Q4 2019 Earnings Call
[music].
Good afternoon, and welcome to the Admob the logic slick water and full year 2019 financial results Conference call on Thursday March 12, 2020 at this time all participants I know you said only mode. There will be a question to follow Mifi advice that this call is being recorded at the company's request and it will be available.
Let's take approximately two hours following the end the call at this time I would like to introduce Mr., San Martin Managing Director Argot Partners, Adam Smith Investor Relations for him. Sir. Please go ahead.
Thank you Joanna welcome everyone and thank you for joining US this afternoon to discuss Adam Biologics financial results for the fourth quarter and full year 2019.
I'm joined today I'm joined today by Adam Grossman, President and Chief Executive Officer, and Brian Lens, Executive Vice President and Chief Financial Officer.
During today's call Adam will provide some introductory comments and provide a corporate updates and then Brian will provide an overview of our fourth quarter and full year 2019 financial results. Adam will then provide some brief summary remarks before opening up the call for your questions.
Earlier today, we issued a press release detailing our fourth quarter and full year 2019 financial results releases available on our web site at Atmel Biologics Dot com.
Before we begin our formal comments I'll remind you that we will be making forward looking assertions during today's call that represent the company's intentions expectations or beliefs concerning future events, which constitute forward looking statements for the purposes of the safe Harbor provisions under the private Securities Litigation Reform.
Act of 1995.
All forward looking statements are subject to factors risks and uncertainties such as those detailed in today's press release announcing this call and in our filings with the FCC, which may cause actual results to differ materially from the results expressed or implied by such statements.
In addition, any forward looking statements represent our views only as of the date of this recording and should not be relied upon as representing our views as of any subsequent date.
We specifically disclaim any obligations to update any such statements.
We refer you to the disclosure notice section in our earnings release May and the risk factor section of the annual report on form 10-K for discussion of important factors that could cause actual results to differ materially from these forward looking statements.
With that I would now like to turn the call over to Adam Grossman Adam.
Thanks, Sam and.
This is our first earnings call.
Quarterly conference call at ADMET Biologics, so welcome everyone and.
But all these fancy prepared remarks, which I am going to read but really for those that know me well.
Today was quite a day interesting trading day, it's been an interesting trading.
I guess couple of weeks and I said before I get into the prepared statements and then we open it up for questions I really just wanted to touch base and say, we're very proud of the fact that we were able to complete a strong financing earlier this year.
Raise a lot of capital that's going to carry us to accomplish a number of milestones. The company is in the strongest capital position it has ever been in.
We have three FDA approved drugs, we are producing drug manufacturing drug releasing drug making sales of drug treating patients helping to fulfill the tight supply in the immune globulin market in the United States, There's absolutely nothing that's changed with our company's fundamentals I wake up every day very upset.
About where we are in the world from a financial market perspective from a macro picture, but we're excited here at adamant biologics because unless the government tells us we can't come to work. We've got a team of 350. Some odd people here that are locked the arm in arm working very hard for our shareholders to exit.
You on the plans that we've outlined for you. So I just want to start the call by saying things are great ADVA. The stock price is out of my control and the ups and downs can make people sick and the one thing I can say is.
It's a rollercoaster ride and what they all told me to do is just hold on for the ride because we've got good products that help people and you've got a management team and a staff that has delivered for the shareholders and has executed on our objectives since acquiring this fees.
Assets in June of 2017, so I, probably upset my IR firm and my CFO give me a look so for those that know me understand this is who I am and for those who were just getting to know me welcome to the party. So thank you Sam I'll start with the prepared remarks now.
Good afternoon, everyone and thank you for joining us on todays call.
The second half of 2019 in early 2020 have been an exciting time at Atmel biologics.
As many of you know our to lead intravenous immune globulin products began and incentive relaunched in both achieved first commercial sales during the second half of 2019 in the United States following their respective marketing approvals from the FDA.
First commercial sales for began Innocentive commenced in August 2019 in October 2019, respectively.
Following the FDA approvals have been a game in incentive our commercial team began a coordinated outreach and marketing plan focused on messaging to healthcare professionals and treatment centers and working to secure access to therapy for appropriate immune deficient patients.
For the fourth quarter of 2019, we generated total revenues of $12 million, which represent.
Since I agree to 93% increase over the same period in 2018.
For the full year 2019, we generated $29.3 million in revenue revenue, which represents a 73% increase over the same period in 2018.
Brian will be providing more detail on the financials later in the call I would just like to mention that we are very pleased with the launch trajectory of our IP portfolio, thus far and we continue to ramp up the commercial production of both began an incentive and build continue forward to continued growth and supply to the us market, which can.
10 used to remain in a period of tight supply.
As a reminder, the timelines for production of plasma derived drugs are much longer than for other types pharmaceuticals and drugs.
