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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Greetings, and welcome to the Apricus Biosciences’ Fourth Quarter and Full Year 2017 Financial Results and Corporate Update Teleconference and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Matt Beck. Please go ahead.
Good afternoon, and thank you for joining us today. I'm Matt with Solebury Trout, Investor Relations for Apricus Biosciences. With me today from Apricus is Chief Executive Officer, Rich Pascoe; and Executive Director of Finance, Kelly Deck.
During today's call, Rich will provide a brief review of the Company's progress in the fourth quarter but focus mostly on the Vitaros complete response letter recently received from the FDA and Apricus’ plans ahead. The Kelly will briefly review Apricus’ 2017 financial results. We will then open the line of question.
I'd like to remind everyone that certain information discussed on today's conference call is covered under the safe harbor provisions of the Private Securities Litigation Reform Act, and that during today's conference call, management will be making certain forward-looking statements regarding future events or future financial performance of the company, including statements relating to Company’s plans following the FDA complete response letter and the Company’s ability to address issues raised by the FDA in the letter, the outcome of the U.S. regulatory approval process for Vitaros, business development plans and objectives and expected uses of cash reserves.
Such statements are predictions based on current expectations and actual results could differ materially. Please refer to the company's most recent filings with the Security and Exchange Commission, including Apricus' quarterly report on Form 10-K, which was filed earlier today or additional discussions regarding these and other risks that may affect our business.
These documents can also be found on the company's website at www.apricusbio.com. Apricus' financial results release for the quarter and full year ended December 31, 2017, crossed the wire earlier today and can also be accessed on the Company's website.
I will now turn the call over to Rich Pascoe. Rich?
Thank you Matt. Good afternoon and thank you all for joining us on the call today. Since the end of the third quarter of 2017 we have been focused on supporting the by Vitaros new drug application resubmission and strengthening our balance sheet. While we were successful achieving the latter, we were extremely disappointed with the FDA’s recent decision regarding the approval of Vitaros, particularly given the product is approved and commercialized outside of the United States and given the extensive NDA resubmission including new clinical data analysis as requested by the FDA, new non-clinical safety data and substantial updates to the CMC Section of the NDA. All of which we believe at the time of the submission adequately address the deficiencies outlined in the original 2008 complete response letter.
The FDA continues to question whether the overall risk benefit profile of Vitaros outweighs the safety concerns. Specifically, the safety of the permeation enhancer DDAIP with respect to its potential as a tumor promoter and its potential to enhance the transmission of sexually transmitted infections were noted in the recent complete response. In addition the FDA raised two new CMC issues neither of which were mentioned in the 2008 complete response letter, but which we believe are addressable within a reasonable timeframe.
Therefore we intend to seek additional guidance from the FDA in order to address the ongoing concerns expressed by the FDA with respect to the 2.5% concentration of the DDAIP permeation enhancer. As such we will submit a request to the FDA in the coming days for an end-of-review meeting and based on FDA guidelines we expect that meeting to take place in April. Our objective for this meeting is to determine the specific requirement needed to address the deficiencies. Noted twenty eight king of the it was five with an emphasis on the D.D. a I.V. safety concern.
War over article jacket remains of teen approval four by terrorists in the United States we must also focus our efforts on identifying a by winning opportunities or business combinations that will enable us to maximize shareholder value as we have no guarantee that the FDA will provide for the viable path forward for my terrace Moreover even if the FDA does provide a path we may not individually be in a position to address the complete response given our limited resources as an added step we will also look to reduce our expenses and extend our cash runway so that we can maximize our strategic flexibility following our discussions with the FDA.
With that I'd like to turn the call over to Kelly to review our fourth quarter and full year 2017 financial results. Kelly?
Thank you Rich. Net loss during the quarter and it December 31, 2017 was $2.4 million or loss for share of $0.16, compared to a net loss of $0.03 million or loss per share of $0.04 during the fourth quarter of 2016. Net income during the year ended December 31, 2017, was $0.03 million or income per share of $0.02, compared to a net loss of $7.4 million or loss per share of $1.15 during the year ended December 31, 2016.
Net income during the year ended December 31, 2017 was primarily due to the $12.3 million gain recorded upon the sale of our ex-U.S. Vitaros rights and assets to Ferring, offset by the $1.5 million regulatory milestone payment made to Allergan upon the FDA’s acknowledgment of our Vitaros NDA resubmission, as well as Vitaros commercial preparation activities, and other general and administrative expenses.
For all periods presented, financial statement activity related to our ex-U.S. Vitaros business has been presented as discontinued operations. As of December 31, 2017, the Company’s cash totaled $6.3 million, compared to $2.1 million as of December 31, 2016. As of February 26, 2018, the Company’s cash totaled $6.3 million, which is expected to fund operations through the end of 2018.
I will now turn the call back over to Rich for his closing remarks. Rich?
Thanks Kelly. In closing I’d like to acknowledge the tremendous effort made by the Apricus team throughout 2017. While we did not achieve our priority goal of obtaining Vitaros approval, we have positioned the company financially to have a flexibility to continue to work with the FDA on identifying a potential platform for Vitaros while in parallel we explore opportunities with the goal of maximizing shareholder value.
With that we will now open the call up for questions. Operator?
[Operator Instructions] Our first question comes from Yi Chen with H.C. Wainwright.
Thank you for taking my question. If the FDA requires the company to lower the concentration of the DDAIP, would the company go ahead and do – reformulate the product and do additional clinical trials?
