Hello, this is the 60 Degrees Pharma webinar. We'll be getting started at 3:15 P.M.
Hi, Geoff. This is Craig from RedChip. Can you hear me?
Yeah, all right. Can you see me and hear me okay?
I sure do, Geoff. Loud and clear. I see your background. Yeah, everything's fine. Can we try your presentation now to make sure that we can see that?
Yeah. Okay. Is that looking okay?
Yeah. Now you've put it in presentation mode. That's exactly what we're looking for. You might want to turn it to the page you're going to start on. I suppose you're going to be the only person from the company being on today?
I am, yeah.
Okay. Since we've completed our visual check as well as our sound check and deck check, you can leave your deck up. You can mute your line and turn off your video. At 4:14 P.M. Eastern, I will give the one-minute warning. At 4:15 P.M., I will start the webinar by introducing you and giving the safe harbor. You will begin. We'll take questions. Usually, Geoff, as you probably know, we wrap up by the top of the hour, 45 minutes. That should be just fine. Does that sound good?
Yeah, that sounds great.
Excellent. I'll see you in a few minutes, Geoff. Thank you. We already have people joining today's webinar. Yes, this is the 60 Degrees Pharma webinar. We'll be getting started in less than four minutes at 15 after the hour. Thank you.
Hey, Craig, my
Yes, Geoff. Hi.
I don't seem to be able to advance the slides anymore. Maybe I will.
Are you able to advance them on your own local computer?
No. No.
Okay, likely a problem.
I'm going to try sharing again.
Yeah. Let's just do that. More persons have joined. You've reached the 60 Degrees Pharma webinar, and we'll be getting started in less than three minutes now at 15 after the hour. Okay. Working now. Good. Looks great, Geoff. Yep. Good. Thanks. We'll be on very shortly now. This is the 60 Degrees Pharma webinar. We'll be getting started in one minute. Hello, everyone. This is Craig with RedChip Companies. Thank you for joining today's event with 60 Degrees Pharmaceuticals, which trades on the NASDAQ under the ticker SXTP. With us today, we have Geoffrey Dow, the Chief Executive, President, and Director of 60 Degrees Pharmaceuticals. We will begin with a brief presentation in a moment, and then we'll open up this event to your questions. I will keep everyone's lines muted throughout the presentation.
Users may ask a question at any time by using the Q&A tool at the bottom of the Zoom window. Before we begin, please allow me to read the safe harbor statement. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements. Any statements that are not historical fact should also be considered forward-looking statements. Of course, forward-looking statements involve risks and uncertainties. I now turn this webinar over to Geoff. Please go ahead.
Thank you, Craig, and thanks to everyone on the call listening in. I appreciate your time today. I'm going to do a short presentation focused on some key high-level issues, and then there'll be time for questions. For those of you who are not familiar with our story, we have a single FDA-approved product called ARAKODA for malaria prevention available in the U.S. commercial market. We have a market cap that doesn't match that historical record of achievement and success. What I'm going to share today is our plan to get to a longer-term market cap that's more appropriate for a company that's successfully been through the FDA-approved process as a commercial stage biotech company. This is the history of our gross sales of ARAKODA since the approval of the product or its entry into the U.S. market in late 2019.
For the first year or so after the FDA approval and commercial availability, we were stuck with the COVID pandemic, which you're all familiar with. The main customers for ARAKODA, which is a travel medicine product to prevent malaria, weren't using it because there was no travel. We never formally launched ARAKODA in the way that you normally would. I'll return to that point later in the presentation. As the pandemic started to wane, we started to get calls from patients with what, to us at the time, were quite an unusual cluster of symptoms, including chronic fatigue, cognitive dysfunction, and various other issues. To our surprise, those calls trying to access ARAKODA continued to increase over time.
When we did a look back about two years ago to assess what was going on here, it turned out that most of our sales to date had been off-label for a disease called chronic babesiosis. Since then, sales have continued to increase, except for a brief supply chain disruption earlier this year, which has been resolved and allowed us to start our formal commercial pilot for the malaria indication, which I'll come back to. I'm not going to focus too much on the P&L, but just wanted to highlight a few key points. Our U.S. sales have continued to increase, except for the quarter related to the recent supply chain disruption. As those sales have increased, so has our net revenue.
