NRX Pharmaceuticals, Inc. Common Stock FDA announcement

Please go ahead. Thank you, operator, and welcome, everyone.

Before we begin, I would like to remind everyone that certain statements made during this call are forward-looking statements under U.S. federal securities law. These include statements about the timing of commercial launch and first shipments, market size and growth, pricing, manufacturing and supply, and future products. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the present expectations. Additional information concerning these factors is contained in the press release issued this morning and in the company's periodic reports filed with the SEC. The forward-looking statements made during this call speak only as of today, and the company undertakes no obligation to update or revise them. NRx is not providing revenue or margin guidance on today's call. Joining me today is Dr. Jonathan Javitt, founder, Chairman, and Chief Executive Officer of NRx Pharmaceuticals.

Following his prepared remarks, we'll open the call for questions. I will now turn the call over to Jonathan. Jonathan, go ahead. Congrats. Thank you, Brian.

Good morning, everyone, and thank you for joining us. This morning, we announced that the FDA has approved our abbreviated new drug application, or ANDA, for preservative-free ketamine ahead of the November 10 goal date. This is NRx's first approved product, and it marks our transition from a development-stage company to a commercial company. According to the FDA's data, the average time to ANDA approval is 35.6 months. This ANDA took less than 14 months from time of submission. While that's in part a function of the extraordinary team who come to work with us each day and the regulatory lawyers who support us, it's also a function of the recognition that goes from the FDA all the way to the president of the precarious nature of the U.S. sterile drug supply and the urgent need to return sterile injectable drug manufacture to the United States.

Today, nearly 60% of sterile injectable drugs that are critical to the lives of Americans are manufactured overseas. We've seen shocks to our energy supply, even though the U.S. is a net exporter of petroleum. Imagine if we had a shock to our sterile drug supply and surgeries could not be performed for lack of anesthetics or infections could not be treated for lack of antibiotics. Although we will be talking about our first ANDA drug approval today, much of what I will say is generalizable to many drugs. Many investors in our segment don't expect biotech companies to become commercial pharmaceutical companies. However, commercial pharma is where we come from at NRx. Our leadership team has decades of commercial experience at some of the world's largest pharmaceutical companies.

One of our founding board members, Chaim Hurvitz, rose to be president of Teva's international division and served on Teva's board during the years when they pioneered the first treatments for multiple sclerosis and other CNS diseases. Given the sales force resources already in place at our partner Nephron Pharmaceuticals, we are immediately capable of meeting the market demand for our first commercial product, and we embrace the challenge. I want to use our time this morning to cover five things. How did we get here, and what does this have to do with our original mission? Why are we able to manufacture an old generic drug at new innovative drug margins? Why this product matters to patients and hospitals, a bit about the U.S. ketamine market, and how we plan to launch. Then we'll take your questions. How did we get here?

As those of you who have been long-term shareholders know, our company was founded around NRX-101, an oral antidepressant currently being tested in a DARPA-funded phase III trial in combination with transcranial magnetic stimulation. Our original Breakthrough Therapy Designation from the FDA for NRX-101 called for us to stabilize suicidally depressed patients with ketamine, following which they would receive our innovative oral drug. As we discussed with shareholders a few years ago when we met with FDA after COVID to reinitiate our psychiatry program, FDA asked us to seek a label for use of ketamine in depression. That's when we learned how tenuous the U.S. ketamine supply is, when we learned about the benzethonium chloride problem, and when we began to understand why ketamine and most of old sterile drugs like it are no longer manufactured in the U.S.

Most of the cost of manufacture in a sterile injectable drug is actually in the glass bottle, not in the drug. It was the combination of a worsening drug shortage for a $400 million a year U.S. product whose need is much larger overseas, whose demand is growing rapidly, the ability to use modern blow-fill-seal manufacturing technology to make it feasible to return ketamine manufacture to the U.S., and the realization that we could remove an old toxic preservative in the process that led us to seek and obtain FDA approval to sell ketamine for the broad hospital and clinic market, not just for the psychiatry market. This is a path that we had the experience to undertake.

Thirty years ago, Dr. Panaccucci, our head of manufacture, and I were involved at different pharmaceutical companies in moving the manufacture of eye drops from preservative-containing bottles to preservative-free blow-fill-seal solutions that have now become standard. However, the solution that worked for dropper tip vials could not work for injectable products because of the need to maintain sterility while drawing the medicine into a syringe. The missing piece was the innovative Luer lock tip developed by our German partners at Rommelag and pioneered at Nephron Pharmaceuticals. Although it is a tiny bit of plastic, you have seen on the FDA website that our innovative vial is classified as a drug-device combination. You saw that it took an extra 2 months to get the ANDA through as we demonstrated the integrity of that product component.

The user studies we have completed with doctors, nurses, and pharmacists tell us that professionals are highly enthusiastic about a medication vial that eliminates the need to affix a needle to a syringe, advance the needle through a rubber stopper of a glass vial, and withdraw the medication. Not only do we cut the staff time in half and eliminate the medical waste, we end the risk of needle stick injuries because with our solution, there is no needle. This newly developed ability to package a sterile injectable drug in a blow-fill-seal vial without the ever-increasing cost of glass bottling substantially reduces our cost of goods and enables us to manufacture and distribute an old generic drug at margins that rival the margins of new innovative drugs. Suddenly, it is economically feasible to restore sterile injectable drug manufacturing to the United States.

Together with the preservative-free nature of our product, the ease of use, and our ability to guarantee supply, we believe we are poised to enter the U.S. hospital and clinic supply chain and displace old generic players who cannot adequately supply quantities of badly needed drugs. At the same time, we remain committed to obtaining an FDA label for treating depression and PTSD with ketamine and are compiling newly obtained data comparing IV ketamine to SPRAVATO that we will share in our next quarterly earnings call. Why is there a supply shortage of ketamine, and why will it get worse without us? Ketamine for injection has been on the national drug shortage list since February 2018.

According to the American Society of Health-System Pharmacists, as of this month, all six ketamine manufacturers have at least one presentation of their product back-ordered, intermittent, or on allocation, and some manufacturers have recently discontinued production altogether. The Secretary of Health and the FDA commissioner have identified ketamine as a strategic drug whose supply in the United States must be assured. As I mentioned, most of today's supply comes from overseas and is made the traditional way in glass bottles. That labor-intensive process has not been economically viable in the United States for decades. We can package 1 million doses of ketamine using blow-fill-seal technology in about the same time as a glass bottling line can package 10,000 to 50,000 doses. More importantly, we do not have to buy pharmaceutical-grade glass bottles and stoppers, which are frequently in short supply and have quality problems of their own.

All we need to buy is a few plastic pellets and let the machines do the rest. Our belief is that the reason for the shortage of ketamine and other old injectable products is that manufacturing costs have risen to the point where suppliers are somewhat indifferent about supplying and are reallocating their manufacturing capacity to biologics and other high-margin products. This has created a unique commercial opportunity for us together with our partners. Preservative-free ketamine is made in West Columbia, South Carolina, by our partners at Nephron Pharmaceuticals on high-speed blow-fill-seal lines with no glass. You might ask, "Why won't the rest of the world copy us?" Well, certainly some will, but the innovative Luer lock tip that enables the process is proprietary. The technology cost is high, the skill set required to implement the technology is higher, and we have a head start.