Q1 2020 Earnings Call
[music].
Good day and welcome to the BYOD delivery side, just first quarter 2020 earnings call. Today's conference is being recorded this time I'd like to trying to conference over to Mr., Terry Folio, Chief Financial Officer of five deliveries Sciences. Please go ahead.
Thank you and good afternoon, everyone welcome to our first quarter 2020 earnings Conference call me during the call today in terms of care Chief Executive Officer, we're joined by succession, President and Chief Commercial Officer.
Following our prepared remarks, we will conduct a question answer session.
After the market close today by deliver Sciences issued a press release announcing its financial results for the first quarter 2020, a copy of the release can be found on the Investor Relations page of the company's website.
Before we begin I'd like to remind everyone that certain statements made during this call which may contain forward looking statements such forward looking statements are based upon current expectation and there can be no assurances that the results contemplated in these statements will be realized.
Actual results may differ materially some such statements due to a number of factors and risks some of which are identified in our press release and our annual quarterly and other reports filed with the FCC.
These forward looking statements are based on information available to be Viasat. Two day may set of 2020 in the company assumes no obligation to update statements as circumstances change.
Audio recording in broadcast replay for today's conference call will also be available online in the Investor section of the company's website.
With that I'd like to turn the call over different who care Perm.
Thank you very much Terry.
Welcome everyone to our company's first quarter 2020 earnings calls.
I recognize these are extraordinary in challenging times and hope you and your families are well and help.
With regard to the first quarter performance I'm very pleased to report that we once again.
I was an all time paused for a total company net sales of $38.3 million representing growth of 94% versus the first quarter 29 team.
So buga instant book prescriptions grew 52%, 19%, respectively year over year during the first quarter.
These strong results were fueled by positive momentum for both products the only part of March.
Point, we began to experience impact of the cold at 19 pans out.
Nonetheless, the hard work dedication of our employees.
Able to rapidly transformer commercial approach that's successful we finished the quarter with record level performance.
Turning to the Kogan 19 situation I'm very proud of her employees responded to this unprecedented challenge.
That's because then that materialized or number one priority was to meet the needs of patients under health care providers, We service.
We acted quickly and with me on three fronts.
First reinsured constant supply of our products as they provide important clinical will lead for patients suffering from chronic pain.
Second we transitioned to our customer engagement to virtual support and launched an array of new customer in patients surface programs.
Third we establish an internal pulled that 19 cross functional committee.
Vigilantly Assa.
The market trends and dynamics benchmark best practices across the industry and ensure hyper focus to navigate through this unprecedented situation.
We believe these actions are having a beneficial impact based on the brand trends, we see in the second quarter, thus far and believe it will be important components for renewed momentum as our customers return to more normal operations.
In addition to the successful customer initiatives and services, which we launched since the start of depends on them.
The organization continues to make important progress on many other aspects of the business.
One of our stated objectives has been to expand the hope you get access for Medicare and major regional commercial plans with the aim to match the level of success, we've achieved across commercial national plans.
But that is I'm very pleased to share. The we have recently gained preferred position within multiple Medicare plans expanding access to several million covered bonds.
In addition, we have expanded access within several prominent regional institutions, which offer both their own covered bonds as well as potential influence on clinical practice within their metropolitan <unk>.
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On the supply side, we have continued to increase our supply of finished goods to approximately four to six months of inventory on hand for all seven doses of BELBUCA.
This represents a significant increase since the start of dependent.
We have also secured sufficient materials to continue production into 2021.
Our ability to make investments in the new customer programs building further inventory of supply and continuing successful operations in the organization as a result, because the key immediate reorientation and actually by the company as a pandemic surface.
We began to here with the strong balance sheet and were able to further strengthen our position with a very successful first quarter.
Ensuring financial durability is a key strategic priority for beauty us and we're prudently managing our spend during this period to protect and she has a business through this near term disruption, while continuing to invest towards long term sustained growth.
The cold the 19 pandemic is unprecedented in fluid circumstance with significant near term uncertainty.
We had a great deal of confidence in the growth momentum of our portfolio, which led us to provide full year guidance in November of last year.
