Q3 2019 Earnings Call
At this time all participants are in listen only mode. Following management's prepared remarks <unk> session will be out as a reminder, this call is being recorded.
I would now like to turn the call over to Roger cameras sworn Vice President strategy for College Pharmaceuticals. Please proceed.
Thank you operator, good morning, everyone. Thank you for joining today's call.
Joining me from the company are Mark I Wiki, Chairman, President and Chief Executive Officer, Hudbays Martz, Chief Operating Officer, Mary remain Chief Financial Officer, Humming, Chen Chief Scientific Officer, and Kim Brazell, Chief Medical Officer.
Today's call is being webcast live webcast link can be found in the investors and media section on our website called <unk> Rx dotcom.
During this call will be referring to non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles.
A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in our press release today.
Also be found on our website.
On this call, we will make certain comments about call as future expectations plans and prospects that are forward looking statements within the meaning of the private Securities Litigation reform.
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These statements include observations associated with our commercialization all been dealt us in the U.S. statements regarding the development and commercial plans rights to this including destroyed three clinical trial, the sufficiency of our cash resources and projected revenue.
These statements are based on the belief and expectations of management as of today November seven 2019.
Actual results may differ materially from our expectations. The company undertakes no obligation to revise or update any statements reflect events or circumstances. After the date of this conference call.
Investors should carefully read the risks and uncertainties described in today's press release as well as risk factors, which identify specific factors that may cause those four events to differ materially from those described in the forward looking statement. This forward looking statement is included in the company's filings with the FCC, including the quarterly report on form 10.
Q.
The Form 10-Q will be filed with the FCC after the market close today and will be available on our website.
We'll now turn the call over to call a CEO Mark high wiki Mark.
Thanks, Robin and good morning, everyone. Thank you for joining us today to review, our third quarter financial results, which we released earlier this morning.
Todd will describe in further detail later in the call. We're pleased with how the insults as launch is progressing.
Approximately 97000 prescriptions of investors have been reported since launch and we've made significant market access progress.
More importantly feedback from eye care professionals has been exceedingly positive reaffirming and belts. This is unique value proposition of strong efficacy safety and twice a day dosing.
As you're aware, we filed an end D.A. for our dry eye product candidate I should this in October of 2018 that Andy a was supported by data from one phase two trial into phase three trial stride one in stride too.
In August we announced that we had received a complete response letter from the FDA with respect to the San Diego.
The FDA indicated that efficacy data from the additional from an additional clinical trial would be needed to support a resubmission based upon the previous recommendation to the FDA, we initiated an additional phase III clinical trial stride three in the third quarter of 2018, which we expect will serve.
As the basis of our response to the CRL.
We design stride three with certain modifications to the inclusion exclusion criteria, which we believe improve the studies probability of success. We're looking forward to the conclusion of the trial in the coming months, we've experienced a slightly slower patient enrollment than originally projected and we're now targeting topline results in the first quarter of 20.
20, we expect to class two resubmission of the NDA in the first half of 2020 , which should be subject to a six month review clock.
Finally.
We believe we have a healthy cash position, we anticipate that our existing cash resources together with projected envelop. This revenue will enable us to fund operations through the next 18 months I'd now like to turn the call over to taught to discuss the and felt this launch.
Thank you Mark good morning, everyone. We're pleased with all the adult us launch is progressing.
We continue to see strong prescription growth with approximately 40000 prescriptions of adult is being reported by Symphony health and the third quarter, which represents an increase of 30% over the second quarter.
I was at the weekend in October 25th approximately 97000 prescriptions have been reported an adult this has achieved a branded new prescription market share of 10.1 person and just over 10 month since launch.
Branded new prescription market share grew by 55% in Q3 compared to Q2.
Our adult is prescriber base also continues to achieve strong growth.
New prescribers grew by 19% in Q3 compared to Q2.
Launch to date, nearly 2700 eye care professionals have prescribed in Feltus, which represents approximately 40% of our targets.
We believe this means there is still significant room for growth as we continue to add new prescribers.
Importantly, and Voltus has demonstrated strong prescription and market share growth and a year in which the other major branded and generic Star awards are showing declining trends.
Stephanie Health one of the third party providers, whose data we rely on to make our estimates related to revenue recognition has informed us that commencing the we ended October 11th 2019. They began a six week process a phasing in a 5% change to their projection methodology.
Reporting in belt this demand prescriptions.
