NRx Pharmaceuticals (NRXP) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the NRx Pharmaceuticals, Inc. Corporate Update Call. [Operator Instructions] As a reminder, this conference call is being recorded. I will now turn the call over to Brian Korb. Please go ahead.

Thank you, operator, and welcome, everyone. 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 law. 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 today and in the company's Form 10-Q, which may be accessed from the Investor page of the NRx Pharmaceuticals website. Joining today's call is Dr. Jonathan Javitt, our Founder, Chairman and CEO. Dr. Javitt will provide an important regulatory update and a material addition to NRx's development pipeline. Following his prepared remarks, we will take questions. I will now turn the call over to...

Thank you, Brian. Good morning, everyone. Thank you for joining us. When we last spoke with you, we advised that we had submitted an abbreviated new drug approval or ANDA application for our preservative-free formulation of ketamine for which we've applied to the FDA for the proprietary name of KETAFREE. I'm pleased to announce that the FDA has notified us that the agency has agreed to receive the filing. Specifically, the FDA advised us in their letter that it made a threshold determination that the ANDA is substantially complete and on that basis, the ANDA was received for review. The agency has signed a July 29, 2026 goal date for completion of the ANDA review. Over the next 6 months, the agency will review the chemical manufacturing controls, stability and other critical data to ensure that KETAFREE meets current standards under the Generic Drug User Fee Act. As we've previously shared, KETAFREE is the first preservative-free formulation of ketamine that specifically does not contain a preservative Benzethonium Chloride, a preservative that's not recognized as safe by the FDA and is not even allowed to be used in hand cleansers and topical antiseptics under current law. BZT was added to ketamine back in the 1970s when it was originally formulated as a multi-dose vial that was intended to be shared among several patients. That practice is no longer allowed in U.S. health care facilities. NRx has filed a citizens petition with an expert toxicologist detailing the dangers of BZT and seeking to have it removed from all commercial presentations of ketamine. We posted that toxicology report on the Internet. In an era, when ketamine was used primarily for anesthesia and there was little likelihood that patients would receive ketamine on a regular basis. The exposure to BZT associated with a single dose of ketamine might not have been alarming. However, when ketamine is repeatedly used for treatment of depression or pain control, the toxicology report that we published documents that the dose of BZT administered approaches known levels of toxicity. I first became acquainted with the risks associated with this class of preservatives in the 1990s when ophthalmologists began to seek the cause of chronic dry eye syndrome seen in many glaucoma patients. The root cause was traced to Benzethonium Chloride preservative that was used then in most eye drops and artificial tears. Benzethonium Chloride was shown to be toxic to cells of the eyes conjunctiva and cornea, which led to the development of preservative-free eye drops and artificial tears that you see in pharmacies today. Our ANDA application seeks approval for NRx to market ketamine for its currently approved uses and sales of ketamine for those uses today worldwide approximate $750 million a year according to industry reports. There's additionally a substantial amount of compounded ketamine sold to clinics today in the United States because of the chronic shortage of manufactured ketamine. If our ANDA is approved, we would expect to gain a substantial share of today's current market. Should our citizens petition be approved and preservative containing ketamine no longer allowed for sale, we would expect to gain a larger market share, which could also result from increased recognition of the dangers associated with BZT and other preservatives of its class. As I said, BZT is not generally recognized as safe by the FDA. Although graft determination was -- graft, of course, is generally recognized as safe, determination was not required back in the 1970s when this preservative was first added to ketamine and several other sterile products. It's since been removed from all but 20 currently marketed sterile products, of which ketamine is one. The FDA has clearly recognized the dangers associated with Benzethonium Chloride and does not even allow its use for hand cleansers and topical antiseptics. As you know, removal of toxic substances from foods, drugs and vaccines is a key initiative of the administration's MAHA or Make America Healthy Again initiative. Approval of our ANDA filing on or before July 29, 2026, which is the goal date, would enable NRx to earn significant revenue in the second half of 2026. We've manufactured 3 commercial lots of KETAFREE and aim to have at least 1 million doses manufactured and ready to ship by next July. Rather than using traditional glass vials that require low throughput filling equipment and create a supply chain challenge for glass vials from time to time, our manufacturing program uses modern blow-fill seal technology capable of producing more than 1 million doses per month. As you know, ketamine is deemed a strategic drug for the United States. And just last month, the FDA awarded a Commissioner's National Priority voucher to a U.S.-based manufacturer of ketamine drug ingredients or API, emphasizing the need for U.S. manufacturer of this critical medicine. We've been in touch with that manufacturer. And when their U.S. manufactured API is available, they estimate 2027. We anticipate changing to that supply. As a preservative-free formulation of ketamine is an important invention, we filed a patent application with the USPTO to protect our intellectual property surrounding this patent. It was previously believed that Benzethonium Chloride was required not only to maintain sterility, but it was believed that Benzethonium Chloride was actually an excipient that was part and parcel of the product. As noted, the existing generic market for ketamine has been projected at approximately $750 million a year. We believe that KETAFREE made in the United States and offered without any toxic preservatives offers patients and clinicians a superior option. We'll continue to work diligently with the FDA to move our application forward as rapidly as possible and to provide a safer version of this critical product to the American public. As you know, we are also developing NRX-101, a fixed-dose combination of D-cycloserine and lurasidone for treatment of suicidal bipolar depression. FDA awarded us breakthrough therapy designation for this drug prior to the COVID pandemic. Based on important new information, we've now amended our investigational new drug file to include the use of NRX-101 in association with Transcranial Magnetic Stimulation. Last month, we saw a publication of the exciting and unanticipated finding that low-dose D-cycloserine, the active ingredient in NRX-101 when combined with a 1-day protocol of Transcranial Magnetic Stimulation, or TMS, resulted in an 87% clinical response and 72% remission from both depression and suicidality. This has triggered exceptional interest in the use of D-cycloserine to enhance the efficiency of TMS in the treatment of depression, suicidality and PTSD. D-cycloserine like ketamine blocks the NMDA receptor and enhances neuroplasticity. Although in the context of TMS, D-cycloserine is used at a low dose, which does not block NMDA and is believed to be neuroplastic. Recently published real-world efficacy data provides the confirmatory evidence that was seen in prior randomized clinical trials that low dose of D-cycloserine more than doubles the antidepressant and antisuicidal effect of TMS. You can find those references in our recent filings. Of note, DCS alone is contraindicated in patients with depression, while NRX-101 is not. That's because we added a low dose of lurasidone to block side effects of DCS that were well known at the time the drug was originally marketed. This creates an opportunity to develop NRX-101 for use in conjunction with TMS to treat depression. NRx has more than 25,000 manufactured doses of NRX-101 at the appropriate strength on hand and has launched a nationwide expanded access program to enable physicians to access this medication at no charge to the patient. That would happen under the expanded access and federal right to try laws. The market estimate for this newly validated indication for NRX-101 should it receive an FDA approval is in excess of $1 billion. We're in active conversation with manufacturers of TMS devices to initiate a definitive clinical trial that would seek to demonstrate the benefit of NRX-101 in augmenting the effects of TMS to a level of statistical significance required for drug registration for that indication. Should we succeed, millions of patients will have a new option for treating suicidal depression, a condition that's reached epidemic proportions and NRx shareholders will benefit from this scientific advance. Our progress towards ANDA approval in the near term and a new pipeline target while continuing the development of Hope Therapeutics National Network for care delivery are transformative steps for the company and for the treatment of mental health in the United States. Operator, we're ready to take questions.

