James Manuso- CEO of RespireRX

Brett Johnson: Today I am with Dr. James Manuso. He is the President & CEO of RespireRX Pharmaceuticals. The stock symbol is RSPI. It’s an innovative company that has been developing drugs for respiratory diseases for which there are no medicines at this time. Thanks for joining us today, Jim.

James Manuso: Thank you very much for having me, Brett.

BJ: First, tell us, what is the focus on RespireRX?

JM: RespireRx invents and develops innovative medicines for respiratory diseases for which there are no approved pharmaceuticals, including the diseases obstructive and central sleep apneas and respiratory depression of multiple origins.  All our medicines address blockbuster markets where there are major unmet needs.

Our most advanced program is the further development of dronabinol for obstructive sleep apnea.  Dronabinol, a phase 3-ready medicine, was the subject of a large a phase 2b clinical trial that was recently completed.  Two of our ampakines have completed three successful phase 2a proof of concept trials for drug induced respiratory depression.  

BJ: How big is the problem of sleep apnea, and how is it being treated today?

JM: Almost 30 million Americans suffer from obstructive sleep apnea.  Anywhere from 5-50 times an hour, they stop breathing. This is not snoring. It is the cessation of breathing for ten seconds or more (apnea), or the abnormal severe slowing of breathing for ten seconds or more (hypopnea).  The disease is measured by the Apnea–Hypopnea Index, an indicator of the severity of sleep apnea/hypopnea.  

The Apnea Hypopnea Index measures the average number of Apnea–Hypopnea events per hour during sleep. Its scale ranges from normal to mild to moderate to severe. If the problem is severe, it can be a death knell for the patient, especially if they suffer co-morbidities such as heart failure or diabetes. It is a major problem in the United States.

Obstructive sleep apnea is treated with devices, primarily the CPAP (Continuous Positive Air Pressure) device. CPAPs are facial masks or nose tubes attached to a device and worn throughout the night.  They keep the airway within the throat open by creating an air splint or “wind tunnel” to avoid the collapse of the smooth muscles in the throat that cause apnea. Unfortunately, for logistical and personal preference reasons, the CPAP device is either used improperly or not enough or not at all by diagnosed and CPAP-prescribed patients.

The annual cost of obstructive sleep apnea in the U.S. is estimated to be in the range of $160B. It is a cost greater than asthma and hypertension, and about the same as diabetes, problems for which many medicines can be prescribed, medicines that sell in the billions and billions of dollars.  Unfortunately, there are no approved medicines for obstructive sleep apnea.  RespireRx is working to address this problem and to capitalize on the associated opportunity for our investors.

BJ: Why hasn’t Big Pharma and the biotech industry developed any drugs to treat sleep apnea?

JM: In large part, obstructive sleep apnea has not been particularly well understood, nor has the depth of the problem in the country been fully appreciated. The prevalence of obstructive sleep apnea, in the moderate to severe range, is close to 30 million people.  

Of those 30 million, about 24 million are not diagnosed. About 6 million are diagnosed, and of those, a lesser number are prescribed the CPAP device. In the end, only 30-40% of those who are prescribed the device use it properly, obstructive sleep apnea remains to be a highly under-treated disease.   

BJ: Your drug helps to keep the airways open, is that correct?

JM: That is exactly right. Dronabinol gently stiffens the smooth muscles that collapse during an obstructive sleep apnea event to avoid throat muscle closure.   We perceive dronabinol as a breakthrough medicine. It’s an oral, small molecule, a cannabinoid receptor agonist.  Working through the peripheral nervous system, specifically the spinal ganglia, it reduces apnea by firming up the controlling muscle tone in the throat.  

BJ: What is the evolution of this molecule? Where did it come from?

JM: Dronabinol is a synthetic cannabinoid known chemically as delta-9-THC. It was approved by the FDA more than 30 years ago to treat nausea and vomiting in cancer patients undergoing chemotherapy and subsequently for the treatment of anorexia in AIDS patients. It’s a Schedule III drug, available by prescription only, with no apparent risk of addiction.  

Through an exclusive worldwide license from the University of Illinois, RespireRx has rights to patents claiming the use of dronabinol for sleep-related breathing disorders, including obstructive sleep apnea. That intellectual property protects dronabinol for use in obstructive sleep apnea through 2025. We also have submitted patent applications claiming specialized doses and controlled release formulations of dronabinol, which we believe will significantly extend the commercial life of the molecule. Since dronabinol has more than 30 years of safety history in the marketplace, we believe that it has been clearly established as a very safe medicine.