The performance during the first quarter, but some puts and takes exemplifies the potential for sustained momentum in the brands.
Well, we remain confident that differentiated clinical benefits of our products and the underlying demand we received from physicians and patients the near term uncertainty around depends on that leads us to withdraw guidance for 20 Twond.
We remain hopeful that as states begin to remove stay in place orders physician office aneurysm clinics will resume more normal patient care activities with corresponding market performance.
We look forward to providing updates as events in the country unfold over the next few months.
To conclude I'm very pleased by the success of the first quarter as well as how the organization has responded to the challenges presented by the code to 19 kind of done.
We have therapeutically important products, a strong balance sheet and a talented and committed team of employees.
We remain poised to successfully navigate through the short term uncertainty and achieve our ambition of long term sustainable growth.
With that I'll turn the call over to Scott to provide more details of our performance during the first quarter and our new promotional tactics in 20 twin.
Scott.
Thank you harm that's her mentioned during Q1 2020, we reached another record for BELBUCA prescriptions of more than 99400 retail tier axis.
This represents a 52% increase and BELBUCA trx is compared to the first quarter 2019, and a 3.5% increase over the fourth quarter of 2019.
We were building momentum during the quarter and our trends supported BELBUCA exceeding expectations in the first quarter and beyond.
The early momentum we built was slow toward the end of the first quarter by social social isolation measures began to be implemented nationwide in March.
During the slowing of growth BELBUCA Q1, trx market shares increased to 3.6%.
From a Q4 2019 market share of 3.3%.
Also encouraging to see BELBUCA market share increased to 3.8% through the first three weeks of April.
During the first quarter BELBUCA is new to brand market share of 7.3% held steady from the fourth quarter and March finished up 7.8% well above the trx share of 3.6% and there's still significant opportunities to grow total prescription share as these metrics historically converge.
Our BELBUCA prescriber base continues to grow in the first quarter, a testament to the execution by our sales team.
We grew our BELBUCA prescriber base in the first quarter by over 1100, new prescribers.
Fifth quarter in a row, where we added more than 1000, new prescribers.
Reaching over 7600 totally need prescribers in the quarter, an increase of 28% versus same period a year ago.
As we entered Q2, we were able to improve BELBUCA coverage from non formulary not covered.
Covered or preferred status and over 2 million Medicare part D lives that express scripts.
Lucked health and you PMC health.
Furthermore, we believe that with additional work we have the potential to add sovereign several million more Medicare lives as we head into 2021.
On the commercial side, we improved our coverage within two prominent commercial plans.
Hi, Mark the Blue Cross Blue Shield and U.P.M.C.
While we were previously covered for than high Mark patients will no longer be required to fail to long acting opiates before accessing BELBUCA.
Importantly, you and your P.M.C. has moved BELBUCA from a non formulary not covered status to covered.
With a typical class prior authorization.
The media side commercial team has a proven track record of pulling through market access wins. This focus on maximizing these opportunities.
This is displayed in the results we've seen in Prime therapeutics. Since this win was put in place during Q4 and Q1.
We have seen BELBUCA trx market share within Prime go from 3.9% in Q3 of 29 chain.
4.7% in Q1 or 2020.
The product Q1.
So some pro Q1 retail prescriptions reached over 16100, representing a 19% increase year over year compared to Q1 2019.
During Q1, 2020, we generated 13.3% enteric share.
And 11.7% Trx share representing the highest market shows to date.
We expect continued trx and revenue growth for some pro it has its interact share has can see consistently exceeded total or share since may 2019.
And was 13.8% in the month of March.
In the first quarter, we successfully added 1170, new prescribers for some product, which helped the brand reach and not a new quarterly high of almost 5000 prescribers.
We continue to view some pro it gives an extremely promising Brad I believe our early 2020 market access wins with and Prime therapeutics.
Yes, we'll be catalyst for growth in 2020 and beyond.
The Mediasite Salesforce has done a strong job taking advantage these wins as improve or trx market share within prime therapeutics from approximately 20% in Q4.
To 44% in Q1.
