Okay, we're live. Good morning, everyone. Thank you for joining us on the third day of Cantor's Healthcare Conference. I am Imogen Mansfield. I am one of the biotech analysts here, and I am delighted to be joined by Jonathan Javitt, the CEO of NRx Pharmaceuticals. Welcome, Jonathan.
Thank you, Imogen.
To get us started, there are a lot of moving pieces with NRx, so could you help navigate us with how they all fit together, and give us an overview of the company?
Well, I think it is important to start out with the context. Just as we are observing the 25th anniversary of 9/11, in my case, this is the anniversary of the moment where my closest friend came to me actually in synagogue during Yom Kippur, told me he was having an episode of depression.
That he was going to be seeing one of the top psychiatrists in the country that week, and just wanted me to be involved. Called me up a few days later, told me, "Guy's brilliant. Really understands me. Started me on Zoloft , told me I'm going to be fine." I kind of put that in the category of, okay, he's going to be fine. Well, later that week, he went up to Harvard, was invited to give the endowed lecture everybody dreams of giving. Came back to Pittsburgh, kind of crashed from that high. Went to see the brilliant psychiatrist who was off giving his own named lecture. He saw the junior guy, and junior guy said, "You know, this Zoloft isn't working well enough. Let's triple the dose and see what happens." What happened was he went home and hanged himself.
That's probably one of the two most shocking things I've seen in my life as a physician.
The only other time I was that shocked and surprised by a medical outcome was somebody I was involved in treating as a medical student who came in with acute myeloblastic leukemia. We gave him chemotherapy, and three weeks later, he was dead from sepsis. At the same time as this happened, my brother Dan was just starting a clinical trial based on work he'd started in the 1980s on the NMDA receptor in the brain. In that clinical trial, they discovered the role of D-cycloserine in mediating the NMDA receptor, decreasing depression and suicidality. I assumed that invention would be snapped up by Big Pharma and would turn into a drug right away, and instead, Big Pharma basically ran away from psychiatry and is only now coming back. So in 2015, we started NRx Pharmaceuticals really around those patents, around D-cycloserine and its effect on suicidal depression.
That's the genesis of our drug, NRX-101. Well, I had no idea where this adventure would lead in that process. One thing it did was led us into a COVID pandemic that put our whole psychiatry program on ice for the better part of three years. But ultimately, as we emerged from that, we already knew that NRX-101 works better after a dose of ketamine.
We had an agreement with the FDA saying that they would allow us to give it after a dose of ketamine. We went back to the FDA and met with them after COVID, and they said, "Well, you know what? We think that if you are going to do that, you have got to change the label on ketamine so that ketamine can be used in this application." You cannot actually change the label on somebody else's drug. Ketamine was owned by Par Pharmaceutical. We had to start our own ketamine. We actually had to become a drug manufacturer and make ketamine, which we have done.
That has led us to KETAFREE.
It led us to realize that there was a toxic preservative in everybody else's ketamine, and we ought to fix that along the way. It also led us to realize that drugs alone are not going to solve this problem. Yes, it is great to modulate the NMDA receptor, which is what all the drugs we are working on do. It is great to modulate the 5-HT2A receptor, and that is Caplyta and that whole family of drugs. But it has become very obvious that it is not sufficient, that you really have to add other modalities, and probably the next modality that is becoming mainstream is transcranial magnetic stimulation.
Although NRx has remained at its core a pharmaceutical development company, we started this adventure called HOPE Therapeutics, where we own clinics, we are involved in developing technologies, and you just saw a press release this morning showing that our team, together with the people at Zeta Robotics, Zeta Surgical, are demonstrating the first robotic-enabled neuro navigated TMS. People may say that is science fiction. The nice thing about science fiction is DARPA, the Defense Advanced Research Projects Agency, is in the business of funding science fiction. They funded this crazy thing that turned into the internet. They funded other crazy stuff that turned into the first simulation. In fact, the DARPA program officer who funded that back when he was a navy lieutenant commander ultimately left as a three-star and is our president of NRx Defense Systems.