BJ: Can you discuss which stage of approval that you are currently in?

JM: A highly successful phase 2b clinical trial of dronabinol in obstructive sleep apnea has just been completed with 56 evaluable patients. Of those 56 patients, 17 were administered placebo, 19 received 2.5 milligrams of the medicine and 20 were on 10 milligrams of the medicine.  

The medicines and placebo were administered before lights out every night. The results indicated that the dronabinol group was observed to achieve statistically and clinically significant improvements in the primary outcome measures, which included the Apnea–Hypopnea Index that I mentioned earlier, the (next day) sleepiness scale, and patient satisfaction. To give you a sense of how significant the results were, the 10 milligram dronabinol dose reduced the Apnea–Hypopnea Index compared to the placebo group at a statistical significance level of p<.001.  

BJ: Have you received the final results of the study yet?

JM: Yes, the final, top line results have been published. We plan to meet with the FDA during the current half of 2017, and we will finalize plans for the phase 3 trial that will be required for approval at that time. We will consider a variety of approaches on the regulatory front, to position dronabinol as a breakthrough medicine, because there are no approved medicines for obstructive sleep apnea.

We will also ask the agency to grant us the Fast Track designation, and we will do everything we can to facilitate and hasten the development path, since the need for an approved medicine for obstructive sleep apnea is extremely high.  Remember, Americans are dying every day from untreated obstructive sleep apnea and its aftereffects.

In fact, you may be interested to know that because obstructive sleep apnea sufferers don’t get good sleep, their next day sleepiness interferes with their functioning and capabilities. The recent train crash that killed eleven people on the Hudson Line in New York was the result of an engineer who was literally “asleep at the switch” because he had untreated obstructive sleep apnea. The same thing happened recently in New Jersey.  Imagine the worldwide magnitude of deaths and disabilities from auto and industrial accidents caused by untreated obstructive sleep apnea.  

BJ: When do you expect to begin the phase 3 trial?

JM: We hope to agree with the FDA on a regulatory path and initiate a phase 3 trial by no later than the third quarter of 2017. We are now analyzing the data in greater detail. The pivotal clinical trial could take approximately 18-24 months. Thus, if we begin the phase 3 trial in 2017, we would likely complete it during 2019.  Based on the positive results from the phase 2b trial we hope the FDA would facilitate a rapid final development scenario.

BJ: What are your thoughts on the size of the market? If you were to be approved, how big is the market for this drug?

JM: We do not envision dronabinol penetrating fully the market of all obstructive sleep apnea sufferers. Our initial targeted market would be the mild to moderate obstructive sleep apnea patients who are diagnosed and perhaps prescribed the CPAP device, but don’t use it. That would leave us, in our estimation, about 1.8 million adults. That is 30% of the six million diagnosed adults in the U.S.  

The daily price per pill, presently, at the retail level, is about $5 for the lowest dose. In terms of patient compliance, assume that the patients take the pill only half of the time, which is 183 days a year. Those assumptions yield a gross sales estimate of $1.6B. As you might imagine, given pharmaceutical margins in the 80%+ range, if the long-term penetration of the market is much greater than the 1.8 million adults, the numbers become quite staggering.  


BJ: You mentioned $5 is the current price. Is that for the approved uses you stated earlier?

JM: That is correct. The retail prices for dronabinol range between $5 – $10 depending on the dosage. It is our belief that the 2.5 milligram dose costs about $5. The 5 milligram pill costs about $7.50, and the 10 milligram dose costs about $10.  Based on the phase 2b data, we would initiate the phase 3 trial with the 10 milligram dose.

We could “underprice” the generics and still make considerable money on dronabinol sales in the obstructive sleep apnea market.

BJ: Is this a reimbursable treatment?

JM: Yes. Dronabinol, if approved by FDA, would be the first medicine ever available for treating the root cause of obstructive sleep apnea.  We believe an oral medicine would induce better patient compliance in the treatment of the disease. Cost is low, safety is well established and we have observed initial indications of efficacy. Moreover, lessened obstructive sleep apnea has the potential to drive better cardiovascular outcomes for heart failure patients. Because dronabinol is a Schedule III drug, any off-label use is monitored by the U.S. government, so all generic manufacturers are discouraged or otherwise barred from selling for off-label uses.

