Matthew Duffy; Chief Business Officer; NRX Pharmaceuticals Inc
Jonathan Javitt; Chief Scientist, Director; NRX Pharmaceuticals Inc
Michael Abrams; Chief Financial Officer; NRX Pharmaceuticals Inc
Jason Kolbert; Analyst; D. Boral Capital LLC
Thomas Shrader; Analyst; BTIG, LLC
Vernon Bernardino; Analyst; H.C. Wainwright & Co., LLC
Edward Woo; Analyst; Ascendiant Capital Markets, LLC
Operator
Good morning, ladies and gentlemen, and welcome to the NRx Pharmaceuticals 4Q and full year 2024 earnings call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question-and-answer session. (Operator Instructions)This call is being recorded on Monday, March 17, 2025.
I would now like to turn the conference over to Matthew Duffy, Chief Business Officer. Please go ahead.
Matthew Duffy
Thank you, Joelle, and good morning, everyone. Welcome to our call. Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under US Federal Securities Laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.
Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports filed with the Securities and Exchange Commission. The forward-looking statements made during this call speak only as of the day hereof, and the company undertakes no obligation to update or revise the forward looking statements.
Information presented on this call is contained in the press release issued this morning and the company’s Form 10-K, which was filed on Friday and may be accessed from the Investor page of the NRx Pharmaceuticals, Inc. website.
Joining me today on the call are Jonathan Javitt, our Founder, Chairman and CEO; and Michael Abrams, our Chief Financial Officer. Dr. Javitt will provide an overview of our company’s progress as reported in the 10-K and in the press release, following which Mike will review the company’s financial results. Following our prepared remarks, we will address investor questions.
I will now turn the call over to Jonathan. Jonathan?
Jonathan Javitt
Thank you, Matt. Good morning, everyone. Thank you for joining us. As you know, the Board asked me to assume leadership of NRx five months ago and to chart a path forward in the context of a capital market environment that’s been less than supportive of pre revenue biotechnology company.
Over the past five months, we’ve raised new capital, retired toxic debt and begun executing on a path that leads our enterprise from a purely research and development focused company to a healthcare company that has potential to generate revenue and look forward to profit by the end of 2025. We believe that’s rare among small cap biotech companies. At NRx, we continue to be driven by our mission to treat and prevent suicidality, depression, PTSD, and related disorders.
While our mission has not changed, our path to revenue has advanced. Moreover, the US government and particularly the new administration has expressed increased commitment to the treatment of these lethal conditions with the class of medicines and clinical approaches that are central to our business. NRx Incorporated now owns two operating entities, the original NeuroRx business and the newly created HOPE Therapeutics.
All drugs under development are owned by NRx, while HOPE is focused on delivering clinical care. Under the original NeuroRx business, we’ve initiated filing of a New Drug Application or NDA for NRX-100, our preservative free intravenous ketamine based on stability data that support more than two years of room temperature shelf stability. We have proven manufacturing capacity to supply more than 1 million doses per month should we gain FDA approval.
We believe the strategic term sheet we have received to acquire this product for more than $300 million in total milestones and a double-digit royalty provides further validation of our drug development approach. NeuroRx is further preparing an accelerated NDA filing for NRX-101, a fixed dose combination of D-cycloserine and lurasidone with the anticipation that we will initiate an NDA filing in the coming quarter under accelerated approval.
Last year, we incorporated HOPE Therapeutics as a wholly owned subsidiary and began refining its mission. Simply put, NeuroRx will continue developing life-saving drugs, while HOPE will own clinics to treat patients with depression, PTSD and other life-saving — life threatening brain diseases with a combination of drugs, medical devices, digital therapeutics and integrated psychiatric care.
Those wishing to understand the mission of HOPE may gain insight from our presentation at the Sachs Biotechnology Innovation Forum cited in our annual report. In the past ten years, treatment of these diseases has transformed from a hopeless world in which psychiatric hospitalization, electroshock therapy and frequently ineffective drugs were the only alternatives for patients contemplating suicide to a world in which clinical success is being reported routinely in the public arena and being demonstrated in a number of well controlled clinical trials published in first tier journals.
However, the totality of evidence as we see it suggests that no single treatment will yield the long term remission from the disease that Winston Churchill called his black dog, a disease that claims the life of well more than 500,000 Americans each year. The totality of evidence suggests that many patients require a combination of NMDA antagonist drugs or perhaps newer psychedelic therapies when they’re approved, plus neuromodulatory therapies such as transcranial magnetic stimulation to achieve long term remission.
All of these approaches are believed to work by a common pathway, namely raising the level of glutamate and other beneficial chemicals in the brain and causing the brain to form new healthy connections, otherwise known as synapses. HOPE has signed nonbinding letters of intent to acquire three already profitable interventional psychiatry clinics.
Our pipeline includes a number of additional clinics in Florida with whom we’re in negotiation, as well as additional clinic groups in other geographies. We’re in the process of drafting definitive acquisition documents and navigating the complexities of purchasing medical treatment facilities under state regulations. We’re dedicated to building a company that will bring life-saving treatments to patients and financial returns to our investors.