[Operator Instructions] And your first question comes from Thomas Shrader with BTIG.

This is Jenny on for Tom Shrader. I just want to ask how much does the ANDA derisk the NDA?

I'm sorry, would you please repeat that question?

Yes. How much does the approval of the ANDA derisk the NDA that you have filed?

The ANDA is completely separate from the NDA. And as we discussed in August, there's a slight difference in the formulation of the innovative form of ketamine that's in the ANDA versus the form that's in the NDA. That's because FDA asked us to keep the salt concentration in the ANDA formulation identical to that of the reference drug [ KETILLAR ]. So there's about 6.4 milligrams per ml of sodium chloride in the ANDA form. There's slightly more an isotonic level of sodium chloride in the NDA form. And therefore, these 2 products, even though they have the same active ingredient, will have different drug numbers and also different commercial paths, potentially different pricing should both be approved.

Next question comes from Patrick Trucchio with H.C. Wainwright.

Congrats on the FDA's acceptance of the KETAFREE. And we have a bunch of follow-up questions. The first is now that you've established readiness to scale manufacturing to 1 million vials per month, I'm wondering how that aligns with expected demand across anesthesia, pain and psychiatry markets. And as well, is this sufficient inventory should the citizen position to remove Benzethonium Chloride be approved? And can you kind of walk us through that process?

We believe that we have 5 years of API available in the warehouse. And yes, we can scale up the manufacturing throughput substantially. We could even add a second line, if necessary. But given the throughput capability of the low-field steel manufacturing technology, it's absolutely scalable to meet the full market demand if we ever had that opportunity.

Right. And with the FDA confirming ketamine as a national priority drug through the CNPV pilot, I'm wondering if you could tell us the status of your CNPV application for NRX-100 and what, if any, formal interactions would you expect to have with the FDA?

I know that the FDA is aware of the filing. I was invited to attend one of the commissioner's closed door listening sessions and staff knows about the application we've made. As you know, there have been other than the CNPV that was awarded to an ingredient manufacturer, there have been no CNPVs awarded to any of the psychedelic drugs yet. And the commissioner has said publicly that this class of drugs is a priority for him.

