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Edited Transcript of PLXP earnings conference call or presentation 9-Aug-19 12:30pm GMT

Q2 2019 PLx Pharma Inc Earnings Call

NEW YORK Aug 10, 2019 (Thomson StreetEvents) -- Edited Transcript of PLX Pharma Inc earnings conference call or presentation Friday, August 9, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Natasha Giordano

PLx Pharma Inc. - CEO, President & Director

* Rita M. O'Connor

PLx Pharma Inc. - CFO

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Conference Call Participants

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* Donald Bruce Ellis

JMP Securities LLC, Research Division - MD & Senior Research Analyst

* Esther Lannie Hong

Janney Montgomery Scott LLC, Research Division - Director of Biotechnology

* Lisa Wilson

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the PLx Pharma's Second Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's call, Lisa Wilson, Investor Relations for PLx Pharma. Please go ahead.

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Lisa Wilson, [2]

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Thank you, Duranda. Welcome to PLx Pharma's Q2 2019 Earnings Results Call. This is Lisa Wilson, Investor Relations for PLx.

With me on today's call are Natasha Giordano, President and Chief Executive Officer; and Rita O'Connor, Chief Financial Officer of PLx.

You can also access the webcast of this call through the Investors section of the PLx website at plxpharma.com.

Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act.

These forward-looking statements are based on information available to PLx Pharma's management as of today and involve risks and uncertainties, including those noted in our press release issued this morning and our filings with the SEC.

Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements.

PLx specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. An archived webcast of this call will be made available for 30 days on our website, plxpharma.com.

For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on August 9, 2019.

Since then, PLx may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings.

And with that, I'll turn the call over to PLx's CEO, Natasha Giordano.

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Natasha Giordano, PLx Pharma Inc. - CEO, President & Director [3]

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Thank you, Lisa. Good morning, everyone, and thank you for joining our call. I'm pleased to share some updates with you today as we continue to make progress toward our planned launch of Vazalore in the middle of next year. As we advance Vazalore through the regulatory process, we are tracking well on all our key milestones.

We conducted a Type C meeting with the FDA, in a written response-only format, regarding our April briefing package submission for Vazalore. The Type C meeting confirm the information we need to provide for the approval of Vazalore. We completed the manufacture of registration batches at the end of June and are now gathering stability data to support the sNDA submission for Vazalore planned for year-end. We continue our precommercial activities, and we're on track to launch Vazalore in mid-2020.

I'll now turn the call over to our CFO, Rita O'Connor, to discuss second quarter results and our progress in manufacturing. Rita?

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Rita M. O'Connor, PLx Pharma Inc. - CFO [4]

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Thank you, Natasha. We recognized revenue of approximately $183,000 in the second quarter of 2019 compared to revenue of $167,000 in the second quarter of 2018. All the revenue recognized is attributable to work performed under an award of the National Institutes of Health grant.

Research and development expenses were approximately $1.6 million for the second quarter of 2019 compared to $734,000 in the second quarter of 2018.

The expenses in both periods included continued development and manufacturing activities for Vazalore. This increase from 2018 is due to the manufacturing of the registration batches to provide data for the sNDA submission.

This level of expense will continue for the remainder of the year as we complete stability testing on the registration batches as well as expenses to complete the sNDA submission expected at the end of this year.

In addition, we're excited about the manufacturing services agreement entered into with Thermo Fisher Scientific for the commercial manufacture of Vazalore. Thermo Fisher has been our partner on the reformulation and manufacture of the registration batches, and we are pleased to secure capacity for the production of Vazalore.

Continuing to second quarter results. General and administrative expense totaled $2.4 million in the second quarter of 2019 compared to $1.8 million in the second quarter of 2018.

This increase reflects approximately an additional $400,000 in commercial-related activities in support of the upcoming launch and a payment to the University of Texas associated with the patent license agreement of $225,000.

G&A expense is expected to increase the rest of the year due to the increased prelaunch marketing spending focused on the health care professional, retail trade and the consumer.

Other income and expense net was $5.5 million of net other expense in the second quarter of 2019 compared to $1.2 million of net other expense in the second quarter of 2018. This change is largely attributable to the noncash change in the fair value of warrant liability primarily due to the fluctuation of the price of our common stock.

