PLx Pharma Inc. (PLXP) CEO Natasha Giordano on Q3 2020 Results - Earnings Call Transcript
PLx Pharma Inc. (NASDAQ:PLXP) Q3 2020 Earnings Conference Call November 16, 2020 4:30 PM ET
Company Participants
Lisa Wilson - Investor Relations
Natasha Giordano - President and Chief Executive Officer
Rita O'Connor - Chief Financial Officer
Conference Call Participants
Elliot Wilbur - Raymond James
Jason Butler - JMP Securities
Operator
Ladies and gentlemen, thank you for standing by and welcome to the PLx Pharma Q3 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session [Operator Instructions]. Please be advised that today's conference is being recorded [Operator Instructions].
I would now like to hand the conference over to your first speaker today to Lisa Wilson, Investor Relations for PLx Pharma. Thank you. Please go ahead.
Lisa Wilson
Thank you. Welcome to PLx Pharma's Q3 2020 earnings results call. This is Lisa Wilson of In-Site Communication 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 Web site 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. The archived webcast will be available for 30 days on our Web site plxpharma.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on November 16, 2020. 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.
Natasha Giordano
Thank you, Lisa. Good everyone, everyone and thank you for joining our call. We are thrilled to announce that in October we submitted two supplemental new drug applications or sNDA, one for the currently approved VAZALORE 325 milligram and one for VAZALORE 81 milligram dose to the FDA for regulatory approval ahead of the previously announced timeline. The submissions are a significant milestone for our company and represent the culmination of a tremendous work effort on the part of the PLx team and our partners.
These submissions are considered chemistry and manufacturing control for CMC filings as they include information on a change in formulation and a new manufacturing site for VAZALORE 325 milligram and a new product strength for the 81 milligrams those. The submission for the 325 milligram dose also contains the results of a clinical study conducted demonstrating VAZALORE bio equivalent to immediate release aspirin, further supporting the change in formulation. The submission for the 81 milligram dose builds off the information in the original approved NDA and the recent sNDA submitted for VAZALORE 325 milligram.
We believe the results of the BE study supporting the 325 million grant sNDA and the information submitted reporting, supporting 81 milligram sNDA, together with the additional requirements for a CMC supplement form the basis for two strong submissions to the agency. We received acknowledgement letters from the FDA officially confirming the receipt of our submissions and the estimated completion date of its review for both VAZALORE 325 and 81 milligram doses by the end of February, allowing for a four to six month review and sufficient manufacturing times, we are targeting a market launch of both doses of VAZALORE in the third quarter of next year.
We are also happy to announce that we have secured $18 million in financing led by White Rock Capital and Level One Partners. We look forward to executing our strategic plan with these new partners. I will now turn the call over to our CFO Rita O'Connor to discuss our third quarter results and provide further details on the financing. Rita?
Rita O'Connor
Thank you, Natasha. Our federal grant from the NIH was completed in the second quarter of 2020, thus no revenue recognized for the quarter ended September 30, 2020. Research and development expense totaled $1.2 million in both periods. 2020 expenses included clinical related spending for the bioequivalence study, combined with prevalidation manufacturing costs.
The prior year period included manufacture and packaging costs for the VAZALORE registration batches. Things are going well on the manufacturing front with our partner Thermo Fisher Scientific. We're preparing for the validation batches, working on manufacturing efficiencies and production planning for the launch. Regarding the COVID outbreak. We are fortunate that we have not experienced any significant impact to our supply chain. Thermo Fisher is US based and is currently fully operational as it relates to VAZALORE.
General and administrative expenses totaled $2 million in the quarter ended September 30, 2020, compared to $2.5 million in 2019. The decrease primarily reflects lower compensation related expenses combined with reduced spending on conferences and related travel due to COVID-19 restrictions. We expect G&A expenses to be slightly higher for the fourth quarter as we begin prelaunch marketing.
Interest expense net was $73,000 for the quarter versus $118,000 in the prior year. This decrease is due to the lower principal balance combined with lower interest rates on the term loan. As of September 30, our debt balance is $1.6 million and will be paid off in the first quarter of 2021. The income related to the change in fair value of warrant liability declined to $135,000 from $5.5 million in the prior period. The decrease is largely attributable to the fluctuation of price of the company's common stock. As a reminder, a decrease in the stock price at the end of the quarter compared to the end of the previous quarter causes a decrease to the liability and thus income to the P&L.
Net loss attributable to common stockholders for the third quarter of 2020 was $3.6 million or $0.40 per share compared to net income of $1.4 million or $0.09 per share for the third quarter of '19. The change to a net loss of $5 million or $0.49 per share was primarily due to significantly lower income from the warrant liability of $5.4 million or $0.53 per share. As of September 30, 2020, cash and cash equivalents were $9.1 million. As Natasha mentioned today, we entered into an $18 million private placement led by White Rock Capital and Level One Partners.
The securities purchase agreement for the sale of units comprised of shares of common stock and warrants to purchase shares of common stock in a private placement that will result in gross proceeds to the company of approximately $18 million before deducting placement agent and other offering expenses for the issuance of 4.8 million shares of common stock and warrants to purchase up to an additional 5.2 million shares of common stock for per unit price of $3.79. The product placement is expected to close on or prior to November 18th. The warrants will become exercisable on the date of issuance and have an exercise price of $4.31 per share and will expire five years from the date of issuance.
