Earnings Transcript for ADMP - Q3 Fiscal Year 2021

Operator: Greetings. Welcome to the Adamis Pharmaceuticals Corp Q3, 2021 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Robert Uhl, will you may begin.

Robert Uhl: Thank you, Operator. Good afternoon, everyone. And welcome to the Adamis Pharmaceuticals Third Quarter 2021 Financial Results and Corporate Update Conference Call. Thank you for joining us today for the update and welcome to our shareholders, analysts and anyone 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 Adamis ' recently-named 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 statements 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. In addition, I would also like to say that if anyone would like to email questions in during the Q&A portion of the call or at anytime during the call, please feel free to do so using the email address, ir@adamispharma.com. With that, I will now hand the call over to Dr. Dennis Carlo, President and CEO.

Dennis Carlo: Thank you. Robert. Well obviously, a lot has happened since our last business update in June. And at that time, we were looking ahead to the following

David Benedicto: was offset with the reduction in operating expenses and the gain from the sales of assets to cover up. Cash and cash equivalents at the end of September 30, 2021 were approximately $28.7 million. Based on the operating capital required by USC over the last 4 quarters, we estimate the shutdown of the division may increase the Company's overall cash burden by approximately $1.2 million per quarter, starting in the fourth quarter of 2021, excluding expenses associated with the wiping down of USC's business. Additionally, over the 4 quarters, the Company estimates to receive additional cash from amounts payable relating to the previously announced of certain USC assets . The Company will be selling or other wise disposing of the remaining assets of U.S. Compounding, which includes land, the buildings, the machinery, and the equipment. Once again, please see our December 31, 2020 Form 10-K, and our quarterly reports on Form 10-Q for additional details and disclosures. I will now turn it over to our Chief Medical Officer, Dr. Ron Moss, for an update on our regulatory pipelines development.

Ron Moss: Thank you, David. As Dennis mentioned, in September we began enrolling patients into a Phase 2/3 clinical trial testing Tempol in early COVID infection to determine the effects on clinical improvement, inflammation, and the rate of hospitalization. Tempol, as you know, has a unique triple mechanism of action, including antioxidant, anti -

David Benedicto: inflammatory and antiviral activity, which differentiates itself from other approved or unapproved antivirals and monoclonals. Of note, our trial requires individuals with moderate COVID-19 sentence to be unvaccinated and have co - morbidities such as heart disease, as those patients typically have worse outcomes requiring hospitalization. We continue to involve the trial and remain blinded to the data as required by the study design. However, we have experienced enrollment challenges as Dennis mentioned, precipitated by the dramatic decrease in COVID infections and increased immunizations in this country. To mitigate this challenge, we are engaged in the process of opening new sites across the U.S. and are ready for the next COVID surge should there be one this winter as many are predicting and as we're reading in the newspapers. It should be noted, on average, working with an experienced clinical research organization, new sites take 10 weeks to open and involve multiple steps. In addition, we're also planning to consider clinical sites outside the U.S. in geographic locations where vaccination rates are lower and COVID rates are higher. The Company plans on announcing the interim analysis decision by the Data Safety Monitoring Board when it becomes available. I want to emphasize, again, the Company is blinded to the data on a daily basis. As mentioned, we'll report on the trial as to the DSMB interim analyses for the first 50 to 60 patients. Until then, we do not plan on announcing any new information publicly. At this time, I would like to turn it over to David Marguglio. Thank you, Ron. As we've previously disclosed and as mentioned a few times on this call, we sold certain assets at the end of July relating to the USC human compounding business to Fagron. That agreement provided hat we will receive monthly payments over the next 12 months or maybe over a 12-month period and amount equal to 1 to 2 times the total sales of products. Certain identified customers in the book of business that was included as part of that agreement. In addition, we've sold additional USC assets and are engaged in process of winding down the remainder of the business and selling or otherwise disposing of any remaining assets of USC, including the land, building and the manufacturing equipment. Please refer to our most recent filings for additional details regarding the sale of USC. Now, turning to product commercialization. According to market data from Symphony Health, sales of epinephrine injection products in the U.S. exceeded $1.7 billion for the 12-month period ending September 30, 2021. So it remains a very large market opportunity. And despite marketing challenges posed by the pandemic and related lockdowns, Symphony Market data indicates that for the 9 months ending September 30, 2021, SYMJEPI unit sales have increased approximately 98%, versus the first 9 months of 2020. While these numbers continue to lag our own expectations, the trend suggests that US WorldMeds is gaining traction, a nd based on the overall size and growth of the market, we remain bullish on the long-term commercial potential for SYMJEPI. Now, turning to ZIMHI. Certainly, last month's early approval was exciting but as quickly as the excitement came, we immediately shifted gears to preparing for commercial launch. Since the approval, Adamis, along with our manufacturing partners, have been working closely with US WorldMeds to prepare for the launch of ZIMHI in 2022. We will provide additional information on the status of that launch in future updates, but in the interim, I would encourage you to explore the new zimhi.com website for additional information on the product itself and its availability in the market. With that, I'll give it back to Dennis for closing remarks. Thank you, David. I'll conclude by listing some of the major corporate accomplishments for 2021. 1. We filed an IND and we initiated our Phase 2, Phase 3 clinical COVID trial. 2. We resubmitted our NDA for naloxone and received early approval. 3. We've increased sales of our SYMJEPI epinephrine products. 4. We sold both the human and veterinary businesses of US Compounding. 5. We began GMP production of Tempol. 6. We continued working with our commercial and manufacturing partners to enable the launch of ZIMHI, our high-dose naloxone product. 7. We intend to file an IND for another application for Tempol by year-end. With that, I'd like to close and I'd like to open up to questions. Thank you very much.

