Talphera, Inc. (TLPH) Earnings Call Transcript & Summary

Good afternoon, and welcome to the AcelRx KOL event. [Operator Instructions] We will be hosting 2 Q&A sessions today, once after Dr. Chawla and once at the end of all the presentations. [Operator Instructions] I would now like to turn the call over to your host, Vince Angotti, Chief Executive Officer of AcelRx. Please go ahead, Vince.

Thanks, Sara, and thank you to the LifeSci for helping organize today's presentation and all of you who have tuned in with an interest in AcelRx Pharmaceuticals and the nafamostat program. We much appreciate your interest. Next slide, please. As always, before we begin, I'll remind you that today's session may include forward-looking statements that involve risks and uncertainties of our business, and I'd encourage you to refer to our SEC filings for additional information. Next slide, please. So most of you have known AcelRx as an acute pain company for the last decade plus, really revolving around the sublingual sufentanil platform in the form of Zalviso, an approved product in the EU and NDA-ready in the U.S., and more so with DSUVIA, which is approved in both the U.S. and EU with the EU launch by Aguettant planned for the second half of this year. But really, over the last several months, we have scoured the landscape and significantly bolstered our late-stage pipeline of assets for the medically supervised setting. And first, in July of last year, we licensed in 2 prefilled syringe products, those being ephedrine and phenylephrine. And we plan on submitting NDAs for both of those products this year with potential approvals for both in 2023. We see it as a very exciting opportunity and that our research suggests that 70% of hospitals stock anesthesia carts in the OR with prefilled syringes that are typically outsourced from 503B compounding facilities. And they do that despite the associated risks with quality and shelf life. So we see that as a significant market opportunity to address moving forward. More recently, we announced the acquisition of Lowell Therapeutics, providing a very exciting set of opportunities in the medically supervised setting in Niyad and LTX-608. Now these products, combined Niyad, LTX-608, they make our nafamostat program, and that will be our focus for the session today. Next slide, please. And while there are multiple potential indications for this program, many of which are already proven outside the United States. Most of our focus today will be on renal replacement therapy for which Niyad has already received FDA device breakthrough designation and a CMS reimbursement code. So we feel like we have wind in our sails from a regulatory and reimbursement standpoint on this particular program. And to that end, in this particular disease states, we are privileged -- next slide, please -- to have with us today 2 extraordinary thought leaders in the area of acute kidney injury, or also referred to as AKI. First, we have Lakhmir "Mink" Chawla, I should say, Dr. Lakhmir "Mink" Chawla, who, prior to joining industry, was a professor of medicine at George Washington University, where he had dual appointments in the Department of Anesthesiology and Critical Care Medicine and in the Department of Medicine, Division of Renal Diseases and Hypertension. Prior to that, Dr. Chawla was the Chief of Division -- of the Division of Intensive Care Medicine at Washington D.C. Veterans Affairs Medical Center, and he is an international renowned expert in the field of acute kidney injury and shock. And not to be outdone, in addition, we have Dr. Stuart Goldstein, who's a Professor of Pediatrics and the Director for the Center of Acute Care Nephrology at the Cincinnati Children's Hospital Medical Center, one of the best in the world. He has received his medical degree from Columbia University, and he serves on panels for International Guidelines for Renal Replacement Therapy. And combined between both of our experts today, we have published over 450 peer-reviewed publications and journal articles. Next slide, please. So as I'll guide to the discussion for today, we'll begin with Dr. Palmer on a general background of Niyad for the anticoagulation of the extracorporeal circuit. She'll be followed by Dr. Chawla, who will talk about the disease state and standard of care unmet need for dialysis anticoagulation, at which time we'll pause and answer any questions that you may have to that point. Following that Q&A, Dr. Goldstein will be speaking about his recent publication of nafamostat versus citrate for renal replacement therapy, followed again by Dr. Palmer for the clinical development of Niyad in the U.S. And then finally, briefly, we'll touch on LTX-608 or nafamostat for intravenous injection in other potential disease states, and have an opportunity, pending time, for some final Q&A. So with that being said, again, welcome, everyone. We're excited to have you and our experts today. And I'll now turn the call over to Dr. Palmer.

