Q1 2020 Earnings Call
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Sure.
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Ladies and gentlemen, thank you for standard I and welcome to the series.
So difficult first quarter 2020 financial results conference call. At this time, all participants are and I listen only mode. Later, we will conduct a question and answer session and instructions will be [noise].
All right at that time [laughter] during the conference. Please press Star Zero on your Touchtone telephone as a reminder, this conference call is being recorded I would now like to turn the conference over to your host Ms. Allison White Senior Vice President of the same Mr relation.
[laughter] communication I mean anything [noise].
[noise], putting a welcome to there's this first quarter 2020 financial results corporate update conference call I hope that everyone is doing well in staying safe safety is our top priority. We are conducting this call virtually was speakers in different locations, there and just to think guideline.
Please bear with Us [noise].
That's really [noise].
Our results was issued this morning can be found on our website. Your joined today by Paul eat It chairman and CEO and buried <unk> CFO, Paul will provide opening remarks, and Barry will review the financial results open the line for questions [laughter] always again I would like to remind you that this call will contain forward looking statements.
Okay.
Team.
At this is there's a few terrific and plans prospects clinical approvals commercialization corporate strategy performance, which.
Forward looking statements for the purposes of the Safe Harbor provision.
I just.
Hi, Matt 95.
Actual results may differ materially from those indicated by these forward looking statements as a result, the various important.
Pittsburgh location and prior authorization managements, all the way to free home delivery of Gibault.
Additionally, we reminded the diabetes community of our partnership with Killpack and clarify the simplicity of the home delivery process.
I'll wrap it pivots too virtual custom engagement has been critical to maintaining and recently gained momentum in G.O.P.S.S. prescriptions.
Converted all of our traditional speaker dinner programs to virtual virtual webinars.
Conducting 38 programs through April when almost 250 healthcare professional attendees.
Our sales Representatives Rouge, digital and virtual meetings.
Including the zoo, we face time also using text and email and facts to stay in games with their customers and it's just as needed to help them certain locations.
Especially important as they position themselves were figuring out the virtual world <unk> Tele medicine.
Now I'd like to back out of debt to talk about the first quarter.
Which was our first real quarter of G.P.S.S. watch.
I say that because from the time about writing a group one they'd September through the end of 2019, our focus was on building a foundation for successful watch.
Hiring and training I feel for securing wholesale distribution, ensuring retail access to g. vote.
Securing importantly, securing payer contracts and product reimbursement through formerly approvals.
During that time, we also distributed over 5500, Sam 40 minutes to our position customers.
And confirming she bold was in all of the electronic health record system set up that you should use.
[noise] getting all this in place in the fourth quarter of 20 like teen and through January This year was critical to sending us up to drive to do man they sales in 2020.
[noise] also achieving very high levels of pair coverage in the first quarter was key to the start of good prescription growth.
By the end of February approximately 70% of covered minors, we haven't talked about like 70% of commercials Meyers recovered without restrictions.
And we are experiencing continually teaching improvement in Medicare and Medicaid coverage throughout the core.
In addition, we were seeing units per prescription of G.D.F.S. in the 2.22 0.3.
<unk>.
And the overall markets and growing at 25% to 30%.
<unk>, we in fact had very good momentum prior to the company's 19 destruction and what do you can even outpacing the market 45 weeks prior to this destruction.
During late March and April it looks kind of market as a result of the <unk> 19 disruption a monkey Sloan and if you vote prescriptions get slightly however over the past four weeks you vote continued to gain market share you believe just as Jews and fast action. He took to immediately go virtual an entire was worth of our commercial.
Teams implement programs.
I don't care professionals and patients to access cheap during the pandemic.
We've seems evoke in the most recent weeks gain some additional momentum with most recent week at a watch high on for 439 prescriptions in the week.
Unit sales of also maintained sounds momentum and you continue to average more than two units per prescription compared to the traditional mix gets and still around one point for 40 minutes for prescription.
Importantly, we're prepared for the G., both hyper petting wants as well.
Type of and has been included in all the drugs lifting compendia.
All position electronic health record systems, all pair formulary contracts. So the hype of happened remain Ontrack for July watch.