From 10.5% to 13.7% within Cvs Caremark.
We're very proud of these results that our team generated during Q1, especially with the headwinds that we face due to the covert 19 pandemic.
While the influx of new patients who are products have slowed much like we're seeing in the broader markets. We are encouraged by the refill rates we are seeing.
Steady trx trends.
Is the impact of Cobot 19 grew our primary focus was to support our H.C. peas and their patients.
We accomplished this by reinforcing the many resources available to patients HCP is and the unique attributes are products possess.
That's hurt highlighted our commercial team rapidly pivoted to new virtual promotion environment in the quarter.
We continue to implement new ways for a territory managers remain engaged with a target physicians in office staff.
And for doctors to maintain a dialogue with the company and their peers about BELBUCA and some prohibition.
We have now implemented a new virtual engagement platform.
And enhanced email communication portal and virtual speaker programs.
These initiatives have resulted in the salesforce, having over 5500 touch points with HC peas, and their staffing tweak a meaningful increase over the typical number of interaction interactions in any given week.
It's also been encouraging to see the high interest H.C. piece have exhibited and learning more about be BELBUCA from their peers.
Through our personal speaker programs, where we have averaged well over 15 attendees per program.
We also property recognize it patients may face disruptions and insurance coverage and income during the pandemic and have created initiatives to help secure and preserve access.
First we are in the process of implementing a hub service, which was which should be fully functional by the end of May early June.
This service will assist with prior authorizations at a time when the pain practices, we support maybe short staffed.
They're not and not have like same capacity to assist patients with the prior authorizations are insurance providers may require.
Secondly, recognizing that current patients and potential new patients may experience changes in their insurance coverage. During this challenging time, we've recently expanded the co pay assistance program for BELBUCA.
With regard offering a maximum out of pocket them out for commercial patients may not that may now be uninsured or underinsured.
Our goal is to make BELBUCA more accessible during these difficult times.
Taken together, we hope that these initiatives will keep our brands relevant and available to our customers and patients woman maintain our position as a key partner in the treatment of chronic pain and opioid induced constipation.
We had a very successful Q1 that resulted in another record quarter for revenue and many other important growth metric metrics for BELBUCA and some public.
Our Q1 results supported the growth trends, we had in place prior to our men momentum being slowed by the impact of the co. The 19 pandemic <unk>.
We also believe that a recent market access wins for both brands and our successful track record with executing against these wins.
Support the growth of up you can some public.
In concluding I'm, particularly proud that our sales and marketing team pivoted, so quickly to effectively implement new initiatives to support our health care professionals.
And the patience.
Support during these different challenging times.
With that I'll turn the call over to carry to provide an update on the financials Kerry.
Thank you Scott.
Turning to Scott discussed we have very excited to report outstanding first quarter results, which had once again exceeded expectations across the board for both sales and profitability.
Total net revenue for the first quarter 2020 was $38.3 million, an increase of 94% compared to $19.8 million and the first quarter of 2019. In addition, total revenues in this first quarter increased by 21% compared to $31.6 million in the fourth quarter of 2019.
So you can net sales in the first quarter with $33.5 million, an increase of 79% compared to $18.7 million into first quarter of 2019.
The net sales growth of 18% in the first quarter versus the fourth quarter of 2019 was primarily driven by the continuing growth in prescriptions, which Scott chaired favorable gross to net deductions and higher average price driven by the favorable does snacks and the impact and the price increase enacted in January.
In public has been an ideal complimentary product for Mediasite as we were able to effectively integrate it into our product portfolio and take advantage of the substantial overlap in the target prescriber base.
<unk> net sales in the first quarter ended March 31st 20, $24.2 million, an increase of 54% versus the fourth quarter of 29 team driven primarily by favorable question that deductions and the impact of the January price increase.
We were pleased to see that we were able to end the first quarter with wholesaler inventory levels comparable to previous quarters for both up you can see probably.
Beautiful net sales for the first quarter were $100000 compared to $1.1 million and the first quarter up 29 team.
In March this year, the company announced the plan discontinuation of marketing of being a bail in 2020.