Wonderful. Thanks, Vince. Now so my background, I'm the Chief Medical Officer of AcelRx. I am an anesthesiologist by training. And so it's just really exciting for me to bring to you today this drug that it will actually be regulated as a device and we'll get into that, that is used for people with severe acute kidney injury. It's just thrilling. So as the Chief Medical Officer of AcelRx, I was actively involved in -- Vince used the word, scouring. Scouring the universe for great products to bring in. And I really feel with nafamostat, which was an asset with the company, Lowell, that we found a needle in the haystack. Next slide, please. So what is nafamostat? So it's a broad spectrum serine protease inhibitor. That's a mouthful. What does that mean? Well, serine proteases are enzymes that actually have the immunoacid serine at their active site, and they cleave peptide bonds or protein bonds. Now it turns out that many of the cascades that occur in the body, the clotting cascade, the immune cascade, the inflammatory cascades, they're all actually a series of proteins that are cleaved from each other that create downstream effects. So it's sort of like a domino. If you want to think about a series of dominoes. And often, in fact, the clotting cascade, when it's activated, can activate the inflammatory immune cascade. So it's almost a series of dominoes activating each other. And these serine proteases actually help that cascade go forward, but they can go awry. So in disease states, you can actually see, and COVID is a great example. You can see when the clotting occurs, the immune system, the inflammatory, all these cascades are going awry at once. So it's actually wonderful to actually have a drug that goes in, in a broad spectrum way and inhibit these during proteases. The problem is these cascades are critical for life. So when you want to inhibit them, you want to do so in an extremely titratable manner. And as an anesthesiologist, we know this very well. We're constantly dialing up and down blood pressure, heart rate throughout the surgery, and we need short half-life drugs such that the infusion can be finally titrated. That's the critical part of nafamostat. That's the part I love about it. It's a broad spectrum serine protease inhibitor with a half-life of 8 minutes. That means we can go in and, for the first time, really be able to inhibit some of these cascades that have gone awry in serious disease states and do so in a very titratable manner. Next slide, please. Now today, what we'll be specifically talking about, we'll talk a little bit about those disease states in a bit, but this is now going to be the coagulation pathway. And the important part of that is when you talk about extracorporeal circuit, what does that mean? So extra means outside, and then corporeal or corp means body. So it is a circuit that takes the blood outside the body and temporarily assumes the function of an organ. So in the case of dialysis, it's replacing the function of the kidney. You've probably heard the term ECMO. That stands for extracorporeal membrane oxygenation. So it's actually taking the blood out and aerating it or oxygenating it, taking the place of the lungs. And then cardiopulmonary bypass is actually what occurs during open heart surgery is a machine that takes place at both heart and lungs. When blood is taken out into these machines, it's going to clot. That's what blood does when it sees foreign substances. So what we need is a way to anticoagulate the blood while it's going through the machine. Now a simple way, of course, is heparin, right? Heparin, everyone knows that, it's an anticoagulant. The problem is when you give heparin, even if you give it into the machine to anticoagulate the blood in the machine, it's not removed by the machine. So it stays in the blood as it goes back to the patient and unfortunately, also anticoagulates the patient. So that's why it is classified as a systemic anticoagulant. It's anticoagulating the machine, but unfortunately, the patients at the same time. What's optimal is the classification is a regional anticoagulant, meaning it is an anticoagulant injected into the circuit that only works on the extracorporeal circuit as far as being an anticoagulant. And when it goes back to the body, it's not dramatically anticoagulating the patients. So it's called it regional. Next slide, please. So specifically, what we'll be talking about is the extracorporeal circuit that is the dialysis circuit. So the anticoagulation of this circuit is really what we're excited about for Niyad. So it's known, when used in the hospital for acute or chronic kidney disease, as renal replacement therapy, RRT, and we'll be using that phrase RRT throughout this talk. So again, I mentioned regional anticoagulation is desirable. In fact, it's sort of the international standard, if you can use it because it really is optimal to anticoagulate the device and not the patient. In the U.S., there is only 1 regional anticoagulant that is available, and it's available through an EUA, emergency use authorization, and it's called citrate. You'll hear a little bit more about that later as well. What's exciting is that we are bringing Niyad in to be approved here in the U.S. for this exact indication, but it's being brought in and approved through CDRH, and its mechanism of action is in the circuit as a device, and they have agreed. Therefore, it can be regulated as a device and not a drug. And there's huge benefits to that, which we can cover later. Next slide, please. So without further ado, I will actually hand you over to the experts in this area. And Dr. Chawla, I'm really excited to have you here today. As Vince mentioned, he's a professor of medicine at George Washington University, also in the VA. And he's also recently gone into industry that makes him an expert in device and drug development as well. So it's really exciting to have Dr. Chawla here today.

Thanks, Pam. I appreciate the invitation. I will be delighted to talk to you guys about this unmet need. Next slide, please. So I think one of the things we teach all of our trainees is that blood doesn't like to leave the body. And when it does, it tends to clot. And so one of the big issues is when we dialyze patients, we then expose the patient's blood to a lot of plastic and a bunch of other biomaterials. And we do the best to make sure that these materials are biocompatible, but it still induces clotting. And so we need to use some form of anticoagulation in order to deal with this. When we fail to do it effectively or properly, it causes nontrivial problems. The patient loses blood, which requires then blood transfusions. They use platelets, which are problematic. But more importantly, the blood, as it leaves the body, if it's not anticoagulated, will foul the membrane and the membrane doesn't work well. So you don't actually get a good treatment in. And so you're actually failing at the most basic thing you're trying to do, which is actually remove different toxins from the patient. And obviously, all this clotting creates a very significant burden on health care professionals, meaning time and money. Next slide. Now if you look at the inpatient RRT market, I just told you how important anticoagulation was. And you'll notice that about 1/3 of patients are anticoagulated with heparin, which everyone's familiar with, has been around for many, many decades. But we have major issues because patients who are in the hospital had bleeding risks. And heparin goes back into the body and puts those patients at risk for bleeding. And so when you have a concern about a patient bleeding from an ulcer or from major surgery or other procedures or other issues, we are left with very few options. One of the options is citrate, which Dr. Palmer mentioned. But problematically, we don't have options for the other 60% of patients. And this is a real issue because now we're stuck dialyzing patients without an anticoagulant. We don't get good treatments in, and we are losing blood and platelets, and having to transfuse these patients back. Next slide. Now heparin has been around for many decades as I mentioned. It's a pretty simple molecule. You put it into the dialysis circuit. It is an effective anticoagulant. But the big problem with heparin is it goes back into the body, and it has a very long half-life. And this is a real problem because heparin can cause thrombocytopenia, but it significantly increases bleeding risk. And because of its long half-life, if you get into trouble, you have to actively reverse it. And active reversal heparin causes a separate series of problems. You can overshoot and actually make the patient procoagulant. So it's very difficult to use heparin in a patient who is very sick for bleeding risk. And so the way we've largely addressed this in advanced centers, next slide, is through a technique called regional citrate. And this is a bit complex. It's a complicated protocol. It requires advanced training of nurses and physicians. The critical care staff, the nephrology staff, all the nurses, all the techs involved have to be trained to make sure you do this correctly. And the reason why is because citrate impacts your calcium level. And if your calcium goes down and if it goes down rapidly, it can cause what's called the sentinel event. And a sentinel event is a very fancy word for terribleness, hypotension, matricular fibrillation, drop in cardiac output and even cardiac arrest. And with citrate, this can happen very quickly, meaning in minutes. And so advanced centers use citrate, they can use citrate effectively, but you have to be all in to do this correctly because if you don't, bad things can happen for patients, and these are things which are not easily reversed. Next slide. Now the main advantage of nafamostat or Niyad is it gives you all the benefits of citrate, meaning that you can anticoagulate just the circuit. But because of its very short half-life and its long safety record, we know that we can do this very safely in patients. And the beauty of this is that it occurs through the natural characteristics of the molecule. The molecules are serine protease. It anticoagulates the blood. Most of it is removed by the filter. So very little returns to the patient. And because of its very short half-life, what returns to the patient is rapidly metabolized. This allows the circuit to be anticoagulated. It allows the filter to not be fouled, so remains effective, and it allows the patient to be protected. And you can see the difference in bleeding risk. I mean this is nontrivial. And when patients begin to bleed in the ICU, it begins to cause a large series of problems, which is beyond the problems that already brought them into the hospital. And so we try very, very hard to avoid iatrogenic bleeding. And so the lack of options for this critical therapy has been a real limitation in our ability to roll it out broadly across the U.S. medical enterprise. And this is something, which we think will be a very nice option to have given the number of patients who are not being used -- utilized for anticoagulation with RRT who should be getting it. Next slide. And I think the thing to recognize is that this is not just supposition. Nafamostat has been standard of care in Japan for over 3 decades and over -- and standard of care in South Korea for about 15 years. And so we have large, randomized controlled trials and other types of retrospective data across large groups of patients and populations. So we have a very nice assessment of safety. And we also know that it's effective. And I think the best example of this is the experience in South Korea. South Korea has a very similar medical system to the U.S. They have similar types of machines and technology. And in that environment, nafamostat rapidly became the de facto standard of care in that country, which, to me, represents a nice natural experiment of the potential nafamostat to help clinicians to get this therapy to patients. And with this brief overview, next slide, I'd be happy to take any questions.