Hi Yi. Thanks for the question. And I think, that's a critical question that we need to understand from the FDA's point of view, what would be required to gain approval for the product? Clearly, the issue that was raised in this complete response was not necessarily new to us as it was originally raised in the 2008 complete response. We believed, based on the additional work that was done over the last several years, which allowed us, by the way, to gain approval in about 30 countries outside of the U.S. that we had more than adequately addressed this concern, nonetheless, it still exist.
So one potential pathway that we could talk about with the FDA is lowering the concentration of the DDAIP to a level that they are more comfortable with or we could certainly talk about any new additional nonclinical studies that might be performed to address the concern with the current formulation. I think, it's too early to say, which direction we would go, but in the event that we had to reformulate to a lower concentration, I think it's fair to say that we would have to run at a minimum some type of bridging study to be able to tie back to the existing efficacy data that we have from the higher concentration.
Got it. So, so far it has any safety signals being observed in patients using Vitaros outside of the U.S.?
I’m sorry, can you – you, kind of, broke up, could you say that again, Yi?
Sorry. So, I mean, thus far, for patients who use Vitaros outside of the U.S., where the drug is approved, has any safety signals being observed, negative safety signals?
Well as you know, because the product is approved outside of the U.S. and that product is currently – and the rights and the commercialization is being done by Ferring, we don't get the most recent up-to-date data from them. Having said that, through our experience with the product outside of the U.S., prior to the sale of the ex-U.S. rights to Ferring, we did not see any incident that would, in any way, point to this tumor promotion or somehow enhancing the transmission of sexually-transmitted infections in patients from our database. And, of course, as we've noted previously, we included that safety database in our most recent submission to the FDA, so they had access to that information.
So this issue is specific to the FDA. It is specific to the U.S. product. It does not have any bearing on what happens outside of the United States given that the product is approved in those countries and is under the jurisdictions of those regulatory authorities. And I think, at the end of the day, what we need to try to understand better from the FDA in this – in the review meeting that we'll schedule, is the extent, in which the FDA believes, we need to further mitigate any chance that these things – that they've noted in the complete response might occur. And as we've, sort of, characterized in the past, it's almost as if you're being asked to prove a negative, because we're not seeing in the real world these things occur, but at the same time, the FDA continues to put a burden on the submission to do just that.
So it will certainly be something we will focus most, if not all of our time, with the FDA on this particular issue. I think, it's fair to say that there is a path forward for Vitaros in the U.S., the question is, does it involve a reformulation or does it involve some nonclinical work to overcome this particular objection? And while the complete response did annotate or note other deficiencies that need to be addressed, principally the two new CMC issues, we feel that those are addressable and they are addressable within a reasonable timeframe and I would characterize them as not really being gating items to approvability. We think, they can be addressed assuming we can come to some agreement with the FDA on this safety question.
Okay. So given the cash position at the end of 2017, what is your projected cash – quarterly cash run going forward? And before the meeting with the FDA, in April, would you start doing some work to solve the CMC issues raised in the CRL? Or would you wait until further clarification from the FDA?
Yes. I'll do those in reverse order. So I think, we'd certainly wait until after the meeting with the FDA, because, as I've noted, the safety deficiency is really the gating item here. So to gain some sort of consensus with the FDA on how to address that and in what way would be is critical. The CMC issues would then be dealt with, I think, in due course if there with, I think, in due course if there is a viable path forward. So I do think that there's really no need for us to focus on the other deficiencies at the moment, because of the relative importance of addressing this DDAIP safety concern. And again, the concern is limited to or focused, I should say, on the 2.5% concentration and so there's options there potentially to lower that concentration is something that the FDA use, is not having these same characteristics.
To answer your question, we did file our K today. At the end of the year, we had $6.3 million in cash as of February 26, just a few days ago, we had $6.3 million available in cash. And we believe that, that cash and our burn rate, which will, as expressed in my comments, will continue to look for ways to further reduce that here over the coming months and the fact that we will not be doing at least in the near term any substantial R&D work on Vitaros until we've talked with the FDA, all of which, we believe, will allow us to operate the company and deal with this matter with the FDA and have cash to do that through the rest of this year at a minimum.
Got it. My final question is, how much influence does Allergan has on the company's final decision for Vitaros path way forward? And is Allergan going to be part of the participants in the FDA meeting?
We have an obligation to work with Allergan on all things, Vitaros U.S., including any FDA interactions and/or submissions. We have kept Allergan apprised of all of these developments and shared with them, of course, the complete response letters, some of our discussion around strategy with the FDA including our desire to go to – and take advantage of the end-of-review meeting that is afforded to us. Ultimately, we have the development responsibility for Vitaros and that's our choice to make. If for whatever reason, we decided to not continue to develop it then it would potentially the rise for the turn back to Allergan as one option, but again, as I said in my comments, our overarching objective is to find a path forward for Vitaros in the U.S. to address these deficiencies and as such, we will continue to be a good partner with Allergan in that journey.
Got it. Thank you.
[Operator Instructions] And I’m not showing any questions at this time.
Alright, thank you operator. So again in closing I want to thank all of you for your continued support of Apricus as we look ahead into 2018, as we make progress on all fronts, we will, of course, update the market appropriately.
And operator, you may now disconnect.
Ladies and gentlemen this does conclude today’s presentation. You may all disconnect and have a wonderful day.