Mary will discuss this further later in the call.
We recently completed a large quantitative market research study with 200 eye care professionals.
In this study approximately half a b C. P reported having already prescribed and deltas and rated highly for the key attributes of inflammation suppression and low risk of increasing inter ocular pressure.
This group of Bcps offer reported that they intend to increase prescribing from a current self reported overall share of 6% up to 25% over the next six months.
Additionally, 57% of GP that had not yet prescribed in adult does but who have been detailed by our salesforce reported they intend to trial in deltas within the next six months.
We also continue to made great strides and securing market access we're pleased to report that as of today, we have achieved unrestricted access for approximately 125 million commercial patients representing approximately 75% of all commercial lines.
Medicare part D contract negotiations are still ongoing.
As of today, and Multisite achieved unrestricted mark market access for approximately 23% of lives covered by Medicare part D payers.
Today, we're also providing an update on our commercial plans for the launch of by soon as our lead pipeline candidate for dry eye disease.
The team has been making great progress on launch planning preparations.
Market research with eye care professionals and patients so strong interest would be I see this product profile.
Typically eye care professionals and patience report a high level of interest for an effective rapid acting therapy that can be used to treat the signs and symptoms of dry eye flares.
There are approximately 33 million patients for dry eye disease in the U.S. of whats half have been diagnosed and our managed by an eye care professionals. However, only about 1 million of them are currently treated with a prescription therapy.
Data suggests that the vast majority of diagnosed dry eye patients experienced flares multiple times a year.
Several quantitative market research studies conducted with dry eye patients, including studies done by Cala and an external study conducted by an independent third party research firm.
Indicate that approximately 80% to 90% of patients report experiencing dry eye players.
This is report experiencing a median six players a year.
Lasting for days on average, which represents over 300 million flare day days per year and the U.S. alone.
This represents a total addressable market potential and excessive $8 billion annually.
If approved we believe I cirrus could become the preferred prescription option for the treatment of dry eye flares.
The size of the dry market opportunity was recently further validated by Novartis is acquisition of Zohydro in a deal valued at up to $5.3 billion.
If approved we believe I subarus will be the ideal prescription therapy for the vast majority of dry eye patient who experienced episodic players.
Would benefit from a rapid acting short term treatment that can address the information, which is considered the key trigger of layers.
Our market research indicates that I subarus would be used and mild to moderate patients who currently use pallet of approaches such as artificial tears, which do not directly impact.
Mission.
Well as in more severe patients as an adjunctive therapy to their chronic dry eye prescription medication in order to treat breakthrough symptoms.
I care professionals indicate that they intend to prescribe I assume this for more than half of all their dry eye patients regardless of whether they're currently on a prescription medication, we're only using artificial tears.
If the FDA approved through this we plan to increase the sales force from our current 57 reps to a total of between 75 to 100 reps, who will promote through an adult us.
We expect the Salesforce is this size will allow us to effectively covered the eye care professionals that are responsible for approximately 75% to 85% of all dry eye prescriptions.
By this time adult this will have been on the market for approximately two years and we'll move to a second position for our sales team.
There is significant overlap between I subarus, an adult this call targets, which will result in highly efficient sales calls.
So in summary, the impetus launch continues to progress well with physicians reporting an intent to increase prescribing over the next year.
Position in patient feedback on the potential I see this product profile are very favorable and launch preparations for I subarus are well underway.
I'll now turn the call, we're going to marry to discuss our financial results. Thanks Todd.
And this discussion of our quarterly financial results, our reference certain non-GAAP financial measures. These non-GAAP financial measures exclude stock compensation depreciation and noncash interest expense for a full reconciliation of our GAAP to non-GAAP financial measures. Please refer to today's press release, which is available on our website.
For the third quarter 2018, we reported in Deltics net revenue of 1.5 million.
Who didn't net revenue is a 600000 dollar reduction resulting from a change in the estimated payer mix due to the revision in Symphony health projection methodology.
I noted we have relied on this third party data to make estimates regarding our revenue ready recognition.
Downward adjustment primarily relates to the second quarter 2018, excluding this adjustment we would have reported a quarter over quarter increase in net revenue in line with the growth in prescription.
That's DNA expenses for the third quarter of 2018 were 15.3 million compared to 8.5 million for the same period. In 2018 increase is primarily due to costs associated with hiring additional personnel building our commercial organization to support the launch of adult is at an increasing facility related costs.
non-GAAP SC any expenses for the third quarter 2018 were 13.5 million compared to 6.9 million for the same period in 2018.