Our gross margin started out in the negative, but as we've increased volume and so erased the effect of some of those fixed costs, it has started to increase. Our gross margin percentage has stabilized at around 50% relative to net revenue. At the moment, our annualized gross sales are somewhere between $1 million and $2 million. We think that could be over $200 million by the time our patents for malaria prevention run out in 2035. There is certainly the opportunity on the high end, a ceiling that's quite a bit higher than where we are at the moment. We think that malaria prevention represents about a quarter of that market potential, while chronic babesiosis might represent the bulk of it.
We've obviously got to prove a lot of things in order to take advantage of that economic opportunity and to meet and satisfy the unmet medical need associated with it. In the remainder of this short presentation, I'm going to focus a little bit on the approved indication and what we're doing with that. I'll share a little bit of information about chronic babesiosis, how we think our product may have utility in that disease, and then share some of the key trials that are going to produce the de-risking events that are important to realize that potential new indication. Many people who live in the U.S. think about malaria as something you get when you go on safari in Kenya. It's something that's not really relevant to folks living in the suburbs in North America. Unfortunately, that's not always true.
As you can see from this quote from a local Fox News reporter in the Washington, D.C. area, malaria is an awful disease, which obviously disrupted his daily life and required a hospitalization for a couple of weeks while he took every drug under the sun to get over it. This is not an isolated case. The incidence of malaria in returning travelers from areas with malaria has continued to increase over the decades. There is no vaccine to prevent malaria in the same way that there is for other travel diseases like dengue and yellow fever. The CDC recommends that you take daily or weekly medications while you travel to prevent malaria. Almost all of the cases of returning malaria in travelers are because people have failed to take their chemoprophylactic medications while they're overseas. Part of that is because malaria is complicated to manage.
That's highlighted in this slide by just two examples. You're probably aware that malaria can relapse many months or years after an infection. The kind of malaria that causes that, Plasmodium vivax malaria, is mostly common in Latin America and in India and Southeast Asia. There's very little of it in Africa. In Africa, the deadly kind of malaria, Plasmodium falciparum, is highly endemic. In some parts of West Africa, you have a very high likelihood of contracting it. The drugs you use to prevent malaria of these parasites are different. You can protect against malaria everywhere in the world, all the species, and the different places with drug resistance if you use a triple combination of tafenoquine, Proguanil, and Primaquine.
For a typical one-month trip, that might involve taking 53 pills, which you can imagine that some travelers have an objection to and may be part of the reason why many travelers don't take their medications like they're supposed to. In contrast, ARAKODA, because of its loading dose and weekly dosing profile, requires only 16 tablets for the same duration of travel. When we did some market research earlier in 2024 to plan the commercial pilot, which I'll talk about in a minute, we discovered a few things about ARAKODA that were potential barriers to uptake, which we need to address. The first is that no one had ever heard of it, which reflects the fact that there's never been any marketing. Healthcare providers and patients both liked the product profile. There are two challenges. The generic alternatives have lower out-of-pocket costs.
There is a G6PD testing requirement, which is like a cholesterol test, in order for the drug to be administered safely. This is a barrier for some travelers who have a short planning horizon or who are not repeat travelers. In July of this year, we began a commercial pilot program. It has three basic components. Firstly, to increase the awareness and differentiate ARAKODA through electronic media. It has a virtual sales representatives component to directly reach out to prescribing physicians to encourage switching to ARAKODA versus other medications. There is a copay opportunity to try and reduce the cost of the out-of-pocket for insured patients. Those three things, or those three components of the commercial pilot and the data outputs from them, should become available later in the year. I'll now switch just to babesiosis.
Babesiosis, of course, is a tick-borne disease that's transmitted by the same parasites that, or the same ticks that transmit Lyme disease. Anywhere where there's a high incidence of Lyme disease, you can also contract babesiosis. Babesiosis is a little bit different from Lyme, though, because it's caused by a parasite that targets your red blood cells. It divides in those red blood cells, and when those burst, that's what causes the acute symptoms and the anemia associated with the disease. It also means that babesiosis can be transmitted to other people through the blood donation system. Historically, that's been not the major source, but one of the sources of infection in the U.S. Something really interesting happened when the FDA approved a very sensitive screening test for blood banking.
When that test was approved and rolled out in 2020, the incidence of blood-borne transmission of babesiosis declined precipitously, and there have been very few cases since that introduction. If you think about blood donors, when you go and give blood, you're usually feeling healthy and don't have any obvious symptoms of an illness. What this is suggesting is if a test can eliminate transmission, it's suggesting two important things. One is that there's a reservoir of parasites in otherwise asymptomatic people. The level of infection you have is relevant because it can be transmitted to someone else unless you get screened. The question that we have as a company and many physicians in the community have is what's the significance of that underlying undetected parasite reservoir?
