NRx Pharmaceuticals, Inc. (NRXP) Earnings Call Transcript & Summary

Good day, everyone, and welcome to the NRx Pharmaceuticals First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Suzanne Messere with Stern Investor Relations. Please go ahead.

Thank you, [ Vaishnavi. ] Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under U.S. Federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports filed with the SEC. The forward-looking statements made during this call speak only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements. Information presented on this call is contained in the press release issued earlier today and in the company's Form 10-K, which was refiled on May 1, which may be accessed from the Investors page of the NRx Pharmaceuticals, Inc. website. Joining me today from NRx Pharmaceuticals are Stephen Willard, Chief Executive Officer; and Seth Van Voorhees, Chief Financial Officer and Treasurer. Stephen will provide a summary of the company's progress, Seth will review the company's financial results, and then Stephen will review upcoming milestones before making closing comments. Following their prepared remarks, Stephen and Seth will be joined by Jonathan Javitt, the company's Chief Scientist; and Matthew Duffy, the company's Chief Business Officer, to address investor questions. I will now turn the call over to Stephen.

Thank you, Suzanne. Good morning, everyone, and thank you for joining us to discuss our continued success as we advance our pipeline of innovative therapeutics for patients facing psychiatric disorders with great unmet need, including treatment-resistant suicidal bipolar depression; post-traumatic stress disorder; and potentially, chronic pain related to depression. Today, we will discuss first quarter 2023 results and provide a business update. 2023 is off to a great start as we continue to build our leading brain health franchise, advancing our compelling science and building long-term value for our shareholders. In recent months, we've made great strides in our clinical trials for our lead product candidate, NRX-101, while continuing to execute on our corporate strategy. To summarize, we aligned with the FDA on the chemistry, manufacturing and controls of NRX-101 as well as a path to commercial stage product and continued to align with the FDA on the potential paths for approval of NRX-101 in a Type B meeting. We announced encouraging findings of our independent Data Safety and Monitoring Board, or DSMB, whose first evaluation of unblinded data identified no safety concerns, and subsequent evaluation indicated that no safety or futility signals were reported in the first 50 patients treated and provided a positive recommendation to continue enrollment. And based on FDA interactions and DSMB findings, we are consolidating our 2 clinical trials of NRX-101 in suicidal bipolar depression into one study for patients with suicidal treatment-resistant bipolar depression. I'll begin by reviewing recent progress made for NRX-101 in suicidal treatment-resistant bipolar depression, PTSD and chronic pain. NRX-101 is a fixed-dose combination of D-cycloserine, an NMDA-receptor modulator; and lurasidone, a standard-of-care medicine for use in treatment-resistant bipolar depression. There are approximately 7 million people living with bipolar depression in the U.S., and the risk of suicide is very high with this population. Data indicates that 50% or more of these patients will attempt suicide in their lifetime. However, there are currently no approved medicines for people with suicidal bipolar depression. To our knowledge, NRx is first company to attempt to bring a medicine to people whose only FDA-approved treatment alternative in electroshock therapy. This is a potentially life-saving advance because antidepressants carry black-box warning labels regarding the potential for increased risk of suicide in vulnerable populations. Based on NRx's differentiated therapeutic profile, we believe that we have the potential to address a significant unmet need for patients who are currently underserved by available treatment options. Turning to the science behind NRX-101. NMDA-antagonist drugs have been shown to reduce symptoms of depression and suicidal ideation, and neither D-cycloserine nor lurasidone have shown potential for abuse, which is an important consideration when treating psychiatric disorders with suicidal thoughts. At NRx, we discovered the unique synergy between NMDA and 5-HT2a-targeted drugs as well as the critical dosages at which D-cycloserine may be effective in these conditions. These discoveries resulted in a portfolio of 90 patents around the world, 48 of which have now been issued relating to the treatment of bipolar depression, major depressive disorder, PTSD and other central nervous system conditions. We initially introduced NRX-101 as a drug mature benefit in conjunction with ketamine in acute care patients, proof-of-concept data from the Phase II stable B clinical trial, which administered NRX-101 following stabilization of hospitalized bipolar patients with acute suicidal ideation after treatment with ketamine, demonstrated a highly differentiated therapeutic profile in a patient population with no drug therapy options. Based on this data, the FDA granted Breakthrough Therapy Designation and a Special Protocol Agreement, or SPA, for NRX-101 in bipolar depression with acute suicidality. In January 2023, the company initiated a Phase III registrational clinical trial of NRX-101 for the treatment of severe bipolar depression with acute suicidal ideation and behavior. Based on recent comments from the FDA at a Type B meeting of NRX-101 for hospitalized patients with acute suicidality, this study has been converged with our Phase II clinical trial of NRX-101 and bipolar depression with subacute suicidal ideation, a study initiated in 2022 for a much broader potential patient population. This decision was made in March of this year, when we announced encouraging findings from our outpatient trial of NRX-101 in the sub-acute population versus lurasidone. Our independent DSMB examined unblinded data from the first 50 patients and found no futility signal at this time in the trial. Similarly, no safety signals were identified in association with NRX-101, and the DSMB recommended that enrollment in the trial continue as planned. According to the study's statistical analysis plan, a failure to identify futility requires that an advantage, though not yet a statistically significant advantage, of the investigational drug relative to the comparative treatment must be observed by the DSMB. The newly converged and upgraded Phase IIb/III clinical trial includes patients with suicidal bipolar depression -- suicidal bipolar patient populations, which represents a broader indication. We believe the results of this study could be used in the future registrational filing should the trial prove successful. In this trial, we have focused our outpatient clinical trial, first, on those of greatest unmet medical need, specifically those patients who are under care of the physician for bipolar depression and who have ongoing depressive symptoms and active thoughts of self-harm despite treatment with available medicines. The objective of this multicenter randomized double-blind controlled potentially registrational study is to demonstrate NRx's ability to significantly improve symptoms of depression and suicidality over 6 weeks when taken twice a day on a home-use basis. The study has the potential to expand the use of our medicine to the nearly 1 million people, who currently suffer from severe