Net loss attributable to common shareholders for the second quarter of 2019 with $9.6 million or $1.10 per share compared to a net loss of $3.6 million or $0.41 per share for the second quarter of 2018. The second quarter of 2019 included a noncash charge of $5.4 million or $0.61 per share compared to a $1 million charge or $0.11 per share in 2018 as a result of the change in the fair value of the warrant liability.

The second quarter of 2019 also included a noncash charge of $302,000 or $0.03 a share for preferred stock dividends related to the Series A $15 million convertible preferred financing we completed in February of 2019.

As of June 30, 2019, we had cash and cash equivalents of $21.3 million. Our cash burn for the quarter was $3.1 million, which reflects $2.6 million of operating cash burn, $937,000 of debt principal repayments partially offset by net proceeds from the issuance of our common stock of $463,000 under our equity distribution agreement or ATM.

Going forward, we expect our cash burn to be around $5 million per quarter for the remainder of the year as we prepare the sNDA submission and increase our sales and marketing expenses in advance of the Vazalore launch.

We have cash on hand to finance operations to the anticipated date of FDA approval of Vazalore. To finance the U.S. market launch, we intend to review nondilutive financing alternatives such as debt and royalty-based financing.

Prior to FDA approval, we may opportunistically raise additional capital to accelerate certain precommercial activities. This could be done in the form of debt or equity and might include issuing stock under our ATM.

To date, we have raised $1.7 million under that ATM.

With that, I'll turn the call back to Natasha to provide more details of our commercialization activities. Natasha?

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Natasha Giordano, PLx Pharma Inc. - CEO, President & Director [5]

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Thank you, Rita. This is a very exciting time for us as we bring Vazalore through the next steps of the regulatory process.

I'd like to focus on a few key themes today that I believe will help to illustrate the reasons behind our enthusiasm for Vazalore, and the market dynamics that give us a significant amount of confidence in launching our novel aspirin therapy.

First, let me briefly remind you of our target market opportunity and reiterate our compelling clinical data. Data that we believe will be instrumental in informing the health care professional of our innovative aspirin product, Vazalore.

We are targeting the sizable secondary prevention market. We see a critical role for Vazalore in this population, which encompasses 2 groups: first, people who've experienced an event such as a heart attack, stroke or have undergone a vascular procedure; and second, diabetics, who don't necessarily have heart disease, but who, by virtue of their condition, are at a higher risk for having a vascular event.

Taken together, these segments represent over 40 million patients for a $10 billion market opportunity.

By capturing even a small market share of that huge market, Vazalore has the potential to generate meaningful revenue and importantly, impact many patient lives.

Let me now turn to the supporting clinical data and an overview of what makes Vazalore's formulation so unique in the aspirin category.

Vazalore capsules are filled with a liquid lipid-aspirin complex that bypasses the stomach and gets rapidly absorbed in the duodenum. Accordingly, Vazalore provides faster, more reliable aspirin absorption and better platelet inhibition compared with enteric-coated aspirin, the current standard of care.

Importantly, this improved efficacy comes with the added advantage of less GI toxicity compared with regular aspirin.

Our study, a robust PK and PD comparison of regular aspirin, enteric-coated aspirin and Vazalore was published in the Journal of American College of Cardiology and was recognized as one of the Editor-in-Chief's Top Picks for 2017 with Dr. Deepak Bhatt of Harvard and Brigham and Women's as the principal investigator.

Headlines from that study showed that Vazalore, as compared to enteric-coated aspirin, achieved therapeutic efficacy 4x times faster, up to 5x greater absorption and 2x better platelet response.

Another study published in the American Journal of Gastroenterology compared to our upper GI damage of regular aspirin and Vazalore in healthy subjects via endoscopy.

Our third-party blinded review of endoscopic studies revealed that Vazalore demonstrated 47% lower risk of erosions or ulcers within NNT, the number needed to treat, of 5; 71% lower risk of ulcers with an NNT of 8.

By definition, NNT, the number needed to treat, is an accepted measure for a drug's clinical and economic performance. An NNT of 5 or 8 means that you only need to treat 5 or 8 patients to save one event.

Now let me turn to our approach on commercialization. Key to our commercial strategies to engage with 3 important groups, health care professionals, consumers and leaders in the retail trade. We continue to actively participate in major conferences to raise awareness and build brand familiarity among these important constituents. To that end, we've participated in several prestigious conferences to educate and build awareness among top practitioners and key thought leaders.