Typically it takes seven to 12 months to collect the sourced plasma produced test and release, a batch and then immune globulin product.
These timelines are not unique to add my biologics and our typical for all manufacturers operating the plasma industry and these timelines are what analysts and investors should use when modeling for anticipating the timing of future revenues and forecasted revenue growth.
So I just want to say that I said earlier in this talk though we received FDA approval for these products.
Less than a year ago, we received FDA approval for these drugs in April and May of 2019, if we commenced commercial production within 30 days of these approvals call that June of 2019, if it takes a seven to 12 months to produce a batch.
We're not prepared to give forward looking guidance on the total amount of revenues that were going to do this year, but we're trying to be as transparent and as helpful as possible as to when investors and analysts.
Can anticipate inventory to hit the market and the ramp of revenue trajectory to take off.
Back to the prepared remarks, I'd also like to say that I'm very proud of our whole team at Atmel biologics analyze all the employees and staffs efforts in.
And gaining the FDA approvals for our products, producing and launching began and incentives as well as remediating the outstanding quality compliance issues at this site.
This was no small undertaking and it requires a lot of patient and dedication.
We are very excited about the potential of all of our IBG products and we look forward to keeping you updated as the commercial rollout in production ramp for these products continue.
For background began with the plasma derived polyclonal intravenous immune globulin and it is indicated for the treatment of patients with primaries moral immuno deficiency.
Began contains a broader to those found in normal human plasma. These antibodies have directed against bacteria and viruses and help to protect immune deficient patients against a wide range of serious infections.
Incentive is also a plasma derived polyclonal intravenous immune globulin and its indicated for the treatment of primary who moral immuno deficiency in adults and adolescence 12 to 17 years of age.
As many of his differentiated from began and other Ivy IC products on the market in that it is the only immunoglobulin manufactured using Adam is unique patented plasma donor screening and tailored plasma pulling design and methodology.
This technology proprietary to add HMA blends normal sourced plasma and plasma obtained from donors tested to have sufficient tires to respiratory syncytial virus or RSV savvy using the company's proprietary microneutralization testing assay obtains net incentive contains naturally occurring polyclonal.
So antibodies, which are proteins that are used by the body's immune system to neutralize microbe, such as bacteria and viruses and prevent against infection and disease.
I'd now like to take a moment ERCOT opportunity for plasma derived immunoglobulin.
As many of you know plasma derived therapies, our unique area of health care that has an established track record of long term growth and.
Durability.
In 2018, the addressable us immune globulin market was reported to have approximately $6.8 billion an annual sales.
The us market and demand.
For IC products as forecasted in projected to grow at an anticipated compound annual growth rate of approximately 11% each year for the next five years.
This could result in an addressable market size of approximately $14 billion by 2025 for total us immune globulin utilization.
We think it's a great time to be in the plasma industry and being able to provide immunoglobulins to a market that is growing at this pace and.
As a tight supply situation with unprecedented demand.
There was some other unique factors as well Adam is only one of six companies that currently produce IBG an immune globulin that are approved for the U.S market.
Adam is also the only use domiciled in own producer of these immunoglobulins at present.
In order to produce in market plasma derived products for the US market. These products must be manufactured from us sourced plasma collected from us donors.
Some other notable feature will features of the us immune globulin market, our safety as pathways reimbursement pathways are generally well established.
There are virtually no substitutes for polyclonal human immune globulin, but they're approved indications.
There was a low risk of junior products being introduced from non US countries are global emerging markets due to current regulations and product life cycles for plasma derived drugs can be decades long.
Now I'd like to provide a quick review of certain noteworthy fourth quarter 2019, and recent achievements.
In October data from two case studies were presented at I'd week, 2019, which describe the clinical outcomes from the compassionate use of incentive in the treatment of two immunocompromised children infected with RSV.
The two immunocompromised children were being treated at the Mayo clinic in Rochester, Minnesota for T cell lymphoma plastic lymphoma.
Both patients were undergoing chemotherapy and each were diagnosed with an RSV lower respiratory tract infection.
This is a serious and life threatening condition for these types of patients.
Both children retreated with incentive under an authorized emergency FDA investigational, new drug protocol and both children recovered from their RSV infection and were released from the hospital.
This is why ADMET gets up to do what it does every single day.
We're very pleased with these clinical results and believe that further evaluation is warranted for incentive and this and similar patient populations.
To begin 2020, we achieved a number of other key corporate objectives, including as I mentioned earlier strengthening the balance sheet to the successful completion of an underwritten public offering of address common stock.
This resulted in gross proceeds to the company of $94.6 million.
This capital was important for us because it allows us to continue operations and procure the raw material needed for the manufacturing a began in incentives.