We know from the seminal study that was published in the New England Journal in 2000 that symptomatic babesiosis patients who are treated with the current standard of care gradually become undetectable using conventional PCR. You can see that in the survival curve in the right hand of this screen. Over about a 12-week period, you go from being 100% positive on that test to apparently zero. In the left-hand table, if you compare the sensitivity of the tests that are used to do that in the context of treating patients, they're at least 500 times less sensitive than the blood bank test that I talked about in the press slide. What this means is that we don't know, ultimately, if you take standard-of-care medications, whether you actually clear your infection. The question is, who cares and why is that important?
In an immunocompetent person, the assumption is that whatever residual parasites remain after treatment are just cleared up by the immune system, and it may be of little clinical significance. We know if you have certain risk factors, such as no spleen or you're taking immunosuppressive drugs, you have cancer, or you have some other immunosuppressive condition, those parasites can hang around and relapse and cause rehospitalization. That risk is well described in the literature and not controversial. What we don't know is what happens if you have an immune system that is not normal, but is not classically suppressed in a way that would count as being one of those recognized risk factors. For example, if you get COVID, your immune system becomes dysregulated. You have chronic symptoms like chronic fatigue and cognitive issues. You get bitten by a tick and get babesiosis.
What is that doing to your underlying disease state in terms of your ability to recover from long COVID or post-treatment Lyme disease or chronic fatigue syndrome? Many practicing physicians who treat chronic babesiosis believe this is a real problem. The hypothesis in the community is that if you have a persistent babesia infection and then one of these long diseases, it prolongs your recovery time from that underlying illness. I'll share a little bit about the way we think tafenoquine works and the potential utility of the product. We know from the non-clinical literature that tafenoquine kills malaria and babesia probably in the same way, and that's through the induction of oxidative stress. You can see that from this set of smears where you compare the morphology of the parasites treated with tafenoquine to those treated with hydrogen peroxide.
Importantly, that mechanism of action is different from the way other drugs kill the parasite, and so it's mechanistically differentiated from the standard of care. That's one of the reasons why there have been a number of case studies that have evaluated weekly tafenoquine in different patient populations of babesiosis. What I'm showing on this slide here is a representative case from a case series that was published in 2024 from Yale Medical School, where they treated immunosuppressed patients who had previously failed multiple rounds of conventional drugs. They combined tafenoquine weekly with standard of care, and in four out of five patients, led to successive negative PCRs. The implication was that these patients were cured of their babesia infection.
Based on all that background, it's kind of set us up for a focused research strategy that's targeted towards generating FDA approval and broadening the acceptance of the concept of chronic babesiosis and the ability to manage that condition using pharmaceuticals. Our goals are to demonstrate statistical significance in at least one of the clinical trials, which I'm going to share with you, to prove that chronic babesiosis can be diagnostically confirmed, schedule an appropriate meeting to discuss our data with the FDA when we've achieved significance. Our goal is to request the broadest possible labeling for treatment of babesiosis. The earliest feasible NDA submission date is the end of 2026 if all the data outputs from our three trials are hit when we expect them to. These are the three trials that we are actively enrolling in or about to.
They use or are evaluating the same dosing regimen that's approved by FDA for malaria prevention. The reason for that is to reduce development risk because we're living on the platform of the safety profile from the approved indication. We're targeting three different populations of babesiosis patients: hospitalized patients, immunosuppressed patients with risk factors for disease, similar to the ones that were enrolled in the Yale study. The third study, which is about to start at Mount Sinai in a couple of weeks, is a chronic babesiosis study, which will focus specifically on those individuals who have chronic symptoms of disease and evidence of a persistent babesia infection. We expect all these studies to report some sort of data in the second half of 2026.
Recently, we announced a really exciting finding from the first patient that completed the expanded access study and was an immunosuppressed patient who had failed multiple rounds of prior chemotherapy. What we found with this patient was that there was no evidence of babesia infection after taking all the required medications and doing the final screening 60 days after the end of treatment. They were negative on that blood bank test. The strong implication from that result is that there are insufficient organisms left to cause any further symptoms. The patient has actually been cured with tafenoquine plus standard of care where all other medications failed. Just a final point about the chronic babesiosis study. This will enroll patients with severe disabling fatigue, at least one other symptom of babesiosis, and some laboratory evidence of exposure.