depression and suicidal ideation despite expert medical care with currently available medicines. We anticipate that this is a market of approximately $2.2 billion a year. The company believes that the strategy to converge the ongoing clinical trials and broaden the indication could enable more patients with suicidal bipolar depression, the option of an outpatient therapy in the coming years. Data from the ongoing Phase IIb/III clinical trial are expected in the fourth quarter of 2023. This broader indication may also offer significant advantages in commercialization in a matter consistent with the FDA's recommendations. Importantly, in January 2023, we also reached alignment with the FDA on our proposed manufacturing plan based on the Type C meeting to review our chemistry manufacturing and controls. As a result, NRx is now positioned to conduct registrational trials of NRX-101 and able to make NRX-101 available through expanded access and right-to-try programs for patients who have exhausted approved treatment options. We are excited about this milestone in particular, as we believe that adopting a commercial-ready manufacturing process at this stage of our development can lead to a more seamless NDA submission, review and approval process under the potential Breakthrough Therapy Designation without the need for bridging studies. During the first quarter of 2023, the company refined its ability to validate the psychometric ratings that are used to assess the efficacy endpoints for the clinical trial. The company relies upon a team of veteran raters who both train independent site raters and monitor the technical quality of each rating. A standard was set of 90%-or-better concordance between the company's veteran rating team and site raters. This standard was met for all study participants whose ratings were obtained in their primary language, and management believes that the standard can be maintained for the duration of the trial. In April 2023, the company contracted with 1nHealth to initiate a recruitment campaign that may cover up to 45 states in the U.S. to recruit sufficient participants for this enlarged trial. The company has similarly broadened its previously disclosed relationship with Science 37, a contract research organization that conducts decentralized clinical trials to enroll patients identified by the 1nHealth recruitment initiative and to randomize them to be treated within the broadened clinical trial. 1nHealth has additionally engaged The Mighty, a-voice-of-the-patient organization with national reach to publicize the clinical trial to the 800-plus-thousand subscribers who have indicated a focus on bipolar depression and suicidality. Additionally, last quarter, we continued to work to advance our development plans for NRX-101 in post-traumatic stress disorder or PTSD, another area of high unmet medical need, which is also associated with suicidality. Approximately 9 million individuals in our country experienced PTSD, and 1/3 had severe PTSD, with 10% experiencing suicidality. Between 17 and 22 members of our Armed Forces of Veterans are lost every day to suicide. Depression in PTSD may be driven by pathways that are similar to those that drive depression in other conditions. However, NMDA antagonist as a class, and D-cycloserine in particular, may have a more specific effect in treatment of PTSD. In a preclinical PTSD study, D-cycloserine demonstrated the ability to extinguish reoccurring images of traumatic events, also known as Fear Memory, in a validated WKY model of PTSD. This model has been similarly used by others to document a PTSD-specific effect of ketamine. Repeated IV ketamine has also been demonstrated to improve PTSD scores in a randomized controlled trial. Unlike ketamine, however, NRX-101 is not neurotoxic and not addictive and has not caused psychedelic side effects in clinical trials. We anticipate that our investigational drug will show antidepressant effects in PTSD compared to placebo, and we hope that it will demonstrate specific effects on the Fear Memory components of PTSD and directly reduce symptoms of PTSD itself. Today, there is no approved medicine for these specific PTSD symptoms. We are on track to initiate a study of NRX-101 and PTSD in 2023. We are incredibly excited about the potential life-saving effect of NRX-101. And in order to support the continued clinical development of these programs, we announced the close of a $2.9 million registered direct offering to support our pipeline efforts and more specifically the initiation of an expanded access protocol and safety database for NRX-101 study in treatment-resistant bipolar depression with risk of self-harm. This database allows us to investigate the expanded indication put forward by the FDA psychiatric division in our Type B meeting for our registrational trial. And we look forward to providing you all with an update of our clinical activity in the months to come. The continued financial support from our existing shareholders, based on our existing data and ongoing trials, demonstrates their commitment to people living with serious CNS disorders and the potential of NRX-101 to become commercially successful. We have achieved a number of significant corporate milestones in recent months. In February, we received notice of the issuance of the U.S. patent for NRX-101, which covers the use of NRX-101 to treat patients suffering from depression, including bipolar depression or major depression with or without suicidality. This patent strengthens the company's intellectual property position until at least 2033. We also strengthened our [ deep venture ] healthcare executives in world-class psychiatrists in recent months. We announced the appointment of Professor Andrew Nierenberg and Professor Marion Leboyer to our Advisory Board in March. Professor Nierenberg is a Chaired Professor of Psychiatry at Harvard Medical School and is the Director of the Dauten Family Center for Bipolar Research at Massachusetts General Hospital. He is one of the world's most published scientists in the area of psychiatric research, particularly as it relates to bipolar disease. We are honored to have him as Principal Investigator of our ongoing clinical trial in suicidal bipolar depression. Professor Leboyer is one of France's leading psychiatrists and extensively published researcher in the field of neuropsychiatry, particularly as it relates to bipolar disease and autism. In addition to her Academic Achievements, Professor Leboyer chairs the Fondation FondaMental and has facilitated this important collaboration between NRx and French psychiatry researchers, studying ketamine for the treatment of acute suicidality among hospitalized patients, particularly patients with bipolar depression. Please see their biographies on our website. Also the company has continued to engage in a strategic conversation focused on funding the drug approval and commercialization of our product. In parallel, the company has established an ongoing dialogue with Streeterville Capital LLC, the company's current debt lending, to address the company's current debt facility to best support the ongoing needs of the clinical trial. We are confident that we have achieved a strong foundation for NRx that enables us to efficiently advance our clinical trials and make a difference in the lives of patients with life-threatening psychiatric disorders. I would like to express my gratitude to the patients, the NRx team, clinical trial investigators and shareholders for their continued support. With that, I'll turn it over to Seth for a brief overview of our financial results.

