quarter 2019 financial results. Amounts, unless specified otherwise, are expressed in U.S. dollars and in accordance with generally accepted accounting principles used in the United States of America. Revenue for the third quarter was $6.7 million, and the associated cost of goods sold for the same period was $2.3 million. This compared to $7 million in revenue for the third quarter of 2018, with associated COGS of $2.1 million. Direct sales for the third quarter were $4.6 million, an approximately 48% increase compared to $3.1 million for the same prior year period. This increase was primarily the result of an increase in the sales of our antibiotic products Xydalba, Zevtera/Mabelio. The overall decrease in our revenue was primarily attributable to the delay of $2.9 million of distributor orders which were expected to be shipped in September, but due to logistic constraints, were not completed until early October.

In addition, foreign currency exchange factors approximately 5% in both euros and British pounds negatively impacted our sales figures. As a reminder, Correvio's revenues may fluctuate between periods based on the timing of these large and infrequent distributor orders. These distributor orders may impact both quarterly and annual revenue figures and the related variance compared to both prior periods because a large order may comprise a relatively large proportion of that particular period's total revenue. As a result, changes in revenues on a period-to-period basis may not provide a clear indication of our actual sales trends.

SG&A expense for the third quarter of 2019 was $11.2 million compared to $9.2 million from the third quarter of 2018. During the third quarter of 2019, we had higher regulatory and medical costs associated with the NDA resubmission of Brinavess, advisory committee preparations, higher legal and adviser fees associated with potential business development activities as well as higher stock-based compensation expense. Interest expense for the third quarter was $2 million compared to $1.7 million for the same prior year period. This increase was due to interest being accrued on a higher long-term debt principal amount.

For the third quarter of 2019, we recorded a net loss of $10.8 million or $0.23 per share compared to a net loss of $7.1 million or [$0.20] per share for the same period in 2018. In the third quarter of 2019, our cash used from operating and investing activities combined was approximately $7.4 million. As of September 30, 2019, we had cash, cash equivalents and restricted cash of approximately $19.7 million. As of November 13, 2019, we had approximately 50.5 million common shares outstanding.

In early August, we completed an underwritten public offering, whereby we issued 9.2 million shares of common stock, which included the exercise of the underwriter's over-allotment option in full at a price to the public of $1.50 per common share. Aggregate gross proceeds to Correvio totaled $13.8 million before deducting the underwriting commission offering expenses payable by the company.

Looking ahead to the remainder of 2019. With the proceeds from the recent financing and our existing cash on hand, we have a cash runway to mid-2020. As Mark stated earlier, we remain on track to deliver full year 2019 revenue that achieved a 20% growth compared to 2018. We continue to explore various nondilutive asset monetization strategies with the goal of maximizing value for our shareholders.

And with that, I'll now turn the call back over to Mark.

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [5]

--------------------------------------------------------------------------------

Thanks, Justin. In closing, I would like to take a moment to review our upcoming near-term milestones. During the fourth quarter of 2019, we are expecting: number one, to receive regulatory clarity from the China FDA regarding the path forward of Brinavess in this very important territory; number two, the advisory committee will take place on December 10 to review the data supporting our Brinavess NDA; and number three, the PDUFA target action date on December 24. Following that, we are aiming to secure a potential strategic partnership for the commercialization of Brinavess in the U.S. during the first half of 2020.

We remain steadfastly committed to delivering innovative hospital drugs into the hands of physicians and patients who need them. We look forward to bringing Brinavess opportunity across the finish line in the near term and delivering value for all our stakeholders. We look forward to keeping you updated on our progress in the coming months.

And with that, we would be happy to take your questions. Operator?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And the first question is from Louise Chen from Cantor Fitzgerald.

--------------------------------------------------------------------------------

Sudan Naveen Loganathan, Cantor Fitzgerald & Co., Research Division - Analyst [2]

--------------------------------------------------------------------------------

This is Sudan Loganathan in for Louise Chen. I have a few questions here. So first, I wanted to ask more about the Chinese FDA that's expected [for clarity] coming here in this fourth quarter. When should we expect it to come? And then also what is the sentiment towards Brinavess in the Chinese market? What's the potential market opportunity there on the number of patients and how it will be implemented in the hospital system?

And then also secondly, on the PDUFA date that is quickly approaching. What is your go-to-market strategy? And how is the talk with partnerships going at this point?

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [3]

--------------------------------------------------------------------------------

Thanks. Those are questions that we are talking about internally, and I'm going to be a little bit conservative with regard to my answers to them. With regard to the Chinese market, the Brinavess was on a list of drugs or 48 products that the Chinese government felt were essential. It is still not clear to us whether that will truncate our requirements to conduct any clinical work in China. As you know, we have an Asia Pacific study, and so we do have experience in Asian populations. And so we are currently taking a look at whether that's sufficient. We haven't heard back from them, and so I can't really comment on that. Obviously, if they would require us to do any further clinical work, that would change things.