We will continue to burn approximately $4.5 million for the fourth quarter. The $18 million financing plus existing cash, should provide a cash runway through at least approval of both doses expected next year. This financing will fund prelaunch marketing spending and begin commercial inventory build prior to the approval of VAZALORE. To finance the launch, we intend to review nondilutive financing alternatives, such as debt and royalty-based financing as well as equity financing that may include issuing stock under our ATM.
With that, I'll turn the call back over to Natasha to discuss our next steps.
Natasha Giordano
Thank you, Rita. We are very pleased with the quality of our submissions and are highly confident in the data that support and validate VAZALORE. Submissions, such as these, take an enormous effort to complete, and we are delighted to file them a few weeks ahead of our mid-November plan.
This is a really exciting time for us. VAZALORE, as the first liquid filled aspirin capsule, is a novel addition to the aspirin category, which has had no innovation in 80 years. VAZALORE has demonstrated faster and more complete platelet inhibition, providing a more reliable antiplatelet effect than enteric coated aspirin and reduces the risk of stomach injury typically seen with immediate release aspirin. VAZALORE has the potential to transform the way healthcare professionals and consumers think about daily aspirin therapy. We are excited to provide physicians and patients an alternative in this category.
Now that the submissions have been made, we are transitioning from the strategic planning stage to the execution of our commercial launch. We continue our commercial efforts focused on three key constituents: the health care professional, the consumer and retail trade. At the same time, we are finalizing our professional and consumer messaging to build awareness for VAZALORE's key differentiators and to generate enthusiasm in the aspirin category. We continue the active dialog with our scientific advisory board, gaining their insights in the management of high-risk vascular disease patients in clinical practice. We remain closely engaged with all our retail partners as they are looking forward to implementing VAZALORE into distribution.
As our focus shifts from product development to commercialization, PLx management's deep experience with large commercially successful products is especially valuable. Collectively, we bring decades of commercialization experience on large Rx and OTC brand names, such as Mucinex, Lipitor and Zantac, just to name a few. And know that VAZALORE has the potential to become a household name. We look forward to the agency's regulatory review, planning for a successful launch and bringing a much needed aspirin therapy to patients at risk.
With that, I will open the call for questions. Operator, please go ahead with the instructions.
Question-and-Answer Session
Operator
[Operator Instructions] I show our first question comes from the line of Elliot Wilbur from Raymond James.
Elliot Wilbur
So I want to extend my congratulations, not only on just pulling forward the application by a couple of weeks, but completing what essentially has been a two and half year journey to get to this point, an odyssey really. So congrats to the team. I know it's been a long road. So first question for you is, with the filing now submitted and given the recent or the just announced financing. Can you just talk to us a little bit about sort of what the next steps for the company are going to be on the engagement front, both on the clinician side and on the retail trade side?
Natasha Giordano
So on the engagement front, as you know, Elliot, we've been engaging with the top key thought leaders in the anti-thrombotic space for four years now, and our engagement with them continues. We talk a lot with them about clinical practice, what is meaningful to a healthcare professional as they treat these high risk patients. Some of our scientific advisory board members have been with us for four years, and we will be meeting with them. Again, we're planning our next meeting for January. From there we will, through different mechanisms, educate their peers. That's the one thing that they're very committed to is helping us educate their peers, cardiologists and neurologists, in having a new alternative in the aspirin category to manage specifically secondary prevention patients, people that have had events or some sort of invasive procedure and as well as diabetics who may be candidates for aspirin therapy that are high risk.
We are in the process of continuing to develop our commercialization plan and to really adopt some of the things we're learning in the marketplace, especially during and post-COVID -- the COVID era. Identifying how consumers and health care professionals receive information. And it's a combination of in-person and virtual ways to get to those constituents. And we're working through what is the best platform to do that as we speak, and we'll talk more about that as we get closer to our launch. In terms of -- I was going to go to the trade part of this first and then go to manufacturing.
So in terms of the trade and the retail partners, we are continuing to meet with them as we speak. We have meetings scheduled, ongoing meetings to partner on how we're going to promote VAZALORE within their own distribution systems because as partners then everybody wins. The retail segment wins, the company wins and certainly patients wins. So those are ongoing discussions that are becoming very, very detailed on how we're going to support each other in this launch. And then Rita can talk a little bit about what we have to do from a manufacturing standpoint.
Rita O'Connor
So our next steps now, things are going very well, actually. We're going to start validation later this year and into early next year. And then if all goes well with that, we plan to go right into building commercial inventory. That's why this financing was key for us because we could build the inventory and then we're all ready to go, when the retail trade places their orders and we already have a pretty good idea of where they're coming in, as Natash mentioned. So we're going to be ready to go.
Elliot Wilbur
And are there any deals you could share at this point in terms of just how much of the financing you actually expect to invest in inventory levels and what sort of launch that, that would actually support? I mean, would you be targeting just initially some of the large retail chains or some of the larger mass distributors kind of fit within your initial launch plans, or would that be something that you would follow on at a later point in time?
