Q4 2019 Earnings Call

At this time all participants are in listen only my mode.

It'll be a question and answer session to follow please be advised that this call is being paid at the company's request I will now introduce your host for today journey second awful.

Executive Vice President corporate Communications and of course. Please go ahead.

Okay Marcelo good morning, everyone.

Before we begin let me remind you that this presentation will contain forward looking statements detailed disclosures can be found in our SBC filings, which are public and we encourage you to refer to those filings I'm Gonna now pass the call over to our CEO, Ron Cohen dexterity morning, everyone.

Starting.

With embryos your.

As a reminder, embryos a is inhaled leave adobo LIBOR dope or is the gold standard therapy for improving symptoms of Parkinson's disease and breaches indicated to address the return of symptoms are also known as all periods on an as needed basis, when a patient regular met.

Occasion regimen.

Stops working.

During at various times during the day.

Enbridge your was approved by F.D.A. in December of 2018, we launched it at the end of February of 2019, and during 2019, we had two key goals educating healthcare professionals. So that they would know how to properly use and prescribed the drug and then also achieved.

Formulary access we've been successful and increasing physician awareness with about 75% of positions now having unaided awareness at a breach in our most recent research.

I'm fully 92% have awareness is aided or when given a hit.

That's 78% other physicians, who are aware of in breach are also said that they expect to increase their prescribing.

[noise] regarding patient access over 2019, we reached agreements with several of the major payers and P.B. Atms. We now have about 72% of commercial lives covered on formulary. That's actually ahead of our internal projections on Medicare we have about 25% of covered lives with actually.

Yes, that's about where we expected to be due to the greater restrictions imposed a Medicare part D and also timing issues related to when we were approved in came to market versus when a request for proposals or do each year.

Where we fell short in 2019 was in understanding the important factors in the market that influence prescribing behavior in patient.

Compliance related to insurance and access or what we have learned is that first.

Challenges with insurance, an access play an even greater role in this market than we anticipated and they feed into physicians reluctance to prescribed the drug.

Virtually all of the new drug entrance in the last four to five years in the Parkinsons market have had major restrictions on access.

That's extremely time consuming for physicians and their office staffs and as a result they'd been condition to hold off prescribing any new product on the market for the first nine months to a year or so after launch because they know it takes at least that long to get access issues worked out and in fact early in the launch we had signal.

Advocate restrictions on access, which improved only toward the latter part of the year.

We also depend on the initial patients coming back and reporting positively to their positions that's encouraging them to prescribed for more patients because so few patients receive prescriptions early on and those that did often encountered access issues the significantly diminished the feedback loops that we expected in the.

First year and it usually takes several months for a patient to come back for their next visit so if you put it all together you see that this significantly lengthens the timelines for the feedback to occur.

We also learned.

We need to teach patients and physicians differently about how to inhaled drug.

And our clinical studies fewer than 2% of participants dropped out due to cough.

In practice. This is turned out to be more of an issue a number of clinical practices have done a great job and training patients and we are now sharing a those best practices nationally.

So that brings us to what we're doing this year to apply the lessons learned from the first nine months or so of the launch we're beginning what we're calling phase two of the launch as I noted in phase one we focused primarily on awareness by health care professionals.

Also in achieving access and we're going to continue to do that but we're shifting our emphasis now to prioritizing patient awareness and to motorbike motivate them to ask their physicians about embryo.

This phase includes direct to patient initiatives digitally and through other means educational programs as well as patient ambassadors, who have had positive experiences within breach and are eager to communicate this to other people with Parkinson's. We're also looking to expand our patient base.

By adding focus on markets, such as federal the V.A. and potentially long term care.

Why is this emphasis on patients.

Important.

ER physicians tell us consistently that it's challenging for them to prioritize recommending ambrish I, even though they are excited about it and like it.

Because they're dealing with multiple issues that patients typically come in and reports since their last visit however, if patients ask about it this prompts the position to prioritize it and in fact in a physician's a research that we did on with a 151 doctors participating they reported.

On average that about 64% of patients who asked them about Umbria received a prescription.

So.

Our research continues to indicate as I said that healthcare professionals are enthusiastic about the drug. They believe it's an important new medication and that it will become a standard of care for treating the reemergence of symptoms or off periods and our new emphasis is designed to.

Go to the next logical stage and accelerate that process.

Moving to empyrean.

Since Empyrean went generic in September 2018, the tail has remained robust even in the face of generic competition. In 2019, we did about $163 million and that sales and that was based on our having achieved significant brand loyalty among people with a mass in there.

Our positions over the years and also on deliberate strategies that we began to put into place well over a year before we actually went generic such as encouraging physicians to write dispenses written or DSW and also continuing our first step free trial program and our physician and.

Reimbursement support.

All that said, we do expect continued decline over time, our goal remains to maintain the value of the franchise as much as possible.

So moving to our 2019 financial performance and 2020 guidance.

This stable outlines key financials for the year, which you'll find a dressed in detail in our press release, we ended the year with cash cash equivalents investments unrestricted cash of approximately $169 million.

For 2020 were projecting about between $35 million to $40 million, an embryo sales and $300 million to $500 million in peak sales.

The lower end to those ranges are predicated on only maintaining the average.

Rate of new prescriptions that we saw over the last six months of the launch.

Not increasing them to the extent that our initiatives that we've discussed increase them that will push us more toward the upper end of the ranges.

Were also projecting ampyra sales this year of 85 bad between 85, and 100 million based on our analysis of the existing trends and we're projecting operating expenses of $170 million to $180 million.