That press release that you saw this morning talking about NRx and Robotic TMS is all in preparation for a program that we are kicking off with the military. It is going to be 240 patients treated in civilian settings, between 140 and 160 patients treated in military treatment facilities. You may say, "Well, why does the military suddenly care about depression?" The military has to care about depression. People exposed to combat are four times more likely to have depression and PTSD than civilians. It used to be, well, okay, you have depression, you have PTSD, you are suicidal, you are going to be out of the military in two weeks. That just does not work anymore. It does not work for people, and it does not work for the mission. Because a unit that is down 10% in strength is not combat deployable.
If you have a special forces operator who has got depression, you cannot just send him to the VA and go get yourself another one. You are talking about somebody who takes five years to train. Aside from not being kind to people, it is just not consistent with what we need to achieve. All of a sudden, the possibility of a one-day treatment with Robotic Neuro-N avigated TMS and our drug D-cycloserine lurasidone, NRX-101, becomes mission critical for one of the largest organizations in the U.S., namely the U.S. military. That is really what the preliminary data show. The preliminary data suggest, and these have been unrandomized trials, unblinded trials, that if you treat with a full day of transcranial magnetic stimulation, sort of 20 sessions in a day, combined with NRX-101, or they actually use generic D-cycloserine, you can find perhaps a 50% reduction in depression that lasts.
You will start to see the effect in a couple of weeks, and it lasts over months. We do not yet know whether it lasts over years. But in that process, it has become clear to us and clear to others that all TMS is not created alike. There have been some market disasters with large strings of transcranial magnetic stimulation clinics. They are littering the Nasdaq right now, where you have got a technician who kind of knows where the motor strip in the brain is by trial and error.
You give some impulses and wait to see the thumb move, and you think you are at the motor strip, and based on that, you say, "Well, let us arbitrarily go four centimeters in front of the motor strip and aim there." That is like hunting around in the dark with a flashlight compared to doing MRI guided neuro navigation, where now we have a robot that replaces that technician, and delivers the impulse to where the MRI points with sub-millimeter precision. On one hand, you could say we are doing an awful lot, and maybe we are doing too much. On the other hand, we are very focused on what are the things that are going to make us a profitable pharmaceutical company and start to deliver for our shareholders. The lowest hanging fruit for us right now is what we call KETAFREE.
That may or may not be the product name when it comes to market. KETAFREE is preservative-free ketamine using the same label as ketamine has been sold since the 1970s. Ketamine is approved for anesthesia, it is approved for pain control. That is all it is approved for. All these other uses are not approved. That does not mean they cannot be given. They are given in our clinic. It means that they cannot be reimbursed by insurance. Intravenous ketamine has shown over and over again that it has an incredibly potent effect in reducing depression and reducing suicidality.
On the other hand, the only people who can get it are either people who can write a check and pay cash, and it tends to cost about $500 an infusion. People want it, people keep coming back because it works, but it limits the number of people who have access to it.
The other people who have access to it are people in the VA and people who have military benefits because those organizations know it works. They are not willing to wait for FDA labeling. They are paying for it for their people because it works. The second thing we are doing is we are bringing the real-world evidence around ketamine to the FDA in order to put a label for treating depression, suicidality on our ketamine. That is what we call NRX-100. An approval of that will enable people to get intravenous ketamine with insurance reimbursement. It probably increases the addressable market by 20-fold.
In those discussions, have the FDA given you any indication of the likelihood that that could happen?
I can tell you that in those discussions, the director of the FDA Center for Drugs has come and sat down in the psychiatry division with us. The director of the FDA Office of Neurosciences has come down and sat in the psychiatry division with us, and they have expressed very strong commitment to finding a way to get an approval based on real-world evidence.
President Trump has signed an executive order saying that real-world evidence should be used for this drug approval. The Agricultural Appropriations Committee of the U.S. House of Representatives, who you wouldn't think would necessarily have a big opinion about this, except it turns out that the Agricultural Appropriations Committee of the U.S. House of Representatives funds the FDA. FDA's under their budget because most people forget it's the Food and Drug Administration. They've written budget language into the FDA's budget guiding the FDA to use real-world evidence to approve ketamine.