Royalty revenues for X U.S. sales the Painkilling break hill totaled $563000 fit the three months ended March 31st 2020.
<unk> decreased to $600000 when compared to the fourth quarter of 29 team.
Total gross margin for the quarter was 85% as compared to 80% in the first quarter of 2019 and 77% during the fourth quarter of 2019.
The increase versus the fourth quarter of 2019 was primarily due to the fourth quarter onetime impact of approximately $3.8 million in cost associated with the plan discontinuation of marketing of being about.
Gross margins for both BELBUCA NC pro at where approximately 87% in the quarter inline with the fourth quarter of 2019.
Total operating expenses in the first quarter of 2020 were $26.7 million compared to $17 million into first quarter of 2019 and $23.8 million into fourth quarter of 2019.
A year over year increase is primarily driven by the impact of expanded salesforce and market access teams as well the establishment of the medical affairs and NFL team together with the introduction of seem probably into the company's portfolio.
The quarter over quarter increase reflects the impact of planned marketing investments and the phasing of key initiatives.
GAAP net income for the first quarter was $5 million or a net income of five cents per share.
Compared to a GAAP net loss of $3.8 million into first quarter of 2019 or a net loss that's five cents per share.
First quarters net income reflects that overall revenue growth, coupled with improving gross margins as well as our improving operational efficiency.
EBITDA in the first quarter, 2020 was $7.8 million or 20% of net sales compared with $100000 in the first quarter of 2019 and $4.1 million or 13% of net sales in the fourth quarter of 29 team.
Non-GAAP net income for the first quarter was $8.3 million and reflects gaps net income excluding stock based compensation.
And noncash amortization of intangible assets.
This compares to non-GAAP net income of $6.4 million in the fourth quarter of 2019, excluding stock based compensation noncash amortization of intangible assets and the onetime nonrecurring impact of the discontinuation of marketing a being about.
At March 31st 2020, BD, aside had cash and cash equivalents at $70.6 million as compared to $63.8 million at December 31st 2019.
Operating cash flow in the first quarter was $6.4 million with overall cash flow in the quarter of $6.7 million compared to $8 million in the fourth quarter of 2019.
We're pleased to have entered 2020 and the second quarter with a healthy balance sheet.
This strong financial foundation positions us well to manage through the current period of uncertainty.
In terms shared already we are managing our expenditures prudently and sharing continuation and prioritization of key initiatives.
I'm very proud of them Pds, I finance team, who rapidly transitions remote working and closed the quarter seamlessly.
Overall as a company, we're proud of our resilience and the team's ability to very effectively adapt to over the past quarter and look forward to continuing to bring meaningful clinical value to our patients.
We'd now like to take your questions operator.
[noise], absolutely if you'd like to ask the question. Please signal that pressing star one on your telephone keypad. If you are using his speakerphone. Please make sure you give mute function just turned off so I like your signal to reach our equipment. We'll go first with friend and folks from Cantor Fitzgerald. Please go ahead.
Hi, Thanks, taking my questions and congratulations on the quarter.
Firstly, maybe one on the core to our you know you talked a lot of favorable gross knits and just caught out the potential 40 increased co pay assistance for the rest of the it.
Can you just help us think about gross to nets for the remainder of the year and then maybe can you provide some color in terms of what you're seeing in April was new to brand patient starts and chicken leads are you seeing any signs up to assistant to creep up as patients who show it to.
<unk> and <unk> could you maybe provide any color in terms of what percentage of patients on bump you could maybe managing their pain. It hit of an elective surgery. Thank you.
Hey, Brandon Thanks for the question I'll start out and then I'll pass it over to to harm to build upon that so first of all on the gross to nets I think we do see typically in the first quarter of most years you have some favorability you don't have the Medicare donut hole impact, which 10.
The increase as the year moves along.
So that's certainly one of the drivers as we look at the phasing throughout the year I think overall, our our gross to nets had been pretty stable now for about a year and I would expect at this point that it would probably stay in it and are about that same range knowing that as the year progresses, you do have the Medicare in particular, they have the Medicare donut hole impact.