As a result of the foundation, we established with a bunch of G.P.S.S., but heiko pen will launch into a much more hospitable environments.
A growing market with unit for prescription on the lives.
Conditions are preparing our commercial teams for July launch a significant virtual components.
And and face to face customer engagements, depending on the degree to which positions opposites are open for business and then what parts of the country that maybe taking place.
Do you know type of family the ultimate simple solution.
Around other treatments treating blood sugar emergencies.
What type of time, if the first and only autoinjector for severe hypoglycemia.
<unk> very low received by the diabetes committed.
Regardless of the degree to which the country has returned to some form of 80 normal we will be prepared for a successful launch of juvenile type of having both virtually end in person in July.
Now, let me turn briefly to our pipeline.
First our marketing authorization application for our ready he was going to be done for rescue is currently under review in the E.M.A.
Assuming a typical he M.A. review time frame, we could have a C.G.I.C.H.M.D.
Late this year early next year, so that revenge on track.
You need to move forward and positive results from our weight base Dozing study of R.I.M. formulation that adds up Ham.
We believe that the pharmacokinetics properties displayed by our I am I as Japan suggestive should be particularly effective in reducing the number of <unk> that so often occur in this epilepsy patient population.
Our next step is to request a meeting with the F.D.A. to agree on a path forward. So this program.
[noise] this quarter, we also the top one results for each outpatient portions of the exercise induced hyperglycemia.
T.I.H. study.
Post geriatrics controversy there tedium study.
Oh, we have already been ported positive results for the good clinic portion of each of those studies.
If we see similar results of the outpatient portion of each.
Well also propose pastries studied designs and a path to improve over the D.F.D.A.
As you know our goal with these <unk> gotten programming is to advance he was ready to use could gone for patients that will ultimately get a non rescue Nintendo's indications that mark indication to the market.
In addition artists aerosol <unk> will also have a clinical study results this quarter.
If we are again, if we see my results with will assess the next steps and just got the clinical and regulatory path forward with the F.D.J.'s later in 2020.
<unk> current purple studies this quarter go spend the next few quarters, having those discussions with the F.D.A.F. path forward for each program.
In the meantime, we continue to pursue other applications of our technology as well as other users of our approve liquid gone outside its current rescue indication.
For example were evaluated evaluating another new market opportunity to g. vote for use as a diagnostic eighth during major logic examinations to temporarily inhibit movement at the G.I. trap.
Current U.S. market for this indication that she'd look again at approximately $100 million an ankle sales.
Liquid group forgotten could provide a convenient notably constitution required alternative to current presentations.
As always but especially how at this time of uncertainty.
We need to also be both strategic imprudent about our capital allocation.
We have looked across the entire organization detector adults getting surely maintain a viable enterprise.
For example in April.
Compensation plan homosexuals team and Board records, just NDN by differ in a significant portion of their 2020 and 2021 compensation until 2022.
It was induced cash burn, including my personal potential to your differ over approximately 85% of my cash compensation.
We also receive the P.D.P. loan to help retain employees maintain payroll and pay rent and utilities all in accordance with in terms of the cares act, which variable cover with more specifics.
Mm.
But let me provide a few comments on the P.T.
April 23rd received approximately 5.09 million and P.B. funding.
We believe these funds when necessary to support our ongoing operations, particularly given this critical stage of we find ourselves in wherever you're facing the impact to come in 19, as we work to drive G.G. won't see our best prescription drugs.
Air for July launch of G., <unk> and this workshop I results from three additional studies.
Some may want after due consideration in light of S.B.A. guidance that just continue to involve changing the days and weeks he's D.V.D. almost a fruit and funded we determine it was advisable and then the public interest return approximately $900000 of the P.D.P. funding to make additional government funding available other small business.
You will use the remaining funniest retain employees maintain payroll and for rent and utilities, all accordance with the terms of the care is that.
Yeah.
Let me provide a.
Alright.
Yeah.
Now what I'd like to do is turn the remaining or the presentation over to very to go over our financial results and then I'll return and summarize it yet.
Thanks.
Net sales or G., those T.F.S. were $1.7 million for the first quarter of 2020.
That's sales represent gross product sales.
Allowances for our co pay assistance program <unk> discounts pay a rebate from charge backs.