Let's talk a bit more about what makes KETAFREE different to other formulations of ketamine. Tell us about this experience you had of finding out that there was a preservative in ketamine, and the evidence behind that.
Again, when we founded NRx, I never had any intention of manufacturing ketamine. I figured we'd buy it, and we'd use it. Then the FDA said, "Well, you need to have a label on ketamine that says it's appropriate for depression and suicidality, and the only way to do that is to make your own." We went to our friends at Nephron Pharmaceuticals, asked them to make us some ketamine, and we looked at the batch records, and we noticed that they'd put a preservative, Benzethonium chloride, into it. We said, "Well, what's that doing there?
We didn't put that in the ingredients." They said, "Well, everybody knows you need Benzethonium chloride as an excipient in order to keep the ketamine in solution." I said, "Well, I recognize that ingredient." In fact, back in 1995, and this is the advantage of being one of the oldest CEOs in biotechnology. Back in 1995, people at the Wilmer Eye Institute asked the question, "Well, why does everybody with glaucoma have dry eye?" It turned out that it was the Benzalkonium chloride in all the eye drops. It was a preservative that was being put into eye drops because you're always touching the dropper to your skin and getting bugs into the bottle. That Benzalkonium chloride poisons the goblet cell in the conjunctival epithelium.
Yeah.
That sounds like a lot of words, but that cell is the cell that makes the lipid layer of tears.
If that cell's not working, you have dry eye syndrome, and the tears roll down your cheek.
Yep.
I said, "Well, gee, I know about those preservatives, and they don't really do very good things for people." I said, "Well, we shouldn't have that in our drug." And they said, "Well, you have to have it because otherwise it'll fall out of solution." I said, "Do you know what? It's our money. Let's just try it without." And three years later, a preservative-free ketamine is rock solid stable. And it's a product.
Yeah
That's hopefully about to get approval.
Mm-hmm. I guess just on the toxicities there, you talked about dry eye and the issues with Benzethonium chloride there. People are hopefully not putting ketamine in their eyes, but there are other issues associated with this.
Well, so, yeah.
Could you tell us about that?
The fun thing about the human body is the creator reuses the same cells all over the place, and one of the other places you find those epithelial cells is the bladder. The bladder is lined with cells that are almost identical to the cells that line the conjunctiva of the eye. Yes, you have never seen dry eye syndrome in somebody getting ketamine, but what you do see in people getting ketamine is a condition called Interstitial cystitis. It is well-recognized, and it is very hard to treat. We know that ketamine does not cause interstitial cystitis, does not harm epithelial cells, and we know that Benzethonium chloride does directly harm epithelial cells.
What we have done is we filed a citizen petition with the Secretary of Health and Human Services saying, "The law says that you cannot have unsafe ingredients in foods and drugs." Actually, the law says that everything in a food or a drug has to be safe. That is part of what the MAHA movement is all about. Benzethonium chloride is known to be unsafe to the point where FDA has barred its use in hand cleansers and topical antiseptics. The notion that it ought to be injected intravenously into human beings is just kind of ridiculous. If you are an investor and you are saying, "Well, why does this stuff matter?" Sure, the preservative-free part is important because if our citizen petition is granted, the people who are currently selling ketamine with a toxic preservative in it will have to reformulate.
There will probably be some period of time where we have access to a bigger piece of that generic market than we might otherwise.
Is there any protection that you have over that preservative-free formulation?
We do have a patent pending, and the patent may be issued.
Once the patent's issued, people will attack it, and either we'll prevail or they'll prevail.
I've never been of the strong belief that patents are great protection in the marketplace. At the same time, just the fact that we're out ahead.
Yep.
If you want to sell a sterile injectable product, you've got to formulate it, then you've got to put it up for stability. FDA wants to see two years of real-time stability.
Yep.
Automatically, you've built yourself a period where you're out ahead of the market. By the time they catch up to us, we're going to be doing very different things.
Yeah.
