READ THE FULL OPNT RESEARCH REPORT
Financial Update
On March 15, 2022, Opiant Pharmaceuticals, Inc. (NASDAQ:OPNT) announced financial results for the fourth quarter and full year 2021. For the fourth quarter of 2021, Opiant reported revenue of $13.8 million, including $13.0 million of revenue from the licensing agreement with Adapt Pharma Operations Limited, a subsidiary of Emergent BioSolutions (NYSE:EBS), for the sale of NARCAN® Nasal Spray, compared to approximately $10.0 million for the fourth quarter of 2020. Emergent BioSolutions reported revenue from the sale of NARCAN Nasal Spray of approximately $120.6 million for the fourth quarter of 2021.
For the full year 2021, Opiant recorded approximately $47.8 million in revenue, compared to approximately $29.6 million for 2020. For 2020, the company reported $40.7 million of revenue from the licensing agreement with Adapt Pharma for the sale of NARCAN Nasal Spray compared to approximately $27.4 million for 2020. Emergent BioSolutions reported revenue from the sale of NARCAN Nasal Spray of approximately $434.4 million for 2021.
With the launch of a generic equivalent to NARCAN Nasal Spray by Teva Pharmaceuticals in December 2021, the royalty rate for Opiant will reduce to 2% if NARCAN revenues, which includes its authorized generic, are less than 70% of the net NARCAN sales in the third quarter of 2021. EBS reported 3Q21 revenues for NARCAN of $133.3 million, thus in order to avoid having the royalty rate reduce to 2%, sales of NARCAN and its authorized generic would need to exceed $93.3 million. The threshold is determined on a quarterly basis, thus there could be some or all quarters in 2022 at the standard royalty rate or the reduced rate. Since Opiant is unsure of what kind of effect the generic product will have on the opioid overdose market the company will wait to give royalty income guidance until later in 2022 after EBS has announced financial results for the first quarter of 2022.
Net income for 2021 was $3.0 million, or $0.68 per share, compared to a net loss of approximately $1.9 million, or $0.44 per share, for 2020. G&A expenses for 2021 were approximately $12.2 million, compared to approximately $11.7 million for 2020. The increase was primarily due to increased personnel expenses offset by a decrease in expenses related to the Opioid Overdose Reversal program. R&D expenses for 2021 were $16.8 million, compared to approximately $9.2 million for 2020. The increase was related to increased third party expenses for OPNT003 and personnel costs. Sales and marketing expenses were approximately $4.6 million in 2021, compared to approximately $4.7 million for 2020. Royalty expenses in 2021 were approximately $9.1 million, compared to approximately $6.2 million for 2020. The increase was due to higher net royalty revenue in 2020 compared to 2019.
As of December 31, 2021, Opiant had approximately $53.0 million in cash, cash equivalents, and marketable securities. In January 2022, the company announced an additional $2.2 million in funding under its existing contract with the Biomedical Advanced Research and Development Authority (BARDA), which will be primarily directed toward the cost of OPNT003 clinical studies. We believe the company is well capitalized to support the planned commercial and R&D activities planned for 2022. As of March 14, 2022, there were approximately 5.1 million shares outstanding and, when factoring in stock options and warrants, a fully diluted share count of approximately 9.4 million.
Business Update
Pharmacodynamic Trial Results in 2Q22
Opiant is currently conducting a pharmacodynamic (PD) trial of OPNT003 that will compare its effectiveness to intranasal (IN) naloxone. It is a single center, randomized, open label study in healthy volunteers that is powered to demonstrate non-inferiority between nalmefene and naloxone. The primary endpoint is the reversal of respiratory depression brought about by the synthetic opioid remifentanil (measured by minute ventilation at five minutes), with additional secondary endpoints examining a range of other timepoints.
On the fourth quarter earnings call, management indicated that enrollment has completed with 46 subjects having been randomized into the trial. During the trial, healthy volunteers were administered a high concentration of carbon dioxide to increase respiration followed by an infusion of remifentanil, which decreases respiration caused by carbon dioxide increase. Using a crossover design, the subjects were then administered either nasal naloxone or nasal nalmefene on days 1 and 5 of the study. Due to the nature of the trial there were a high rate of dropouts related to study conditions. Participants in the trial were required to wear a tight-fitting mask for extended periods of time and remifentanil has a number of unpleasant side effects, including nausea, dizziness, and emesis. This led to the study taking longer to finish than originally anticipated, however now that enrollment is complete the company is working diligently on the data analysis and we anticipate topline results in the second quarter of 2022.