Thank you, Dr. Chawla, for that excellent presentation. We'll now open it up for questions from the audience. And as a reminder, for our analysts, please raise your hand to indicate you have a question. [Operator Instructions] So please hold for a moment while we poll for questions. Great. So our first question comes from Thomas Yip at H.C. Wainwright.

This is Thomas asking a couple of elections for [ Ed ]. Very good presentation so far. Perhaps the first question for Dr. Palmer. You mentioned earlier and perhaps I will go into this later, can you just go over what are some advantages that Niyad is considered a device versus a drug?

Sure. Absolutely. And I will get into that a little bit later in my next section. But it is -- been blessed with the breakthrough device designation status. So first of all, that's incredible in and of itself. It's also already received an ICD-10 code. And by being regulated as device, you're really getting out of that extensive Phase I, Phase II, Phase III, multiple Phase III clinical trials. It's just very streamlined, much less expensive. Their agreement with the agency is, in fact, for 1 pivotal study from a clinical example. I can tell you, compared to drug development, that is just very, very different. And it's derisked. I mean, I think you just saw that 30 years of efficacy safety data that's already there. So it's really a derisked drug from an efficacy safety standpoint and the development pathway because of the device is very ...

Got it. And perhaps a couple of questions for Dr. Chawla. From a clinician standpoint, if Niyad is -- becomes available, what would be required to transition from heparin, as you pointed out earlier, 35% anticoagulant market share? And then also, how is the cost of currently citrate versus heparin?

Yes. So the cost is going to be covered in some other slides. I'll give you the ballpark number. It's around $650 a day. And there's some clearer, more detailed data on that cost structure for citrate. But I think the bigger problem for citrate, and the cost is not trivial, is the work and the risk. So one of the things I didn't mention specifically is because we worry about the calcium level being at a certain place, you need to check calcium levels frequently, usually 4 to 6 times a day. And that's assuming you're not making major changes in the dosing. That's just your surveillance. And you can't just use a regular calcium. You used to have -- you use a specialized calcium assessment called an ionized calcium. And so this means that, that nurse in the ICU or in the hospital is going in and out of that room to do all these extra blood draws. And that value also has to come back from the lab in a timely fashion because if that value is abnormal, you must respond to it, especially if it's low. And if you don't, things can happen that cause significant complications. Because nafamostat does not have that workload on it, it is going to be attractive. And I think that, for the first time in my critical care career of 20-plus years, we have finally begun to care about the burden on our nurses, and this is obviously largely due to COVID. We are losing ICU nurses at an unprecedented pace through people not coming in because of the pandemic and active retirements. And so ordinarily, when a patient is getting this type of advanced treatment, the ICU nurse is usually 1:1 or 2:1 to the patient, meaning that 1 nurse is covering 1, 2 patients, sometimes 3. In our hospitals that I attend at and I was the Chief of Critical Care, we would never allow a nurse to be 3:1 if they had CRT. But now due to labor shortages, we have to. We have no choice. We're 3:1. We're sometimes even 4:1. This is dangerous because nurses are in other rooms and cannot attend to what's happening to patients in other places. And so as a consequence of that, this excess work, which is related directly to safety, makes citrate more concerning. Now if you're at a medical center where Dr. Goldstein is at that has extraordinary quaternary care facilities, you can implement this in a very efficient way. But if you're in a mid-tier hospital in a rural area or outside a small-sized city, you simply do not have the capacity to run this thoughtfully. So something that allows the efficacy of citrate with an enhanced safety profile is going to be welcomed.

And perhaps can you just briefly go over how would they switch from heparin to nafamostat? What kind of work would require a transition?

Yes. So I think that what you'll see first is all those patients in that 60% that currently receive no anticoagulation will rapidly put people on nafamostat because now instead of going through 3 or 4 filters every 4 days, every 3 days, which is a lot of money, each of those filters cost money and time to set up and you lose blood, I think that's the first place you'll see the switch. You will go from no anticoagulation to nafamostat. And I think that's the market that you'll see immediately. I also think it will displace citrate very quickly in places where they don't want to do the work. I think it will begin to erode into heparin because as clinicians begin to use it and they like it, which was the experience in South Korea, it will likely become the de facto standard. But I think that we will -- the low-hanging fruit is citrate and no anticoagulation first. And then I think the heparin, third, would come as a sort of a second grouping as clinicians become comfortable and like it.

Thanks for the questions, Thomas. So I think we have time for 1 or 2 more questions during this Q&A session. So I'll turn it over to Dory at LifeSci Advisors for any questions that came in through the webcast.