Bitter service fees and product returns.
[noise] rests profit for the first quarter of 2020 with negative $2000. The reason for the negative gross profit is that we had $1.8 million in cost so difficult for the corridor, which included $1.2 million related to the establishment of reserve for accessing absolutely inventory.
Manufacturing costs for Gibault concurred prior to approval and initial commercialization were previously expenses restriction develop inexpensive <unk>.
Such a cost of goods sold we're not reflect fully loaded standard costs of the tools for unit until those materials have been consumed.
Total operating expenses were $28.3 million for the first quarter of 2020 compared to $25.7 million for the first quarter of 29.
As a reminder, our total operating expenses for Q. for 2019 were $33.1 million.
[noise] R. and D. expenses for the three months ended March 31st 2020, or $6.6 million compared to $13.2 million for the same time period and 2019.
Decrease the driven by decrease C.M.C. costs due to reduction of manufacturing batch of and supplies needed for Preclinically clinical trials as well for previously mentioned expenses incurred in the prior year for the manufacturing of Chivo prior to commercialization.
A second contributor to the decrease was lower expenses associated with clinical and pre clinical trials.
Both of these impacts were partially offset by increases and personnel costs.
So in general and administrative expenses were $21.6 million for three months ended March 31st 2020, compared to $12.5 million for the same period and 2019.
Increases primarily driven by increases and marketing expenses and the addition of their says commercial sales force in the fourth quarter of 2019.
Net loss for three months ended March 31st 2020, $29.2 million or 89 cents per share compared to $25.3 million or a dollar seven cents per share for the same period and 2019.
As a March 31st 2020 were held approximately $100 million and cash cash equivalent to the investments.
During the quarter the company sold in a file on equity offering approximately 10.3 million shares of common stock at a price of $4.15 per share.
Net proceeds from the offering were $39.9 million after deducting underwriting discounts and commissions and other public offering expenses.
Total current shares outstanding as of March 31st 2020, or 37 million 541037 shares.
In April as Paul mentioned, various implemented a deferred compensation plan under which members of our executive management team and board of directors.
Bring a significant portion of their cash compensation until 2022 to minimize r. cash brain.
Also in April as pod mentioned the company entered into a U.S. small business administration Paycheck protection program, otherwise known as P.P.P. loan with silicone Valley Bank and the amount of $5.1 million enabled by the current a virus aid relief and economic Security Act of 2020 other like none of the cars Act.
We received the full amount of the P.P.P. alone in April.
And as Paul mentioned, I may 4th we repaid $900000 of the loan.
The company plans to use the remaining proceeds retain employees maintain payroll and make leasing utility payments in accordance with the relevant terms and conditions of the cares Act.
The P.P.P. loan matures in two years and bears interests at the rate of one per cent per annum.
No payments are due on the loan for the first six months.
We believe that we have sufficient cash to fund or operations and capital expenditures for at least for next 12 months.
Regard to control expensive, we have and continue to implement.
Spending reductions.
There are no plan significant clinical trial expenses and the executive team in board or differing a significant portion of their cash compensation.
Revenue from G. vocal determine when <unk>, when we will be cash flow break even.
Now, we'll turn the call back to Paul [noise].
<unk>.
In summary.
We we were whether the common 19 storms effectively because.
We have an improved product generating revenue, we have an athlete pivot into a virtual customer engagement model.
We are on track for July launches Gibault Hypo pen.
We're seeing momentum recently in prescriptions for G., both the bass.
Being prudent introducing with our spent.
We have several important data read on upcoming and we are continuing to add new opportunities drug development pipeline.
That operator, you completely open the line for questions.
Yeah.
Yeah.
Huh.
Action has been.
Yeah.
Right.
Yeah.
Yeah.
[noise] first question is from.
RBC capital market.
<unk>.
I got just a few questions around mid July hypo pen much.
First.
Walk through the final beating items before that launched were correct.
Second how would you characterize the level of physician awareness around you go type hope that you look at your call universe, or <unk> concerts, coming or you have more work you there.
Lastly to what degree to sampling factor into those much plan.
Mm.
[noise] they bring a little.
So in terms of final gaining items I think there are.
To really critical ones one we're currently manufacturing commercial supply.