In May, we participated in EuroPCR, the largest gathering of interventional cardiologists in Europe, where the latest advances in cardiovascular science are communicated.

We heard thought leaders reiterate the need for reliable, lifelong antiplatelet therapy for high-risk patients, and we were thrilled when Vazalore was specifically mentioned as a coming soon, innovative, new aspirin formulation with an improved benefit risk profile that could benefit millions of patients.

We remain laser-focused on our efforts to launch Vazalore in the U.S., but we're also convinced that the reliable efficacy and enhanced safety of our novel aspirin resonates among clinicians globally. And we plan to consider opportunities that would make Vazalore available to patients around the world.

Also of note, we presented 2 abstracts on Vazalore's value proposition at the ISPOR Conference, the leading global conference for health, economics and outcomes research.

The first is entitled hospital budget impact of switching to an alternative aspirin formulation with improved GI safety for treatment of acute vascular events. And the second is limitations of enteric-coated aspirin underscore the need for a next-generation safer and effective aspirin option.

The complications associated with aspirin use, specifically upper GI bleeding, can contribute large added cost during the acute hospitalization of patients with heart attacks or strokes.

We demonstrated that the use of Vazalore instead of the currently available formulations on the treatment protocols of these high-risk patients can translate into significant cost savings for hospital budgets based on superior acute GI safety and reduced risk of bleeding.

We are continuing our work on the economic benefits that Vazalore can also contribute in the chronic treatment setting and plan to present our findings in upcoming meetings.

Forums such as these are attended by the most influential practitioners in the world and thus present important opportunities for us to inform them about Vazalore and to ensure that its unique benefits, both clinical and economic, are well understood.

From the consumers' perspective, because this is an over-the-counter product, the decision to purchase Vazalore will be between the consumer and their physician. These patients require a lifetime daily regimen of aspirin therapy as part of secondary prevention.

Further, our research shows that when an OTC product is recommended by a physician, patients will seek out that product in the store and are willing to pay a premium price for it.

We continue to have productive dialogues and planning meetings with key retailers who have indicated a strong interest in Vazalore. They have expressed their enthusiasm for a long overdue innovation and investment in the aspirin category.

Finally, as we transition PLx from development to commercialization, we have relocated our corporate headquarters from Texas to New Jersey as we continue to prepare for the launch of Vazalore.

In conclusion, let me share a couple of thoughts on why we are so excited about bringing Vazalore to market and the opportunity to impact so many patients' lives.

First, we believe Vazalore can address an unmet critical need and offer physicians an innovation in the treatment of vascular disease. Its unique mechanism of action has enabled us to secure a very strong patent life for an over-the-counter product through 2032.

Second, Vazalore utilizes our PLx novel drug delivery platform, which enables it to provide better efficacy and improved GI safety.

With these key benefits, we believe we can transform the current standard of care to Vazalore.

And finally, our conversations with key thought leaders in the cardiology and neurology communities have confirmed our enthusiasm for Vazalore and its potential to disrupt the aspirin landscape.

We look forward to continuing our progress towards launch.

With that, I'd like to open the call for questions. Operator, please go ahead with the instructions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Donald Ellis from JMP Securities.

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Donald Bruce Ellis, JMP Securities LLC, Research Division - MD & Senior Research Analyst [2]

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I have a few questions and if it's all right, I'll ask them one at a time. Yes. First question is, were there any changes to the AHA or ACC recommendations for either primary or secondary prevention in 2019?

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Natasha Giordano, PLx Pharma Inc. - CEO, President & Director [3]

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So the guidelines right now recommend for aspirin use as a foundational therapy for secondary prevention. In fact, it's never been recommended by the FDA to prescribe or recommend aspirin for primary prevention. However, they also suggest that, that's a decision that should be made between the patient and the physician based on the amount of risk that, that patient has i.e. if they're diabetic, they're at significant risk for a cardiovascular event. So they may be a candidate for aspirin therapy. The guidelines agree and states that aspirin should be foundational and required for all secondary prevention patients, which really is our target patient profile.