As well as conduct the commercial rollout of our products expand the manufacturing of our Boca Raton facility, including bringing certain important supply chain functions in house.
Additionally, we are further bolstering and expanding our vertically integrated plasma collection facility network.
It should be noted that cash on hand at year end.
2019, plus the net proceeds from this recent financing results in a pro forma cash balance of greater than $110 million and this cash will allow the company to achieve.
Weve multiple milestones in revenue growth.
In early January 2020, we entered into a five year manufacturing and supply agreement to produce and sell plasma derived intermediate fractions from our FDA approved immune globulin manufacturing process.
This agreement is expected to add approximately $5 million to $10 million per year in annual revenues for 2020 in 2021 and.
And approximately $10 million to $20 million of revenue per year for 2022 through 2024.
We are able to potentially recognized revenue from these intermediate fractions more rapidly than the typical seven to 12 months production cycle scene with our finished immune globulin and it products.
And finally in December 2019, we were added to the NASDAQ Biotechnology index.
All of these initiatives served to solidify AD was placed within the biotech and plasma products competitive landscape.
And it positions us to be able to execute on our corporate goals admission in the months and quarters ahead.
So with that I'll turn the call over to Brian lens, our CFO for a review of the financial highlights. Thank you Adam.
Since we issued a press release earlier today outlining our fourth quarter 2019, and full year 2019 financial results I'll just curious on the highlights.
For the fourth quarter 2019, our total revenues were $12 million compared to $4.1 million for the same period in 2018, and this reflects an increase of approximately $7.9 million or 197%.
The increase in revenues was attributed to several new contributing factors, which include the first commercial sales of incentive in October 2019, the commercial relaunch of began in August of 2019 sales of our intermediate fractions related to our recently disclosed new customer manufacturing and supply agreement and contract manufacturing.
Avenue all manufactured here at our Boca Raton, Florida facility.
These revenues were partially offset due to admin, having one at the license Plaza Center during 2019 compared to having to FDA license plasma centers throughout 2018 generating revenue.
ADMET transfer ownership of two of those plasma centers on January Onest 29 team. This is part of the purchase price for the bulk of hotel in Florida facility. We've already put plans in place to expand our plasma collection Center network from currently having one FDA approved plasma center to expanding our plasma center network to include an additional five.
Five to 10 plasma centers throughout the us over the next three to five years.
Our consolidated net loss for the fourth quarter, 2019 was $10.6 million or 18 cents loss per basic share and diluted compared to a consolidated net loss for the fourth quarter 2018 of $18 million or 39 cents loss per basic and diluted share.
The decrease in net loss of $7.4 million was primarily due to higher revenues of approximately $7.9 million and a reduction of total operating expenses of $700000. During the fourth quarter 2019 compared to the fourth quarter 2018.
Partially offset by increased interest expense.
Included a $10.6 million net loss for the fourth quarter 2019, or noncash expenses of $1.9 million, which is comprised of stock based compensation depreciation amortization and noncash interest expense.
And now for the full year 2019.
Total revenues were $29.3 million compared to $17 million for the full year 2018. This reflects an increase of approximately $12.3 million or 73%.
The increase in revenues was attributed to several new contributing factors as previously mentioned first commercial sales of incentive and began intermediate fraction sales from they recently approved supply agreement from a new customer as well as contract manufacturing revenue all manufactured here at our Boca Raton, Florida facility.
As previously stated these revenues were partially offset due to add more having one plasma center during 2019 compared to two centers throughout 2018 generating revenue.
Our consolidated net loss for the year ended December 31, 2019 was $48.3 million or 89 cents loss per basic and diluted share compared to a consolidated net loss for the year ended December 31, 2018 of $65.7 million or $1.45 cents loss per basic and diluted share.
For the full year 2018.
This decrease in net loss of $17.4 million was primarily due to increased revenues of approximately $12.3 million. In addition to lower operating expenses of $6.5 million for the year 2019 compared to 2018.
The full year 2019, let net loss of $48.3 million included noncash expenses of approximately $7.1 million. This is comprised of stock based compensation depreciation amortization and noncash interest expense.
At December 30, Onest 2019, advent had cash and cash equivalents of $26.8 million and accounts receivable of $3.5 million. This is compared to the December 30, Onest 18 balance of cash and cash equivalents of 22.8 million and accounts receivable of $1.4 million.
At December 31, 29 team at my hat inventory of $53.1 million compared to December 30, Onest 2018 inventory of $18.6 million.
The increase in inventory from 2018 to 2019 sets the stage for anticipated year over year revenue growth, which were expecting for 2020 and beyond.
Adam as net working capital as of December 30, Onest, 2019 was $71.8 million compared to $34.9 million as of December 31, 2018.