Thanks, Sara. Yes, we do have a few questions from our audience. The first is, can you explain the large market share of non-anticoagulation for renal replacement therapy? Why is it so high?

Yes. So I touched on that a little bit, but the main reason is that heparin is a problem and heparin causes bleeding. So we just have elected in many situations to say what if this person who is critically ill and in shock or has severe COVID bleeds? Well, that's a disaster. So I'm not going to take that risk. So then if you have the training and the ability, and advanced centers do, they'll use citrate and they'll put the work and the effort, they'll get the nursing to it. But most centers simply do not want to risk the heparin and they don't have the sophistication to run citrate, and they can't run it safely. So they elect the only other option, which is no anticoagulation. So it's a default position of desperation. And because we don't have options, this is a problem. And recall that citrate is not FDA approved. And although there is a single citrate solution that has an emergency use authorization, people who use citrate tend not to use that product. They tend to use ACD-A, which is outside the system, which creates some real complexity, or they use a compounded solution. And I think we've all seen compounding gone awry. So there's real issues for many centers in taking that citrate option. And so we're left, frankly, with nothing. And doing dialysis with nothing is better than no dialysis, but it's not great.

Yes. That makes sense. Okay. Then the next question is, Dr. Chawla and Goldstein, what percentage, in general, would you say patients and hospitals do not receive anticoagulation for renal replacement therapy? And do you believe that nafamostat would be used in these patients?

I'll let Stuart speak to that one.

Yes. Thank you very much, Dory, and thanks to everyone for joining the call. It's very clear even at large centers, if you look at the data from the ATN trial or from the renal trial, which were large multicenter studies of CRT and dialysis in critically ill adults, that half of patients don't get anticoagulated. And these centers are some of the best centers in the United States and Australia. So anywhere from 50% to 60% of patients are not being anticoagulated. And as I'll get into in the next -- in my portion, with children, loss of the circuit is even more critical because they lose a greater percentage of their blood. So that's why pediatric programs tend to move to citrate, but there are even some times where we have to not anticoagulate because of problems with citrate and with bleeding with heparin.

I think we will turn it over for your portion next, right? Dr. Goldstein?

Yes. I'll hand it over to the operator and move over to the next session. Thank you, everyone.

Yes. I would just like to say we're thrilled to have Dr. Goldstein here. In fact, I met him a few months ago at a pediatric AKI, acute kidney injury meeting up in Napa, and is just really top notch. As Vince mentioned, a Professor at Cincinnati Children's Hospital. But he's also on the international AKI guideline sort of working group and has his finger on the pulse of all things RRT, renal replacement therapy. And I think as you'll hear, the adults and children are very similar, how they're treated, but with children, as you heard Dr. Goldstein say, it's even more dicey. So he has just recently published an article. We're thrilled to have him here to talk over the findings of that article. So Dr. Goldstein, you can go ahead and take it away.

