Q1 2020 Earnings Call
[music].
HM.
Welcome to the Acorda Therapeutics first quarter 2020 update at this time all participants are in listen only mode, we'll be Clinton and especially in two follow up.
Please be advised that this call is being recorded at the company's request.
And now introduce your host for today's call attorneys that could be no executive Vice President corporate communications at Acorda. Please go ahead.
Thank you good morning, good afternoon, everyone. Before we begin let me remind you that our presentation will content contain forward looking statements detailed disclosures can be found in our SVP filings, which are public and we we encourage you to refer to those filings I will now pass the call onto our CEO Ron Cohen.
Ron.
Thanks, Stephanie good afternoon, everyone.
Starting with the coal did my gene pandemic. This is created an unprecedented challenge for businesses throughout the country in the world.
<unk> priorities or ensuring that health and safety record as associates and their families. While also continuing to serve the Parkinson's disease and multiple sclerosis communities.
Most of our associates are now working from home with the exception of a small number of employees where needed to keep our manufacturing facility compliant and manage the operations of our art we offices.
Facilities receive regular deep cleaning those associates, who need to go in have access to match sluggish hand, sanitizer and we also imports are well distancing.
We haven't had any interruptions in the supply of our medications and we currently don't know of any circumstances that would cause disruption.
Our field sales and medical teams have adapted rapidly there now working virtually to provide education and information for health care professionals and patients we're seeing a high level of interest in these programs for both groups.
Acorda has also made a substantial donation of personal protective equipment for P. P E to support workers at our local hospitals in Boston and New York.
[laughter].
Moving to a review of Q1.
Revenue for both in breach and PURA at 4.4 million and 20.1 billion, respectively were consistent with our internal projections. These took into account for traditional impact for seasonal factors on our business in the first quarter. These include the fact that many patients switch health plans at the beginning of the year with resets.
We have deductibles and changes in coverage in addition, Medicare patients, which form a majority of parkinsons patients.
Our impacted by the initial coverage phase at the beginning of the calendar year, which resulted in increased out of pocket cost for them to obtain their medications.
Consistent with this January ex factory sales for both products, where the lowest through the year to date.
They then increased month over month from February through April So that February was greater than January March greater than February and April greater than March.
In March as it became clear that social doesn't seeing and staying at home would help to slow the spread of the Corona buyers. Many physicians offices were also moving to virtual operations and people living with Parkinson's where an at risk population were among the first the shelter themselves at home independent research has shown.
And approximately 80% drop in in person visits beginning at that time and that was in person visits to neurologists. During the ensuing weeks. Consequently, we saw a decrease in new prescriptions at the last week of March the continued into the first three weeks of April and we have begun to see some recovery Andrew.
Prescriptions over the last two weeks as physicians and patients have been adjusting to the new virtual interactions.
Our field and customer service teams of move quickly.
They're engaging virtually with physicians and their stabs they've been providing education information about how to prescribe through our hub also ordering samples even without access to the offices.
Among our other new initiatives. We've also moved all of our speaker programs, both peer to peer in consumer virtual platforms. We recently had a virtual consumer speaking program could speaker programs for example, with presentations both by a leading position and the patient ambassador. It was attended by over five.
Hundred attendees, we believe that these techniques will continue even when the Kobin crisis has passed based on their demonstrated the power of current technologies to reach both patients and HCP is in large numbers and cost effectively.
We also have a team of nurse educators now available to assist in breach of patients with questions about the correct way to administer Indonesia, and we have customer service teams also available to assist in Brisa ended pira patients with questions about their medications or insurance coverage.
Our specialty mail order pharmacy model for dispensing both in breach and Pira allows patients with Parkinson's and mass to get their medications without having to leave the house or visit a retail pharmacy.
We've also launched new tools and services to provide people with Parkinson's with more detailed information about how to administer and brisa focusing on the understanding that we developed in 2019 of the need for supplementary training, particularly with respect to call. These include a new helpful.
Hence guide, which is now available both on our website and in print and an updated.
Video how to video that takes patients through the administration process step by step our nurse educators are also connecting with every new in breach of patient to ensure that they are properly trained.
As we announced in our fourth quarter call. Our top priority. This year is to reach people with Parkinson's to educate them about and brita and the first quarter, we initiated additional programs to reach people the parkinsons through a variety of online vendors our research indicates that when patients asked.
Their health providers about Ambrish up about two thirds of them receive a prescription.
Our initial goal was to deliver at least one digital ad or impression per person per day, specifically to people for itself is identified as members of the Parkinsons community.
Through the first quarter, we well exceeded this goal delivering approximately 48 million impressions. This graph shows the increases in metrics between the first quarter and Q4 2019 as well as the breakdown between banner in Facebook ads.
We generated 113000 visits to the Ambrish a consumer website in the first quarter compared to 89000 in Q4.