<unk>.
That'll be does it won't be able to distribute it early July.
Second one is continuing to get extremely good or extremely effective with our commercial organization and all the programs that we will be implementing that we're currently working through with G.O.P.F.S. in terms of virtual as though his face to face selling.
We need to be prepared for an environment, where there's a significant birds all components still and a lot of the programs a lot of the activities that are currently ongoing.
<unk>.
Oh really getting out people much more skilled <unk> interacting with physicians and offices virtually through all the various media email fax.
Meetings et cetera.
That's going to be critically important then that's a big part of what we're doing right now <unk>.
Let's have a sampling perspective, if you recall we've provided.
Considerable number of the sample into the marketplace for the P. So syringe.
Early in in the process to avoid prescriptions going to the pharmacy and being rejected it just under Mr. Form letters, we will be all who were already on all the formulary, both forgiveness and for the hype offend. So we don't anticipate that there won't be a sick.
Component at all of a sampling <unk>.
We do consider there are some pockets of positions they require some and in some situations positions about asked if they could have samples for office just in case of getting office emergency and you know we will be providing some modest numbers potentially for that.
In terms of awareness.
I'd say, it's minus that now positions are we're focusing positions expanding the use of the G.D.F.S.G. low in general to a broader audience of their patients population, they're engaging more and more in discussions of white people need to M.G. folk instead of the old traditional kids.
And I say, but.
The level of awareness of the coming Hypo pen is.
Modest not not hot yeah.
Okay. That's helpful and it's like that that's just one follow up.
You have any data you can share the prescription still rate or.
P S.S. and how that stranded simplon. Thank you yeah. Great question. The bill rate early on was relatively relatively low.
We were seeing a trend where we were losing prescriptions they were not being filled at least two and we saw some substitution of the traditional kits.
Yeah, we we've identified with that was over a few causative factors one was the prescription written.
G Botox injections.
For injection.
And that is that caused some confusion at retail.
We also some of it was early on.
Last Spanish or coverage.
And and thirties would be prior authorization.
Done since then.
We've gone to a hobby format and 90% of the prescriptions are going through the hub phone position. So instead of going into their electronic health records and doing a drop down to pick a pharmacy. They just send it to the <unk> deal with part authorization they'll deal with reimbursement.
And they will send the the product to the patient by whatever means they prefer if they want to pick it up and local pharmacy they'll send it there we're seeing a high rate home delivery through the public as well so that gives us much greater control and the bill rate has has dramatically increase.
Okay, great. Thank you.
<unk>.
Security.
Hi, Thanks. This is Dan Clark on on for D.C.
I guess to start.
And he just mention your mail based our access then up over the past couple of weeks. They didn't call that you know you expect that to synch new.
Once pharmacies, reopen and social insisting measures and relax and then as a quick follow up to that.
Are there any any mail based sources that don't shopping I.Q.V. data that we should be aware of.
Some day on a date for the question the.
Nailed based prescriptions I think the or have a lot to do the the percentage I don't have it at my fingertips tickled to 75% of descriptions going to your hard right now.
Deliver overnight for home delivery.
One would expect that we would expect that you know once pharmacies are back opening people feel comfortable going back into pharmacies that that will decrease in people, who will go more to the traditional pick it up the pharmacy keep in mind. However, this is a very Atlas population. So I think what you're going to see is I think you're going to see that.
The diabetes people with diabetes can be more cautious getting never been charged you whatever they're the normal lives. So the rate of overnight delivery to mail delivery may remain hi, those prescriptions are still showing up in on qbs. So that's that's not an issue there are a few.
We have a few <unk>, it's not hundreds tens.
So if you on an on an average basis. If you were 5% dish to the <unk>, you'll you'll have.
Covered what's going to go back as well.
Yeah.
Thank you and then just quickly on on the gross margin fine roughly like how many quarters do you expect to have sort of a higher cost of goods.
Yeah I don't.
Go ahead, yeah type huh so.
You know the.
The quarter. This year is that natural is impacted about it you know reserved you know over the next yeah, Yeah, Yeah near near term time period moving forward here you know our cocktail radek for a number of reasons. One is your product launch in inventory uncertainties, so you're yeah, you're saying that reservists quarter.