I guess, how do you want to take the second part of his question.
It's actually Terry I think I'll take it this is Scott I got the thanks. Thanks for your question I'm. So first regarding the new to brand great insight because obviously, the Ics exposure or do you mind patients going in offices. Now is has been reduced on what we're seeing is new to brand impact that's comparable to the market.
Yes.
It's a it's basically down 20% to 25% at this point in time and so as we as we look at that I think tying it into like things like persistency I think persistency right. Now. It's you have to look at persistency over three to six months typically.
So we really don't have the you know the data to look at that long term know if it's going to be stickier overtime. When things that are encouraging is that the new to brand has been.
Maybe you can build a upon that some maybe anthrax and some of the programs that were put in place.
Some of the programs in component of the answer to this question are ones that are very acutely important now, but actually we believe have real bad.
[laughter].
Yeah in terms of elements of helping those continue to drive further growth into the future and so a lot of these programs you know we think will have <unk>.
Come out of it so I would be to condemn it situation.
Yeah, but to your question you have thing you know right now we were very please.
Well this year, especially you know heading into the early part of March where we were really seem you know quite quite a pick up as we tip. It.
The the pandemic you know Scott correctly pointed out you know has sort of have somewhat of an impact.
But we are.
I see.
Part of the pandemic.
Very hopeful that as the country begins to open up and estates begin to.
Remove or let expire they're staying place orders.
That are.
Piccolo patients that they had previously begin to provide the same kind of service to patients in that market performance follows accordingly.
And we remain very optimistic about the long term opportunity or these products.
Got maybe once or just.
Will continue to add value moving forward as well.
Yeah, I think you harm.
Mentioned at night I prepared.
Program and we we were already considering putting speaker programs back in place back half of the year, So very quickly pivoted and pulled out of that for it in.
Obviously are doing them virtually now and as I mentioned.
To have over 15, H.T.K.'s on a call to <unk> speaks to the interests of the product on the other thing.
We've we've looked at his providing the C.P.A. support.
Prior authorization support and I think right now offices that may be stretched it cannot do all the work right now maybe they would have been able to previously to help patients putting a product and I and then.
For commercial pay patients.
And especially if they're being stretched right now economically or maybe our.
Under sure under insured are uninsured as we go forward here I think well during during this pandemic.
And the other thing I think as interesting as as as we look at our.
The states that are opening up by this weekend basically two thirds of our prescriptions come from the states and then.
Open up our programs layer on top of all this I think I think be helpful to our brands going forward.
Well he mentioned to regional planes, what what part of the country do those two weeks no plans cover.
Yeah, I'm happy that.
But to answer that so.
They're a U.P.M.C.N.N. highmark Blue Cross Blue shield, they're very prominent and within the area.
Pittsburgh, specifically, so there there.
The predominant in New York, but the Pittsburgh market in particular.
Is influenced greatly by them and that's her mention his his remarks. They you know, they're they're not only needed to attain form every coverage. So we're we're pleased to be able to to move them improve their their cover.
And built those plans.
Well, thank you very much more questions.
Well the next go with David and fun from type first handler. Please go ahead.
Hi, this exactly fair deliverable.
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Prescribing.
Thank you.
Dammit after we had pulled our sales force is.
We want it to make sure that the H.C.P. is that we support or.
For very aware of attributes of a schedule three a product where they're burden. During this time, so the only a colon prescriptions. The fact that they can actually get five refills as well.
What.
It's very important.
And then also we provided them with all the phone numbers and contacts for all the mail order pharmacies as well a larger change and so that they had that access available to them something that you know all these all these attributes.
So it's separate us from from the schedule to there's really yeah. That's a couple of thinking.
You're welcome.
Thank you will next go with Matt <unk> don't mind.
<unk>.
Hi, guys going after man just want it could be getting a little bit more Q.E.
I'm good success, but lately good given a sense in terms of where you think you could continue that moment in terms of gaming you got more party lines on <unk>.
Personal lives to really you know how to locate the output.