Rita O'Connor
So in terms of retail trade, we're assuming that it's going to be all the top chain drug stores as well as the mass merchandisers. And we've been speaking with them for years, including actually recently, now that we've really submitted and everything is ready to go, so we're targeting a nationwide launch. So this inventory we'll have to build a lot of it because it's going to be on the retail shelves around the country. So we haven't put dollars to it per se since we haven't gotten their final orders. But a good portion of that $18 million will help fund that inventory ahead of schedule, or ahead of the approval, I should say. And then once we receive approval that's when we'll target some additional financing to actually move forward with all of the commercial plans that Natasha talked about.
Elliot Wilbur
And then last question for Natasha. I mean, you've talked for quite some time about the importance of sort of owning thought leadership here in terms of being able to successfully launch the product. But kind of wondering how you're thinking about sort of your original plans in terms of establishing commercial infrastructure with feet on the street in terms of detailing the product? How much flexibility you think you have kind of given some of the new tools that seem to be out there that companies have used to successfully launch products without necessarily having to onboard reps. Still wondering if you're planning on this kind of being a sort of a rep-driven launch from the outset.
Natasha Giordano
So we've done a lot of thinking with our partners. We've done a lot of research with that as well. And yes, in this COVID environment, it's going to require a different approach. We still believe that it's really critically important to get to the cardiologists and the neurologists. We will absolutely utilize our scientific advisory board as a vehicle through different mechanisms. So for instance, our publication strategy, our medical conference appearances are presenting abstracts that evolve into manuscripts are all very key and important to get into the community cardiologists and those things are in progress as we speak.
As far as reps and feet on the ground, we have been talking and assessing with our partners and potential partners how we want to address that. And most likely, I think there will be in the market every manufacturer, big and small, are pondering how they're going to get to the health care professional with reps. And there's some innovative ways to do that, where you combine face-to-face with a virtual approach. There's platforms that are new and evolving. And we are evaluating those on what the best mix is, what the best mix is to provide that information to the healthcare professional. But we absolutely are adapting our thinking to get ahead of this wave of change. The good news is that we can plan for that in front of our launch that's scheduled for Q3 of next year.
Operator
I show our next question comes from the line of Jason Butler from JMP Securities.
Jason Butler
First off, just any color, if you can, on the dialog with FDA since the applications were submitted. Obviously, they've responded to you. But just any sense of the progress they're making and your expectations, do you expect a pre-approval in manufacturing inspection?
Natasha Giordano
Our interactions with the FDA, as you know, have been pretty regular and ongoing. One thing I'll say, as I always like to say, is that we have aligned with them on what they require in the CMC supplemental NDAs on both doses. And so that gives us very high confidence in that we have submitted everything that they will need. And so we have heard from them very recently that they have an estimated completion review date of the end of February. Now of course they may have questions all along the way that's why we always say the approval is expected within four to six months. But again, I'll say that we have a very high degree of confidence that we've provided everything that they will need to get to approval, and we're ready for any questions that they might have. And the other part of question, I'll give to Rita.
Rita O'Connor
The One nice thing with the FDA is we're using Patheon, a division of Thermo Fisher scientific, a very well-known manufacturer and they have a great track record of compliance with GMP. So we're hopeful that they will waive an inspection. But they are entitled to do that but we're confident that they may waive it, because it's not a new chemical entity, it's aspirin. So we're hopeful that they will waive this at this time. And with US inspection, it will be a US inspection, which I understand, there’d be a little better timing than they are with foreign inspection. So it would just be the Cincinnati plant.
Jason Butler
And then obviously, there's a lot of work you'll be doing between now and approval. But can you talk about the key gating items post-approval to launch, both from a manufacturing and supply chain perspective as well? Just what needs to be done from the approval date to the 3Q launch?
Rita O'Connor
So the big thing is there, as you hit on the head, is manufacturing. So unlike an Rx product, the package, the actual package and carton of our product is the label. So as you can imagine, trying to print all that at risk. I mean, we're pretty confident the FDA has already approved our 325 label, other than a few changes we made here that were pretty insignificant. They still have to approve the 81 milligram carton as well but there's very similar language on there. And it's also class labeling for all aspirin. So we don't think it's a big risk but we want to make sure that we manufacture enough and not too far in advance that you have a dating issue. So we're anticipating going out with 24 months is typical for an OTC product. So you don't want to start that dating clock too early and by making it. So we want to make sure that we're timing it sufficiently. So it's certainly a balance of between when we receive approval and launch. So mainly, a lot of that is related to manufacturing and not building it too early but making enough time to build enough.
Operator
Thank you. I show no further questions in the queue. And at this time, I'd like to turn the call back over to Natasha Giordano, President and CEO, for closing remarks.
Natasha Giordano
Thank you. Thank you for joining us this evening. This is an exciting time for PLx. I’d like to thank the PLx team, our partners and shareholders for their support and confidence throughout this process. We look forward to sharing future updates. Please stay healthy and safe. And have a great evening.
Operator
Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.