We -- with regard to the market, the market opportunity, I think, is quite significant in China. I mean -- and the -- it's 1 billion people, of course. And the atrial fibrillation is as common as it is in Western populations. So we anticipate that there will be a big market there. On the other hand, with regard to the strategy of approaching that, we really believe that we will be best served by partnership. And so we have a partner in China, and we continue to work with them. And I think they will be in charge fundamentally of trying to access the Chinese market, which is a completely different approach than obviously Western Europe or the U.S. So any further comments on China you'd like to make?

--------------------------------------------------------------------------------

Justin A. Renz, Correvio Pharma Corp. - CFO & President [4]

--------------------------------------------------------------------------------

Just to share that we did file the briefing book with the Chinese authorities in early October and our expectation is that we should hear in the next few weeks of a path forward that we will announce as promptly as we can.

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [5]

--------------------------------------------------------------------------------

They are not subject to the same kinds of regulatory time lines and that -- so it's difficult to set expectations, but we anticipate to hear this year.

Your second question, I think, really about what the go-to-market strategy in the United States is an interesting one. We've engaged a number of important external firms, Smart Pharma, 1798 and have brought on very, very high level commercial consultants to help us work through a lot of payer access and really understanding who the buyer is for the product.

The -- it's -- I think as you know, this is not as simple as stacking up what it would be patently obvious to me from a pharmacoeconomic argument that hospitalizing a patient and requiring both cardiology and anesthesia is going to be, by definition, much less burdensome to the system where you're estimating the cost of that fully loaded in the $15,000 to $20,000 range than as opposed to an emergency room procedure, where you can plug in a number for the cost of vernakalant and you look at in excess of 80% of patients being discharged home. So from a systemwide perspective, this is a clear winner in addition to being good medicine.

But translating that into a commercial strategy is another matter. And so that's one of the things that we are working on now. And we're working on it in order to be sophisticated in the conversations we have with our prospective partners in the U.S. As you know, our strategy is to partner with someone who has, we hope, an in-hospital presence so that they can -- we can leverage that across their capabilities. But we also want to be as informed as possible with regard to the approaches that they may take. So we have clearly identified those partners. We are in dialogues with them. But we don't anticipate anything occurring until really we have more regulatory clarity.

--------------------------------------------------------------------------------

Operator [6]

--------------------------------------------------------------------------------

The next question is from Swayampakula Ramakanth from H.C. Wainwright.

--------------------------------------------------------------------------------

Swayampakula Ramakanth, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [7]

--------------------------------------------------------------------------------

So the first question is regarding the Chinese FDA. I know you spoke a little bit about your strategy there and how your conversations are with the Chinese FDA at this point. But considering that you -- the Brinavess has the side of residential products and also with the way the regulations have changed in the -- with the Chinese FDA accepting data from outside the Chinese -- also the Chinese state program permitting studies. Do you think the FDA dossier that you have created is good enough for the Chinese FDA? I'm just trying to understand since other products have been approved in that route, what's the chances for Brinavess going through the same route?

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [8]

--------------------------------------------------------------------------------

RK, thanks for the question. This is a hard one, okay. I think the -- we stand by the data. And the point I'd make and will make at the Advisory Committee is that unlike most drugs that come with dossiers of 2,000 patients and from a risk perspective, have to jump from 2,000 exposures to literally hundreds of thousands of exposures, Brinavess is somewhat unique in that we have, I think the best studied antiarrhythmic in history. I think we have a very strong database of randomized controlled clinical trials, which include an Asia Pacific study. So exposures in Asians that do not meaningfully differentiate with regard to any pharmacokinetic or pharmacodynamic differences between race. So that gets built up then after the controlled clinical trial database with the investigator-sponsored initiatives, which is over 3,000 patients studies in various countries.

On top of that, you have the observational study SPECTRUM, 2,000 patients. And on top of that, you have 59,000 exposures worldwide with 6 reported deaths, none really attributable to drug. That is a very impressive body of clinical evidence for a regulatory authority to consider.

So we think it's a very strong file. On the other hand, there are obviously nuances with regards to politics and consideration that are -- you have to factor in, in addition to the clinical and scientific basis. And I really can't comment on how they're going to see this. But from a pure medical perspective, I think this is as strong a file as they're going to see certainly for an antiarrhythmic.