R&D expenses for the third quarter of 2018 were 7.1 million consistent with the same period in 2018.
As an adult is related R&D spending for the third quarter 2018 were offset by an increase in facility related costs.
non-GAAP R&D expenses for the third quarter were 6.1 million compared to 6.3 million for the same period in 2018.
From operations for the third quarter 2018 was 21.6 million compared to 15.5 million for the same period in 2018.
non-GAAP operating loss was 18.8 billion for the third quarter compared to 13.2 million for the same period in 2018.
Net loss for the third quarter of 2019 was 23.2 million or 68 cents per share compared to a net loss of $15.6 million were 63 cents per share the same period in 2018.
non-GAAP net loss was 20.1 million for the third quarter 2019, compared to 13.2 million for the same quarter 20 team.
The weighted average number of shares used to calculate net loss per share was 34.29 for the third quarter 2018, and 24.6 million for the third quarter 20.
Our cash position as of September Thirtyth was 97.6 million compared to 170.9 million at December 31st 2018.
We anticipate that our existing cash resources together with projected in Belfast revenue will enable us to fund operations to the next 18 months.
We expect that fourth quarter operating expenses will be relatively consistent with third quarter.
We believe our current infrastructure is well positioned to launch I see this and continue to commercialize in belt.
Looking beyond 2018, we expect overall operating expenses to be in line with this year.
R&D expenses will be substantially reduced as a result of the completion of stride three.
That concludes our prepared remarks for today and we will now hold the question any.
Operator, we're ready to take.
Thank you and as a reminder to ask a question you will need to press star one on your telephone and to withdraw your question. Please press the pound key.
We symbolic compiled acuity roster.
[noise] and our first question comes from the line of Chris Scott with Jpmorgan. Your line is now open.
Thanks, Ed This is Chris near on for Chris Schott.
Question on Oh I see this.
For the pivotal readout for dry eye data is not expected in early 2020.
The CRL response plan for the first half of 2021, what are your expectations for the potential launch timelines and if possible any expectations on initial coverage, particularly in full year 2021, and then a second question on in felt it you're currently at 23% unrestricted coverage should we expect that similar level coverage.
Financially in Fourq, you and is there any color you can provide on the timing for coverage decisions and play 20. Thanks so much.
Morning, Chris and thanks for the question so.
Your your.
Timeline that you talked about.
As a kind of our planning thoughts as well so.
You never know the exact timeline, but we do believe that the product could see approval in 2020, we are able to launch the product very quickly because we have our existing sales infrastructure in the marketplace.
So I think you know very late 2020 is when we would hope that it would be approved and then and then get it launched quickly either at the end of the year the very beginning of.
2021.
And then maybe for the in belt is access.
Question that you have and I think it was around Medicare, but maybe Todd can just talk about the Medicare and commercial access that we've had sure I think there was a couple of access questions you had there Chris both.
What it may look like when we first months I Super stand currently for in both of so I'll just Sun belt as first is.
The axis is actually 75% unrestricted within the commercial payer or the commercial book of business and currently 23% for Medicare. So we're just in the final stages negotiations and Medicare and.
We'll be looking to update what or access is going into next year, I think baseline assumption of 23% for Medicare in fourth quarter of this year is reasonable.
We will report at the end and the fourth quarter, what we what our access is going to be in 2020, but currently the commercial access from deltas, 75% unrestricted.
When we get to dry eye that market. Its 50, 50, commercial and Medicare and we expect that we'll be able to negotiate and start gaining unrestricted access very quickly. After launch as we were able to do this year with adult is particularly within the commercial book of business.
They stated after only three quarters in the market, we already have 75% unrestricted access with commercial payers for and deltas.
Which demonstrates there's opportunity to gained significant market access within the launch year.
Operator, I hand, it back over to you.
Thank you and our next question comes from the line of Liana Moussatos with Wedbush Securities. Your line is now open.
Hey, this is comedies on for Liana, what did you do in the strike three to reduce placebo symptom effects through the inclusion exclusion criteria and as the second question can you take us through the needs of patients suffering from EPS the episodic manifestation.
Versus more severe cases at <unk>. Thank you so much.
On your first question.
We did some revisions to the inclusion exclusion criteria in the focus was to.