We're encouraged that these metrics have continued to increase in April and a portion of these programs are also tied to AI and machine learning engines. These are helping us both the measure and optimize the impact of these ads. This is an iterative process, we expect increasing impact overall.
Time, specifically over the next few months.
Moving to our first quarter 2020 financial performance in 2020 guidance.
This table outlines key financials for the year, which you'll find the dressed in detail in our press release, we ended the first quarter with cash cash equivalents investments and restricted cash of $126.3 million and the first quarter. We recorded a 26.5 million dollar change in the fair value.
Derivative liability, which is contained in the 2024 convertible notes change was a result of a reduction in the fair value of the liability, but this is a conversion feature of the new notes that will require revaluation on a quarterly basis.
And PURA is.
Appear as an established franchise and our revenue projections are based primarily on the rate of refills and persistence significantly more than on new prescriptions. Therefore, we remain confident in our full year expectations for Ampyra and are reiterating our our revenue guidance for 2020 of 85 to 110 Meg.
In dollars.
Asia, which was launched last year is still expanding its face of patients. Its revenues are driven significantly more than peers by growth in new prescriptions. As a result of the co bid 19 stay at home orders widespread decrease in physician office visits we don't have visibility into how changes and.
And behavior may impact new prescription starts over the remainder of the year and therefore withdrawing our 2020 guidance.
We're also reiterating our guidance for operating expenses for 2020, which are expected to be 170 to 180 million as it was as a reminder, our operating expenses in 2019 were 252 million and so we've made dramatic reductions in our cost structure and we're continuing to look for.
Ways to reduce costs further.
We believe that in Russia will become a standard of care for the treatment of Parkinson's disease, and we continue to expect in breach of peak sales of $300 million to $500 million.
Looking ahead, our top priorities for 2020 are to accelerate and breezes growth using all of the strategies. We reviewed earlier continued to support Ampyra as it continues to generate valuable patch and is still an important and medication for Dms community and to drive long term value for shareholders.
Managing our cost structure and strengthening our balance sheet.
We'll now open the call for your questions operator.
Thank you would like to ask a question. Please press Star then the number one on your telephone keypad again, a star one to asking questions well pause for a moment to how the county roster.
Okay.
Your first question comes from Michael Yee Jeffrey.
Okay.
Hey, Ron inflation coming out Canada, you found.
Two questions Rick I can hear one is yeah, okay, great Hey, Ron Thanks.
Okay two questions one is.
How do you think about 22 key.
Trends for three shack, yet you talked about how you thought things might recover a little bit should maybe just talk about extension you went to guidance. How how you think about Q2 in Q3 in Q4 and the second question actually as digging a little deeper into it do you think that revenue numbers are.
More of a patient awareness, so painful doctor awareness issue or insurance.
Reimbursement issue, maybe just talk initiating selection there still are more the bottleneck.
The like.
Correct advertising and digital ads that that was actually I think so is it something else. Thanks.
Well so yes, so let me let me tackle at a one by one.
So 2020 trends how.
It's it's difficult right now in light of the sort of a curve ball, we've all been thrown with coated.
The project into the rest of year, which is why we felt we really had to withdraw the guidance on a breach.
We are pleased with the pattern that I mentioned, where we've seen both rent PRN in breach.
Increase sales month over month and ER.
January through April.
But remember most of that doesn't account for the impact on new prescriptions that we began to see in the last week in March and that persisted.
For the first three weeks of April and then the last two weeks, we've seen some recovery, it's not back to where it was but theres clearly been recovery over the last two weeks, but having said that that's not a long enough period for us to really project. So we're going to have to follow at week by week month by month, along with the more global trade.
Ends in terms of physicians offices opening up more patients getting used to tell them as telemedicine regime.
Getting back to more normal.
Patterns in that sense, so we're going to be watching that as we go along Matt that feeds into your other question.
We we mentioned I think on the last call the last quarterly call.
But we identified that the key issue right now all creation as you mentioned are part of the puzzle right. So physicians are not a physician awareness and willingness to prescribe a new product.
Insurance issues, and then patient awareness and patient demand and what we what we did last year was we focus.
Largely on insurance and physician awareness and by the end of the year. We really had made a lot of inroads on both a we had or something like 75% unaided awareness and the breach among our target physicians 92 over 90% I think it was 92% if I'm remembering correctly.
Aided awareness of embryos. So the awareness was there and we did it I think a very good job with that.
Insurance.
We got we got up to well over so we got out over 70% commercial formulary coverage, which was great.
We were at 25% of Medicare coverage and it's too soon to tell where we're going to be because Medicare makes its decisions on next year's coverage about mid year, but we've already seen some more flexibility through the co bid prices even for patients who are not on formulary or plans that are not on formulary.