In February 2022, Opiant announced positive results from a multi-dose pharmacokinetic (PK) study in 23 healthy subjects in which OPNT003 was given as a single 3 mg dose in one nostril, a single dose in each nostril, or two doses in one nostril. The study was requested by the FDA and the company will include the results as part of the new drug application (NDA) submission for OPNT003. Topline results showed:
• Rapid nasal absorption in all three study arms
• Proportional plasma increases of nalmefene were seen following administration of a single dose or two doses. Nalmafene's long plasma half-life (t1/2 ~ 11 hr) was confirmed
• Nasal nalmefene was safe and well tolerated when administered multiple times
Opiant will be conducting a pre-NDA meeting with the FDA before the end of March 2022. Depending on the outcome of the meeting, this could put the company in position to file an NDA for OPNT003 in mid-2022. If approved, Opiant would be in a position for commercial launch in the U.S. in 2023.
OPNT002 Phase 2 Trial Underway
Following a delay due to the COVID-19 pandemic, the first patient has been dosed in the Phase 2 clinical trial of OPNT002 (intranasal naltrexone) for the treatment of alcohol use disorder (AUD). It is a randomized, double blind, placebo controlled trial of approximately 300 individuals in the E.U. and United Kingdom. We anticipate topline results in 2023.
Just as with intranasal nalmefene, Opiant is developing intranasal naltrexone with INTRAVAIL® to rapidly increase the plasma concentration of the drug following dosing. The following table shows that intranasally administered naltrexone with INTRAVAIL® has a Cmax that is approximately 50% higher than orally administered naltrexone along with a Tmax of approximately 12 minutes, and a short half-life. All of these characteristics are suitable for developing OPNT002 for ‘as needed' intranasal dosing.
The FDA has changed its stance on endpoints for treating AUD. Whereas previously the agency would require an endpoint that examined abstinence (0 drinks), research shows that is an unrealistic expectation given how many different signaling pathways alcohol affects. Thus, the FDA now considers a "harm reduction" endpoint acceptable in AUD trials. For example, a decrease in ‘heavy drinking days', defined as ≥ 4 drinks in one day for women or ≥5 drinks in one day for a man, as an acceptable endpoint. This is based on a meta analysis showing a couple of drinks a day actually reduces overall mortality and that the decreased risk of mortality effect is lost at approximately 4 drinks per day for women and 5 drinks per day for men, as shown in the following figure.
One of the biggest issues with AUD trials is the high placebo response. In an effort to mitigate this effect, Opiant will be utilizing a Sequential Parallel Comparison Study Design for the Phase 2 trial of OPNT002 in AUD. An overview of the trial design is shown below. During stage 1, two doses of the drug are tested along with placebo. At the midpoint, the trial is unblinded and those that were administered placebo are re-randomized. Subjects that responded are maintained on placebo, while non-responders to placebo are randomized between placebo and active.
The primary endpoint of the trial will examine whether OPNT002 reduces heavy drinking in patients as measured by the World Health Organization (WHO) drinking risk levels (WHO, 2000), which are defined by alcohol consumed per day (low risk: 1-40 g for males/1-20 g for females; medium risk: 41-60 g for males/21-40 g for females; high risk: 61-100 g for males/41-60 g for females; very high risk: 101+ g for males/61+ g for females). A recent study showed that at least one- and two-level reductions in WHO risk levels were associated with improved health parameters and quality of life (Witkiewitz et al., 2018), with another study showing one- and two-level reductions in WHO risk levels by the end of treatment being associated with WHO risk level reductions at the 1-year follow-up assessment (Witkiewitz et al., 2019).
Conclusion
We are continuing to look forward to results of the PD trial in the second quarter of 2022, and while unfortunate that it's taken a bit longer than expected to get the results we are confident in a positive outcome and eventual approval of the drug following a mid-year NDA filing.
The introduction of a generic NARCAN, while expected, has caused us to make changes to our model. We had not anticipated the royalty rate potentially dropping to 2%, and with the dramatic decrease in projected revenue for NARCAN by EBS (2022 guidance of $240 - $310 million) we are now assuming a 2% royalty for NARCAN sales after the first quarter of 2022. This does not affect how we feel about OPNT003, since we believe it will be viewed as a differentiated product, but in the near term Opiant is likely to report decreased royalty revenue. This change has resulted in a decrease in our valuation to $42 per share. Even with the slight decrease in valuation, we continue to view Opiant as a having a favorable risk/reward profile at the current share price.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR.
DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives quarterly payments totaling a maximum fee of up to $40,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.