For instance, there's no question that intravenous ketamine is magic. There's no question that Intravenous ketamine is far more effective than placebo in reducing depression. It seems to have a better effect in real-world evidence than nasal ketamine, and it's non-inferior to electroshock. On the other hand, as somebody who now is in the business, who owns clinics, my provider number as a doctor is actually on some of those clinics because of Florida's laws. Hiring IV nurses, hiring nurse anesthetists to supervise intravenous ketamine is not an easy thing to do, and I'm not convinced that it's nearly as scalable as the world seems to think. We're already working on non-intravenous methods of delivering parental ketamine. It's not going to be through the nose.
Ketamine nose spray works to some degree, but it's a big blast of ketamine.
It does not give you the steady state blood levels you want. Oral ketamine is never going to work because absorption through the stomach is so variable from person to person.
Metabolism in the liver is variable from person to person. It is just not the right route of administration. The problem with subcutaneous ketamine is ketamine is highly acid. It has a pH of 3, so you cannot give ketamine as it is currently manufactured by a subcutaneous route. It is very painful, and it causes skin ulcers. The FDA has a law against giving anything that is below pH 4
Subcutaneously. What we have done is we have actually formulated a pH neutral form of ketamine that could actually be given by something like an insulin pump. All of a sudden, no intravenous route of administration, no IV nurses in the clinic, no nurse anesthetists.
You cannot hire a nurse anesthetist today for less than $2,000 a day.
The labor market is gone crazy.
If this is going to become a widespread therapy, it's probably going to be by a different route of administration. By the time people copy our preservative-free ketamine we'll be doing the next thing.
Let's just ask a little bit more about this before we move on to NRX-101. What's the current status of the FDA review of KETAFREE? What's happened so far, and when could we hear more on this?
What we've told the shareholders is that the FDA has had only what they call minor deficiencies around everything to do with the drug, the ingredients, its formulation, its stability, its sterility, its purity, its potency. All of that's fine. Then at the last minute in June, a reviewer at the FDA twisted the top off one of our vials and said, without reference to any outside standard, "Well, this looks too pliable. It could be a risk to patient safety." We went back, and she closed out the review cycle.
We went back to FDA and said, "Well, okay, we understand that that observation was made, but by the way, you've approved this vial three different times in three other drugs, one of them as recently as last June, the same month." Our abbreviated new drug application contains 3,868 tested vials because what we do is, as we're manufacturing, test lots are currently taken off the manufacturing line and tested by a human being for opening strength and their alignment with the syringe. One thing to understand about our vial is it's very different from the typical glass vial, and that has a lot to do with our unit economics. Typically, these drugs are sold in glass vials with a rubber stopper. You put a needle on a syringe, you put the needle through the stopper, you draw up your drug.
Take the needle off, put another needle on, give it to the patient. It's a cumbersome process, the process that generates a lot of medical waste. It's a process that leads to needle stick injuries in hospitals every day. We have a vial that's made on a blow-fill-seal machine. There's no glass. As a result, you basically take some plastic pellets, melt them down, blow them into the shape of a vial, fill the vial, seal the vial, label the vial, package the vial, all without any human hands touching it. These lines that we've put together with Nephron Pharmaceuticals can produce a million units of our ketamine in the same time that a standard bottling line could produce 10,000 units.
We went to FDA and said, "Hey, here's 3,868 tested vials." We have a torque measure. Torque and pliability are kind of the same thing. We have a torque measure that's set by ISO standards. All of this is governed under medical device design controls. There have been zero failures on any of the 3,868 vials tested, and 11.5 million units using this vial were shipped in the last 12 months with no returns, no complaints, no recalls, no reported adverse events. We think this is kind of a pretty proven container for a sterile injectable product. We took that to a higher level at FDA, and we're expecting an answer mid-October.
Okay.
We're still optimistic that we're launching this drug on time because we're convinced that we've got a safe and properly manufactured drug.
And if you are able to secure approval, would you commercialize this with a sales force, or what will be the process there to trying to tap some of this? You've talked about the $750 million market today.
Yes.
For ketamine before.
We brought on a commercial team. We're in the process of engaging the market. Ketamine is in drug shortage. It's almost unheard of for hospitals to have to go buy stuff from compounding pharmacies because they can't buy an FDA-approved drug. Ketamine's one of those drugs. The problem is that the ketamine supply is coming from China, it's coming from India. The price is fixed at a fairly low price, and therefore, the generic manufacturers have no margin left. To the best of our research, a glass vial filled with ketamine, by the time it's cleared customs in the U.S., costs the manufacturer about three bucks.