On February 24th 2020, we announced the completion of an underwritten public offering including the full exercise of the over allotment option of approximately 27 million shares of our common stock at a public offering price of $3 or 50 cents per share, which resulted in gross proceeds of approximately 94.6 million.
In dollars to the company before deducting underwriting discounts commissions and other offering expenses. After deducting these underwriting and other operating expenses. The net proceeds to the company were estimated to be $88.5 million.
As previously mentioned our cash on hand at 2019 year end 2019, and the net proceeds from this recent financing results in pro forma cash of greater than $110 million. So this puts us at a place to be well capitalized to achieve several key milestones throughout 2020 and beyond with that I'll now turn the call back.
Over to Adam for closing remarks.
Thanks again, Brian.
Again, I've got more prepared stuff here, but before I read this prepared stuff I'm going to talk a little bit about our key strategic priorities for the upcoming year end, we woke up this morning to the same news that you all did and be a shutdown we saw baseball's closed.
I think my kids lacrosse is sell canceled for the rest of the season. So.
These strategic goals and priorities I'm going to outline for you are based upon assumptions I have today as we sit our supply chain is intact. Our staff is coming to work.
We are doing well.
So this could change refer to our risk factors in there so I'm going to read this and I don't want people to get offset like how is he going to accomplish all this we're realistic we've got contingency plans in place.
Again, we've got the inventory we're buying the inventory we got the cast by the inventory we've got the staff to make the drug and we've got demand for the products to pull it through so with with that I'll get back to the.
Written remarks looking ahead now to 2020 I'd like to take a moment now to review Adam is key strategic priorities for the upcoming year.
So our goals are to continue to expand the activity for the game engine of video game in incentive for the treatment of patients with primary immune deficiency and continue to ramp the production throughput for the first full year of commercial sales of our products.
To evaluate implement strategies for potential manufacturing capacity expansion, which are ongoing.
To execute on fulfilling the newly secured loan commitment to produce and sell plasma derived intermediate fractions.
To expand our plasma band our plasma collection Center network by at least two centers in 2020 and by at least five centers over the next three to five years.
To execute on our supply chain robust this strategy and being certain fill finish and other capabilities in house.
Secure new supply contracts for potential CMO opportunities that are internally to enhance our intellectual property portfolio as we put out an announcement.
This week last week last week.
Job security product development.
Element to enhance our intellectual property portfolio in product development pipeline candidates, consisting of additional specialty plasma and our hyper immune globulin products targeted two important infectious disease.
We are monitoring the cobot 19 global situation.
We can report today that there are no members of Atms management team or operational team or otherwise that I've been infected with the virus at this time.
Currently we are not experiencing any impact on our supply chain. However, we refer you to our risk factors in our 10-K as we may not have all the information from our third party vendors suppliers laboratories et cetera.
This is a global pandemic and we continue to closely monitored the situation.
And we hope that our shareholders and our analysts and our stakeholders know that you're dealing with the management team that is nimble that is flexible that's on site looking at own at our manufacturing plant every day.
Whether my family likes it or not I'm here I put the business first and that we're going to do everything we can to ensure that investment and that we protect.
The continuity of care for the patients that we've made a commitment for.
In closing I'd like to the highlight that we're proud of the organization, we built over the past two and a half years. Our company is strong today, we have completely transform the assets that we acquired in June of 2017, and we are now commercial enterprise with three FDA approved commercial immune globulin products, we're not waiting for anymore.
Rubles, we've got what we need.
Collectively these three products together with the associated intermediate fractions carry a total revenue potential of approximately $250 million annually or more.
We have an FDA compliant manufacturing facility with a 400000 leader processing capacity and room for expansion.
In addition, we're now members of the plasma protein Therapeutics Association or PA and I'm, a member of its North American Board of directors on Privy to a lot more information today than I ever was about what's happening with respect to the industry and lobbying the hill and I can tell you. It's great that we now have a seat at the table with other leaders.
In our industry to address the unmet needs for patients in the us.
And we are very excited to be able to participate in such a rapidly growing global marketplace.
We believe all of these items leave us well positioned for success in the growing plasma market, where type product supply continues to be well documented.
We remain deeply committed to the ongoing commercial rollout of began in the Senate and bringing each product to patients with life threatening immunodeficiencies. We're confident that we've got the right people in plan in place to maximize the value of our portfolio and the value of ADMET biologics for our stockholders.
We look forward to keeping you updated on our progress in the months in quarters ahead. So stay in the car with us on deepen the car with you My management team is deepen the car with you My Board has deepened in in the car with you.
And.
You know, we're going to keep blinders on and.
I've been talking raise that if you make good products that help people everything falls into place and Thats what were going to do so we're going to we're going to work like hell and deliver for for our stakeholders. So.
With that the operator asked me to let her know that we would now like to open the call for questions. So operator, we would now like to open the call for questions.
Ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your touched on telephone. If your question has been answered or you wish to remove yourself in the queue. Thanks Brad.
Your first question comes from the line of Anthony Petrone of Jefferies.
Your line is open.
Thanks.
Adam and Brian Congratulations on on this on all the progress in the past year and.
Looking forward to continuing to attract the developments here. It add my so maybe just in light of where we are and the landscape with Corona virus.
Adam you had a press release last week.
Talking about expanded IP around San as that potentially covers two strains of Corona virus.
One of your competitors has moved ahead to develop a high tighter kroner buyers products, So maybe where the plasma industry sits in terms of Corona virus and how feasible cannot be that we do have a antibody therapy from this industry knew attack. This virus say within the next year too.
Years, and then I'll have a couple of follow ups.
As far as the first of all thank you Anthony but as far as timing goes you know Thats a question for the FDA, how fast they want to approve of something but what I can speak about is that adamant biologics has published in numerous.
[music].
Piece of data in peer review publications and it met on 20 in 2015 I believe it was journal cold Frontiers in immunology bye.
The only authors Dr. Jordan Orange.
We published data that demonstrated that plasman donors that we identify with our.
Patented RSV Micronet Presti Microneutralization assay also have high levels of neutralizing antibodies to a panel of seven other respiratory pathogens.
Two of those pathogens were to common Corona viruses two to 98.
We then further did additional testing on three batches of incentive compared with a number of batches of commercially available IBG at that time, and we demonstrated statistically significant levels of antibodies against RSV as well as this panel of other respiratory viruses, including the.
Those two kroner viruses that I mentioned somewhere between approximately two to eight fold greater levels of antibodies and commercially available.
Slide check so.
Ascending of today is manufactured using this this.
Technology, and we feel very confident that.
The antibody profile of our product as it pertains to respiratory pathogens is pretty consistent touch the way we manufacture the drug. So we've got a patent already issued we are commercial with this product our press release went out before another companies press release.
Im not an IP expert we've got fancy Schmancy IP counsel from a couple on so from a couple of different firms, who we work with known what I know is that.
You cannot do anything people are allowed to investigate whatever they want it's once they generate some sort of income or revenue derived some benefit it.
That we may have an issue we don't see any issues at this time in fact.
We consider the other plasma companies.
In the industry.
Collaborators, especially when it comes or something like this.
Adam is on the phone with we've been on the phone with CDC with NIH Shah, our Chief Medical and scientific Officer was the former head of the Immunology laboratory at the NIH for many many years got a lot of connections there as well as you know our relationships within the biotech community.
We're doing everything we can to.
Provide insight and guidance.
Adam has been a company.
We're not just like hot to the table here. Anthony This has been our founding principal in our founding mission to develop plasma derived therapeutics polyclonal antibody products for the prevention and treatment of respiratory viral infections and immune compromised patients.
It's amazing that 15 years later, the world is kind of shutting down because of this but.
We want investors to feel confident that they're working with a team of scientific leaders is like how how we like to look at were not copying anybody else. We feel people are copying us.
This is what we've been championing admission.
Since inception of this business, we feel very confident that we're in a good place if we need to defend our IP, but we also feel that incentive could potentially offer some been some benefit in a very very near term.
Wait to some of these patients hopefully that answers your question no. It doesn't I guess.
Just couple of follow up solid other shot jump in here what would be 10.
And.
Shortages in particular.
But again is is obviously laundry.
And so sort of when I look like in the current state of Ivy shortages can you give us enough data exactly kind of where that says how much slack or lack thereof is there and sort of when you consider the shortage situation.
But where are your balance sheet said cfifty million dollars of inventories exiting fourth quarter, how should we be thinking about 2020 and the potential to convert that.
Into revenues over the next say 12 to 18 months.
Thanks, Sean.
Sure you got an Anthony so Anthony you like to use the word shortage.
I'd like to use the word tightness of supply from from from my perspective, the plasma industry produced more immune globulin in 2019, and they did in 2018 as a whole on and from the best of my memory. The industry produced more in 18 and they Didnt 17, so the industry. If you take it as a whole.
Full.
Is producing more immune globulin than everyone than ever before so it's hard to serve our shortages I don't like that term.
I'd like to think that Theres, a supply and demand imbalance. The demand is outpacing supply. So we look at as as.
From looking at some.
Marketing industry reports that we've read what's really driving this demand is the growth in secondary immunodeficiency the utilization of TMB sell depleting agents car T cell immune modulating products other novel therapies for autoimmune diseases in cancer. When you use these immune modulation products. It it may.
Modifies the immune system in some patients may be more susceptible to opportunistic infections.
Reports on when we were at JP Morgan we were looking very closely at these reports back then we were seeing somewhere in the range of 5% to 8% supply and demand imbalance.
