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Greetings, and welcome to Adamis Pharmaceuticals First Quarter 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Robert Uhl with ICR Westwicke. Thank you, sir. You may proceed.
Thank you, operator. Welcome to the Adamis Pharmaceuticals first quarter 2023 financial results and corporate update conference call. Joining me on the call today are members of the Adamis executive team, including Chief Executive Officer, David J. Marguglio; and Chief Financial Officer, David Benedicto. And once again, DMK Pharmaceuticals CEO, Dr. Eboo Versi, will also join the call.
Our format for this call will consist of prepared remarks from Adamis Management and Dr. Versi, followed by a Q&A session. This call is being webcast and will be available for replay in the Investors section of our website at adamispharmaceuticals.com.
In today's call, we will make certain forward-looking statements regarding our business based on current information and expectations. Those statements speak only as of today, and except as required by law, we do not assume any duty to update in the future any forward-looking statements made today. Of course, any forward-looking statements involve risks and uncertainties, and our actual results could differ materially from those anticipated by any forward-looking statements that we make today. Additional information concerning factors that could affect our business and financial results is included in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission and in other subsequent filings that we make with the SEC. These are available on the SEC's website at sec.gov or on Adamis' website.
Now let me hand the call over to David Marguglio, CEO of Adamis.
Thank you, Robert, and thanks to everyone for joining on our call this afternoon.
Today has certainly been an exciting day for all of us here at Adamis. As you may know, earlier we hosted a special meeting of stockholders during which stockholders approved both measures that will enable us to proceed with the merger with DMK Pharmaceuticals. Following this stockholder meeting, the Adamis Board of Directors met to review the voting results. After the Board Meeting, we filed our 10-Q with financial results for the first quarter ending March 31, from which David Benedicto will provide a summary of in a few moments.
During the Board meeting, among other matters, the Board discussed the necessity for meeting the minimum bid price requirement to avoid being delisted from NASDAQ. The Board determined that it is in the best interest of the company and its stockholders to avoid delisting and therefore authorized the company to affect a reverse split in the near future to be able to reach the closing price of over $1 a share for at least 10 consecutive trading days prior to the NASDAQ imposed deadline of June 26.
We notified NASDAQ of our plan and in the coming days, we intend to further describe the timing and the ratio for the reverse stock split. Following the reverse split and upon the satisfaction or waiver of the remaining closing conditions, we intend to close the merger with DMK.
This merger has been the result of countless hours of work over the last 6 months by the employees of both companies as well as our respective auditors, lawyers and other advisers. I believe I speak for everyone involved when I say that this merger is truly an exciting milestone in the history of both companies and we have great expectations for the future of the combined company.
Before turning it over to our incoming CEO, Dr. Eboo Versi to provide a glimpse of that future, I will ask David Benedicto to summarize the first quarter 2023 financials. David?
Thank you.
As David mentioned this afternoon, we filed our Form 10-Q for the quarter ending March 31, 2023. I would like to describe a few key items from those financials but I encourage you to review the full 10-Q for additional details and disclosures.
Revenue for the first quarter ending March 31, 2023 increased by 26% to approximately $1.5 million versus approximately $1.2 million for the same period in 2022. The increase in revenues was primarily due to product sales of ZIMHI to US WorldMeds. No revenues relating to SYMJEPI were reported for the first quarter of 2023 or 2022 due to its manufacturing hold and the voluntary product we recall that was announced in March 2022.
Selling, general and administrative expenses for the three months ending March 31, 2023 and 2022 were approximately $4.8 million and $3.4 million respectively. The increase was primarily a result of increased legal, audit and advisory fees associated with both the merger and the financing transaction which closed in March.
Research and development expenses were lower for the first quarter at approximately $1.3 million compared to $4.2 million in the first quarter of 2022. The decrease was primarily related to the weighing down of Tempol clinical trial and product development work.
Net loss from continuing operations decreased by approximately 12% to approximately $9 million from approximately $2.2 million for the quarters ending March 31, 2023 and 2022 respectively. Lastly, cash and cash equivalents at March 31, 2023 totaled approximately $3.1 million.
I would now like to hand it over to Dr. Eboo Versi. Dr. Versi?
Thank you, David.
I would like to thank both Adamis and DMK stockholders for their approval and support. And I look forward to completing this merger in the coming days.
To accelerate the integration, teams from both companies have been meeting regularly to level set and align on strategic objectives. On Adamis's last earnings call, I described DMK's lead compounds, the stage of development and the indications and regulatory parts we intend to pursue. Today, I want to spend some time discussing my vision for the combined company, which will focus on saving lives and treating patients with substance use disorder.
Where is Adamis focus was on saving lives through the development of rescue treatments for opioid overdose and anaphylaxis, I intend to use ZIMHI as the foundation upon which to establish the new company as the leader in the treatment of substance abuse. An American dies every 5 minutes from an opioid overdose and 85% of these are due to fentanyl that is plaguing our country.
Given the high potency of fentanyl, I believe the intranasal Narcan or its generic equivalents are unable to revive patients with a single dose. Recently, Dr. Strauss of the FDA presented data that suggested that again fentanyl, rapid dosing with naloxone is the most effective reversal treatment. This is precisely what ZIMHI achieves.