There's been more flexibility in allowing patients to get to drugs. So those trends. So far have been positive what we identified by the end of the year was that the big course needed to be on patients. The research clearly showed that when patients go and asked the doctor about.
In breach up about two thirds of the time, they get a prescription and what we were hearing from the doctors and elsewhere was they theres just so much going on at every visit so many different issues that they're dealing with that they even if they're aware of and breach or they're not necessarily thinking about at top of mind for the 15 or 20 minute.
So they habit of given visit and if they don't give a prescription patient goes out they don't come back for another three to five or four five months. So it's critical in our view that we drive patient awareness and the intent of the patient to talk to their doctors and asked them about bridger.
That's where all of these.
Digital and other initiatives come in and we've been very pleased with what we've been seeing so far there now having said that our initial.
Projection on that was that it would take a couple of quarters of of all of those programs before we could really begin to get to handle on the impact that they were having on prescriptions given what's been going on with co bid, that's probably being pushed out probably by another quarter or so is my guess.
But the trends are we were encouraged by.
What we're seeing happened with these digital programs, we can't get Hyatt specifically to the output, but that were mostly interested in which is patients being given the opportunity to trial and breach.
Five wells will be getting that information over the coming weeks and few months.
Thanks I appreciate around appreciate.
Your next question comes from Paul matches with Stifel.
Hi, great things it Alex on for Paul just to just a quick follow up on the last season. The questions I just wanted to sort of understand it sounds like Q2, it's a little bit early obviously, but sounds like you expect Q2 to probably had the largest impact is that at least consistent qualitatively have you down to see sort of little bit more granular data.
Yeah on Nustars, I'm, sorry out or a little bit more it.
Tyson I mean do.
Yeah, I'm, sorry, you got a little garbled on my phone I'm, sorry to make you go do start the question yeah.
No no problem, yes, so I just had sort of a quick follow up hoping for a little bit more color on the back of Michael's question.
It sounds like what you're seeing in the data so far for Q2 and it looks like maybe there's some rebounds.
Can you provide any more color I guess around are you seeing new more new starts in areas that.
Our opening a little bit more do you expect sort in Q2 to be that sort of peak.
In tax quarter at least looking forward into 2000 2020.
It's way too soon to tell I mean, we have as I mentioned, it's only been a couple of weeks that we've begun to see a reversal and you know an upward trend again on on.
New prescriptions. So it's early to tell on that so I wouldn't project I honestly I I would I wouldn't I would hope that second quarter slots. The peak that we're going to see I would expect that as we get further and further.
Into a resolution of the whole covance crisis and get back to more normal operations at physicians offices in the field and so for that quarter by quarter I would expect to see continued growth.
Through the rest of the year and in particular back to Michael's question, we were.
Pretty excited about these digital initiatives that we've launched the fact that we were able to get 500 patients.
Spend over an hour on.
On a.
Zoom chat with a kale well and a patient ambassador who is taking a breach.
That was pretty compelling and the fact that we've had 48 million impressions within.
And audience that is self identified as having parkinsons are being close to people who have Parkinson's is also very encouraging and having said all that it's you know the counter current is what's been going on with Kogut 19, So we're going to need a little more time to sorted out.
And I expect that by next quarter, we should have more clarity and a and more to say about it.
Okay. That's helpful. Thank you.
Your next question comes from Cory Kasimov with JP Morgan.
Hey, Good afternoon. This is Turner on for Corey. Thanks, taking my question I'm just one quick one he described some trends from Breeze in March through April I'm, just curious how sales stacked up relative to your expectations earlier in the air particularly in January February prior to many of the social distressing and sheltering mandates were in place.
Yes, so so I think I just touched on in my presentation, we actually hit our internal projections. So so the.
The performance in the first quarter was consistent with our internal projections.
And expectations for the first quarter boats for a breach and Ampyra and you know that's based on a lot of experience that we've had over the years in the neuro specialty market and gauging what those patterns tends to be the first quarter in our experience has always been taking a hit as it were and its prime.
Narrowly related to that the massive changes in insurance coverage.
In resetting of deductibles resetting of the initial coverage phase and donut hole, so that patient out of pocket costs go up and you just see more patients being ginger about filling their prescriptions.
That tends to adjust itself as you get through the first quarter and then into you know beyond a and consistent with that as I mentioned, a very consistent with that projection was that we would see continued improvement throughout the quarter, which we did you know February better than March smart.
That said better than January March for them in February and now April better than March.
Got it thank you.
Your next question comes from feel native.
Cowen and company.
Perfect. Thanks for taking my question, Ron a follow up to the one eight you just answered you mentioned that.
Let's say your internal projections based on all your experience so you've had with occur over the years in Q1 disruptions.
Based on experience can you give us some magnitude of a dollar impact in Q1 for Enbridge Asia and para Sue.
If you were able to.