I defer to you Anthony I know that you track this stuff well so so.
Maybe greater than that it may be less than that but.
Different products, you may see some spot.
Shortages, if you will but as a whole, it's really being driven by the utilization something that my salesforce. So we had a call with them today I wanted to be prepared for this call and something that we're hearing from some of our field force out there is that in light of the.
Current throne of our situation of our situation patients with Immunodeficiencies, who are on IBG.
Some clinicians if they have the availability of product are increasing of certain immune compromised patients. This is be costs basic principles of immunology teachers more antibodies better than last when trying to Peter presented infection and the physicians don't know of their patients are going to be able to come in as regularly as they've been able to.
Due to.
Certain restrictions that may put in place. So I think that this tightness of supply is going to continue for the foreseeable future.
I know that there are a number of activities being undertaken from other manufacturers, but we really believe that as much product is Adam I can produce this year next year the year after.
Through 2024, we believe that the market will easily absorb all the immunoglobulin that we can produce out of this plan to touch on your second part of the question on alternative Brian. Please sure. Thanks, So the Anthony as you mentioned converting the $50 million in inventory into sales.
What I want to have everybody keep in mind as the $53 million that we have on the balance sheet at the end of 29 team. This is in our cost. There is no margin. There is no profit margin in that that profit margin in gross gross margin will be recognized throughout 2020 and beyond and also keep in mind. There is an inventory sales cycle as we mentioned earlier from seven.
In the 12 months and as part of the inventory growth. We wanted to plan for the future as we purchase that inventory and built that inventory up after we assi receive the FDA approvals in the middle 2019, we anticipated.
Future year over year revenue growth throughout 2020 beyond so thats, how I think about the 53 million Theres no margin. There is no profit it's in our cost and then think about future year over year revenue growth.
Thank you.
Your next question comes from the line of Elliot Wilbur of Raymond James Your line is open.
Hi, Good afternoon has actually that come around on for Elliot.
Congrats on the progress glad of unsafe and thanks for taking the questions.
Sure.
So let's have a couple of here on incentive and the commercial strategy going forward.
So first off could you update us on some other aspects of the initial launch dynamics on incentive and I know you mentioned some details around the inventory build.
But when would you expect to be in full launch mode from a commercial perspective, and maybe what I saw the gating factors in terms of reaching that point, especially looking at things like reimbursement.
Sure. Thanks for the questions. So.
When you say full launch mode I'm interpreting that to mean, you know when Weve hit full commercial capacity, we're where we are launching the product incentive is a very detailed sale.
As many folks know and the investment thesis around incentive is that since its manufactured like a hyper immune it is price like a hyper immune so.
It's typically price at a premium to where standard immunoglobulins are sold.
We're very pleased with the launch so far we're making drug we've got drug in the channel and we're pulling that drug through and it's being utilized in patients.
The reimbursement pathways for a cenovus is to being used in a hospital based setting today, we're working very closely with PNC committees getting emergency access and emergency approval.
The product is being covered under certain DRG ease when certain patients are re admitted to hospital setting with say a type of pneumonia or in RSV confirmed.
Diagnosis number PMT committees have approved for use in the outpatient setting their miscellaneous J codes that can be used.
To obtain reimbursement from private and public payers at the present time, we plan a number of center specific as well as.
National Medical Medical Education Symposiums. Some of these are slated for later in the year typically.
As I mentioned earlier in my with my prepared remarks spectrum.
I'd week is typically in October.
So we're very hopeful that I'd week is going to.
Take place but.
We've got.
We've got right now we've got five salespeople pound in the Street, we've got three field medical science liaisons and we're out there responding to medical information requests and meeting with clinicians payers and treaters all the time.
We feel very good about the uptake of incentive.
Okay perfect Thats helpful.
I guess is related follow up are there any key milestones tough for us to watch for in terms of either those specific pair negotiations or the PMT company reviews and.
Second parts of that I guess could you discuss any plans to build out.
The commercial organization over the course of 2020, either in terms of adding additional field reps or.
Maybe even a chief commercial officer.
Et cetera.
Sure.
I think.
[music].
With respect to milestones I mean, I just not typical that I've I, we don't have planned on our like press release schedule that when we get payer coverage, we weren't necessarily planning on announcements I mean, we think we're going to let revenue speak.
Quarter over quarter as as we go.
The plan is to enhance our commercial team.
But im not going to sit here and blow smoke and say, yes, we're going to hire another 345 people in another three medical science liaisons I mean look if we find some super duper people were going to bring them on but quite frankly, I mean, let's be straight right now in number of hospitals around the country on our line people and so I think we've got to keep our buys.
Open we've got to continue to move forward, we've got a good solid core team, that's well trained and understand this product.