Thank you so much, Dr. Palmer. I appreciate the opportunity. So yes, as you've heard, we had a recent publication and actually the largest comparison of nafamostat versus citrate for renal replacement therapy to date. Next slide. So we published this, this year in the Journal of Pediatric Nephrology, which is really the vanguard of our specialty. And I think it's important to state upfront that neither Lowell Therapeutics nor AcelRx had any input into the conduct of this study. We were not paid to do the study nor were they involved in any way with the design. But I was very fortunate in my training program here. I run a critical care nephrology fellowship program that Dr. Mai Miyaji, who did her critical care training in Florida, but is originally from Japan, had experience, having been in Japan as a pediatric resident, with nafamostat. And so we had a unique opportunity to compare citrate, which is our standard of care in Cincinnati to nafamostat. Now as Dr. Palmer mentioned, pediatric and adult anticoagulation needs are similar. There's nothing different about the coagulation cascade between a child and adult. But the margin for error is much narrower in children. Children, again, if the circuit clots, then a greater percentage of their blood volume is lost compared to an adult. So we work very hard in the pediatric community to try to extend filter life. And to the previous question that came to Dr. Chawla about what would be required or how difficult it will be, I can tell you that once citrate became available in the first decade of this century, 80% of programs switched nearly immediately within a year from heparin to citrate because we were able to ensure safety. And we don't take care of as many patients in a pediatric cost, but even a large one like ours, that -- then they do, say, at a very large VA or at the University of Alabama. And regional citrate anticoagulation is gold standard, but it is complex. You're always measuring the ionized calcium in the circuit and in the patient to make sure you're getting adequate anticoagulation in the circuit, but not harming the patient. And so we have this unique opportunity, as I said, with Dr. Miyaji and her colleagues in Tokyo and with the work that we do here in Cincinnati, to compare nafamostat to citrate and to evaluate its safety. Next slide. So this was a retrospective study. It was not prospectively done. And starting in June 2019, we looked at the most recent 100 medical records of children receiving RRT with either citrate or nafamostat at each of our 2 hospitals. The primary endpoint was what we call filter life, which is the number of hours a single dialysis filter was in use. And we sometimes stop filters not because they clot, but because a patient has a scheduled circuit change or they need to go to radiology, and we don't want to count that against the anticoagulant. So that's also called censoring the filter life. So we really understand what is the true clotting burden. Safety were bleeding complications, anaphylaxis or an acute allergic reaction. Citrate toxicity, which can happen, again, if we cause the patient to have a low blood calcium, which can be life threatening to them. And then citrate also brings into play a number of electrolyte imbalances, including low blood sodium and an alkalosis, so a high PH, which, for a critically ill patient, may be deleterious because it may delay their ability to be extubated because their respiratory drive is inhibited. And citrate can lead to that. Next slide. So after we excluded certain patients, and the exclusions were patients were not exclusively treated with citrate sometime or nafamostat. Sometimes they had heparin or they were outside of pediatric age range, we had a very large comparison, still 80 patients with nafamostat and 78 with patients. We actually, just based on the epidemiology and demographics of the 2 cohorts, the deck was stacked against nafamostat actually. The kids in Japan were younger, smaller, therefore, had smaller catheters and lower blood flow rates of the CRT machine. All of those factors are associated with reduced filter life. So if we had shown that citrate was better, but the deck was stacked in favor of citrate, then that would not be a useful comparison. Patients with nafamostat also had a higher prevalence of liver disease, which creates a much more complicated citrate protocol. And the reason is citrate is metabolized by the liver. And so the standard protocol you use can, in a patient with liver failure, can become even more dangerous because citrate will build up in the blood. It won't be metabolized and, therefore, the patient's ionized calcium can drop even more precipitously. And so in these patients, we check circuit and ionized calcium not every 6 to 8 hours, but every hour for at least 6 hours to make sure that they're stable. The results show that the filter life was actually slightly longer in the nafamostat group. Now 2 hours is not necessarily clinically longer, but it was certainly statistically longer. Again, remembering what I mentioned in the bullet point, too, that the kids were smaller, younger, had smaller catheters and lower blood flow rates. So we would have expected that nafamostat -- the nafamostat group would have a shorter filter life, but in fact, they didn't. And when we control for filter life -- controlling for things like filter surface area, catheter diameter and pretreatment platelet count, again, no difference in survival. And then when we looked at censoring over time to make sure, for instance, that there weren't more nafamostat patients who were taking trips to radiology, we looked at many time periods over 72 hours, which is the standard length of a filter goal, filter life goal, we saw no difference between circuit life with citrate versus nafamostat. Next slide. The bleeding complications between the 2 were similar. And you can see in regional citrate, was 9%, nafamostat was 4 -- 5%. Yet not powered to look at this, but certainly no difference. Minor bleeding was also about the same. And we defined major bleeding as a 2-gram per deciliter loss of hemoglobin that required a blood transfusion. 14% of patients though had citrate toxicity. And 11 of them, 11 of these patients, that comprised 11, 3 had refractory metabolic alkalosis. So 8 of the 14 patients who had either citrate toxicity or metabolic alkalosis had to have regional citrate anticoagulation stopped. And therefore, they either went on to no anticoagulation, and we just suffered with shorter circuit lives, or we took the risk of heparin anticoagulation. Anaphylaxis has been reported as an extremely rare complication with nafamostat, and we observed no anaphylaxis. So next slide, please. Someone brought up the discussion about expense. And so this is an independent assessment of the expense, again, done by our pharmacy team using real-world data from Cincinnati Children's. And if we looked at a standard protocol for CKRT or CRT, and as Dr. Chawla mentioned, ACD-A is the standard that we use, the total cost, not including nursing time to run and troubleshoot multiple infusions, the time for drawing calcium levels or checking the labs, the total cost for regional citrate anticoagulation, as it's done in the United States per day, is about $525 per day. Next slide, please. So in conclusion, I would say that we demonstrated citrate and nafamostat, both provided satisfactory anticoagulation with no difference in major bleeding risks or rates. Nafamostat is much simpler with fewer risks for serious adverse events, including citrate toxicity. And citrate anticoagulation is more complex, time consuming. And I haven't used nafamostat, but I would believe that would be significantly less expensive. Thank you very much.