Let’s look at these programs in more detail. Suicidality is a national epidemic. Approximately 3.8 million Americans make an active plan to commit suicide each year according to the CDC. An American dies from suicide every 11 minutes and worldwide, somebody dies from suicide every minute. Today, we are faced with a system where all patients who need life-saving precision psychiatry care with ketamine and other therapies are not routinely able to get it. Ketamine, for example, is available today almost exclusively to those who can afford to pay out of pocket and will remain so until FDA approval of ketamine for treating suicidal depression is obtained.
We’ve initiated filing of our NDA for NRX-100, our intravenous preservative free ketamine in the treatment of suicidal depression, an indication with no approved pharmacotherapies. This NDA is supported with efficacy data from multiple well controlled trials. As identified in our 10-K, we’ve accepted nonbinding potential terms from a commercial pharmaceutical company to license and distribute NRX-100 valued at potentially more than $300 million in milestones, plus a tiered double digit royalty.
The issue of ketamine safety is one that will garner increased attention as the repeated use of ketamine becomes more widespread. Data from both primate and human studies show that repeated ketamine doses on the order of 60 doses or more of the currently available commercial intravenous ketamine may be toxic to the brain.
The currently available ketamine preparation was designed for single use of the product in anesthesia. Ketamine is currently sold in a multi-dose vial where it was anticipated that doctors would draw from the same vial for multiple doses. Back in the 1960s when this preparation was formulated, it was manufactured with a potentially toxic preservative, benzethonium chloride.
While there’s no evidence that benzethonium chloride is toxic at its current concentration for the intended use in anesthesia, its safety has never been shown or even proposed for repeated use. The manufacturers of benzethonium chloride identify it as caustic, toxic, and capable of causing severe burns. This class of preservatives has increasingly been removed from eyedrops because of clear evidence of toxicity to the cornea and conjunctiva, even at the currently allowed levels.
Chronic use of ketamine is associated in the literature with ulcerative cystitis, a dangerous bladder condition. This condition may be caused by the excretion of the preservative rather than by ketamine itself. Notably, there are no cases reported of interstitial cystitis following the use of SPRAVATO, a nasal form of S-ketamine that does not contain benzethonium chloride. Accordingly, we are filing a citizen’s petition with the FDA to remove ketamine preparations with benzethonium chloride from the market until it can be shown safe for repeated use.
In light of our success in achieving long-term stability with preservative-free ketamine, the company is also filing an abbreviated NDA or ANDA for preservative free ketamine for all currently approved human and veterinary uses of intravenous ketamine. Hence, although we will never lose sight of our core mission to treat lethal CNS diseases, including suicidal depression and PTSD, the market for NRX-100 may be far larger than originally anticipated.
We have current manufacturing capability to supply 1 million vials of ketamine per month with the potential to scale up if needed. The toxic preservative is not the only challenge with the old Vietnam-era ketamine formulation. It’s supplied at a pH of less than four, which can be administered intravenously, but cannot be injected subcutaneously because it causes pain and may cause skin ulcers.
If you raise the pH, ketamine precipitates out of solution. Those who have tried to give ketamine by mouth have learned that the resulting blood levels can be highly inconsistent. Similar problems have occurred with ketamine nose spread. While intravenous administration is completely reliable in achieving intended blood levels, this mode of administration requires skilled nurses in clinic facilities.
An attractive alternative is to give ketamine subcutaneously in the same way that insulin and newer obesity drugs are given. That route of administration is only enabled by a pH neutral form of ketamine. We’ve now developed a patentable version of pH neutral ketamine that remains stable at room temperature and are — HTX-100 and we expect to begin human bioequivalence studies this year.
As is well known, bioequivalence is far simpler and less expensive to prove than safety and efficacy. If we are successful in gaining FDA approval for NRX-100, we have the potential to expand the number of patients who currently benefit from this form of care many-fold. The current off-label use of ketamine in brain disorders is generally only available to patients who can pay out of pocket.
We expect NRX-100, once approved, to be widely reimbursed, thus providing access to the vast majority of people in need, not just those with the means to spend thousands of dollars in cash for treatment. NRX-100 represents a major opportunity for our company given the current market for intranasal S-ketamine, J&J’s SPRAVATO, which is already approximately $1 billion. And the label states that it has not demonstrated anti-suicidal properties.
Now let’s discuss NRX-101, our oral combination of cycloserine and NMDA receptor blocker and lurasidone, the standard of care in bipolar depression. Bipolar depression affects approximately 7 million people in the US. Current treatment options all carry the risk of suicide and akathisia, a side effect of serotonin active antidepressants, which is closely related to suicide. People with bipolar depression and akathisia or suicidality are at imminent risk of self-harm. These patients need better treatment options urgently.
NRX-101 could represent a paradigm-changing breakthrough in the care of bipolar depression. In clinical trials, we’ve demonstrated comparable antidepressant effect to the leading antidepressant in this space with a statistically significant improvement in the safety of NRX-101 when compared to the standard of care, that is lurasidone.