Well, yeah, if you're selling for five and you're manufacturing for three, you're kind of working between the wall and the wallpaper in terms of having any kind of commercial margin.
Well, without revealing too much about the secret sauce in the company, the cost of goods when you're manufacturing on a blow-fill-seal line, you're not paying for glass, you're not washing glass, you're not bottling glass, you're not stoppering glass, you're not putting a crimp cap on glass, is far lower than that. All of a sudden, you have the potential to bring generic drug manufacture back to the U.S. But also, you have the ability to say to hospitals, and to other high-volume users of ketamine, because most ketamine is not used for treating depression. Most ketamine is used for anesthesia and pain control and all that stuff they do in hospitals. You have the ability to set up long-term supply agreements and guarantee hospitals a stable source of supply.
Our market research says that hospitals are more interested in being guaranteed stable sources of supply, than they are in price. That doesn't mean that hospitals aren't very interested in price. Of course, they are. But on the other hand, if you have to cancel a surgery because you don't have any ketamine, that's a real problem.
Yeah. In the last few minutes here, let's spend some more time on NRX-101. Tell us about this combo of D-cycloserine and lurasidone. What have you found in phase II studies, and what are the gating steps to moving that forward into phase III?
NRX-101 was originally conceived of as a drug for treating suicidal bipolar depression. That was my brother Dan's original idea, and it's still a brilliant idea. Along the way, we discovered that it's a potent neuroplasticizer in combination with transcranial magnetic stimulation.
That is the study that is on clinicaltrials.gov.
Yeah.
We are talking to DARPA, and we have been selected as the prime contractor.
The original intent is still alive and well. We have two phase II trials, both of which show that NRX-101 compared to lurasidone alone, decreases suicidality and decreases akathisia, which is a word that most people do not think about, but it is probably the reason most people who are on SSRIs who commit suicide, commit suicide. Akathisia is a well-understood biological phenomenon where you have this irresistible need to move, to do something. People who suffer from akathisia because they have taken a drug that causes it, say, like they feel they are jumping out of their skins. We had a founding investor who went over the railing of his balcony. Somebody who had been sort of the happiest person anybody knew, but developed an episode of depression, was treated with a drug called Mirtazapine, which is well-known to cause akathisia, just like every other oral antidepressant.
Within two days, went over his balcony railing.
We have what we believe is the first drug that has ever been shown to decrease akathisia.
Yeah.
Caplyta is approved, with a label that says it causes less akathisia than other 5-HT2A antagonists.
D-cycloserine is the first drug that has been shown to decrease akathisia.
First drug that has been shown to decrease suicidal ideation.
Yeah.
Our plan and our notion's been we're going to get ketamine on the market.
We're going to become a profitable company.
Probably mid next year. Get ketamine on the market now.
Yeah.
But start to show profit in our quarterly reports by mid next year.
Use that to finance a phase III registration trial in NRX-101 versus placebo, because we think that this will be a highly desirable oral antidepressant.
Before we finish, let's just quickly touch on the HOPE clinics because we haven't talked about those. How many centers do you have open at the moment?
At this moment, we've got six in Florida.
We have active negotiations in a couple of Midwestern states. We originally planned to do a much larger, much more rapid acquisition, and what we saw around us was just carnage.
We saw the Greenbrook clinics run into. This is public information, so I am not telling tales out of school. Run into real financial difficulties.
We realized that until you come up with a reproducible way of delivering accurate TMS, you are not ready to scale. The Magnus Medical people have shown that neuro navigated TMS produces very different results than your sort of guess and aim type of TMS.
Until you figure out a way to roll out precision TMS, in a way that is reproducible and reliable and affordable, you do not go out and buy 100 clinics.
Yep.
That is what we are building.
Well, lots going on and lots coming up quite soon, potentially. Thank you so much, Jonathan, for coming to talk to us today. That is all we have time for.
Well, thank you.
Great. Bye.