Good morning, everyone. Thank you, Stephen. I will now review the highlights for our first quarter 2023 financial results. For the 3 months ended March 31, 2023, NRx Pharmaceuticals recorded $3.7 million of R&D expenses compared to $5.5 million for the quarter ended March 31, 2022. The decrease of $1.8 million is related primarily to a reduction in clinical trials and development expense related to our discontinued activities related to ZYESAMI. For the 3 months ended March 31, 2023, NRx Pharmaceuticals recorded $5.8 million of G&A expenses compared to $10.2 million for the 3 months ended March 31, 2022. The decrease of $4.4 million was primarily related to a decrease in legal, professional and accounting fees. Our net loss for the quarter was $11 million, an improvement of $2.4 million compared to the net loss of $13.4 million for the comparable quarter in 2022. On the financial side, our cash resources were enhanced in March when we entered into a Securities Purchase Agreement with accredited investors who had previously established positions in the company. This transaction involved the sale of approximately 3.9 million shares of the company's common stock and a 5-year warrant in a registered direct offering, priced slightly above the market at $0.75 per unit for the securities. The investors agreed not to sell these shares of common stock or exercise the warrants for 6 months following the issuance date. The aggregate gross proceeds from -- to the company for the offering was approximately $2.9 million. As of March 31, 2023, we had approximately $16.5 million in cash. Assuming future debt payments can continue to be made in stock, the $16.5 million of cash and cash equivalents at the end of the first quarter of 2023 is expected to fund the company's operations through the expected delivery of data in the fourth quarter of this year from our Phase IIb/III trial. Additionally, we are evaluating operational efficiencies associated with the completion of our manufacturing activities as well as considering capital-raising activities to extend this runway. With that, I'll turn it back to Steve for closing remarks. Steve?