A key priority for us in 2020 is continuing to strengthen our capital structure and to manage operating expenses.

In December we exchanged 80% of our outstanding convertible notes extending their maturity to the end of 2024, and we're also continuing to work on maximizing cost efficiencies.

So our top priorities for 2020.

To accelerate in breaches growth using all of the strategies that we reviewed earlier to continue to support impure as it continues to generate value and to drive long term value for shareholders, managing our cost structure and strengthening our balance sheet.

I'll now open the call for your questions operator.

At this time I'd like to remind everyone in order to ask a question. Please press star and the number 100 telephone keypad. Your first question comes from Michael from your line is open.

I don't know Thats, Michael you from Jefferies, but in any case.

Hey, guys Twoq two questions congrats on the.

The finishing out the year and getting into 2020 and thinking about the year. Ron I would just wanted to ask two things on embryo. One is what do you think when you.

Make all these comments what do you think are the two most important things you think are important to accelerating scripts and should be evident and intangible as we watch scripts each quarter throughout 2020 reimbursement is at the patient education, maybe just hone in on the one or two things you think most important too.

Well, we think thanks, Mike we think the patient focus is the key this year all of the research we look at all the things that happened last year.

We've been able to analyze where we got it right, where we frankly got it wrong.

It all points to getting the patients more aware and asking their physicians about it that really seems to be the key continuing to get better access and to move that both forward is important as well we've already got pretty good commercial access.

Yes.

To the extent that we're going to go and extend that in Medicare that would be important and great. So I'd say those are really the two key elements and we believe that the strongest element of that is really getting the patients up to speed on a breach and getting them into.

Asked their doctors about it.

Okay that I think Thats helpful. Just one follow up from me then when you think about the peak numbers that you have given out.

You had you had given a peak number than you raised it and then you're currently at a 300 to 500.

Given the things you mentioned on more longer term kind of factors what are the one or two things that I guess drove youre thinking into the new peak sales number because some of the things you point you would seem to be more just time to get there. So maybe just comment then thank you and yet you know the.

We're kind of full circle, because when we originally acquired the Soviet us and the product.

Original number we gave out Weve was that we thought it would be 500 million or more peak sales on the drug yes based on.

The.

I think.

Not as.

Not as informed assumptions as they are now that we hadn't prior to to now.

At some point, we became even more enthusiastic really because the research was just coming back over and over again with doctors jumping up and down in saying we need. This this is every bit as good as you thought it's really exciting please give us the drug so we really thought that going into the market at launch even though we.

I knew that there would be reimbursement hurdles and so on we thought uptake would be significantly higher than it was I mean really significantly higher than it was.

So there was this disconnect and I think that really is what it accounts, where theres is odd disconnect and you know many independent.

Surveys have also gone out an independent of us.

Now various analysts and others have gone out and they've gotten very or investors they've gotten very similar feedback to what we get in our market research. So you have this odd disconnect where the physicians by and large are quite enthusiastic and yet you don't see that reflected in the first year of prescribing behavior and when we boil it all down.

It really is that these doctors have been precondition before we even got there they were precondition by the other product launches over the last few years to learn that when they start writing the more they write the more of a time sink it is because the insurers keep throwing back the prescriptions as.

Looking for them to Wright medical exceptions, asking them to get on the phone and talk to their own internal pharmacists and physicians and you go through enough of that cycle and the doctors say you know the more I write the less time I have to see patients and the less time My office that pass to actually run the practice so they don't right.

And so we that was where we really underestimated the impact going in and that's what we got so based on you know really based on where we started and also although we believe there's quite a long.

A tail on the product with respect to both intellectual property and know how and the difficulty of developing inhalable therapies.

We want to keep the.

Our time horizon within sort of normal and customary ideas about when you reach peak sales or not not extend that out too far so taking all that into account is what led us to now pulled back on the peak sales range. It's still yes, if we if we can hit that ray.

And it's still a very healthy product, but we want to.

The what we feel is more realistic given the experience and the data that we've gotten out yes.

Thanks, so much on appreciate it.

Your next question comes from the line of Phil Nadeau from Cowen and company. Your line is open.

Hello.

Hello Your line is open.

First.

Our next call a question comes from line of Slaven, Richard from Goldman Sachs. Your line is open.

Hi, Thanks for taking your questions. This is Andrew on for Salveen I apologize. If this has been asked already but if you can maybe comment on the ex us strategy.

Nbn, where that stands now in terms of those discussions with potential collaborators.

Yes, we've we've been discussing with potential collaborators for some time and we're continuing to there continues to be interest.

The European market is highly pressure with respect to reimbursement.

And that becomes an issue in figuring out what what the most valuable approach is to Europe. So we're working that through in terms of market research reimbursement research together with potential collaborators. So we very much are in active discussions but we.

Not yet.

We have not yet come to a point, where we're ready to pull the trigger on a deals. So we were continuing to develop at and we'll update you all as we as that develops.

Great. Thanks, so much.

Next question comes from the line of Phil Nadeau from Cowen and company. Your line is open.

Excuse me filling your line is open.

All right. So I think we're having a technical problems.

Again, if you'd like to ask a question. Please press star and the number one on your telephone keypad.

There are no further questions at this time kinda call back over to the presenters.

All right well. Thank you all and we look forward to updating you as a as we proceed with initiatives that we talked about have a great rescue week.

This concludes today's conference call you may now disconnect.

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