So I feel good about that but im not going to sit here and tell you, yes, we're going to round out the whole team and we're going to hire a fancy chief commercial guiding we'd love to do at all it's part of our budget in our plan, but I got to see how this plays out hopefully that's a fair answer I won't get my face ripped off for that.
Yes, thats perfect. Thanks.
Your next question comes from the line of Landry Shell with Oppenheimer. Your line is open.
Hey look.
Hey, Adam Thanks for taking my question.
I want to ask about.
Your your ability to get.
Get hold of raw source plan.
Without using your own centers, which I know earlier growing over the next few years I know you'd have an agreement with cripples. If you could remind us durability of that when that expires and also when you say that you're going to build another I think it's five to 10 collection centers would that be the right number for you to be self sufficient.
With that align with your current fractionation abilities in terms of the vocal plant. Thanks.
Oh, great questions.
Something I do want to say is that we're not experiencing any changes in donor behavior to date at our plasma collection Center.
Additionally, I had meetings yesterday with my.
Friends over at at referrals and they too have confirmed to me that they're not seeing.
Any significant.
Differences in donor collections, we are receiving all of the plasma that we are contracted for.
The existing contract that we have the first term expires in June of Twentytwenty too.
And then we have to two year extensions.
[music].
On that agreement.
We're very good partners with griffo as we do certain testing for grapples. They are our plasma supply or as you know they they acquired the biotest plasma centers.
A number of years ago. They continued to be a very very good provider and admin is receiving all the plasma under its contract we've got from contracts in place Leland.
I don't see grapples, playing with these contracts at all there I tried and true collector plasma they have hundreds of centers in the United States and and for the amount of plasma that were contracted for.
It's a.
Pimple on the olefins behind from a supply standpoint.
As you know my plant here is 400000 meter capacity, we believe it has the potential to grow to maybe five 600000 leaders capacity.
Typical plasma center collects about 50 60000 liters per year, if you build good ones, maybe they get a little more so when we're talking about building up to 10 centers that would give us in that range of about 600000 leaders annually.
So to answer your question, yes that would make us totally self sufficient.
Our goal right now is to really.
I find the right locations get these centers.
Onboarded because I think most folks know I know that that you've covered this in your report typical plasma center takes.
Somewhere between 3 million $3.5 million to build.
And obtain FDA approval, it's about a two year process start to finish.
And these centers trade on the open market, if you're looking to value them in the 10 12 $15 million range.
I also like to look at plasma as you know to different type of oil, it's a different type of commodity.
I was talking to our board the other day in this past Monday when the market was down the first 2000 point day ever I said to them all the good news is guys that.
30, 40 50 million of inventory, we have gets what it's worth more today than it was on Friday. So the value of plasma remains strong and must contracts are in good standing we've got the plasma we need to.
Let's just say produced the revenues that would keep our analysts happy from an expectation standpoint.
Okay.
Then just kind of another way to ask about the similar topic is if you were to slow down on the build out of those collection centers or.
Or just refer them.
Would you be concerned about.
Getting hold of plasma or is this really more to have asthma becomes self sufficient for that down the road.
You may look to some kind of strategic opportunity. Thanks, you know I can tell you I lose sleep over a lot of things and plasma supply is not one of them.
We have a very good relationship with our vendors and grapples is our main vendor they are not our only vendor.
So look you're dealing with a management and board.
That has an extensive track record of success and industry relationships throughout the plasma industry.
I'm not concerned.
My hope and goal is that this contract continues.
Throughout the two extension terms as well as we build all of our centers I have excess supply there and I can maintain.
The sale sourced plasma to third parties.
As revenue line.
But just know that we're doing this because look.
Im sitting in this office today and I'm talking to you all from Boca Raton.
We had no intent of owning this facility, but when I rely on third parties, sometimes they don't do the best job for me I want to make sure. My shareholders are protected I have millions of dollars of my own money invested in this company and I count on myself I kind of my management team and I count on my staff and when I rely on.
[music].
My team and myself, we seem to get things done when I rely on others had been screwed on I want to get screwed anymore. So we're just doing this because we think it's we think it makes sense globally. The demand for plasma is increasing at a rapid pace and we don't talk about the pricing of sourced plasma, but the pricing of sourced plasma.
He has been growing exponentially you can raise the price of raw material a lot faster than you can raise the price of a finished drug thats commercially available so.
A lot of folks don't look at that in the plasma space, but thats, what makes our business unique and.
Anyway, you look at at Leland, we want to ensure he who has the raw material or she has the raw material or they whoever it may be has the raw material can make the energy. So we want to ensure that we have the right amount of material encumbered. So we can continue look I'm coming out here and I'm, putting putting my neck on the line, saying when we get to peak potential.