Dr. Goldstein, and we'll move on to the next slide here. And any questions -- like I said, at the end, we'll have a Q&A session again. So you can definitely ask questions about Dr. Goldstein's recent study, which is really exciting. I'll talk briefly about the clinical development pathway of Niyad here in the U.S. Next slide, please. So -- and I mentioned this earlier, when I felt like we sort of found the needle in the haystack, to find a drug that I mentioned has been derisked for decades from a safety efficacy standpoint, but that can be brought into the U.S. and has been awarded a breakthrough device designation status, and I think from what you've heard, you understand where the FDA is coming from. We need this product. It's inexcusable that we do not have this option right now in the U.S. to anticoagulate the dialysis circuit. It was also given an ICD-10 procedural code, which -- and we'll get into that in just a minute. But the advantages of the breakthrough designation status, very timely communication with the FDA. And I'll tell you, that is not that easy to come by these days. But with this special program, with much more frequent meetings, you also can get a better balance of pre- and post-market data collection, which, for example, may even relate to some pediatric programs. It may be that we don't have to run a full pediatric program. It could be sort of a post-approval registry in that situation. Flexible clinical design. Certainly, interaction with them regarding the protocol. Priority review. And interesting also that manufacturing considerations. So the pre-approval inspections, they've also put in writing that these are things that they're going to do in a very timely manner so as not to delay the program. The added advantage is that you actually -- and you skip down to that very last sub-bullet under the bottom of the page there, you qualify for NTAP, or new technology add-on payments, because you've been awarded Breakthrough Device designation, which allows hospitals to cover 65% of the cost exceeding the DRG. So not only will this be something they've been waiting for all this time, but it will actually help them pay for it to CMS. Now the really exciting thing is that Lowell applied early for an ICD-10 procedural code because they weren't sure how quickly they'd get on the market and this meeting only occurs once a year, and they got it on the first try. So -- and the neat thing is it's a broad code. So it's the extracorporeal introduction of nafamostat anticoagulant. So it's specifically for nafamostat and a broad extracorporeal, not necessarily just RRT. So I think that's really exciting. And again, I think we found the needle in the haystack here. So next slide, please. So one exciting thing is this concept that citrate is currently being used under an EUA. And so what about Niyad? Niyad has decades of history of safe use in other countries, South Korea and Japan. What about its availability to do an EUA here? So the FDA actually wrote back when that question was posed to them to Lowell. And on August of last year, they made these statements, which I think are very telling, "We believe that your device has the potential to address an unmet need in patients who cannot tolerate heparin and who are treated in facilities that are ill equipped for the use of citrate." So you've heard again here that people -- a lot of folks cannot tolerate heparin, which is why so many of them get nothing, and they are acknowledging the complexities of citrate, and that there's just many hospitals that are not equipped to handle it, which is why the usage is so low at 5%. Additionally, in that next bullet point, they state, "We recognize that there may be an unmet need for patients who cannot tolerate citrate due to a condition such as liver disease." So not only is it difficult to use, but a pre-existing condition makes it very difficult to use. So again, these are words of the FDA. The very last one, "We believe that you have provided significant evidence demonstrating the potential benefits of the Niyad device could be greater than the reasonably foreseen risks." So we are extremely excited here to be able to move forward by manufacturing the drug, getting on stability and going back to the FDA and really applying to this EUA and just think it might have a very good shot. Next slide, please. So the Phase III protocol has been discussed with the FDA. They have affirmed the design and the endpoints. And again, because of the device, we're talking about a single registrational study here through the IDE route. So it is a prospective, randomized, placebo controlled. It is a small study. Only 160 adult patients, 80 receiving nafamostat, 80 receiving placebo who are -- they're undergoing renal replacement rather, for up to 7 days, and they cannot tolerate heparin or at risk for bleeding. It will be performed in up to 10 clinical sites. And the primary endpoint is the post-filter activated clotting time. They're actually going to draw that blood right after it goes to the filter, and they're going to evaluate it over the first 24 hours of the study. So again, you're going to be comparing a known anticoagulant that was just injected prefilter to placebo and then you're measuring the blood for its ability to clot. So very straightforward study. Key secondary endpoints are filter life span. You heard Dr. Goldstein mentioned, that's key. Number of filter changes over 72 hours, number of transfusions required over 72 hours, and the actual efficacy of the dialysis in that we'll look at urea, which is one of the main factors that are pulled out of the blood during dialysis. And then, of course, key safety endpoints, bleeding, electrolyte disorders, and 28-day all-cause mortality. Next slide, please. So this is just a general time line. I mentioned we are actively involved in getting the API drug product produced. We have to then put that on stability. And then right after that, we are hoping to apply for the EUA, which will be about the end of Q2, early Q3 of next year, and then we will proceed with some of the nonclinical studies and producing some of the validation lots so that we can then use those to apply for the PMA along with the clinical study results. And so we're really looking for an approval for Niyad, a full approval for Niyad in Q3 of 2025. But obviously, we're hoping 2 years earlier to get that easy way. So that this desperately unmet need could be met with this drug, which again has 3 decades of safety and efficacy published. Next slide, please. Oh, and by the way, I should mention, all of that, with that first bullet point, should be about $14 million. Regarding intellectual property, we will get through the PMA route 6 years of regulatory and data exclusivity upon PMA approval. There are also patents that have been filed both around Niyad's use in extracorporeal circuit as well as, which you'll hear about in a minute, the IV use in nafamostat for a number of other conditions, including disseminated intravascular coagulation, known as DIC; COVID, which I mentioned earlier, it's an antiviral against the COVID virus; and then also acute respiratory stress or ARDS condition. So we're very excited about that patent portfolio. Next slide, please. So without further ado, we will break away from this sort of regional anticoagulant discussion we've been having. And then Dr. Chawla, being an intensivist and an expert in many of these areas we're about to talk about, we'll talk about how IV nafamostat can be used, which we call LTX-608, can be used for other disease states. So Dr. Chawla, you want to take that?

Yes. Thanks very much, Pam. Next slide. And I think one of the first things to point out is these are different formulations. So the product that would go into the dialysis circuit is for introduction into an extracorporeal circuit, which will have a different formulation that would direct [indiscernible] infusion. But the key insight here is that we are basically taking knowledge from Japan and South Korea for indications which we know will help patients. And in the U.S., we do not have good treatments for DIC at all. It's a significant problem for critically ill patients. I'll talk a little bit about ARDS. And I'll spend a little bit of time on COVID, and I know you're thinking, oh my God, not another COVID therapeutic. I've been hearing about this ad nauseam. I don't want you -- I want to walk you through why we actually have so much enthusiasm about this possibility. Next slide. So DIC is essentially this very peculiar phenomenon where you have excessive clotting to the point where you consume all of your clotting factors. And then the end part of DIC is bleeding from basically everywhere when all your clotting factors are consumed. I'm not going to take you to the gory details. I know any clinician who has seen someone die from end-stage DIC will not forget it. We do not have good therapeutics in this space, and it's something which hasn't really garnered a lot of development. And the fact that this is approved and the standard of care in Japan and used in South Korea, this is an obvious opportunity, and we look forward to having our interaction with the agencies to see which endpoints would be required to advance this program. Next slide. I think the thing which is very fascinating is how nafamostat can work for COVID. And I think the one thing I want everyone to understand is that this is not an antiviral in the way you think about something like a remdesivir. Next slide. The way that nafamostat works is that it is a part of the spike protein when it attaches to a cell. Once it attaches to the cell, it needs to open the door to get in. And the way it opens the door is by having a serine protease in TMPRSS2 open the door. This serine protease inhibitor happens to block TMPRSS2. And this is very important because this is a critical step in viral entry for which there are currently no therapeutics being developed. Now I think it's very important to understand that we've seen this movie before. These are the viruses that have high mutation events. So we learned this in HIV. We learned it in hepatitis C. There is not going to be a single drug that treats COVID. We are all learning a bunch of new Greek letters that we didn't know before or have forgotten. I happened to be in a fraternity. I was a Sigma Alpha Mu. We have now run through the first set of Greek letters. We're now going to start moving to 2 Greek letters. And I'm confident if there is a variant known as SAE, we're all going to die. That's not the point. The point is that COVID is not going anywhere. And the key take-home message is we're going to need a cocktail. Carl Dieffenbach, who's the Division Director at NIAID, the Division of AIDS, stated in The Wall Street Journal, "We need to move to multiple antiviral therapeutics to begin to push back against COVID. And I am quite convinced that nafamostat is going to be a key component of that. So all of us remember AZT for HIV, it was worthless as monotherapy, but once we got the highly active antiretroviral therapy, it became a key cornerstone. Those types of drugs later became drugs like Tenofovir, which continue to be anchor in the antiretroviral therapy. TMPRSS inhibition is going to be a key foundational stone in blocking COVID. The huge advantages that nafamostat has over any other drug that may bug TMPRSS is that it has been in patients for 30 years. That means we can deploy it broadly with a lot of confidence around safety. In blocking COVID. The huge advantage that nafamostat has over any other drug that may block TMPRSS2 is that it has been in patients for 30 years. That means we can deploy it broadly with a lot of confidence around safety. Next slide. And so as a consequence of this information that we see, this serine protease activation is also very important in ARDS. But I think that if you look at the order of indications, it is as depicted in the slide deck. I think DIC is the clearest and fastest one. But I'm really excited about all of the opportunities related to COVID and having to speed multimodal therapy. Next slide. And with that, and probably not as fast as we wanted to get there, I think we have some time for Q&A. I'll hand it over to the operator. Thank you.