Back out the seasonal factors excavated.
Excluding covered what approximately where TV.
The impact to the seasonal factors on reported revenue.
The the impact of the seasonal factors was most was by far the the greatest part of it because.
You know they beat the impact that we saw in terms of new prescription impact really didnt hit until the last week in March so you've got a week or so.
Out of the whole quarter, where it it where you saw that and that would not have substantially impacted sales because it takes more time than that to get to the prescription and so forth. So I would say that that almost all of what we saw the first quarter was related to seasonal factors.
Rather than coded we would not have expected to see the impact of Kobin until April.
And would it would.
Baseline be flat quarter over quarter sales for both products and the absence of the.
The seasonal factors or are there anything any other changes are we shouldn't they can take into account.
That's a you know what I don't know how to answer that because I like I don't have.
The specific numbers, obviously, you can look at a at our sales numbers in the fourth quarter and compare it first quarter I understand what you're saying you know or how do you gauge the the impact of.
Of the seasonal factors I mean, I suppose you could we could go back you can go back and look over the last few years for Empyrean, just as a proxy and look at what those factors look like over time.
Because typically but that doesn't.
You know that only cases, so far so I don't have a specific answer you there Phil other than to say qualitatively that we we expect a decline in first quarter actual demand every year because of the but mostly the insurance factors that we talked about and then back.
Takes up a as people get their new plans are get online than your work out the new insurance issues and get them back on a they you know they get through their deductibles they get through their or their initial coverage and and in some cases, the donut hole so all of that factor.
As in but at least in this in our specialty neuro areas. We just see that decline occur in the first quarter. So so that's that's the best I can tell you.
Okay that makes sense and then second question is on reimbursement, particularly in Medicare portion of the fluctuation.
The passive suggested <unk> it can be hard to have physicians right.
A script when there is a reasonable likelihood is going to be denied because of reimbursement access issues.
Do you ever since if whether that's still how often that's happening in the marketplace and when you take the Medicare reimbursement rate will be sufficient sort of physicians, who have right freely for bridger.
Yes, you know what we're finding is it's really a physician by physician basis, and so it's hard to make the global.
Right.
Our teams.
Our out there constantly with the physicians educating them and their office staffs about.
What their coverage universe looks like in there in their specific geography and their specific practice what their you know what percent of Medicare is covered what percent, they're gonna have to do medical exceptions, and what they can access I can say that globally overall.
By the end of last year, It was night and day compared to when we launch them beginning in March.
Because the first few months, we heard nothing but complaints. It was it was almost universal complaints doctors throwing up their hands not wanting to touch it because there was being rejected constantly and by the end of the year I would say, we still heard some of that but it was a minority voice because the majority.
The positions and offices, we were calling on.
Had gotten it you know they got used to it they understood. It now it doesn't mean that they were all delighted with it no one's delighted with our with our system.
It's still an impediment it's still a.
An impediment to some positions to right right because they just they know that they're letting themselves in for you know doing all that extra work, but as we go forward. Our goal is to keep lowering the prior auth threshold, which will make their process easier we continue to.
Worked with them very closely to navigate every obstacle.
And then I will say that they maybe the best metric we have to that now is that the conversion of part D. A prescriptions right now sort of reset is similar to the conversion rate for commercial.
And just to put a finer point on it that means that in commercial where we are able to pay down the co pays to.
$10.
We're still seeing the same conversion rate in part D, where we're not able to pay down the co pays and that says that people are being educated as the value of the product. They are navigating the hurdles better and even in Medicare it's working much better than it did in the beginning of last year.
That's helpful. Thanks for taking my questions.
Okay, and if you would like to ask your question. Please press Star then the number one on your telephone.
Your next question comes from Salveen Richter with Goldman Sachs.
Thanks for taking my questions, Andrew or something.
Maybe a question on the patients that are on integration right now could you speak to what do we feel that has been and if it's depending on the such profile adaptation.
Oh, I'm, sorry, say, the patients who have been unims leisure and the refill rate.
I guess for patients that are currently on in B, how are they wow, what a refinance and if it's dependent on but there you can just profile.
Yes.
Yeah. So so what we can say is that you know persistency rates.
Weve shown various types of persistency rates before on this but overall, what we've said is that the weak the cohort of patients who takes more than two doses or to a more doses a day.
Is about 70%.
I'm sorry, 72% of those patients are persistent out to a year.
Got it so that's still consistent tend to last time.
Yeah, Yeah. So so again, the people who like it and a and getting benefit they stay on it is the is the lesson there.
For the patient that Oh, I guess, maybe not at are opting not to stay on it are they keep have any color on and.
What does anything it's the discontinuation.
Okay.
Yes.
The.
Yeah, Yeah, if you go back.
From the first nine months launch.
What are the key learnings was.
That costs was a bigger and header.