Narcan, the leading naloxone product franchise reported revenues in excess of approximately $374 million for 2022. And I believe we can, over time, achieve a significant share of this market without being -- while being even more effective at preventing deaths from fentanyl overdose.
Now that epidemics' commercial products have even approached the market share, I believe they can. One of my first initiatives as CEO of the combined companies will be to make increasing sales my top priority by taking an active role in commercial efforts to achieve greater market penetration.
I've already identified several strategies to improve the sales of ZIMHI, which we intend to roll out in the near future. Not only you - do you the stockholders deserve the long awaited price appreciation that I believe should come from putting more meaningful sales numbers on the Board but caregivers also deserve the benefit of these important and differentiated products to save lives.
While seeking to change the sales trajectory for ZIMHI and SYMJEPI, we will look for opportunities to further the development of our lead clinical stage compound DPI-125 as a treatment for opioid use disorder.
The same characteristics and mechanism of action that we believe should make DPI-125 a useful tool in the fight against addiction could also make it a game changing alternative to all currently marketed opioids used for treating pain. If we can do that, there exists the possibility for this company, not only to create shareholder value, but also to play a significant role in trying to substantially reduce or end this current opioid crisis.
The clinical programs that will be required to potentially gain marketing approval for DPI-125 in multiple indications will require investment and time. DMK has a track record of attracting non-dilutive funding in the form of government grants and I propose to continue these activities to fund our programs.
The merge company has several valuable assets that are not central to our core mission of treating substance use disorder. My plan is to seek opportunities to develop or co-develop these additional assets with non-dilutive dollars and advance them through proof-of-concept from which they can then be out-licensed to generate cash from upfront milestones and royalty payments.
By increasing the sales of our marketed products, getting out-license revenues, and by increasing to get non-dilutive funding, I expect to defray the costs of our clinical programs and to increase shareholder value.
Lastly, I would like to say how excited and privileged I am to have this opportunity to unleash the potential that our combined company has in saving lives while increasing shareholder value.
David, I will now pass the call back to him.
Thank you, Dr. Versi. I think you described the new vision very well.
At this point, we'll open it up to some questions. Robert?
All right. Thank you. For the first one, have sales to-date for ZIMHI matched the company's expectations?
No. In fact, I'd say they're well below our expectations. However, we still believe ZIMHI represents a huge unmet need and it's a very large and growing market. So part of the strategy, as Dr. Versi just described, moving forward will be to introduce new strategies to increase the marketing and sales efforts, which we believe will be instrumental in boosting market share and unit sales.
Great. Thank you. Here's one for Dr. Versi. You mentioned three avenues for cash generation, increased sales of existing products, out-licensing and royalty revenue and grants. Does this mean that a follow-on equity offering or other financing is not part of your plans?
As with all small public biopharma companies, until we reach profitability, we will continue to consider raising capital through the sale of equity. However, the financing strategy will be to prioritize growing revenue from the commercial product as these will be key to our long-term growth of the company. In addition, we want to focus on getting nondilutive capital in the form of government and nongovernment grants as well as codevelopment and out-license opportunities.
Okay. Great. Thank you. What is the next step in the clinical development of DPI-125? Is initiation of the next clinical trial anticipated for later this year? And what indication will you be pursuing?
To date, the development of DPI-125 has completed a dose escalation first-in-human Phase 1 study, which showed that the drug was well tolerated and had no serious adverse effects. The next planned human studies will attempt to confirm what has been demonstrated in preclinical studies in terms of better safety from respiratory depression and reduction in abuse liability. Once these key characteristics have been demonstrated, we intend to develop DPI-125 as a treatment for opioid use disorder and eventually as a treatment for acute and chronic pain.
All right. Here's another one for you, Dr. Versi. You have previously mentioned that DMK brings to the merger a portfolio of over 750 novel molecules. Can you tell us why these are valuable and what your plans are for extracting this value?
Yes, sure. There is scientific literature that suggests that these compounds could be useful in alcohol use disorder, depression and anxiety, heart disease, cancer, neuroprotection and wound healing to mention some of them. More recently, tools have been developed that can screen such compounds relatively cheaply to identify these targets. We intend to use these techniques to find high-value indications. If these newly discovered potential treatments are core to our mission, we will develop them ourselves. If not, we will out-license them to generate additional cash to fund our priority programs.
All right. Thank you. You have previously mentioned having a product to treat Parkinson's disease. What are your plans for this product?
Yes. I am very excited about this molecule as it results from preclinical investigations, including nonhuman primate studies suggest that it can be used as monotherapy and also as adjunctive therapy with levodopa. While levodopa is the gold standard treatment for Parkinson's disease, and it is very effective. However, after a few years, some patients become intolerant of this and have to resort to brain surgery called DBS. I believe that this product could prevent the need for such surgery and the FDA could grant it orphan drug status, making it potentially a very valuable product for partnerships.
All right. Can you provide a time line of the key expected events for the company over the next several months?
Sure. I'll take that. So next steps will be to affect a reverse stock split, as I indicated earlier, and then to proceed with the close of the merger transaction and the integration of the two companies. And as far as a specific time line, I think it's realistic that, that can all be achieved in the next 30 days.
All right. Terrific. Thank you all. That brings us to the end of our call today. Thank you again for joining and for your interest in Adamis Pharmaceuticals. Have a nice evening, everyone.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.