Thank you. At this time, we'll begin conducting our second Q&A session. [Operator Instructions] Please hold for a brief moment while we poll for questions. Our first question is, what is the cost of managing the bleeding difficulties seen in 66.7% of the patients?

Do you want to take that, Stuart, or you want me to dive in?

Yes. You can take that, Mink.

Yes. So it's a real problem because what happens is at each filter clots, and then what happens is you lose some amount of blood. So the extracorporeal circuit for adult patients is around 150 to 200 mls. So if you clot the whole circuit, that's half a unit of blood. So if you clot 3 circuits in the 3 days or 4 circuits, you're now having to transfuse the patient back. So the cost structure is nontrivial. You could actually do an itemization of how much blood you have to give the patient back, how many platelets, but the bigger cost is what happens to patients. We know that transfusing banked blood is immunosuppressive. We know that giving these extra products are not good for patients. You wouldn't take a blood transfusion unless you needed it. So this is a completely iatrogenic event. Because we can't effectively do this, we are now having to increase costs from the health care system, but you're exacerbating and worsening outcomes. Because if you immunosuppress a patient in ICU, that is in an environment of resistant organisms, and then they get a nosocomial infection, their trajectory is completely altered. So it's not just good enough that you have to get better when you're critically ill. You need to get better quickly. And anyone who, God forbid, had a family in the ICU understands this quite intimately. And so there's real financial cost. There is real cost to the hospital and what they have to provide for the patient. But what really hurts the hospital cost is it expands the patient's length of stay and erodes their DRG. And that's a big problem for them. But most importantly, it's really bad for the patient, right? So the worst thing for hospital is to have a patient who stays for a very long time and then they pass away. So you get all the costs, you lose money on your DRG and you don't even get an outcome when you get graded by CMS and others sort of quality. So it's these kinds of unforced errors that this drug is going to be able to help with. And I think the fact that it is the de facto standard of care in advanced high-income countries like South Korea and Japan, we know how this is going to play out in the U.S. It will be utilized quickly. The level of enthusiasm we hear from our colleagues is very high. Our Japanese colleagues chide us and say, only took you 30 years to get around to this. So we'll have to accept that for a little while longer, but they're not wrong.

And the only thing I would add to that, just on the side of heparin is that if the patient starts bleeding internally, the cost is -- end up having to go to the operating room. They end up either laparoscopically or surgically, if it's a major bleed, and then their healing time while they're already immunosuppressed and sick is even longer. So there are so many comorbidities that come about with heparin, and that's why we are always trying to balance, keeping blood flowing through the circuit, but also not having the patient bleed.

So the next question will come from Brandon Folkes at Cantor Fitzgerald.

Maybe just for Dr. Goldstein on that study. You did mention you excluded patients who weren't exclusively treated with nafamostat or citrate. Obviously, being a retrospective study understanding why you did that. But I guess, how representative is that of the patients in practice? And then maybe more importantly, how complex are these patients? And if they are on multiple therapies, does it at all complicate the decision on what to use?

Yes. So great question. So as you can see in both groups, there were about 20% of the patients that were excluded because they were either -- they crossed over on therapy. A lot of them were on other extracorporeal devices, so with heparin. So they were on an LVAD, for instance. And so we didn't want to attribute the, say, bleeding if they were on that and citrate in the United States or if they were on heparin for a certain reason in Japan. But what I would say is it's a very -- it's at least 80% representative. Again, we just looked at the last 100 charts. We did not cherry-pick. We wanted to not bias. And so you could see that, at least in the U.S., where we were the citrate group that I could imagine that the -- that we -- almost all of our patients would go to nafamostat because if it works as well as it seems to in Japan, we don't have to deal with the issues with citrate or the concern with systemic bleeding. That's the best way I can answer that question. And the adult prospective study certainly helped with that.

And the next question will come from Thomas Yip at H.C. Wainwright.

Thomas here. First one, perhaps for Dr. Goldstein, you mentioned earlier, citrate toxicity is -- that's about 14% in your study with patients who use citrate. Other than discontinuing or switching to heparin, what other kind of impact and adverse events that you see that will happen to the patient when citrate toxicity happens?

Yes. So exactly. So what you worry about, again, is severe hypokalemia, that -- hypocalcemia that can be life-threatening. The other thing that -- to mention is that many patients are receiving blood products when they're critically ill, and fresh frozen plasma has a significant amount of citrate as well. So the risk of hypocalcemia with citrate becomes even higher, and your -- the patients are getting fresh frozen plasma because they're bleeding. So if you don't have them on citrate, they end up having shorter runs on their CRT circuits. If you look in large studies in Europe, that have treated patients with liver failure at King's College, which is one of the largest liver centers in the world, their average circuit life is 18 hours because they can't use citrate and these patients have varices and they can't use heparin. So it really is the hypokalemia (sic) [ hypocalcemia ]. The secondary effect of the alkalosis is, again, is the delay in extubation for -- because of decreased respiratory drive. ACD-A, which is what we use predominantly in pediatrics, the D is dextrose. And so we're giving a huge dextrose load to patients. And so many times, we have to put them on insulin to keep their serum glucoses in a decent range. Other adult programs make their own citrate cocktails. And so that requires very strict pharmacy oversight. And sometimes, they can be hyponatremic or be made hypernatremic if there are pharmacy errors. So those are the main additional issues with citrate that come to mind.