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Donald Bruce Ellis, JMP Securities LLC, Research Division - MD & Senior Research Analyst [4]

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Okay. Another, there's a meeting in Philly of AHA. Are you guys planning on having your presence there?

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Natasha Giordano, PLx Pharma Inc. - CEO, President & Director [5]

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We are planning to have a presence, yes, at all the major cardiovascular conferences coming up. We will be participating. Certainly, we'll have an exhibit booth. Some conferences, we are presenting. But, yes, we're increasing our presence at all major cardiovascular and also including some neurology conferences as well.

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Donald Bruce Ellis, JMP Securities LLC, Research Division - MD & Senior Research Analyst [6]

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Okay. Now another question. This is an area that you guys have not mentioned or discussed that I'm aware of. And that's the use of the 325-milligram dose in the prevention of colorectal cancer. Have you quantified the size of that market or -- and is that an opportunity for you?

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Natasha Giordano, PLx Pharma Inc. - CEO, President & Director [7]

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We have an ongoing NIH grant to explore the use of aspirin and Vazalore in colorectal cancer. That is not something that is on label at the time, but we are exploring the benefits of aspirin. And we're very hopeful and enthusiastic about what that may bring. But our focus right now is purely on the cardiovascular market, the $40 million-plus patients that could benefit from aspirin and a better aspirin that delivers better efficacy and is safer than what's on the market. So our primary focus will continue to be in the secondary prevention market.

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Donald Bruce Ellis, JMP Securities LLC, Research Division - MD & Senior Research Analyst [8]

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Okay. Next question. Is Thermo Fisher, is that a primary or a backup supplier for you?

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Rita M. O'Connor, PLx Pharma Inc. - CFO [9]

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It's the primary.

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Donald Bruce Ellis, JMP Securities LLC, Research Division - MD & Senior Research Analyst [10]

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Primary, okay. And last question for Rita. The move from Texas to New Jersey. Have you calculated what impact that will have on the -- your corporate tax rate going forward?

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Rita M. O'Connor, PLx Pharma Inc. - CFO [11]

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No. Considering though that we have somewhat significant NOLs, that, that's what we're really focusing on now versus the corporate tax rate for New Jersey.

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Operator [12]

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(Operator Instructions) Our next question comes from Esther Hong from Janney.

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Esther Lannie Hong, Janney Montgomery Scott LLC, Research Division - Director of Biotechnology [13]

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On commercial strategy, can you provide additional details on your launch plans, specifically over the next 6 months? I know you spoke about all the conferences you'll be attending, anything on top of that? And then, in general, what are the key components that would create a successful launch for an OTC product like Vazalore? What are the fundamentals that have to be there?

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Natasha Giordano, PLx Pharma Inc. - CEO, President & Director [14]

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Thanks, Esther. For our commercial strategy, we are extremely focused on 3 groups. Educating the health care professional, meaning the cardiologists, the neurologists, also the pharmacists. Also the consumer, we are developing through a multichannel marketing approach, we're developing educational materials, things through digital and search that will help consumers understand the benefits of Vazalore and help them to go to their physicians to discuss whether Vazalore is the right treatment for them.

And thirdly, we're focused very much on the key retailers. And this is a product that's uniquely marketed to the cardiologists and the neurologists, so any health care professional, but also to the consumer. And so we are in planning and partnering discussions with all the key retailers at the moment to discuss premium shelf space where the product will be located in each store.

The feedback from the retailers has been extremely encouraging. The category itself has been flat, if not declining, and they're looking -- there's been no innovation, no investment in the aspirin category for decades. So it's really ripe for Vazalore to disrupt that category and provide something new, something innovative and something that delivers better efficacy, better safety and it's going to impact so many patients' lives. That's where our commercial strategy is focused on.

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Operator [15]

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I show no further questions at this time. I'd like to turn the call back to Natasha Giordano for closing remarks.

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Natasha Giordano, PLx Pharma Inc. - CEO, President & Director [16]

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Thank you. We believe that Vazalore is a more effective and safer aspirin product with the potential to benefit the millions of people who require lifetime, daily aspirin therapy. The medical community and retail trade's growing appreciation of Vazalore's innovative attributes is especially encouraging as we advance this exciting product through the regulatory process into market. Thank you all for your time this morning, and have a great day.

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Operator [17]

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Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may disconnect, and have a wonderful day.