Operator: At this time, we will be conducting a question-and-answer session. One moment please while we poll for questions. It looks like there are no questions at this time. A question just popped up in the queue. Our first question is from Elliot Wilbur with Raymond James. Please proceed with your question.

Elliot Wilbur: First question for Dr. Moss. With respect to Tempol, given your experience to-date with the compound, maybe you could just outline for us, in terms of how you would rank or -- the potential future opportunities in terms of clinical development programs for the asset outside of COVID-19. What's your what's your thinking about in terms of moving that asset forward?

Ron Moss: Sure. Thank you for that question. Tempol, as I mentioned earlier is a very unique product. Particularly, it's the antioxidant, anti-inflammation components. And one of the things that we've been intrigued with is its effects on neuroinflammation. There's multiple animal models and studies at Tempol for various models that include substance abuse disorders, stimulant abuse disorders, Alzheimer's, multiple sclerosis. In many different models of neuroinflammation, it appears that Tempol seems to be very effective and safe. We will continue to look at these opportunities of other areas, but we think because of its good brain penetration, that one particular area would be treatment of neuroinflammation. That includes methamphetamine use disorder, Alzheimer's, multiple sclerosis, etc.

Elliot Wilbur: Okay. Thanks. And then with respect to the adaptive trial, Phase 2/3 in COVID-19 patients. I think you mentioned the first DSMB interim look is going to occur at 50 patients. I believe there was also a second look in that trial? I just wanted to confirm that, if you could remind us at what patient count that would occur?

Ron Moss: Yes. There is this second interim analysis at approximately 120 subjects.

Elliot Wilbur: Okay. And is there any update on some of the various funding initiatives with respect to utilization of that compound that you had been pursuing earlier in the year?

Ron Moss: We are applying and are continually in contact with the government, but we are applying for a grant for particular indication of Tempol.

Elliot Wilbur: Okay. And then one last question for you, Dr. Moss. With respect to the NIH webinar on Tempol, anything emerging from that presentation that highlights different aspects of the product that you strongly agree with or was there anything that the NIH presentation focused on that you think maybe necessarily was -- is consistent with what you have seen previously or how you're viewing the asset?

Ron Moss: No, I think the program by NIH solely focused on the antiviral effects of Tempol and we believe that it's antioxidant anti-inflammatory activity, are also relevant for the treatment of COVID-19. Particularly, if you can't treat patients very early, we know that the sequelae of COVID-19 -- the virus is very self -limited, and the sequelae are primarily due to an overzealous immune activation that occurs. Their presentation was devoid of that very important information.

Elliot Wilbur: Okay, following up on your response there. So given the current evolution in terms of the advancement of various oral or potential oral therapies for the virus, where do you see Tempol potentially fitting in, with respect to some of these newer emerging therapies? Is it -- could it be a complementary asset or they're various patient populations, you think this might be more appropriate for, than what we're seeing from some of the large pharma companies pursuing oral treatments?

Ron Moss: I personally believe it's complementary to the other therapies that are out there. Similar to utilizing flu antivirals, the efficacy of the antivirals may be limited depending on when they're given in disease. And I think that Tempol, because of its anti-inflammatory activity, has broader coverage for the true sequelae. So I could see this drug being used alone, but I can also see Tempol being used in combination with other therapies.

Elliot Wilbur: Okay. And then a couple of quick financial questions here for David, could you walk us through -- I admit, I may have missed your prepared commentary, but if there are any upcoming cash exit costs associated with the remaining USC operations?

David Benedicto: Yes. Thank you for the question. It's actually part of our 10-K filing. So currently, we have estimated around $1.5 million related to the exit costs with regards to the disposal of USC. It's in the -- it's part of the 10-K filing and the restructuring costs.

Elliot Wilbur: Okay. And then just last question around ZIMHI, can you just remind us if the relationship with US WorldMeds includes anything other than simply straight royalties on commercial sales? I can't recall if there were any associated milestones with respect to approval or launch. But any payments outside of royalty-based obligations?

Ron Moss: David Marguglio, you want to take that?

David Marguglio: Yeah, sure. Thanks, Elliot. The -- yes, there are additional milestone payments, but they are all targeted to performance-based milestones and they are part of a combined overall revenue targets for both products. So the success of both products together leads to cumulative total targets that lead to about a half a dozen additional milestones

Elliot Wilbur: Okay. All right, those are my questions. Thank you.

Operator: We have reached the end of the question-and-answer session, and I will now turn the call over to Mr. Robert Uhl for closing remarks.

Robert Uhl: Thank you very much, Operator. That will conclude our call for today. I thank you for participating and for your interest in Adamis Pharmaceuticals. Have a good evening, everyone.

Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.