Got it. And perhaps one final question from us. This one for Dr. Chawla. Can you give us some thoughts on why there are no approved treatment for DIC in the U.S.? And what are some potential endpoints for 068 (sic) [ 608 ]?

Yes, thank you for that question. I think the problem has been that people have thought of DIC as a coagulation disorder, and we tried a series of anticoagulants initially and it didn't work. And I think the other main issue for why DIC has not been addressed is because it happens in so many different aspects of clinical care. It happens in trauma patients who are getting transfusions. It happens in patients who get infections. And so no one owns that disease. It's not like breast cancer or even something like dialysis where a nephrologist think about this a lot and something we see a lot of. I think that's part of the issue. No one has really coalesced themselves around this. I think the main endpoint, and we haven't had this interaction with the agency yet. So obviously, this is getting a little bit ahead of things. But I would speak to them directly about thrombocytopenia since that's a core feature of DIC, and it's something which they have approved previous products on already vis-a-vis patients who have low platelet counts in cancer or bone marrow suppression. And that, in the end, is the critical piece that we're looking for because if you can impact the platelet count, you're going to improve outcomes for the patient, you're going to decrease bleeding risk. And it's a very good surrogate for this aggregation effect that we see. I think what makes nafamostat so attractive for this is that, aside from it being used successfully in Japan and having a very good track record, we know that nafamostat causes platelets to disaggregate. And so I think that is an endpoint that's rational, it has precedent, and it's also in a place where we know that the asset works well. So I think that has been what we have discussed. I think we haven't fully coalesced around that being what we would lead with, but I think that would be my sense of where we would go.

And now I'll turn the call back to Dory from LifeSci for any other questions that came in over the webcast.

Thanks, Sara. So apologies if you already addressed this, but we did get a few questions on this. Turning back to Niyad. Niyad sounds like a standard of care in some ex U.S. markets. So why hasn't it been brought to the U.S. before?

Well, yes. So this is Pam. It's tough when you take an old generic drug from other countries, bring it to the U.S. and have to spend all the money. We talked about the extensive clinical development program that a drug would go through. So there's just not a lot of incentive there for industry to do that. I think what Lowell did when they saw the opportunity -- I should back up. So in Japan and South Korea, nafamostat is regulated as a drug. And I think that the insight they had was that the mechanism of action being on the circuit, it really should be regulated in the U.S. as a device. And I think that was the eureka moment that allowed the development program to be streamlined and affordable so that -- and the patent protection is there. I mean, you get 6 years of exclusivity of data, we -- mentioned by the FDA. But because of the nature of the filters in the U.S., and they're just slightly different than in another countries, the different types of filters need a slightly different rate of nafamostat based on the charge that they have on them, et cetera. So there's a lot of know-how also in conducting these clinical trials and getting data on a lot of used patents that will be generated from there. So I think it's really the eureka moment they had with having it regulated the device that's allowed us to move forward where other folks maybe didn't have that insight.

Okay. So assuming AcelRx have patents on Niyad, when do these patents expire?

Well, I'll actually introduce our Legal Counsel here at AcelRx. Tom, maybe you could answer that question?

Sure. The patents generally have a 20-year life from the original filing date. The patents on Niyad and nafamostat all are within the last 3 or 4 years. And so you were looking at a 20 -- I can't do the math.

20-year period from that -- the point.

20-year period from that. So -- and any new patents that get filed will have a full year date more or less from their initial filing. So the coverage extends well out.

Okay. Great. Next question is, are there associations, committees or other groups that dictate national or international treatment guidelines?

You okay if I...

I would like Dr. Goldstein -- yes. Perfect.

Yes. Thanks, Pam.

He was a Chairman, so I think he is the best placed person to answer this question.

Yes. So there are. And the international one is called the Kidney Disease Improving Global Outcomes, or KDIGO committee. And they came out with the first set of AKI guidelines, actually ever, on an international basis. And I was privileged to be 1 of the 2 pediatricians on that guideline writing committee. And this is now 10 years old, but citrate has been recommended as a preferred anticoagulant globally in patients who are at increased bleeding risk. And so that has really propagated through academic centers, as Dr. Chawla has said. But again, understanding the risks. The -- in 2020, KDIGO had a Controversies Conference to -- and when they have a Controversies Conference, what that means is they want to see if there will -- if there are enough data out there that weren't a reconvening of the work group to develop new guidelines. And we said, yes, there are enough data. And then, of course, COVID happened. But there will be a planned updating of the guidelines in 2023, 2024, the latest -- as the latest. And I am sure that there will be updates on guidelines for anticoagulation and CRT, which are part of these AKI guidelines. The conference that Dr. Palmer mentioned before in Napa was the first ever pediatric Acute Disease Quality Initiative. That was the 26th Acute Disease Quality Initiative. And again, anticoagulation is certainly part of that, but we didn't have the nafamostat data at that point.

Okay. I think we have time for one more question as we're quarter past the hour. What dictates the protocol at any given institution?

The first thing that really dictates the protocol at any institution is you have to be able to get nursing buy-in, as Dr. Chawla said. You could have the most elegant, physiologically sound protocol, but if you're really overburdening a nurse and nursing team, then that's going to be huge. The second is going to be cost, obviously, to the hospital and most places. I'm fortunate where cost is not so much of an issue at Cincinnati Children's, but that becomes a huge issue in adult programs. And then it's going to be -- it was a very perceptive question as what will it take to change wholesale or even incrementally from 1 anticoagulant to another? Now that people understand the benefit of regional anticoagulation and you tell them that they don't have to reverse it and they actually don't have to measure labs, this will be an incredibly easy sell because it has the ease of heparin without any of its side effects. And so to me, this sells itself.

Great. Thank you, Dr. Goldstein. If there are no other questions, this brings today's event to the conclusion. I would like to thank our panelists and our attendees for joining us today. And with that, you may go ahead and discontinue your line. Thank you.