In our recently completed clinical trial presented at the American Society of Clinical Psychopharmacology, NRX-101 demonstrated a comparable ability to reduce symptoms of depression when compared to lurasidone. Critically, NRX-101 demonstrated a reduction in symptoms of suicidality and is the first oral antidepressant to reduce symptoms of akathisia, a potentially lethal side effect of nearly all antidepressants. This could represent a new paradigm for treatment of bipolar depression.
You may not have encountered the word akathisia before. However, key opinion leaders and patients who have suffered from akathisia regarded it as the worst side effect of antidepressants. Patients frequently describe it as a feeling of jumping out of their skin. Patients with akathisia are known to jump off roofs and in front of oncoming trains.
Recently, a patient petitioned the British Columbia Supreme Court for the right to end her life rather than continue to suffer from akathisia. Patients have simply had to endure this side effect in order to achieve the critical antidepressant effects that are needed to control bipolar depression. The data we presented at ASCP confirms data from our earlier STABIL-B trial demonstrating that NRX-101 is the first oral antidepressant to have effective antidepressant properties, while simultaneously decreasing akathisia in suicidality.
We believe this product profile could lead to NRX-101 becoming the drug of choice in bipolar depression. We’re initiating the filing of an NDA for accelerated approval of NRX-101 for suicidal bipolar depression on patients at risk of akathisia. Given our strong data and the lack of treatment options for this group of people with bipolar depression, we and our regulatory council believe this to be a vital, unmet need and appropriate for consideration of accelerated approval. We plan to initiate filing in the early second quarter and anticipate a 2025 PDUFA date.
The company estimates that the market for the initial indication is over $2 billion, while the broad bipolar market could exceed $5 billion. We’ve made substantial progress with HOPE Therapeutics in recent months. During the second half of 2024, we began outlining the plan for HOPE Therapeutics as a national and ultimately international network of interventional psychiatry centers that would combine neuroplastic treatments in an integrated and reproducible manner.
The business model for HOPE Therapeutics is analogous to that of companies who have been instrumental in making kidney dialysis reliable and reproducible in a manner that transformed the industry. We’ve learned that ketamine alone is not sufficient to maintain remission from suicidality in many patients with depression and PTSD.
In clinical settings, ketamine has rapidly achieved a 50% reduction in suicidal ideation in numerous trials and real-world settings. This magnitude and rapidity of effect is a dramatic improvement from the prior 50 years of experience with SSRI and other serotonin-targeted antidepressants. The critical element is maintaining and enhancing the ketamine effect. This will, in our view, require a full range of additional therapies.
In the fourth quarter, we announced our first major move to implement the HOPE business plan when we announced the signing of a non-binding letter of intent to acquire Kadima, LLC, a pioneering interventional psychiatry clinic in La Jolla, California. Kadima’s founder, Dr. David Feifel, agreed to serve as HOPE’s Chief Medical Innovation Officer post-acquisition and you heard his presentation with me at the SACS Forum.
He is one of the first academic psychiatrists to move ketamine and TMS therapy to the community care model and is frequently featured in the national media such as Rolling Stone and on Peacock as one of the most knowledgeable experts in the safe and appropriate use of ketamine and other advanced therapies in mental health treatment.
Subsequent to the Kadima commitment, the company was poised to contract to acquire and partner with nine facilities in Florida, aiming for 15 to 20 facilities in Florida by year-end 2025. The clinical centers that are being incorporated in this acquisition program are revenue generating and EBITDA positive centers that the company believes can experience substantial revenue growth through the addition of a broader array of comprehensive services.
Looking at the market, we estimate that the acquisition of 20 clinic networks, each with current revenue of approximately $5 million, will be required to meet the 2025 growth target. On the financial front, the best-in-class clinics currently generates operating margins of around 30%, with significant opportunities for further growth.
We expect funding for HOPE to be independent of and thus non-dilutive to NRx shareholders. However, we expect that a portion of the earnings generated through HOPE will support NRx’s path to profitability and support our planned path to a spin-out of the company and subsequent listing on a national stock exchange.
Further, we recently announced the closing of our third tranche of funding from Anson Funds, an institutional investor bringing the total amount of financing to nearly $20 million. We anticipate that HOPE Clinics will be financed by traditional bank loans, supplemented by private equity and strategic lenders.
We recently received a term sheet from a manufacturer of TMS technology to supplement funding from banks and similar financial institutions. As you’ve seen in our 10-K, we’ve substantially reduced operating expenses and are forecasting profitability on a going forward run rate basis by the end of 2025 with revenue and EBITDA from HOPE Therapeutics, along with projected sales of our medications.
My first action when the board asked me to assume the leadership of NRx was to invite Mr. Michael Abrams to become our first full-time CFO. Mike has decades of experience as an investment banker, biotechnology executive, and Chief Financial Officer. He stepped into NRx just two months before the end of the fiscal year and achieved his first audit on time and with no material concerns raised by the auditors.
Now I would like Mike to review our financial results from 2024. Michael?