--------------------------------------------------------------------------------

Swayampakula Ramakanth, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [9]

--------------------------------------------------------------------------------

Okay. And going from China to the U.S., in terms of how the AdCom Panel has been set up for the December 10 and the PDUFA date just being 2 weeks from then, so what are the expectations there from the AdCom? How -- especially, would that somehow move the PDUFA date by any means? I'm just trying to get a feel for like how your conversations are going with the FDA on the file itself, independent of the AdCom recommendation.

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [10]

--------------------------------------------------------------------------------

That's an excellent question, RK, and one that we discuss internally. I think this is really in the FDA's court. They've set up the dates. The dates are -- they have the opportunity to set the AdCom. It wouldn't be the first time that a PDUFA date has moved. I don't think that that's -- if we have a positive advisory committee and we are engaged with the FDA in discussions with regard to labeling, I will be very pleased and I will not despair over a slip in that PDUFA date. It is a very short window for them to construct labeling. You're right on target with that.

--------------------------------------------------------------------------------

Swayampakula Ramakanth, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [11]

--------------------------------------------------------------------------------

Okay. And then regarding Trevyent. So obviously, some of the boxes have been checked in terms of the FDA accepting the Trevyent filing and also you getting the file -- the dossier from UTHR. So what is it that needs to be done that you feel you need 6 additional months before filing in the European Union?

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [12]

--------------------------------------------------------------------------------

So before we can file, we need to obtain a CE mark because of the device nature here. This is reflective of a change in some of the regulations. My understanding is that, so we have -- we are in discussions with external firms who help you with guiding you through the CE mark. But because of that change in regulations, there are actually many, many products that are moving -- that have this requirement and this burden.

And so we try to be as transparent as we can. We had hoped that we were going to be able to move this more expeditiously, but it's clear to us now that the obtaining -- the process of obtaining CE mark, which is a necessary precedent to the MAA filing, will take more than the -- will take more than 6 months. So that's why we have moved the filing to the second half of 2020.

--------------------------------------------------------------------------------

Swayampakula Ramakanth, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [13]

--------------------------------------------------------------------------------

Okay. One last question for me. Justin stated something about monetizing assets. And I'm just trying to understand what are you trying to tell the investment community about with that phrase? So I'm just trying to understand what sort of assets are you talking about when you say, "We are looking into monetizing assets?"

--------------------------------------------------------------------------------

Justin A. Renz, Correvio Pharma Corp. - CFO & President [14]

--------------------------------------------------------------------------------

Sure. So certain of our products, there are territories that may be valuable in the hands of other distributors or companies that we are not actively selling in or we don't have an on-the-ground footprint. So to the extent that we could have a new organization take over product rights in a territory in exchange for cash, that's something that we actively explore

--------------------------------------------------------------------------------

Swayampakula Ramakanth, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [15]

--------------------------------------------------------------------------------

Okay. Okay. So it's more on the geography rather than on the product itself.

--------------------------------------------------------------------------------

Operator [16]

--------------------------------------------------------------------------------

(Operator Instructions) And the next question is from David Martin from Bloom Burton.

--------------------------------------------------------------------------------

David C. Martin, Bloom Burton & Co., Research Division - MD & Head of Equity Research [17]

--------------------------------------------------------------------------------

I've got a couple of questions. The first one is how much of your expenses this quarter were related to your Brinavess regulatory and business development efforts? And if they were to be removed from the P&L going forward, in other words, if someone was to look at the current spec pharma business stand-alone, how close is it to cash flow positive?

--------------------------------------------------------------------------------

Justin A. Renz, Correvio Pharma Corp. - CFO & President [18]

--------------------------------------------------------------------------------

Sure. So in the third quarter, roughly $2 million pertained to Brinavess related activities.

--------------------------------------------------------------------------------

David C. Martin, Bloom Burton & Co., Research Division - MD & Head of Equity Research [19]

--------------------------------------------------------------------------------

Okay. Okay. Second question is, you have high and low adoption markets amongst the markets you've launched into with Brinavess. In the good European markets, what percent of emergency room cardioversions would you say are done with Brinavess in those markets? And what percent of cardioversions are done with Brinavess among admitted patients?

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [20]

--------------------------------------------------------------------------------

That varies. That's an excellent question. And that varies not only by country but by hospital. What we tend to look to is Scandinavia as the best bogey for what we think is going to occur in the U.S. where Brinavess has been very successful in terms of overtaking amiodarone and flecainide. Ibutilide is not used very much there at all. So we've been a market leader in pharmacologic conversions in Scandinavia. And we've seen interestingly, and this is the -- one of the things that makes us -- it's hard to predict. But we have gained ground on ECV quite significantly in Finland and, to a lesser degree but still significantly, in Sweden. And that, of course, is a huge opportunity.