The most important issue is that the insurers would only pay for an approved use of dronabinol. For an obstructive sleep apnea patient, it makes more sense to buy an approved dronabinol for its labeled use, for which reimbursement would be provided by insurers.  That would be the primary reason why patients would have their prescriptions filled on a labeled use. It simply wouldn’t make any sense to do it otherwise. It would cost a person 10 times or more of out-of-pocket expense if they go with an unlabeled use of dronabinol.

BJ: Can you give us a background on the evolution of the company and how you got involved?

JM: The RespireRx portfolio represents the best of later stage development of respiratory medicines from two predecessor companies, Cortex and Pier Pharmaceuticals. During the late 1980’s, Cortex initiated scientific and clinical work on the use of ampakines for a variety of psychiatric diseases such as depression, schizophrenia, ADHD, etc. In the ‘90s, it was discovered that the ampakines could treat opioid-induced respiratory depression and they were then developed accordingly.  

In addition, Pier Pharmaceuticals had been working on dronabinol for the treatment of obstructive sleep apnea. Cortex and Pier merged, and then my partners acquired control of the merged company, called Cortex, which was listed on the OTC-QB, just as RespireRx (RSPI) is listed today. During 2015, we re-branded the company and re-focused the clinical trials to be consistent with what we believe to be the highest and best use of our medicines in the respiratory diseases space.  

I was appointed President & CEO of the Company in 2015.  My selection to serve in those roles stems from my academic credentials and industry experience. I have a doctorate in physiology and genetics and an MBA in finance and I have been active in the biotech industry as a serial entrepreneur since the late ’80s.  Prior to my RespireRx appointment, I served as Chairman & CEO of Astex Pharmaceuticals (ASTX on the NASDAQ).  Astex focused on hematology and oncology indications and was sold to Otsuka for about $900M. Prior to that, I was involved in the foundation, financing, development, management and sale of a number of smaller biotech companies.

BJ: Can you give us a recap of your upcoming catalysts and milestones?

JM: Sure. I think the most important catalyst is what we discussed – the phase 2b clinical trial data on dronabinol in obstructive sleep apnea is being organized to prepare for an end of phase 2 meeting with FDA to permit us to initiate a phase 3 clinical trial, which trial we hope to begin in the third quarter of 2017.  We believe the trial will take approximately 18-24 months to complete.  

We also intend to have a pre-IND meeting with the FDA to plan the initiation of a multi-center clinical trial investigating the ability of CX717 to improve breathing in patients with spinal cord injury.  Pre-clinical collaborative studies with scientists at the University of Florida suggest that ampakines might improve motor function, particularly breathing due to spinal cord injury, the very injury that killed Chris Reeves, the Superman actor.  Any medicine that could treat respiratory depression due to spinal cord injury would have orphan drug designation and it would be a much-needed medical breakthrough.  We plan to submit an IND for CX 717 in this indication before the third quarter of 2017.  

Last year, we completed a phase 2 clinical trial with CX1739 at Duke University, in which it was demonstrated that CX1739 antagonized the respiratory depression produced by the strong opioid remifentanil.  Upon completion of the clinical study report, we shall seek FDA allowance this summer to begin a larger, multi-week study to determine if CX1739 can reduce respiratory depression in a patient population chronically taking opioids.

In addition, we are commencing work on a combination formulation of one of our ampakines and one or another of the most commonly prescribed opioids. The intent would be to avoid death caused by the respiratory depression induced by the opioid. That is what kills chronic or acute users of opioids, they stop breathing. Opioids shut down the breathing center in the brain whereas human clinical trials have proven that different ampakines can trigger and maintain the breathing response in the presence of opioids.

BJ: In closing, can you give us some key investor takeaways?

JM: This engaging discussion brings us back to its beginning: as an investor in biotech and pharmaceuticals, one must look for companies with medicines focused on huge markets, with little to no competition, where the company has minimized early stage risk by advancing the clinical and regulatory development of medicines that appear to be safe and effective. We believe that all our medicines qualify as truly breakthrough medicines, because they all focus on dire diseases for which there are no approved medicines anywhere on the planet. Our medicines are far along in development; they have all completed phase 2-a trials and our most advanced medicine, dronabinol, is preparing for a phase 3 clinical trial. 

As I pointed out, there will be a substantial amount of news flow going forward, as we advance clinically dronabinol and the ampakines in their respective indications.  

BJ: It sounds like you have some exciting times ahead. Thanks for joining us today.

JM: Thank you again, Brett.

BJ: That is Jim Manuso, he is the CEO of RespireRX Pharmaceuticals.