For five years out we say, we can generate $250 million are more revenue out of this place I can't do it unless I have plasma that's why I'm doing it.
Great. Thanks for taking the questions.
Thank you.
Can you save.
Your next question comes from the line of Yale Jen Laidlaw <unk> Company. Your line is open.
Good afternoon, and congrats for your.
Earning cause.
Very good stock.
Yes, thanks Yale.
Two questions. The first one is that you mentioned earlier I can make an earlier Anthony that.
Okay. So people try to make the.
Gobank checking.
And given now in the United States.
Unfortunately become available as well.
I guess the government has about $8 billion.
On a bit by bit enough those was tied to oil full flow treatments and their thoughts for you guys. The thinking about along that line may be.
On that.
To sort of increased pipeline.
Sure.
Great Great questions. Thank you I can tell you look we we like grants.
We like non dilutive capital, we know our shareholders like non dilutive capital.
We believe that as a company that is sitting with IP that has the words corona virus in it and product publications that talked about grown a virus. We think we're in a we're in a good spot, but again nothing is guaranteed and you know I assume that if we were awarded any sort of grant money or any sort of.
Funding that would certainly be something that we would announce as we'd be very proud of that.
You mentioned, it and I guess Victor mentioned it too.
One thing I do want to point out is.
[music].
The FDA issued some blood guidance Sky guidelines yesterday, and if I recall correctly. They are saying that people who have been infected with cobot 19 or have been in close contact.
I have to wait at least 28 days until after they.
[music].
Recover in order to donate blood plasma.
You know I.
There are many ways to make a hyper immune and I don't do we have the time to get into all of these ways, but you can use vaccines you can use naturally occurring antibody.
Again, I've talked about that admin has high tires to oversee 43.
In.
A sensitive and we publish this data and that OFC 43 is based on a couple of medical papers and I've seen from our Med Affairs Department, who see 43 does cross react with the cobot 19 buyers.
I think it's.
I don't have enough details to comment on what some of the other plasma companies are doing but I think it would be very hard at least in the near term to get enough plasma at least from us citizens.
To be able to make a hyper immune and again it takes.
For the best companies seven to 12 months produce batch now can FDA expedite some of these things can FDA give you emergency.
A use and emergency access I NDS and approvals yes.
Im not going to say something can happen, but.
I get my commitment that we are making as much noise as we possibly can.
We are we're doing our best to gain attention from the powers that be in the government CDC the NIH the FDA.
And the medical community. So we feel very good about our position hopefully that answers your question Neil.
Absolutely and maybe just one.
A question Pat on this.
When theres been a warmer one.
I know you're not going to break down the road sells them different lines those wells some guidance, but do you feel debt.
Given that would it not fully over yet.
The attentive just said that.
Hello.
I'll fifth season.
Would that be impact by that.
Maybe offset on the other way by having pulled at night. So maybe there is more patient moly mall.
People wanting to take a higher dose so how do you did it is there.
Yes, I can tell you we are and we are it would be against the law for us to go out and promote the product for something outside of its labeled indication.
And I am I'm not prepared to comment on how sales are in Q1 I can just tell you I feel very good about the launch.
I can tell you that the products being purchased it's being utilized it's being infused into patients and we feel very very good about that.
I do think that the awareness.
Of the general public to respiratory viruses and that the habich that they can wreak on the elderly in the immune compromised.
Certainly prevalent.
It's nice that I've got CNN, Fox and MSNBC championing the message that I had been pounding on the table for for the last 15 years and putting.
Between myself and my family approximately $50 million behind so we.
We believe in this we think that plasma products certainly they may not be the end all be all answered, but we certainly believe that they help.
And they are certainly a very very medically plausible and scientifically rational way to treat.
Immune compromised patients suffering from.
Different viruses and bacterial infections.
Okay, great. Thanks again, congrats on the Gustav.
Thank you Yale and it's only been a warm winter in the northeast it's been cold in Florida as you can believe it. This winter. So the climate change I saw the funniest me never yesterday I start climate change needs to call Corona viruses PR consultants so.
I thought that was pretty funny.
Okay. Thanks.
Thank you all right any.
Any any other questions sneakers I'm showing no further questions at this time and I would like to turn the conference back to Mr. Adam Graf.
Okay.
Thank you everybody you know our timing was certainly interesting again I'm very pleased that we completed the financing when we didnt to those shareholders who came into support the great mission of our company. We certainly thank you and I can tell you the patient certainly thank you.
[music].
Today's call hopefully the next time, we have a call the market isn't a less volatile state, but I. Thank everybody for your continued support.
This is a good company with good products and we're going to continue to help people. So thank you for dialing in and have a very good day and stay safe.
Ladies and gentlemen, this concludes today's conference call all for joining you may now disconnect.
[music].
[music].
[music].
[music].