Yeah, It's hey, Mad at Scott, Scott again, I'll I'll take that question she'll side of a business and I think we've stated for the last a few quarters that we're really going to start.
The thing in on some of these tougher regional plan.
Hi, Mark So we have that and then within the and and it was we benchmark can we go back there were about 60% prefer to M. 95.
There are so you know where we can will continue to try to work to even improve our status maybe even against the other buprenorphine product.
We've we've basically stated is that the Medicare side isn't important focus for us going forward.
That's why we were excited to announce that you know almost one about over 2.1 million lives are close to 2.1 million lives were added on the Medicare side.
Three S.I. and then U.P.N.C. again, and select health and these plans were not formally not covered previously so we're we're having very meaningful and I think.
Productive conversations with other Mark part.
T payers hard to time, when things are going to happen on priority opening up to access the Medicare going forward and will continue to focus on on on the market access side.
Okay.
<unk> success versus not for a quarter of 50% well, what what what do you see driving that graphically.
Yeah.
No matter, what Scott again, so so specifically in in in my prepared comments.
Which was our when that we announcing Q4, but majority lives on Q1, and then C.B.S. health with the other one.
And.
Market leader here is move antic, so they have.
You know mid 70% of market share. So it's really you know.
It's for us to grow the business has to come from Atlantic you know too in terms of you mentioned that there were a price increases taking what are what we what were the magnitude of the price increases and doing stuff.
Yeah.
But I'll take that Terry.
Yeah.
Yeah.
But you can see only about a 5% net price impact across the products you can probably that we took january 1st.
Mm.
And then any plans are made of the year or this kind of hunger yeah.
Oh, the places that's probably in the marketplace.
Cool.
Oh, thanks for taking the question.
Well next go with S. tour Honk from Jamie. Please go ahead.
Hi, Congrats on record here wanted to ask what you're seeing in terms of patient moving commercial health care coverage.
And then Scott can you speak on specific details on the programs you mentioned with regard to these patients what sort of assistant.
They see a little bit of of migration to even some Medicaid as that happens, but I think there are going to be people just are kind of.
Situation.
What was it was to to help and make sure people have access to W. Cook at all possible. So we're up we did implemented.
Kobe card assistance, but basically it's a pain or more than type type situation.
<unk>.
And be able to go forward with it so and then the prior authorization side of things there are pace.
[noise] fairly low across most plans, but they're still remains some challenges that makes it a little bit harder like Medicare for example, where.
Are not covered and there may be step out of we feel that that'll be a an area that will be very helpful until weekend secure future.
Paying kill will next to go with it.
Well, Mexico with teams logo from Williams layer. Please go ahead.
Maybe ordering too because one yeah, I'm done and I mean, and how you guys are kind of eating out.
Yeah.
And I I apologize could you see it was a little bit hard to hearing in full question do you mind repeating it.
That John.
Yeah. This is John on pick him I was just wondering okay <unk> noticing any pull through.
I'm rid of the customer maybe ordering to versus one scripts is ongoing pandemic and how you might be thinking about how prescribing patterns might be changing.
And as we stretch returned to normal throughout the summer.
Seen two two versus one I I think.
Most plans, we'll only allow so many 20 scripts filled you know at one time so.
What we have seen as a slight increase I mean, very gone up and I think that's consistent with what the whole market as I'm, saying I think we've seen some numbers from I.T.V. or that they're seen it.
General you know if patients will get a more likely to get to 60 now. So so they are filling bigger scripts and I think that's not just us it's across the whole industry.
As far as getting back to prescribing I think you know we we are hearing from we have obviously strong relationship to their customers out there for new patients that just haven't been able to get into offices.
You know to to see H.C.P.T.'s and.
And a lot of times for the H.T.P. is to have them. The first time, a <unk> I do think that that it's something to keep an eye on as we go into the recipe.
You are and how it might impact prescribing and and and our brand specifically.
Hey, great. Thank thing correct.
[noise], Okay. We can end the call up I guess.
Thank you everybody for training.
Thank you very nice color.
This kind of close to these calls thank you for parties.
If he showed you may now disconnect.
Yeah.
Oh.
Oh.
[music].