Screened how patients that didn't have a stable baseline in terms of symptoms.
Patients that vary quite a bit during the run and phase. We've said before for example, there was a small group of patients about 80.
It had significant improvement in other symptoms.
The run and phase, but still were eligible.
To go into randomization and these are as we looked at their profiles are likely patients that were experiencing flares and once they got on treatment. They continued to improve dramatically. So we added an inclusion exclusion actually an exclusion criteria.
To keep those patients out of the trial a we added a couple of more there was only a handful about three changes, but when we put all those together apply those changes in the criteria to the stride to get a P value of 0.00 too. So basically we're trying to screen out.
Those patients that created a problem for us in stride to.
Take those and look at stride one it didn't impact the treatment effect on levels as well. So we're optimistic that these changes are going to get us to a point, we weren't stride one.
And thanks for the question about unmet need.
You know the vast majority of patience, we estimate as much as 90% of patients.
Suffer from.
An episodic manifestation of their disease and even the really severe patients that end up on a chronic dry medicine, which is as Todd said only about 10% of all diagnosed patients.
We are actively on a chronic medication like zijin restasis, it's a very small group of patients, but even those patients have significant break through flares as their call by patients and doctors and so what we expect is you know for the huge group of 15 million patients.
That our product I assume this could actually be the first line product that physician views and also a product that stays with the patients therapy for their whole course of their disease, because even when you get to.
Be placed on a more chronic medicine.
Those medicines do not eliminate symptoms in fact, those patients have as many if not more break through flares per year because of the severity of their disease and the marginal effect of the drugs there on than even the more mild patients. So the way to kind of think about this is I subarus.
We believe might very likely be the first line prescription therapy and you would use it a few times a year if your disease progresses to a moderate level maybe use it a few more times a year to treat your episodes and we think that patients have maybe between four and six flares a year of course this varies by severity and then as you get to.
More severe patient you'll keep your eye service. This is our expectation and you'll kind of use it as your rescue product. When you have breakthrough flares, even though you maybe on a baseline maintenance therapy.
Thank you.
And as a reminder, ladies and gentlemen to ask a question do we need to press star one on your telephone.
And our next question comes from the line of each one with H.C. Wainwright. Your line is now open.
Hi, This is Dave on.
For your Chen.
Just a couple of quick questions. How sales of involves us in Threeq you met your internal expectation you expect market penetration accelerate remained stable right decelerate going forward.
Yes, Great question, we do believe that we're going to continue to.
She and improvements in increases in the amount of prescriptions that have been written and as access improves you know, we believe that will gain a better ASP price for each prescription. Yes. We currently continue to use a significant amount of co pay cards to help.
Cover the the prescription cost in the short term why we're building access. So we're on a very nice run rate I think Todd mentioned earlier that ER prescriptions increased by about 30% Q2 into Q3.
You've probably seen from the weekly data that we certainly have a new.
Much higher plateau of scripts the last couple of weeks and we believe that we'll continue to build into 2020.
Okay excellent.
One other thing and I may have missed this are you guys still on track to announce supplies drive phase three data before the end between 19.
We are actually announced this morning that we've had a slightly slower enrollment than we expected and.
We announced that we expect to have the data in the first quarter of 2020.
Okay excellent. Thanks, that's it for me.
Thank you.
Thank you and then just Tom Im not showing you no more questions in queue Mistry wiki I'll turn the call back to you.
It would just appreciate everyone's time this morning for listening in on the call we remain.
Very excited about the launch of our product I Subarus. The access gains we've made the feedback from physicians and there's still strong prescription growth.
We're very clearly turning our eye toward our dry eye product I Sue vis a few more months to finish that trial and then hopefully with a good dataset be able to make a re submission and get that product approved ideally a in 2020 or very early 2021.
And that market is.
Absolutely huge and really in general on top there. There are few products had been approved but those products as we said a few times on this call I really relegated to the most severe patients.
Patients don't stay on those products very long, because they're not well tolerated and they're really don't seem to be appropriate.
For the the earlier more mild to moderate patients where I service. We believe Ken can really be the mainstay first line product for physicians and patients to treat their dry eye disease and to be able to stay on I assume is for the whole course of their disease. So we're very optimistic about our final hopefully stride three try.
Oil and dry eye disease, and we look forward to updating everyone in the future. Thank you again for your time this morning, and that's it operator.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect your lines at this time.