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EMMA: Growing Revenue and Treating Sickle Cell

By Brad Sorensen, CFA



EMMA (OTC:EMMA) is a commercial stage biopharma company bringing relief to sickle cell sufferers and looking to expand their reach. Emmaus Life Sciences, Inc. is expanding the reach of Endari, its treatment for sickle cell disease, while also pursuing other treatments to add to its portfolio. The company reported 3Q 2022 earnings that were slightly below expectations due largely to a delay in production of product packaging in a region—a situation that is rectified in 4Q. Revenues gained for the third straight quarter.

Sickle cell disease impacts approximately 100,000 people in the US and an estimated 20-25 million people worldwide, a disease for which there is no cure and few effective treatments. And it appears to impact the black community in an outsize fashion with the CDC reporting that about 1 in 13 black babies born are born with the sickle cell trait. This results in 1 out of every 365 black babies being born with sickle cell disease, while only 1 in every 16,300 Hispanic-American births are born with sickle cell.

Emmaus has an answer, at least to some degree, to ease the pain of sickle cell patients in its treatment known as Endari, which has been proven to reduce complications of sickle cell disease in adults and children 5 years and older. The treatment has gained the orphan drug designation from the FDA, which is reserved for those drugs and therapies targeted at conditions affecting fewer than 200,000 Americans. This designation provides the company that receives it with the possibility of receiving tax credits for qualified clinical trials, an exemption from user fees, and, most importantly for Emmaus at this point, 7 years of market exclusivity after approval of the drug or therapy. The effectiveness of Endari in the fight against sickle cell disease is demonstrated by the results from recent clinical studies, which included 230 patients with sickle cell anemia or sickle thalassemia. Importantly, prior to the study, all 230 patients had at least two painful crises within 12 months of entering the trial. Among the encouraging results:

- Endari was shown to lower the frequency of sickle cell crises by 45%--annualized.

- Endari was shown to lower the frequency of hospitalizations by 33%.

- Cumulative days spent in the hospital by those on Endari were reduced by 41%.

- The time to the first sickle cell crisis in patients was delayed by 30 days.

- There was a reduced occurrence of acute chest syndrome (ACS). ACS is an acute complication of sickle cell disease and a major cause of morbidity and mortality. Once acquired, immediate intervention is required—regardless of age.

- Analysis by the company indicates that patients requiring blood transfusions and receiving Endari required about 43% fewer units of red blood cells.

Emmaus provided an update on its operations as it continues to grow revenues:

• Emmaus reported 3Q revenues of $4.9 million for 3Q 2022, marking the third quarter in a row of quarterly revenue growth.

o Company management attributed the increase to an increase in sales in the Middle East North Africa Region.

▪ There was a delay in production of product packaging specific to the region, which resulted in the increase being less than expected.

• That situation should resolve itself in 4Q.

• The company reported a loss of $0.01 per share, in line with expectations and better than the $0.06 per share loss in 3Q 2021.

• Company management also noted that the company is in discussions with stakeholders regarding the possible restructuring or refinancing of outstanding indebtedness.

• Endari, the company’s sickle cell treatment, is commercialized and bringing in revenue.

o The company is expanding to other global regions, expanding an already large potential market which is estimated to be in the 20-25 million people worldwide range.

• The company continues to pursue approval for Endari to treat Diverticulosis, which is estimated to be an $8-20 billion market in the US and up to $35 billion in the EU.

o The company is hoping to gain approval for Endari for Diverticulosis as early as 2024.

Emmaus has endured a difficult year, highlighted by the departure of several officers due to various circumstances but we believe the company has now stabilized the executive suite and the evidence shows that revenues are on the increase. We believe this rise in revenue will continue as marketing and word of mouth increase in the sickle cell community and suggest that investors interested in a company making a difference in people's lives and growing its market size take a look at EMMA.

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