The U.S. is a low pharmacologic conversion market in comparison with most of Western Europe. So we think that there is really not only an opportunity to supersede the existing pharmacotherapies, but also to potentially look at an alternative or at least a frontline agent in front of ECV.

--------------------------------------------------------------------------------

David C. Martin, Bloom Burton & Co., Research Division - MD & Head of Equity Research [21]

--------------------------------------------------------------------------------

In your best hospitals in Scandinavia, what percent in emergency would be Brinavess versus ECV and, amongst admitted patients, Brinavess versus ECV? Do you have a rough idea of that?

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [22]

--------------------------------------------------------------------------------

Less so among admitted patients, to be honest, because admitted patients frequently are more complicated. And if they have comorbid diseases, particularly underlying structural heart disease, they're not really candidates. And there's also the whole cardiac surgery piece, which is about 15% of the markets that you see in a hospital.

So if you don't mind, I can answer maybe the emergency department question. And in our best hospitals there, we see 90% are going to be using Brinavess upfront.

--------------------------------------------------------------------------------

David C. Martin, Bloom Burton & Co., Research Division - MD & Head of Equity Research [23]

--------------------------------------------------------------------------------

Okay. Great. And you mentioned the Scandinavian countries are quite reflective of what you expect in the U.S. So what are the dynamics in those markets that are the same as in the U.S.? And is anything a bit different in the U.S. that might not see the adoption as high as in the Scandinavian countries?

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [24]

--------------------------------------------------------------------------------

Yes. So let me be clear. I don't think that the Scandinavian markets are the most reflective. They in fact are probably the most aspirational markets for us. So I mean Scandinavia is a very homogeneous place. And even there, we see variability across hospitals. However, some of the dynamics that we've seen there in terms of concern for controlling costs and keeping patients out of hospital are much more like the U.S. than, say, Germany. Germany physicians are reimbursed for hospitalizing patients at a greater rate than they are for keeping patients out of hospitals. So there's a de-incentivization for actually using Brinavess rather than hospitalizing patients.

So we feel like that's probably, I would say the strongest and most powerful predictor for the U.S. is a general sense that keeping patients out of hospital is a better idea than hospitalizing. The headwinds, just to -- you could say to me, why not the U.K., France and Italy. Those, we see all as opportunities for us that -- those are regulatory authorities that really a chill ran through them when the FDA put us on clinical hold. And we believe that were we to prevail in the United States that we may be able to enter those markets with a little bit more vigor than we have now.

--------------------------------------------------------------------------------

David C. Martin, Bloom Burton & Co., Research Division - MD & Head of Equity Research [25]

--------------------------------------------------------------------------------

And just to clarify, as far as keeping patients out of hospital, Brinavess is better than ECV on that front?

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [26]

--------------------------------------------------------------------------------

Yes. Again, I hate to caveat everything because you're asking really good questions. If you go into a hospital that has an anesthesiologist that is there, they are prepared, and you can get access to essentially at least an observation room with telemetry and anesthesiologists, that you might be able to conduct that procedure and get the patient out of there. And so I think that's -- it becomes almost a logistics rather than medical issue. There is really no -- other than recovering from the sedation and the procedure itself.

But frankly, putting that all together almost invariably doubles the time and results in a hospitalization than an overnight. And then -- but under an ideal world, you should be able to electro-cardiovert patients and send them home, but all of that has to come together in terms of procedures that doesn't and is unlikely to. So that's really what drives it rather than a lot of increased morbidity from ECV versus pharmacotherapy.

--------------------------------------------------------------------------------

David C. Martin, Bloom Burton & Co., Research Division - MD & Head of Equity Research [27]

--------------------------------------------------------------------------------

Okay. One more quick question, then I'll get back in the queue. Have there been any discussions of oral vernakalant amongst your potential partners and how does that fit in? What are the plans?

--------------------------------------------------------------------------------

Mark H. N. Corrigan, Correvio Pharma Corp. - CEO & Director [28]

--------------------------------------------------------------------------------

So unfortunately -- yes, there have been discussions, but it's best to consider that as a dead avenue. And it's dead for a medical reason. This is an ion channel regulator and interindividual pharmacokinetic differences make keeping drug exposure levels at consistent very difficult. And so while it had been a hope of Merck and they did conduct an oral program, fundamentally you need the kind of dosage control and then, more importantly, exposure control that you get from intravenous administration that -- to really be on the safe side here with administering the product.

--------------------------------------------------------------------------------

Operator [29]

--------------------------------------------------------------------------------

Ladies and gentlemen, this does conclude your conference call for today. We thank you for participating, and we ask that you please disconnect your lines. Enjoy your day.