We'll enroll up to 100 patients with the goal of having 16 completed who test positive at baseline using the blood bank test so we prove that they're actually affected. We follow them on 90 days of therapy and then do follow-up longitudinal testing. We'll be using the approved dose for malaria prevention, as I mentioned. We'll be evaluating the ability of open-label tafenoquine to promote recovery from fatigue. We're also looking at the ability of the drug as monotherapy to eradicate infection longitudinally over the course of the study. Because we're doing three different diagnostics, the blood bank test and two commercially available molecular tests, we'll be able to see what the performance of commercially available diagnostics are in detecting what we'll be defining as a true case.
In terms of the catalysts that we anticipate over the next year or so, we recently shared that promising clinical finding in a press release just a couple of weeks ago. We'll be reporting more formally on the status of our recruitment efforts for the three trials in the next few weeks. For those of you who've been following the evolving regulatory strategy, you'll see that we submit a breakthrough therapy designation request towards the end of October. We should be getting some sort of feedback from the agency in December. There'll be sales outputs from the ARAKODA pilot program towards the end of the year. Moving into next year, if our breakthrough therapy request is successful, we'll be pursuing a type B meeting to discuss how many patients we need to enroll in the immunosuppressed patient study before we have enough data to pursue some sort of labeling.
There'll be additional clinical outputs from all three studies in the second half of 2026. I'll leave it there. Thank you very much for listening in and taking the time to do that. We can answer any of your questions. Thank you.
Thank you very much, Geoff. Participants should indicate that they have a question by using the raise hand tool. If they would rather type in their question, they can also use the Q&A button. Click on that and a text box will appear and they can type in their question that way. We already have some questions here submitted. Geoff, is ARAKODA a potential drug for treating chronic Lyme, specifically Lyme arthritis?
There are no data yet about that. We do have a collaboration with Tulane University where we're going to be looking at seeing what tafenoquine does with both Bartonella and then in terms of killing the more treatment-resistant Borrelia species in cell culture. Borrelia, of course, is the causative agent of Lyme disease. We'll see where those data outputs take us in terms of next steps. Just by the nature of the type of patients that often get diagnosed with chronic babesiosis, there are probably going to be patients with some sort of post-treatment Lyme disease in our upcoming chronic babesiosis study. Maybe there'll be some insights from that effort as well.
Thank you, Geoff. Regarding the ARAKODA sales strategy, now following that 140% growth in ARAKODA net product revenues for fiscal 2024, could you reiterate what specific strategies are planned to build on this success and accelerate the growth of the drug in 2025 and 2026?
The single biggest issue is that you can't increase drug sales without awareness of the product. You need to have people on the phone or ideally physically talking to physicians about the product. One of the key aspects of our pilot program is that we hired a couple of virtual sales representatives. We'll have a very good idea of how successful the outreach has been to physicians in terms of increasing prescriptions. We'll use that information to plan what kind of scale-up we need in 2026 to further increase sales. The other aspect to commercialization is the market access piece. What impact will a copay card have on prescribing? Do we need to scale up or retool, try something different depending on how it looks at the end? The focus will be on trying to increase awareness and then secondarily managing the reimbursement and market access landscape.
Particularly, you're thinking ahead to babesiosis where the reimbursement strategy might look quite different because there is no other FDA-approved product in the market for that disease. You're not competing with generics in terms of the copay or the out-of-pocket pay strategy as it relates to insurance and payers.
Thanks, Geoff. What is the status again of patient enrollment for the relapsing babesiosis study? Are there any updates on preliminary results beyond that first patient?
No, not yet. We expected the other two existing patients in the study to finish their course of treatment sometime between February and I think September of next year. One of the challenges is statistically when you believe you have a higher cure rate, you're expecting to see cures for the next patient that comes in. How many patients do you need before you've independently confirmed what other people saw in that earlier Yale study? That's the conversation we want to have with the agency, assuming we're grounded in breakthrough therapy and we're also sitting at a type B meeting early next year.
Thanks, Geoff. Beyond the current pilot program using sales reps, what new commercial outreach methods, if any, is the company evaluating for ARAKODA? Yeah, that's good. Yeah.
I think first we need to take a look at what the performance was for the first six months of the pilot program, which was the intent. We're three months away through it and you haven't seen too much data yet. I think we'll do what any pharma company does at the end of the business year. We'll take a look at how well we did, continue with the things that worked, and then try some new things if we need to.
What additional data is the company providing to the FDA to support that breakthrough therapy designation request for tafenoquine in relapsing babesiosis? Is there an expected timeline for a decision?