Got it. And then just on NRX-101 with bipolar depression with suicidality as well as the TMS augmentation. With the real-world data showing D-cycloserine doubling efficacy of TMS, I'm wondering if you could expand on the design of the planned confirmatory Phase III trial that's expected and how that may support both an accelerated approval supplement and label expansion? And then separately, maybe you can talk to us a bit more about TMS and its use in interventional psychiatry in the U.S. and other markets. And just in terms of sort of penetration in TRD and in other indications, if there are others and how we should think about the TMS market more broadly?

I'm going to answer the second question first, and then I'm going to ask you to restate the first part of your question. So yes, as you know, we believe TMS is a real game changer for the treatment of these conditions. The psychiatry world has finally recognized with the SPECT results that SSRIs are the end of an era. You're talking about a class of drugs that is now known to be about 30% effective that has a massive side effect aside from the suicide black box warning on every SSRI label. SSRIs result in weight gain. They deprive people of much of their sexual pleasure. They have a host of other side effects that patients really hate. But more importantly, SSRIs to qualify people for [indiscernible] sessions. As you know, I'm a pilot. And any time a pilot takes an SSRI, that person is off of flight status for 5 years. So it's a huge disincentive for a pilot, an air traffic controller or a first responder, a frontline troop in the military to even admit to having depression because it means the end of job stats. On the other hand, not only are we seeing efficacy from TMS from a number of manufacturers, and we don't make TMS machines, but we talk to most of the people who do. Without cycloserine, people are reporting 50% to 60% response rates. The Stanford same protocol showed a much higher response rate, although the durability of that is less certain. And then you have this randomized controlled trial done in Calgary with 50 patients, showing more than a doubling of the TMS effect when you add D-cycloserine, not because it's an additive antidepressant effect. In fact, the D-cycloserine dose that's used is not an antidepressant dose. It's down around 150 milligrams or so. But because at those low doses, D-cycloserine is a potent neuroplastic drug. In other words, it causes neurons, brain cells to scrap new dendrites and connect to other brain cells. And think of it as fertilizer in the field before you plant the seeds when you treat a patient with BCS and then do Transcranial Magnetic Stimulation on top of it. So the Calgary study, which is published, there are 4 or 5 publications because they reported the depression effect, the suicidal effect and they've shown add-on effects in other diseases. Those are randomized controlled data. The real-world data that was published November 4 by folks associated with AMPA confirms that magnitude of effect. It's not randomized data, but they saw an 87% response rate when they combine a 1-day treatment protocol with D-cycloserine. Now the problem with D-cycloserine is the label stage, you can't use it for treatment of depression because it's well known to be hallucinogenic. And that's why we originally formulated NRX-101 and approached the FDA saying we'd like to have a form of cycloserine that can be used in patients with depression. And the FDA embraced that and gave us breakthrough therapy designation. So that's kind of how we got to here. Would you like to restate the first part of the question?

Yes, that's really helpful. I was just wondering just regarding, I think there's a planned confirmatory Phase III trial for NRX-101 to augment effects of TMS, and I think it's planned for early 2026. I was just wondering if you work through any of the details for what that design may look like and if you can share those with us.

Yes. You can actually -- clinicaltrials.gov is a little bit behind in its work because of the government shutdown, but we've already filed that protocol, and you should be able to see it online before too long. As you know, we've done protocols with NRX-101 versus lurasidone. This protocol is going to be NRX-101 versus placebo. But otherwise, it will follow the kinds of trials you've seen us do, where the primary endpoint is the MADRS scale, and we've demonstrated an ability to control our ratings to the point where there's less than 3 millimeters of drift. Between raters, the industry standard is to accept 6 points of drift, but we think that, that creates too much variance and harms the interpretability of a clinical trial. We'll talk about it in future communications, but we've just licensed a very exciting technology from France that will put an app on people's cellphone that automatically measures depression levels from voice characteristics and facial characteristics that's already showing an 80% correlation with the MADRS. So we expect that this trial will be the first we run where we've got both objective and subjective measures of depression and suicidality. The nice thing about this trial is you're talking about a day or a couple of days of D-cycloserine treatment rather than 6 weeks of treatment. So the risk that patients might not be compliant with the study drug dropped to near zero.

Thank you. And I'm showing no further questions at this time. I would like to turn it back to Dr. Jonathan Javitt for closing remarks.

So thank you all for joining us on short notice. As you know, we're enthusiastic about the FDA's determination that we've got a substantially complete ANDA filing. We look forward to working with the FDA over the next 6 months to bring this to market approval and to bring this medicine to patients. It's been a great opportunity also to show you where our pipeline is expanding. And we look forward to continuing to deliver for our patients and our shareholders. Thank you all.

Thank you. And this concludes today's conference call. Thank you all for participating. You may now disconnect.