Thanks, Seth. The past quarter has been incredibly productive, and we look forward to advancing our NRX-101 program in suicidal bipolar depression, PTSD and chronic pain in the months to come. Based on the experience we have as a clinical trial company working in CNS, NRx is uniquely positioned for success in future growth. We plan to build on our momentum in the remainder of 2023 as we continue to execute on multiple regulatory and clinical catalysts. We believe that NRX-101 is a potentially life-saving medicine that could change the treatment paradigm for life-threatening psychiatric conditions, which is the driving force behind our mission to meeting the needs of underserved patients with serious CNS disorders. We look forward to updating you on the near-term milestones, which are on track for the coming year, including the initiation of our study of NRX-101 in PTSD, the advancement of NRX-101 in chronic pain associated with depression as well as future updates on Breakthrough Therapy Designation meeting for NRX-101 in treatment-resistant suicidal bipolar depression as well as data from our Phase IIb/III study in the fourth quarter. With the shared commitment of our investors, our team and our researchers, we aim to bring hope to the millions of patients with suicidal bipolar depression and PTSD, who have been systematically excluded from trials of previous antidepressants. Operator, we are ready to take questions from the call.

[Operator Instructions] Our first question comes from Ed Woo with Ascendiant Capital.

My question is on PTSD additional indication. Do you anticipate starting filing the IND this quarter or the next quarter in order to start the trial by the fourth quarter?

Thank you, Ed. This is Jonathan Javitt. Yes, we do anticipate filing that IND.

Great. And then in terms of how large the possible trial can be, do you have any indications of how big it may be?

Well, I think from a registration perspective, there are some precedents from the antidepressant recent approvals. But until there's a formal meeting with FDA, it's not possible to know exactly what the sample size would be. But I think there's some good precedents in recent approvals of antidepressants.

Great. And then my last question is in terms of what you guys have learned with your current study, do you think that it will be -- you'll be able to use any of that data in order to facilitate the trial possibly being easier or be able to go faster?

Well, certainly, a trial for any indication adds to the safety database for all indications, and clinical experience with the drug is always helpful. But the endpoints in PTSD are a little different than the endpoints in depression because in PTSD, you're primarily relying on the CAPS-5 scale, looking at symptoms of flashbacks and recurring memory -- sorry, recurring Fear Memory. Some of that's been demonstrated with ketamine, which as you know, is a very potent NMDA antagonist. So there's reason to be optimistic that a more controllable NMDA antagonist might also relieve symptoms of PTSD.