Statutorily, there's a 60-day time window to make a decision. When I indicated earlier that we expected to have some news about that in December, that factors in that statutory timeline. From our perspective, it's sort of a common sense approach to it. There are seven or eight papers in the literature that show tafenoquine works well in animal models to treat babesiosis, both in immunocompetent and immunosuppressed animals. We know from the case reports in the literature that in relapsing and immunosuppressed patients who have failed all prior therapy multiple times, the apparent cure rate in the literature published by people independently of us is very high when you combine weekly tafenoquine with standard of care. Our job is to confirm all of that body of prior evidence. We believe that should be sufficient in a patient population that has a severe illness and no other options.
We elected to submit a breakthrough therapy designation request when our first patient in our own immunosuppressed patient study was proven to be cured and looked to have a similar outcome to what was observed in that case series published by Yale. The question is, how many more patients like that do you need before you should go and talk to the FDA about it? Some people might have waited for two. We decided to roll with the experience of the first patient to begin the conversation. We'll see what they say and how many additional patients are required in order to provide confidence that we're seeing the same thing independently that was previously observed in all the animal literature and the cases that have been described so far.
Geoff, what is, oh, this person wants to know the babesiosis market valuation. He writes, "In light of the announced $245 million annual market potential for tafenoquine in babesiosis, how would the company plan to capture that market, particularly concerning distribution and, of course, also pricing strategies?" He wants to know.
That number is a ceiling on what is possible if our market research that we did last year or earlier this year is correct. It requires a number of de-risking events before we know whether the true number is closer to that ceiling or somewhere in the middle. The two things that are important for us to be able to do are to demonstrate that chronic babesiosis, as it's defined clinically, is actually associated with a provable infection using an assay the agency will believe. The screening data from the chronic babesiosis study are going to be really important for that. The second component of it is what proportion of those patients with that clinical diagnosis test positive using the commercially available PCR screens, which are less sensitive. The blood bank test we're using to define cases is not commercially available.
The bucket size is going to be a function of A, is this a real thing, and B, what proportion of the time can it be detected using commercial tests. We think that those data will become available as we do the chronic babesiosis study over the next few months. In terms of the long-term commercial strategy, we already have a commercial product available in the U.S. market. We already have the infrastructure set up to do the distribution already. We have some degree of coverage from the PBMs and payers. That requires a lot more market, a lot more research, and building out because it might look quite different for babesiosis than it did for malaria. Overall, it's a scaling of what we're already doing as we increase our sales over time.
What is the total market estimate for this disease? He doesn't indicate which one, but you can answer it in any number of ways.
In the figure I shared in the presentation, our total market potential for ARAKODA as a ceiling, with all the caveats I just indicated, is something over $200 million, of which we believe perhaps 75% of the market would be for chronic babesiosis. It might be a little bit under $200 million and then $30 million or $40 million for malaria prevention.
Thanks a lot, Geoff. We'll give everyone a moment or two to consider any questions they may have for Geoff Dow. You can raise your hand and speak, or you can type in your question. Had a final question here about cash burn. What measures are being taken to manage that burn? I know you do have some revenues coming in. What is the projected timeline for achieving positive cash flow?
We usually report what our runway is every time we put out our financials. The last time we did that, we said that our cash runway was through the end of March 2026. When we put out our Q3 financials in mid-November, we'll update that runway assessment. In terms of where we are on the time to cash flow positivity, we'll be reassessing that once we've taken a look at the outcome of the commercial pilot data and we understand what we need to do to scale in terms of the commercial resources we apply to maintain our sales trajectory with the malaria indication. I would expect we'd have more to say about that early next year.
Thank you very much, Geoff. I'm not seeing any more questions in the queue, nor am I seeing any raised hands. We can wrap up now with a few notes about how to get more information about 60 Degrees Pharmaceuticals. One way is to reach us at 1-800-REDCHIP or by email at sxtp@redchip.com. You can also visit RedChip's investor information page for 60 Degrees Pharmaceuticals. It's sxtpinfo.com. There, you can view and download the investor presentation and fact sheet and sign up for news alerts on 60 Degrees Pharmaceuticals. Watch Small Stocks, Big Money, RedChip's program featuring exciting small-cap companies every Saturday night at 7:00 P.M. Eastern on Bloomberg, USA. Finally, join RedChip's next webinar with NioCorp on Monday, October 27 at 11:00 A.M. U.S. Eastern. Register for all RedChip webinars at redchip.com/events. Thank you again to our participants and thanks, Geoff.
Thanks a lot, Craig. Thanks for everyone on the call for dialing in. Looking forward to talking with you next time. Thanks a lot.