But also it's we've mentioned you know and our 10 K. and then that should make comments here you know.
Cost involved with manufacturing product prior to the approval Ah last September and our commercialization were the consent.
It is already expenses.
That's not going to flow through taxes. So you didn't have sort of you know different factors up and down until we get to a steady state.
[noise] [noise] pay thanks, I'll pass line.
The next question comes from.
From type person.
Mm.
Mm.
Yeah.
Okay.
Mm.
Okay.
Yeah.
Mm.
Yes can you hear me sorry about that I was on there.
Thanks for taking my question. So just just a couple of quick ones I wanted to get your thoughts Paul on you know how you think the.
And the overall glue gun rescue market.
Is going to be impacted to the extent.
That the cold dead landscape is maybe creating more I guess diligent patients or diligent practices in terms of patients, making sure they have rescue rescue therapy available.
Seeing what I would call more diligent are conscientious paper in terms of patients making sure they absolutely have.
Rescue available that's number one I guess do you think that indoors and then second question is on the.
[laughter] Dyad, Japan.
Product can you just talk about the path forward there I know you're resource constraints, let's talk about how much of that is a priority and then the extent to which.
Push that phone thanks.
Should give your thank you very much.
G from a market perspective, the overall, who could gone market all products in what is really accelerating going 30 talks and 25, 30%. The cobras 19 situation has taken a little bit of little bit of the seem out of the total market girls.
But in terms of the patient population.
What we're seeing his positions are more concerned and reaching out to their patients to make sure that they have less people who'd gone and what they said that my comments are the most recent week of data is an all time high for us during the during the pandemic during the crisis.
Oh that is due to the fact that we're actually probably more engaged with physicians better than others.
And really talking to our customers about me.
[laughter] patients are.
Considerably increased risk right now and that they shouldn't be reaching out to that and making sure. They have <unk> yeah.
And I think you know that that's really got us a little bit attraction.
Over time, I think that will indoor I think positions are becoming more attuned to making sure that they're talking to patients about who's gone, especially gibault I think with the advent of the high <unk> going to be even more significant you'd have to remember that.
This is a category what positions were being talked to about who does the decades. So they're reengaging the reengaging their patients they're the beginning to recognize the the new more convenient uses and I think the next stage is actually going to be positions understanding and talking to the patients about me.
The ability to self administer a historically, it's it hasn't been a self administration started taking all of that combined will.
Help for patients at risk to have the more and during believe that they should have something just in case.
Hopefully that answers the question in terms of I had to them we think we.
[laughter].
When when you look at the farm ago kinetic so <unk> both in the original phase one study and they the the second study, which was the way they so they.
More than adequate time, the onset and more than adequate.
Drug getting into the system, what's really beautiful that hangs around for quite awhile and that is critically important too.
Blunting follow on seizures. The question is going to be what yeah. Yeah. It is require that we do going forward in the Bayes three program. So we're going to go to the F.D.A. later this year, we're going to put forward what we believe there's the.
[laughter] appropriate approach and see where we go in terms of resource constraints, you know it it wouldn't be resource constrained they ask us to do more than it is reasonable.
You know keep in mind, where we're investigating this drugs in a an orphan designated population.
And the kind of study that meeting proposed would be <unk>.
'cause just didn't lose it is usually required.
She was the F.D.A. does and then we'll decide on her Passover going after the meeting.
So <unk>.
Oh do do you feel reasonably confident that you can move directly.
To face three or that there's a rapid path to a phase three given that this is five or five.
Two or you know that sort of to be determined based on your dialog with the F.D.A.
Yeah, we will move to blow the base free programs. There's there's plenty of examples in the marketplace. That's that's been the task or.
So you know that that's going to be our approach. We think is if I would probably be too. It's dialysis am is very well studied there's other products that have proposed similar leaps and.
We'll have a very cogent arguments 30 solid argument, especially based on the data.
Okay, great. Thanks for taking my question.
<unk>.
Hi.
Questions at this time.
Okay.
Thanks, very much we appreciate everybody joining up today, you say t. healthy.
Yeah.
Okay.
It was interesting.
[laughter].
[laughter].
[noise].
Yeah.
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